3 Reasons not to Fear the Economic Crisis
Saturday, October 25th, 2008One of the largest contributors to an economic crisis such as the one that we are now witnessing is fear from the general public, and fear in the media. In most cases this is fear of the unknown. Our minds have been transformed by the recent good years, and we often can’t remember what slower economic times are like. To make things more difficult, even the experts seem to be confused. Every expert seems to have a different opinion of long and how severe this will be. As a result we lose the trust we had in the sound financial advice that we’ve received in the past. Fear begets more fear, selling leads to more selling, and sound judgment is temporarily set aside. If it is true that every event must have both a winner and a loser then who is the winner in this scenario? It is the investor, who realizes that fear has driven the economy further down than logic would suggest, and purchases good assets at bargain prices.
I would like to now suggest three reasons that we do not need to fear the economic crisis. In fact, when you begin to calm your mind you will find that you will be better able to weather this storm.
1) The Media Loves Fear: The media loves big stories. That is how the sell their advertising. The larger the story the more excited they get. You can bet that they don’t mind this crisis because more people than ever are tuning in to watch the CNN Money, or logging on to Yahoo Finance or just watching the local news. If this is true then is it not also true that they may be blowing things out of proportion?
2) Sound Finances and Budgeting Will Keep You Safe: The people affected most significantly here are those with higher fixed expenses than they can afford. This could be an investor who purchased a property to flip, but have not yet been able to sell, or someone who decided to move, and purchased their new home but have not been able to sell their old one. If this is you, and you are struggling to pay your loans each month, you need to seriously consider your options, maybe you can rent one property, or maybe it’s time for that price reduction. If you have a budget, and your fixed expenses are in line you have nothing to fear.
3) Our Banking System is No.1 in the World: There have been many reports out recently that have suggested that while we in Canada are not immune to the this crisis our financial system is in fact in the best shape to get through this crisis. One of the reasons is because our lending practices in Canada have been much more stringent than in the US and other countries.
Please feel free to contact us regarding any questions that you may have. If you would like assistance in creating a budget or reviewing your personal or business finances we are able to assist. If we are not able to help we have a list of contacts that can. We would also love to hear from you regarding your own goals, plans and achievements. You can contact us by email at accounting@birchent.org or by phone at 778-786-1440.