10/28/09

Facing Scary Financial Predictions

What do we do when we hear predictions of crashing stocks, bonds, and real estate, or that the explosive national public debt will spark deflation? How do we handle predictions that the deficit will reach about $3 trillion by 2011?

“The sky is falling” predictions instill fear and panic. There are financial advisers at both extremes—some predict dire days ahead; others scoff at the fear-mongering. I like my Christian sister-in-love’s balanced approach. As a highly-successful financial adviser, Janice Thompson (Strategic Financial Solutions, Inc.) has seen the uptrends and downfalls in the financial market. I talked with her recently about a scary report I read.

Janice replied: “Ultimately, do we know that global economic challenges are going to become so severe that only the Antichrist will be able to solve them? Yes. Is that now? I don’t really know. I’ve reviewed the historical data from all the recessions that have occurred during the past 60 years. They all had a common theme—a sense of hopelessness. In reality, while circumstances leading to this economic collapse have been unprecedented, this recession has actually behaved quite normally. In perspective, however, we are still nowhere near the financial devastation of the Great Depression.”

So what did Janice suggest we do in the meantime? “Approaching financial matters without fear is a good place to start,” she said. “Fear is a dangerous emotion. I encourage everyone to be selective about the types of media sources they listen to and how much of it they allow into their lives. I am not suggesting people pull an ‘ostrich’ move, but it is very difficult to remained balanced and be at peace with the mind of Christ (Phil. 4:8-9) when you feed on a steady diet of sensational ‘noise,’ strategically designed to consume your emotional focus.”

Just a few years ago, she noted, it was a challenge to rein in greed-filled emotions with the tech market bubble and booming real estate frenzy. Now the pendulum has swung in the opposite direction, with fear-filled emotions driving the decision-making process.

So what is the wise choice? Janice said it is wise to get our house in order and stay in balance, regardless of whether we’re in a depression, recession, or a period of economic growth. She lives by and shares foundational financial counsel that transcends any economic condition—boom or bust:
(1) Spend less than you earn.
(2) Avoid the use of consumer debt.
(3) Build up a solid emergency reserve. (and she recommends one year’s reserve these days)
(4) Set long term goals and keep working on them regardless of market conditions.
(5) Keep God first in your finances.

“There are no market conditions that take God by surprise,” she said. “Matthew 25 still works!”

Janice believes people should have short-term money in savings or money market accounts, but, “Long-term money can appropriately weather economic challenges," she said. "Purposeful allocation must always precede asset allocation, or you will never be content in any economic environment.”

The wise choice is to be neither greedy nor fearful, but, as Jan says, “Remain content and emotionally balanced as you implement God’s wisdom in your financial affairs.”

Are you still struggling with fear? Perhaps this recent post will help: "Power and Might, in His Hands," ... or these, concerning the "fear" of Halloween: "Kick Out Fear!" and "No Fear of 'Fright Night.'

Focus on the Scriptures to help you conquer your fears: Deuteronomy 31:6; Psalm 27:1; Psalm 27:14; Proverbs 3:5-6; Isaiah 26:3; Isaiah 41:10; Isaiah 41:13; 2 Timothy 1:7; Hebrews 13:6; and 1 John 4:18.

4 comments:

Marja said...

Thanks for this post!
"remain content", that is such a big one! Recently I was reading in 1 Timothy 6:6-8 that we really need to be content with food and clothing! I always wonder how people in third world countries see our 'crisis', since we still live in houses, drive cars, have 20 pairs of shoes, talk on cell phones and have overstocked shelves in every store!

Dawn Wilson said...

You are so right, Marja. Our definition of "content" and theirs are no doubt poles apart. Lord, teach us more about contentment ... and help us listen!

crazydaisy said...

Excellent post. Regardless of trends we see and fears we have, keeping God first should be our ultimate priority. First in our finances and first in every other aspect. That keeps me calm as I'm working 2 jobs (at least it's a step down from 3 jobs!)

Dawn Wilson said...

Thanks, crazydaisy. I heard that almost 40 percent of mothers are now the main wage-earners in our country, and men account for 72 percent of the nation's job losses since the beginning of the recession. More moms than ever are "bringing home the bacon," and that's going to affect all our homes. So we really need to pray for moms in these tough financial days.