OK, let’s talk about the elephant in the living room = this is a perilous financial time.  Every conversation you hear or get sucked into eventually focuses on the investment bank implosion / credit crisis / mortgage fiasco / sub-prime / CDO’s / bailouts / Wall Street versus Main Street and on and on. Do you even know what all that means?  I do not.

Everybody has someone or some institution or some political villain they want to blame.  I do not care.

What is important to me?   Two things – 1) Maintaining an even emotional keel, and 2) What should I be doing for the long-term?

Let’s look at this serially.

Maintaining an even keel = I am not a sailor but I fully understand the importance of having a boat’s weight evenly distributed.  Unsafe shifts in weight create unsafe conditions and my boat might sink.  In our financial lives, this means staying invested, reallocating if necessary, and avoiding fearful decisions. 

It is surely easy to feel powerless when the headlines and politicians are screaming at each other and at us.  Look at this information as possibly but not necessarily factual – and then erase it from your memory’s hard drive.  Better yet, stop watching the news and stop reading the internet blogs.  The hype alone will kill you, but the underlying “problems” will not.  The unceasing media attention to this is the equivalent of financial pornography – it appears to be meaningful but has no real value.

Our information culture offers a range of financial data and "advice", ostensibly to help you take control of your financial life.  Perhaps you listen to the daily (or maybe even hourly) market reports.  Perhaps you believed the Secretary of the Treasury that his first couple of moves would stop the bleeding..  Perhaps you care about the pundits' predictions as to what the economy will do over the next quarter, or year, as if what they think matters.  Perhaps you even read books on investing, and there certainly are enough of those to keep one busy.

However, none if this matters to you and me.  We are working for a living, not speculating in the market.  We have families and friends to take care of and be cared for by.  None of the pundits will help us with this stuff.  The politicians speak and act globally, not so much in our personal lives.  If I want to maintain an even keel, I keep investing in the ways I have been investing, and I am satisfied that I will be there when the market comes back (as it always does).

Thinking long term =  In his book, Facing Financial Dysfunction, Bert Whitehead (who happens to be my financial advisor) offers a self-test intended to determine how much you are in control of your own financial life. Which of the following do you think will most impact your financial future?

1. Interest rates      or       Taxes
2. Specific investments you choose    or    Diversification of your investments
3. Inflation    or     Being a wise shopper
4. Technology    or     How much you earn
5. The political climate     or     The stability of your relationships
6. Globalization     or     The house that you purchase
7. Rate of return on your investments     or     How much you save in permanent savings

If you leaned towards ANY of the first choices, then you are reacting to external influences rather than concentrating on the things you can control.  And you will be setting yourself up for sleepless nights and unsettled days.

More importantly, if you take the larger issues to heart, then you have decided that you are at the whim of external forces and that there is nothing you can do to improve or take control of your financial life. However, since those larger issues affect everybody, why not set up your financial life so that they simply affect you less dramatically?