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How to Kick 11 Fearful Financial Situations in the Face

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This post is part of the one day blog event “The Spectrum of Personal Finance.” In this event, comic book nerd Brian of My Next Buck, will discuss 8 different emotions (taken from the Green Lantern comic series) and relate them to personal finance. Here at Bargaineering we will be looking at Fear. To view the rest of the event look at the bottom of the page to see the other blogs hosting articles.

When I started looking through the personal finance blogosphere a year ago I was frightened of all the information I was gathering. There was so much out there and I didn’t necessarily understand what I was reading. I didn’t want to make a misstep with my hard earned cash, so I didn’t do anything at first.

Fear is prevalent for all of us when we are dealing with money. However, we can mitigate some of that fear by taking specific steps depending on the situation. Below I’ll outline a bunch of fearful financial situations and at least one step you can take to reduce your fear and help you get through each.

  • Asking For a Raise – Before you ask for a raise, you should create a portfolio of things you have accomplished in your position. Additionally, you should look on websites such as Salary.com so you can be armed with more information before sitting down with your boss. If you come into a negotiating session well prepared, you will be ahead of the game and more likely to get the raise you seek.
  • Starting Your Own Business – Jettisoning the 9-5 workforce to embark on your own is an ambitious and fearful undertaking. Before making the leap, you should consider trying to spend your free time working on your business as a “side-project” to see if it’s sustainable.
  • Finding a Financial Advisor/Accountant – Finding a trusted advisor or accountant is a big challenge. Searching through the yellow pages is probably not the best bet, and it’s possible your parents’ financial advisor might be getting up there in years. Your best bet is to talk to your close friends and have them refer you to someone they trust. Then go through a process of selecting an advisor that is the best fit for you and your goals.
  • Putting Money in a Bank – It’s surprising that some people fear banks. I remember co-workers pulling money out of their standard checking and savings accounts after banks started to fail as if they would never see it again. For those that are scared of putting money in banks, I remind you that your money is insured (FDIC) up to $250,000, so feel free to deposit that $1000 in the bank and let it earn some interest.
  • In Too Much Debt – It’s understandable to be scared when bill collectors are knocking down your door. My suggestion is to take a seriously look into Dave Ramsey’s debt snowball and see if his method of paying off debt will work for you.
  • Asset Allocation – Allocating your investments (after you have decided to make them) is a decision I was scared to make. Without being armed with a bevy of information, it all seems like guesswork. If you are like me and just want someone to do this for you, you should take a look at how Harvard and Yale invest. If you aren’t a fan of their portfolios, look into lazy portfolios.
  • Not Knowing Your Inheritance – I know not everyone will have money to look forward to in their future, but I know several peers that expect to have money coming their way eventually. If you are one of these people that have been told by your family that “you will be taken care of,” I suggest having a conversation and finding out what “taken care of” really means. For the best case scenario, you should completely ignore that money is waiting for you, and set yourself up financially as if you had to be independent.
  • Investing Your Money – With the market being as volatile as it has been, I understand that fear exists about putting money into stocks. In order to get over this fear is to look at over 80 years of history and know that the market will rebound and that this country will get back on track. Furthermore, you have to look at where you want to be financially in the future. If a slow rate of return from CDs and interest bearing accounts will get you to your goals, then do what works for you.
  • Preparing for Children – Finding out you are going to be a parent can be the happiest and scariest day of your life. There are significant costs associated with having a baby. Luckily, you have 9 months to prepare. Preparing yourself with an emergency fund as soon as possible can be beneficial if you and your significant other were not planning on a child (or any life changing event).
  • Big Purchases – Big purchases are always scary. Houses and cars represent the largest amounts of money we are likely to spend. Making a bad decision here can impact your finances for years. The best way to mitigate making a mistake is to take your time with the purchase. Do not act on impulse and do as much research as possible until you feel comfortable. Don’t let your emotions of wanting a new car or being a homeowner influence your decision to buy quickly.

What other financial situations have caused you great fear? What are the steps you took to overcome that fear and deal with the situation?

For further reading of the Spectrum of Personal Finance Event, please see:

To view a recap of the event, check out the Spectrum Roundup at My Next Buck

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12 Responses to “How to Kick 11 Fearful Financial Situations in the Face”

  1. Jeff says:

    My biggest moment of Fear that involves money happen earlier this year. I had to have the long talk with my Wife about our finances. Up until then, I had been in charge of them. She knew we were in debt but not as bad as we were. Approaching your wife and telling her that we can’t spend money like before is scary stuff. Especially when thats what we’ve always done.
    It was very fearful for me to have to make a stand for us and begin the process of getting out of debt. We ended up seeing a financial coach to help us start to navigate the debt freedom waters. That has turned out to be the BEST thing I’ve ever done with money. Overcoming that fear was sooo hard though. Great post Brian.

  2. Your best advice was to go slow in making big financial decisions.

    Thanks for a well-written article.

    John DeFlumeri Jr.

  3. Now that is true geekiness Brian! Great post and great networking job you’re doing.

    My biggest fear is fear of failure, period. Everything I do, I’m afraid to fail, hence I try and try my hardest to prepare and succeed.

    But, if I do fail, I learn from it and move on to a new adventure. Dust it off and march forward, forever!

  4. echidnina says:

    Nice post, lots of little bites to think about. Each of those could well be developed into a full article too, but this post gives me enough information to whet my appetite and seek out more. Lots of intimidating things on the list, but many of them have big rewards too :)

  5. “Finding a trusted advisor or accountant is a big challenge.”

    The problem with asking friends if they are satisfied is that too many people are just ignorant when it comes to financial matters. Thus, they have no way to judge the merits of a financial planner or advisor.

    My guess is that when a planner offers a ‘pretty’ graphic package that was generated by a computer, and when that planner spins what he/she sells, the client is satisfied.

    That’s not a good way to find a planner.

  6. Brian says:

    @ Jeff – Thanks Bro… i can only imagine that is a scary situation. Then again, speaking as a bachelor, i don’t know if having that conversation would be any more scary than actually getting married.

    @FS – Everyone certainly has a fear of failure. Its what drives us to excel, and you are doing a great job mate.

    @Echidnina – Everyone who reads my site knows i love series. Maybe i can expand on each of these and do a post per as you mention! Look for it!

    @ Mark – I think its a slippery slope. Track record is what you have to go on. I think i will be very leary when i actually shop for an advisor, but trusting close friends is going to have to be one of the ways to find a group of candidates.

  7. Going to collect on something, like a warranty or insurance program. We pay for these plans and walk away thinking “everythings covered”–until it’s time to file a claim.

    Most plans have enough fine print in them that should give anyone pause to worry at least a bit at the validity of their willingness to pay when the need arises. I’ve been negatively surprised enough times that it’s worth worrying about.

    Now as to the fear part of it–I fear getting into these arrangements all of the time, and often enough to keep me out of them.

  8. zapeta says:

    I think the trick to overcoming each of these fears (and other really) is to do your research and try not to make any rash decisions. I tend to over-research and I end up hunting for a perfect solution when there are several good solutions that would work. The best advice I could give were to pick a way to reduce these fears and go with it…if it isn’t working out you can always change it up later.

  9. Jerry says:

    I am by FAR not a financial genius, or even very educated in investments. I had 1/3 of my money with a financial advisor, and 1/3 I managed myself (the other 1/3 in banks). I have fared SO much better with the money I managed than my financial advisor did, even with me directing him what to do. He came highly recommended by a dozen or so friends. I have since moved my money elsewhere. If you do go with a financial advisor, stay very, very involved. Don’t lose sight of the fact that the financial advisor’s bread and butter is coming out of your wallet.

  10. Izalot says:

    Being the father of two, having kids (A seven y/o and a 12 y/o)has had its scary moments. I have learned to take things more in stride and enjoy the ride. Wheeeeeeee! I save, minimal debt and have a retirement fund but the greatest investment would be for my children to achieve their dreams, have a sense of purpose and to be happy.

  11. TermMonster says:

    As a financial planner who also lives in the benefits space, we see these issues on a daily basis. One of the greates fears we see from people when it comes to money is retirement. Not if I can retire, but if I do, what next? What happens when newly-retired John Doe wakes on Monday and does not have to go to work?

    The models by which most advisors run their practice are flawed. At the end of the day, any advisor (financial, legal, tax, etc..) must understand the end goal and help the client get there.

    As for insurance, yes, read the fine print and also know who you are doing business with and are they rated? A simple check of Standard and Poors or AmBest would tell anyone their ratings.

    TM

  12. aua868s says:

    I read somewhere that though banks are FDIC insured, the real clause is that the deposited amount (principal) would be returned to the customer split into 30 parts over 30 years….its definitely better than wishing good-bye to the money…but principal over 30 years with no interest seems depressing!


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