Managing Anxiety Over the Economy

Managing anxiety over the economy doesn't have to be difficult; it can be handled successfully if you have a plan.

In these stressful times, managing anxiety over the economy has become something of a necessity. The key to doing so successfully is understanding that anxiety arises when there is no plan in place. The antidote to this lies in having a plan.

Managing anxiety over the economy means having a multi-tiered plan that includes:

The first step in managing your anxiety means creating a monthly budget. If you don't already have a budget, or if the budget you currently have is not working, set aside a day (like a Saturday) to create one. To do so:

• Collect all of your bills (including household utilities, car payments, credit cards and the like) and read the amounts due.
• Next, grab a book and write down how much money is currently coming into your household and then calculate how much is going out. After doing that, calculate how much you spend for miscellaneous items (the movies, shopping, etc).
• Subtract the total amount of expenditures from the amount coming in, how much do you left over? The amount left is the money you can put into an energy savings fund.

Once that fund is completed, you can start thinking about having another savings account to fund big dreams (vacations, buying a house, etc) and/or starting a 401k or Roth IRA.

Along with a budget, you need to know your credit score and what's on your credit report. This is important because it gives you a good starting point in knowing how to manage your money. If you have debt, these steps will help:

• Look at your total debt and calculate how long it will take you to pay it off by paying only the minimum amount due.
• Get out your budget book and see how much more you can afford to pay over the minimum, even if you can only pay an extra five or ten dollars, it can shave off years.
• Pay this new amount, religiously, every month. This is the only way you can guarantee that you'll get out of debt sooner rather than later.

If you have debt and creditors harass you, it pays to know your rights.

• Get it in writing: Within five days of the debt collector contacting you, the collector must provide written verification of the name of the creditor, the amount of the debt and the steps you can take to dispute the claim.
• Stop the harassing calls: While it's true that debt collectors have the right to call you at home and/or work between the hours of 8am and 9pm, if you tell them to stop calling you at work (either orally or in writing) they must stop.

The home calls can stop too once you tell them so in writing. Remember to send all paperwork and letters by certified mail so that you have documentation should any disputes arise.

• Debt collectors can't threaten: Debt collectors cannot garnish your wages, nor can they take over your back account. Only a court of law (if they sue you) has that right.
• Report harassment: If you've been harassed or threatened by a debt collector, file a complaint with the Federal Trade Commission. The Fair Debt Collection Practices bill gives you that right. You may also want to contact the office of the state attorney general to learn the debt collection laws in your state.

In the past, many experts recommended having a six-month energy fund; however, in response to these economically challenging times, the recommendation is a year's worth of emergency money.

While daunting, over a period of time, it can be done. Each month contribute some dollar amount to this fund. Once you hit the year threshold, go ahead and save for other things, or open up a 401K.

Obviously, this only applies if you have 401K. If you do have one, it behooves you to have a diversified portfolio; do not put all of your eggs in one basket. Here are some other points worth considering:

• Read all of your 401K statements and take note of your pain threshold. If you feel that you are losing too much money in the stock market, and are tossing and turning at night, it may be time to reevaluate your portfolio.
• Based on the advice of money market experts, like Suze Orman, money that is needed within the next five to ten years should not be in the stock market. Instead, that money may be safer in a Roth IRA or some other money market savings account.
• If you have more than ten years to invest your money, evaluate your long-term strategy until you come to a plan that you and your family (if applicable) are comfortable with.

Finally, keep in mind that emergency money should not be invested in the stock market. By its very nature, keep this money liquid by placing it in a traditional savings or money market account.

If you still feel stressed, these additional steps may help:

• Keep all of your files, bill payments, and other applicable paperwork, neatly, in one place.

• Set a specific date, each month, to pay bills.

• Create a new budget each month (things like holidays and birthdays can all disrupt your cash flow).

• Find more money by calling all of your creditors and asking them to lower your interest rate.

• If you are still worried, consider taking on a second job.

By following these steps, you should see some reduction in your stress levels.

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