6 ways to cope in a scary market
Everyday ways to take your mind off Wall Street's wild swings.
(Money Magazine) -- Memo to the market gods: I can't take it anymore. One day fear of recession tanks stocks. The next day it's inflation or a collapsing investment bank. Frankly, the market needs Prozac.
Unfortunately, I know that neither my wishful thinking nor the presence of antidepressants in the drinking water is going to tame the markets. With the help of experts on psychology and behavior, though, I've come up with six ways to calm myself - none of which involve drugs. They can work for you too.
Topping my list of fears: I bought my home at the peak of the market and plowed in more renovation dollars than I'm ever likely to recoup. If I had to sell today, I'd be out six figures.
Psychologist and consultant Kathleen Gurney, CEO of Financial Psychology Corp., suggests that I write down my concerns. "Then you can look at them," she says, "and answer the question 'How realistic are these fears?' "
In my case, plenty. But the exercise got me to focus on the fact that I may never realize my losses because I'm not planning on moving for a very long time.
In the back of my mind, I know that today's news about falling house or stock prices has little to do with my long-term prospects. "The discussion is about a home you're not planning on selling anytime soon, and retirement is years in the future," notes Robert Meyer, chairman of the marketing department at the Wharton School. "You're not really becoming poor - you're just feeling like you are."
His suggestion: relieve the momentary stress by doing something that makes you feel momentarily richer. Okay, I won't buy those shoes. Or upgrade the iPod.
"The function of this little bit of prudence is much more psychological than real," says Meyer. "It gives you the mental sensation of having more money again."
I bumped up my 529 contributions and am putting a little extra toward my mortgage every month. Now, despite the stock market's slide, my college savings accounts are still heading up.
"The act of saving can be very healing," notes Meyer, even if the additional amounts are small.
That's not its usual state. But when I'm stressed, I can't think clearly. And clutter creates stress, says organizing guru Peter Walsh, author of "Does This Clutter Make My Butt Look Fat?"
So control your financial environment. "Within your home, establish an area that's dedicated to your financial life in the way that you dedicate your kitchen to your food life," says Walsh. "This area is where you pay bills and handle the business of the house. Nothing else goes on there."
I just wanted to know that he wasn't panicked too. Times like these are when a financial plan comes in handy, whether it's one you've made or one that a pro has developed for you. When you're feeling like you have to take action, you can turn to your plan and touch base with reality.
(Confession: I don't really do this. You can file this tip under "Do as I say, not as I do.") "Anxiety inhibits our ability to perceive what we're hearing and seeing," says Gurney. "When anxious people listen to the news on TV or on the radio, sometimes they pick up only the negative information."
Reading is better because you can take much more in and digest the news at your own pace, not the announcer's. Sounds great, but as the daughter of a longtime TV station manager, I'm afraid that on this one piece of calming advice, I'm a lost cause.