Don’t Do Anything Rash

Posted Posted in Brain Science, Continuing Education, Psychology, Seminars, Webinars

By Mary  O’Brien, M.D.

Are you feeling upbeat and happy?  Have you looked at your end-of-the-year financial statements and credit card bills?  Most of us are feeling a bit tense and dismayed these days.  But take heart.  The markets have improved since Dec. 31, 2018 and your statements aren’t as bad as they look.

This is actually an excellent time to re-group financially and protect yourself from further chaos.  High frequency trading and complex algorithms contribute to frightening volatility on Wall Street.  A single comment from a government official can trigger 800-point swings on the Don Jones Industrial Average.

However, there are a few prudent principles that still work and may well save your sanity.

  • Get out of debt! This requires a daily commitment, but it’s worked in countless cultures for thousands of years.  Since financial security has a massive impact on health and emotional well-being, learning how to save money and reduce debt are crucial.
  • Don’t spend more than 25% of your monthly income on housing. No one “needs” or “deserves” top-of-the-line everything.  For 40 years, I’ve watched my fellow physicians fall into this trap.  And it is a trap.
  • Don’t even think of buying a house or condo if you can’t put at last 20 percent down. Aim for a 15-year mortgage.  It will not double your payments.  It makes no sense to end up house-poor because you’ve made a bank rich.
  • Stop buying or leasing new cars. Buy a used car or dealer-program car, take care of it, and drive it for 10 to 12 years.  I kept my last car for 22 years.  It was just fine.
  • Don’t be an impulse buyer. We can all live without much of what we have.  Consider the people who lived in Paradise, California, or the panhandle of Florida.
  • Don’t waste money on eating out or ordering restaurant food in until you’re completely debt free.
  • Stop wasting money on fancy coffee drinks and alcohol. Both your wallet and your waistline will benefit from these two steps alone.
  • Never buy anything to impress other people. If your friends are impressed by your Smartphone or your handbag, you need better friends.
  • Stop indulging yourself with excessive spending on hair, nails, facials, massages, etc. Many young women fall into this trap, especially if they pay attention to “beauty influencers” on social media.  You are capable of taking care of your own grooming.
  • Resist the temptation to go on vacations or indulge in entertainment until you have eliminated all debt. Millennials like spending money on “experiences.”  I recommend the experience of being debt-free.

Finally, use the money you save to build up an emergency fund of three to six months of living expenses.  Twelve months are better.  For most people, this should be at least $10,000.  Shocking numbers of people can’t afford to miss a single paycheck — just ask the folks affected by the partial government shutdown.

Next time, we’ll tackle some tips on investing wisely.  Until then, don’t do anything rash.