Broad General Question: How are you going to change?

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With all this financial crisis, this question is very encompassing of this forum. . .how are you going to change your day to day finances (personal finance) and your investing and banking?

I really haven't made any bold moves in this market (other than a small investment in oil) but I am thinking of managing differently in the future. Here's how.

1. Get an EF. Yup, I am guilty of not having one because I always thought a HELOC would be there for me because I have good credit. But I can see now the trend is to a cash economy and away from easy credit. I should have done this before. . .oh, well, lesson learned. I am no finance saint.

2. Diversfication/schmersification. I am questioning the age old wisdom of "spread your wealth and forget about it." And I am revisiting the philsophy of "Put your eggs all in one basket. . .and watch it like a hawk." It appears Americans spread their wealth about and the "snakes" got their egg. Not this hawk.

3. Transferring investments to ETF's vs. mutual funds. I can get market diversity, a low expense ratio, and I can manage losses better while getting all the upsides of gains. I don't like how at the end of the day I get to find out how my investments did. I want a little more control of my wealth.

4. A little less consumption. I don't beleive I am an overconsumptive American by any means comparatively speaking but the eating out has to be reigned in and since the birth of our 3rd child, it has been. I feel pretty comfortable here but I would look to shave a little more if possible.

5. Kick some politician's ass. I'm going to call them today. If my rep. has to bail the system out, I'd rather it be from the bottom-up (homeowners), then the top down (Investment firms).

[bjl584]

Well, I guess the biggest change for me is that I just got a part time job, so I will increasing my income by a decent amount. With that, I am going to start aggressively paying down my debt. I already save and invest a large portion of my income, so that isn't going to change. Other than that, I am going to be looking for creative ways to cut down on expenses. No more eating out, driving less, basic day to day stuff like that.

[JinCO]

We are trying to cut back on spending by limiting vacations and our entertainment related spending. We are also working on building up our EF. I am currently only investing in 401Ks and I probably won't change where that money is allocated. I am mostly in stocks so it has been pretty brutal lately, but I am over 25 years from retirements so not overly concerned.

[TBH]

I have been slacking off on tracking my expenses, but I'm going to start doing that again. We haven't followed a strict budget in years, but I find that just tracking it helps me make better spending choices. You know, when you look at each other and say, "we spent how much on eating out last month? Let's eat in tonight."

I'm also going to rebalance my retirement accounts early, as soon as I can make the time. Usually I do it in May. By rebalancing, I mean keeping the same allocation and using recent Roth contributions to buy more in the sectors that have slipped. I will definitely not be selling anything any time soon.

I just increased my own workplace retirement account contributions by 1 percent, all I could afford, and I'm going to see about talking my spouse into doing the same.

[jIM_Ohio]

I am learning I want more cash available to buy on dips. Most important thing I am learning is to have a cash allocation above my EF so I can buy when there is panic in the streets.

I am also learning that all politicians are crooks or corrupt and generally out of touch with main stream america.

[kork13]

I've been eating out less, but then that's also because I hate spending more money than really i need too anyway...

I'm gonna be beefing up my EF's more than originally planned... Just in case for some reason my credit card decides to do silly things.

I haven't invested any additional money right now (there isn't anywhere that I want to take it from right now), but I have increased my 401k-equivalent to 10% from 6%, so i guess that's a good thing...

Otherwise, not a whole lot.... I'm highly frugal and financially "on top of things" by nature, so I thankfully don't need to worry much more than I normally do about money.

[Broken Arrow]

2. Diversfication/schmersification. I am questioning the age old wisdom of "spread your wealth and forget about it." And I am revisiting the philsophy of "Put your eggs all in one basket. . .and watch it like a hawk." It appears Americans spread their wealth about and the "snakes" got their egg. Not this hawk.

I'm ok with everything except this.

I trade with my Roth, and passively invest with my 401k. When I trade, I've held no more than 2 stocks at any one time, and more often than not, just one. So, no diversification in my Roth.

The problem with the lack of diversification is that if you make a bad call somehow, then you've just risked everything. Your losses will be staggering. I've read elsewhere that some have suffered loss upwards of 100k at a time from risky and even not-so-risky financials. Sometimes, all in a single day.

I don't completely disagree with your point though. I just think that if you're going to slim down diversification, you have to adjust that risk some other way, and I believe that other way is through due diligence. Lots and lots of homework.

The only problem here is that many "average investors" isn't interested in doing that. Sometimes, they just want to park their money somewhere to grow, and go do something else instead. Nor does everyone have the level of risk tolerance necessary to handle the increased volatility of non-diversification. In which case, I think broad diversification is their only option. And I don't think it's all that bad.

Otherwise, if one has the risk tolerance, the interest, and the willingness to "watch it like a hawk", then sure, give non-diversified investing or trading a whirl.

[disneysteve]

4. A little less consumption.

This is really the only one we'll be working on. I've said before (before the current crisis) that we eat out too much and haven't been doing as much home cooking as we used to. We need to work on that.

Otherwise, it will be business as usual. We have an EF. We have a well-diversified investment portfolio. We have regular investing occurring on an automatic basis. We have no debt except our home and we are making extra principal payments on our HEL. My wife contributes the max allowed (50% of income) to her 401k. I invest 19% of my income. Not sure what else we could be doing.

[maat55]

I started this year as if we were going into a hard recession. I will stay on this plan until our income drops, if need be, we will stop investing and worst case we will dip into our EF.

We are systematically buying food in advance. We are stocking up on non perishables that we use routinely, in desperation, we will switch to low cost foods.

I guess I won't be joining the golf club anytime soon.

[TBH]

We are systematically buying food in advance. We are stocking up on non perishables that we use routinely, in desperation, we will switch to low cost foods.

Why are you doing this? In case you get laid off, or because you think food prices are going to go up?

[cptacek]

I am learning I want more cash available to buy on dips. Most important thing I am learning is to have a cash allocation above my EF so I can buy when there is panic in the streets.

Jim, I thought the same thing yesterday. I would like to have more money available in my IRA to take advantage of things like this.

I remembered that I have an automatic "buy" on the 14th and 28th of every month for one of my mutual funds, and when I checked it this morning, I bought after the dip! Yeah!

[sweeps]

I'm not going to change too much. We run a pretty financially conservative (with a lower case c) household.

I think the average American is going to be forced to run their household the way most of us on this site already do.

[maat55]

Why are you doing this? In case you get laid off, or because you think food prices are going to go up?

I started doing it when prices started going up. I do it with products I use regulary. It's also nice to have in a pinch.

[MonkeyMama]

I'm not going to change too much. We run a pretty financially conservative (with a lower case c) household.

I think the average American is going to be forced to run their household the way most of us on this site already do.

Agreed.

In general, we save up when times are good, to get through the bad times.
A lot of the courses of action listed in this thread is just our lifestyle.

I am a little concerned since we had a self-imposed "recession" from 2002-2005. We dropped our income in half, had children, our expenses (health insurance and gas) skyrocketed. When I read the current news I think, "Welcome to my world." Gas and health insurance are crazy? Um, yeah - where have you all been?

The last couple of years (& even today) have actually been a lot easier in comparison. I just wish we had a little more time to catch back up if we are hitting a long period of financial hardship. But overall, we are not changing a thing. Just staying the course.

[Pitman]

1. Get an EF. Yup, I am guilty of not having one because I always thought a HELOC would be there for me because I have good credit. But I can see now the trend is to a cash economy and away from easy credit. I should have done this before. . .oh, well, lesson learned. I am no finance saint.

Me, and you both pal, thats one of the first changes I'll be making in the near future. Now that I've consciously talked myself out of purchasing a new car, I will use that money to build an EF. I'm hoping to have atleast 6 months of bills covered in my EF.

Down with Debt. By the beginning of 2009, I plan on completely being debt free. I'm about a good month away from knocking out my CC debt, my only ball and chain is my student loan, but with my car note paid off, and insurance down, I can contribute a large sum to my student loan.