Emotion and stress cause consumers to make poor finance choi
First Command offers tips to replace fear with facts when dealing with affairs of
03.24.2009 – FORT WORTH, Texas – To say that the American consumer has been
spooked by the gloom and doom of economic reports is putting it lightly. The fact is
most of us have at some point in our lives made a rash decision out of fear that we
later regretted and many of us have put off critical financial decisions for fear of
making the wrong choice. In this economy, the only thing worse than overreacting is
not reacting at all.
“In today’s uncertain times, it’s easy to subconsciously make decisions based on
fear instead of fact,” said Scott Spiker, CEO of First Command Financial Services.
“We have to take emotion out of the equation, or we risk making financial decisions
that actually hurt us in the long run.”
Based on their financial fears, many consumers have taken drastic measures that
could put them in jeopardy down the road, such as borrowing from their 401(k) to
pay off debt or canceling their health insurance. Before making such decisions, one
needs to sit down to think about how to logically keep their financial picture intact in
this trying economy.
Below is some fact versus fiction according to First Command:
Retirement Investments: Emotion tells us that we’re in a free fall and to get out of the
stock market while the facts say the market is priced at what it was 12 years ago.
• Emotions may run particularly high for retirees who have seen a big drop in the
value of their lifetime assets. If you are one of them and feel a need to move your
money out of the market for peace of mind, one option is to start small.
“Consider withdrawing only the money you need to cover your living expenses for the
coming year,” advised Joe Morrin, CFP® and director of financial planning at First
Command. “Leave the rest of your investments alone.”
Historically, after the market has experienced dramatic declines