Don't worry, be savvy

WASHINGTON (Reuters) - Americans are feeling pessimistic about the economy. The most recent Conference Board report shows consumer confidence at a 16-year low in May, but that only confirms what everyone's been feeling.

People are worried about job loss, debt, rising prices and not being able to sustain their retirement. As one blogger recently wrote: "I have a constant stream of what-ifs in my head. What if we don't ever have enough money to retire? What if one of us lost a job? What if we had an emergency? In essence, a lot of my financial plans are motivated by fear."

Fear can be a positive and powerful motivator, when it makes you save for a rainy day, borrow less than you can, and buy the right insurance. But when anxiety about money makes you lose sleep or joy, it's time to manage the worries, as well as the cash. Here's how to quiet that whiny voice in your head.

• Schedule the stress. Choose a time when you will allow yourself to worry about money. Perhaps 15 minutes before dinner? Or on Thursday evenings? If negative thoughts creep into your head at other times, just shelve them until the appointed worry time. During your worry sessions, allow your fears to run rampant. Then shut them up and move on.
• Make a worst-case scenario list. Put everything on it that you could do if a crisis struck. Family members who would help? A second job? Items you could sell? Insurance policies or savings you could tap? Dialing the family back to one car? Be creative and don't censor the list. It's simply there to let you know that you have options.
• Approach the worry logically and don't lie to yourself. Why are you worried about losing your job? Is your field or company in trouble? Are you worried about bills because you've borrowed too much? Once you get to the financial root of the worries, you can address it more directly.
• Live below your means. It's almost always possible to spend less on a short-term basis, even if you are spending more for gas and food. Curtail nights out, fast-food treats or new clothes. Ratchet back the cable bill and get movies from the library. Car pool. Whatever it takes. Send the money you're saving to the spot you worry about most. If its credit card bills, start paying extra. If it's retirement, use the savings to bump up your IRA or 401(k) contribution.
• Get a professional opinion. If debt is your problem, seek a sit-down meeting with a qualified credit counselor. Do this by contacting the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Don't be in a big hurry to have either group negotiate a debt repayment plan for you, but do get advice on how bad your debt situation is, and how a professional would recommend paying it off. If you're more worried about the stock market's declines or your retirement, get a one-time review from a comprehensive financial planner. Find one from the National Association of Personal Financial Advisors or the Garrett Planning Network. If you feel unprepared for emergencies, review your insurance policies.
• Dust off the resume, and the skills. If you're worried because your job seems tenuous, make yourself more employable. Take a course, brush up your skills, network with others in your field or get training for a more promising field. Keep your resume up to date.
• Avoid the urge to make emotion-based financial decisions. Most people don't even realize it, but they are part of a herd: They buy stocks and houses when exuberance has reached irrational levels, and then sell those assets when the markets have fallen away by frighteningly large percentages. Don't do it. Get a plan and stick with it, and find other ways -- a cup of tea, a session on the treadmill, a warm bath -- to fight the fear. 
  

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern@aol.com.)