Smile Politely

Fear and Loathing in the Stock Market

Do you remember when the Dow Jones Industrial Average first spiked over 10,000? I do. For one reason: a feature appeared in the News-Gazette about a couple who had, years before, ordered a vanity plate for their car: DOW10K, or something similar, in anticipation of the event that eventually occurred in 1999.

This morning, after weeks of plunging, the Dow opened at 9,437. Consider that for a moment. How did you feel in 1999 when the market first soared over that 10K peak? Were you even paying attention? Did you struggle to pay for gas? For food?

How about in 2001, 2002, 2003, and 2004? All four of those years saw periods when the Dow dipped below 10K. What was the financial discussion around your kitchen table when the markets reopened after September 11th? After the United States invaded Iraq? What will the discussion be tonight?

The stock market is a fickle beast. A rollercoaster of a lover who will pick you up and slam you down on the short term, but has always treated you well over time. Today, the difference seems to be the overall feeling of fear in the air. Maybe it’s the media’s fault. Or the presidential campaign. Or the already-depressed emotional state of our nation (which has for years, according to the commentators on the current crises, been engaging in retail therapy it simply cannot afford).

We’ve witnessed a series of events this year — the housing crises, the credit crises, bank and insurance company failures/takeovers/bailouts. And now, immediately following a federal bailout package that could have paid for the entire Iraq war up until this point, a stock market that is looking for the basement. Where does it all leave us?

I have espoused living simply here before. Small changes to lifestyle that saves a family money: gardening, visiting parks and other free forms of entertainment, giving up the precious cell phone. I have even mentioned in passing larger changes (e.g. becoming a vegetarian, forgoing the car for biking and walking). I’ll make a few more significant suggestions: use a clothes line instead of your dryer, clip coupons and comparison shop, cancel some (or all) magazine subscriptions, shop discount stores (think Aldi), don’t use your credit card unless you can pay the entire bill when its due, don’t buy a car on credit, don’t buy a house without a significant (20%+) down payment.

These lifestyle choices are still a choice for many Americans. Some of us can continue on with our lives without much daily concern regarding the country’s financial “crises.” However, many people are part of the problem — and for them, these choices may be forced upon them when they can no longer keep up with their debt payments.

The simple living choices that my family makes are for financial, and in our opinion, ethical reasons. We do not go into debt for things we cannot afford — to us, “making the payment” does not constitute living within our means.

It wasn’t always this way. Before moving to Champaign-Urbana, we had a significantly higher income than we do now — and made a regular habit of spending it. The consequences for us were relatively small: the consumer debt we had was maintained, but didn’t grow or shrink. We picked up a second car loan. When work stressed us out (which was a regular occurance), we drove to the neighboring city, with its large shopping mall and good restaurants, and placated ourselves through consumption.

One day we woke up and admitted that we weren’t happy: with work, with where we lived, and with our finances. I sent out resumés and we did the math for our minimum necessary income.

This choice that we made in 2005 brought me home to Champaign. Three years later, we have paid most of our “stupid tax” (what financial guru Dave Ramsey calls interest payments), and are debt-free with the exception of federal student loans. My wife is in school to train for a new career — an expense we incur out of pocket. Our son is almost fourteen months old now, and we’re learning the complications that come with simple living while parenting.

Don’t get me wrong. We are not flush with cash. As a matter of fact, every month is a struggle. Editors don’t make much money — and full-time students don’t make any. But, we are living our life with an approach to finances that we feel is common sense: don’t spend more than you earn and save what you can.

Every time I’ve turned on the news today, the market has been down a bit more. The anchors speculate on what this means for “Main Street.” What will the candidates say? How will they fix this? Is this going to be a deep Recession? A Depression?

Dave Ramsey has another saying: “Fear is not a fruit of the Spirit.” You may or may not be religious, but know that no good decision can be based on fear or apprehension. The sun will come up tomorrow. The world will move on.

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