media

Don’t Let The Media Color Your Financial Picture

March 7, 2011 By Jennifer Derrick Leave a Comment

If you turn on the TV or read a newspaper, you’re likely to be confronted with two opposite messages. Either everything is great, the economy is strong, and finances are looking better, or things are terrible, everyone is poor, and we’re heading for doom. It depends on the day and the reporter/station as to which message you’ll get. It’s bad enough that these conflicting messages are around us all the time. We never know what to believe. It gets worse when we let the media tell us how we should feel about our own finances.

I know several people whose fortunes seem to rise and fall with the media’s predictions. If the news is good, these people are upbeat and optimistic about their finances. If the news is bad, they’re one step away from having to go on food stamps and sell their house. The same people who were planning a great vacation yesterday are suddenly stockpiling Ramen noodles today. These people don’t have an inner compass about the true state of their finances. In some cases it’s because they just don’t know what they have. They’ve never troubled to figure it out. In others, it seems to be a case of just following along with the herd. “Oh, if everyone else is suffering, I must be suffering, too.” In either case, these people are too easily led by media reports into either spending what they don’t have or into thinking that they can’t buy anything because they must be broke.

People who let the media tell them how to feel about their finances are setting themselves up for trouble. If, in response to good news, they go on a spending spree with money they don’t personally have, they’re in trouble. If, in response to bad news, they deny themselves things that they can easily afford, they’re taking the fun our of their life and making things harder on themselves than they need to be.

The thing is, even if times are great, you may not have any money. You may be so deep in debt or unemployed that you just don’t have anything to spend. In that case, it doesn’t matter if the rest of the country is shopping until they drop. You cannot afford to. On the opposite end, the country may be going through terrible times with large unemployment and scary stock losses. However, if you’ve got a lot of money saved and have a good job that you aren’t worried about losing, there’s no reason why you can’t indulge yourself. (And the economy will thank you for it.) You have to base your actions on what you know your situation to be, not what the media tells you it should be.

You need to develop your own understanding about your personal financial picture and separate yourself from the media’s reporting. You need to sit down with your own checkbook and figure it up for yourself. List all of your accounts and all of your debts to get a true picture of what you really have (or don’t have). Only then will you know whether you can splurge or if you should save. Your finances have nothing to do with the media. It’s not the media that has to pay your debts, buy your groceries, or fill up your gas tank. It’s you, and only you can know whether you should be worried or relaxed.

The Media, Recessions, History and Attitudes

February 14, 2009 By M. Beddingfield 5 Comments

The media would have us all believe that our beloved country has its foot to the floor in a race to heck. Everywhere you turn; there are reports of more business closings, higher unemployment and threats of losses in every quadrant of the nation. People are worried sick about what might happen. What might happen?

I think it’s time to turn off the news and let the big boys play ball with each other. Some of you might think that this is like the ostrich sticking its head in the sand but I know that history has a way of repeating itself. The economy goes through cycles. Let’s consider a few facts.

In the early 1990’s there was a recession, complete with high unemployment rates and Black Monday; where the Dow Jones suffered a record loss of 22%. High levels of unemployment and a huge government budget deficit continued for years. Yet our country continued to grow, progress continued to be made, especially in the field of technology. People prospered.

In 1980, there was a short recession of about six months. The housing market and automobile manufacturing were two of the hardest hit industries. Then, in 1981, there was an even worse recession, compared often to The Great Depression. The Federal Reserve responded to the recession by raising interest rates. The federal funds rate went as high as 20% in June 1981. The prime interest rate rose even higher to 21.5% by June 1982. This plunged the overall economy into a deep recession.

In December of 1982, the unemployment rate in the U.S. was 10.8%. The current unemployment rate is 7.2%. In the early 1980’s, the biggest job losses were in the housing, automobile and steel industries. The same is true today. In 1982, there were a number of bank failures and the FDIC spent millions purchasing bad loans. The following year saw even more bank failures.

When the current President, Ronald Reagan, finally admitted that we were in a recession, he raised corporate taxes and lowered interest rates. These measures gradually led to economic recovery.

Then there was the 1970’s. Remember the 1973 oil crisis and the 1979 energy crisis? I was just a teenager, but I remember well how everyone constantly talked about the problems. The same as today, the news and every type of media could only talk about how bad it was and how bad it was going to get.

I could go back every decade and find a recession, but this isn’t a history lesson. This is a blog about how to save money. However, sometimes we need a reminder about how things used to be, sort of a “good old day’s” reminder.

You know what worked back in the good old days? People lived within their means. The common folk, about 80% of America, tightened their belts, helped their neighbors and ate a lot of beans and rice. They didn’t buy new things; they fixed what they had or did without. They didn’t measure their self-worth by their net-worth. They had a certain attitude towards money that we can’t seem to get a grasp on today.

That attitude was – if you don’t have the money, don’t spend the money, pay your bills on time, help your neighbors and save every penny you can for a rainy day. Sounds like a pretty simple approach doesn’t it?

Are You Really Worse Off or Does It Just Seem That Way?

July 22, 2008 By Jennifer Derrick 18 Comments

Like any good financial nerd, I spend a lot of time watching and reading the media’s coverage of the economy. Over the last few months the tone has gone from mildly concerned, through concerned, and on to full blown panic. This amuses me because you can literally watch the rhetoric ratchet up and up, sometimes from one extreme to the other in a single day. One station or paper reports things as “troublesome” then the next paper or station has to go one better and reports things as “worrisome.” Then the next one has to make it sound still scarier, so they go with “deeply concerning.” And on it goes until everyone is tossing out words like “panic,” “fear,” “depression,” “doom,” and “collapse.”

Of course this works its way into our psyches. We hear of things being “troublesome” and we begin to think, “Hey, maybe something’s wrong.” Then, by the time the media gets to “collapse” and “depression” our moods have followed suit. We become scared and panicky, thinking our personal finances must now be in free fall. We start canceling vacations, hoarding food, postponing needed household repairs and so on. All because we’re terrified that we’re heading for economic doom.

The question is: Are we concerned because we have a genuine need to be, or because the media tells us to be? I think, for a lot of people, it’s the latter. We watch the news and we hear about the troubles some people are having. We hear about “record inflation,” the “pain at the pump,” and the “mortgage meltdown,” and we think, “Boy, things are so bad. I’d better take drastic measures.” Then we panic. But are your personal finances in that much trouble? Are things really that much different for you than they were a year ago, or does it just seem that way because the media makes you feel that you should be suffering?

Here’s how to get a reality check. First, turn off the TV and stop reading the newspaper for a week. Just tune it all out. Give your brain a break from the relentless hype. This alone will give you much needed perspective. Without someone telling you how much pain you should be in, how everyone around you is suffering, how the world is collapsing, etc., you’ll probably feel better. Those things may be the case for some people, but if you look at your individual, personal life and circumstances, it probably isn’t the case for you.

Then take a look at your finances and compare it to the media coverage.

Mortgage meltdown got you worried?

Think about that. Do you need to sell your house right now? If the answer is no, then you’ve got nothing to worry about. By the time you’re ready to sell you’ll probably have no trouble because the market will have straightened out by then. Are you looking to buy? If you have good credit you shouldn’t have any trouble getting a mortgage and it’s a buyers market. Think about where you live. Is your area really losing that much value? Only a handful of places are seeing the severe losses that the media likes to cover. The rest of the country is either losing only slightly, stable, or even gaining modestly-all of which is normal.

The only people who need to really sweat the mortgage mess are those who over-invested in mortgages, those who need to sell in a hurry and can’t afford the loss, those who live in a grossly over-inflated area, those who are looking to buy but don’t have the best credit, and those who have adjustable rate loans that they now can’t afford. If this isn’t you, you really don’t have much to worry about.

Rising fuel prices freaking you out?

This one’s a little tougher, but you can still ratchet the worry level down. Do you drive a gas hogging vehicle? If the answer is no, then you can probably relax, at least compared to the guy with three Excursions in the driveway. Think about it this way: Assume you have a 20 gallon tank in your car. If gas is $3/gallon, it costs you $60 to fill up. If gas is $4/gallon, it costs you $80 to fill up. It’s only $20, yet many people run around acting as if it’s $200. I don’t deny that it hurts but really, $20 is a meal out, a NetFlix subscription, some magazine subscriptions, a book, or a couple of DVD’s. In other words, if it really hurts your budget, there are probably places you can trim or habits you can change (carpool, combining trips, etc.) to make up the difference. Do you have to drive a lot (have to, not want to or choose to)? If the answer is no, then rising fuel prices aren’t a big concern to you.

The people who are really hurting from the high fuel prices are those on the lower end of the economic spectrum and those with huge debt loads that are challenged by any little increase in the price of anything. People who drive huge vehicles are hurting, as are those who have to or choose to drive long distances to work or to chauffeur half the neighborhood around the city to various activities. If this isn’t you, you can probably relax a bit. It stinks, but it isn’t killing you.

Are grocery prices making you panic?

This is much the same as fuel prices. Unless you are living close to the edge, you can probably absorb the increase or at least change your shopping habits to cover the difference. Coupons, shopping the sales, shopping at less expensive stores, and buying store brands are just a few of the ways you can compensate for rising prices if you have to. Those who really have to worry about this are people who are already doing all they can to save on food and don’t have the cushion to absorb the extra. If you’ve got some breathing room in your budget and an ability to reduce your spending, then this is not a huge concern to you. It’s a pain in the rear, but it isn’t going to drive you into bankruptcy.

Are you worried about your retirement accounts or investments? Ask yourself this question: Do I need the money right now? If the answer is no, you’ve got time for the market to recover. You’re buying at a good time (stocks are cheap) and when the market rebounds, your accounts will rebound, too. The people who need to worry are those who plan to retire in the very near future or who need the money right now. If this isn’t you, or if you’ve already taken steps to move your money to more stable investments, just sit back, relax, and let nature take its course.

Worried about layoffs?

Take a good look at your company or business. Is it stable? Under good leadership? Making money? In an industry that’s not volatile? In an industry that’s necessary and difficult to outsource? If the answers are yes, you can probably take the worry down a notch. There are no guarantees, but certain industries are being hit much harder than others. If yours isn’t one of them, you can probably relax.

Thinking of canceling a vacation or putting off some home renovations or some other large purchase?

Ask yourself why. Are you doing it because you’ve taken a long hard look at your finances and discovered you can’t afford it, or because “everyone else is feeling pain, so I must be, too.” If it’s the former, good for you for choosing the responsible option. If it’s the latter, take a closer look at your situation. Do you have an emergency fund in place? Do you have reason to believe that you will have a job for the foreseeable future? Can you pay cash for the item in question without going into debt? Would doing/having it make you happy? If the answers are yes, then go ahead and take that trip or buy that item. If you can afford it there’s no need to suffer needlessly just because the media tells you that you should be feeling pain.

Whichever financial horror story has you worried, take it out and really examine how it relates to your life, not what the media says you should be experiencing. I recently told a friend that I “see” certain economic problems in our budget, but I don’t “feel” them. Every month when I input everything into Quicken, I can see certain categories becoming larger chunks of our spending. For example, auto, including fuel, used to be about tenth on the list. As of last month it’s crept up to fifth. But everything else is holding pretty steady, either because I’ve found ways to cut costs in those areas or because they aren’t real problems where I live. So I can “see” the problems, but I don’t “feel” them the way the media says I should because I can mitigate the damage or draw from other areas. Or it’s just not an issue in my part of the country. In fact, our net worth has actually grown by 20 percent since this time last year. We live well below our means, so there’s quite a bit of room before we feel pain. The media’s drama is not reflective of my life so I refuse to give in to it and panic for no reason.

I watch the media because I’m a financial nerd and I learn things that I can use for my writing. But I also take what they say with a grain of salt because I know they exaggerate and that not everything applies to me. I’ve learned how to evaluate my own circumstances and determine what I genuinely need to be concerned about and what is hype that isn’t affecting me. Everyone is different and you might have to worry about things that I do not, but take the time to determine what your level of worry needs to be before you let the media dictate it to you. And unless you enjoy the media, turn it off, tune it out, and see if you don’t feel better. You’ll probably realize that things in your own personal world aren’t as bad as the media would have you believe and you can go about your daily life without the added drama.

Going Ad-less: Turning off the Media

June 13, 2008 By Ann Hartter 5 Comments

There are few sources of information these days that do not come riddled with advertising, or at least with a list of generous corporate sponsors. To escape the constant bombardment of “buy this” “recognize my name” and “we’re so cool” I decided to take some drastic steps. As a result, I have noticed an improvement in my general consumer satisfaction.

No matter how little you see advertising, you are affected. Periodic changes in your habits can call attention to your weaknesses. If you know where you are weak, you can strengthen your personal frugality skills and make better, more informed decisions. To understand your spending habits, you have to understand why you spend, and rating your responses to advertising is a good indicator for those reasons.

My experiment looked something like this:

I turned off my satellite TV service and instead I buy my television shows on DVD, sans commercials.
I subscribed via RSS feed to my local television news and newspapers. I get the articles, or the gist of them, without all the advertising of reading them on the sites’ pages or getting the news via traditional methods — broadcast and print.
I ended my magazine subscriptions.
I stopped websurfing.
I turned off the radio.
I didn’t decide to stay home, so I still get the bombardment of billboards, light displays, and letter boards on my way to work or school.
I didn’t stop my mail and I get plenty of junk mail, coupons, and other ads in the mail box.

The results have been:

I miss movie releases. I don’t want to go to movies in the theater to see movies that I can borrow or buy on video later.
I don’t feel the need to upgrade. Not only do I only research something to buy when I find the need for it, I find no fault, nothing outdated, about the things I own.
I really don’t feel behind the times. You’d think that without my consciousness being smothered with the latest fashion trends that I’d feel ignorant of what’s new and happenin’. Quite the contrary, the news feeds I’ve found cover quite adequately the things in general society that I deem important.
I don’t know about sales. This is great because, again, I’m happy with the things I have and can employ my normal frugal shopping techniques for anything I may need.
I don’t know how much the economy is taking advantage of me. You know, my insurance company isn’t over charging, my life insurance coverage is sufficient for economic changes, I’m not reminded to be worried about social security, and my interest rates are fine.
Politics don’t anger me. I follow through the news, I read the speeches, and I participate in debates in online forums to learn from others. I miss the poorly-edited clips that make people look bad, the wicked attack ads, and the doomsday voice telling me who is clearly the better choice. In fact, this year I feel most informed of any election year.
I don’t end up on random websites. No slogans with website addresses stick in my head, no errant clicks take me to glaring ads, and no pop-ups. I stay with my news feed page, my forum, and the places I write.

I have found myself restless when visiting friends and commercials pop up between show clips, and therefore, my tendency to ignore ads is greater. I always prided myself in my general knowledge about the methods and effects of advertising, but just making a habit of ignoring them has reduced their overall effect on me. It’s humbling to know that even the most careful parts of me are susceptible to a clever commercial, and my new practices have helped reduce even further the eager consumer of my psyche. I have found some simple changes to reduce ad-intake. Through these, I found fitting habits, advertising strategies that make me vulnerable, and new ways to make finances more comfortable.