Wednesday, October 31, 2007

Personal Finance Nightmares

In honor of Halloween, I thought I would share my top six personal finance nightmares. Some of these are far fetched, others a real possibility. All of them are very scary to me.

Here they are, in no particular order:

1. Disability - not being able to take care of myself, financially or otherwise, is one of my biggest nightmares. I am a very independently minded person, who deeply values his freedom and autonomy.

2. Persistent Joblessness - I have never really been unemployed, but I am very much aware of this possibility. I am a well educated, highly skilled and eminently employable individual, but bad things happen to good people. It's a fact. I have invested a great deal of time and money in my career and the thought of seeing that investment go down the drain is tough to confront. If I found myself in a state of long term joblessness, I would probably start my own business. However, I would like to do something like that on my own terms, rather than be forced to take such action.

3. Health Emergency - last year I got a small taste of what a health scare feels like. I felt unwell for several months, and despite a battery of tests, doctors could find nothing wrong with me. To my deep relief, the condition simply dissipated, gradually and slowly. Someone once told me that we are all one major health crisis away from bankruptcy, health coverage or no. I can believe him.

4. Major Natural Disaster - last week's California wild fires are one such example. A colleague of mine from San Diego was evacuated from her home due to the fires, and was allowed to return two days later only to discover very minor fire damage to a portion of her house. Unfortunately, her next door neighbors were not as lucky. Their house burned to the ground.

We live in earth-quake prone, fire prone, mud-slide prone California. The prospect of a natural disaster is something we have to live with, but that does not mean I am comfortable with the thought.

In fact, after writing these lines, I found out that Northern California was struck by a 5.6 magnitude earth quake tonight. Talk about a potential nightmare - a strong earthquake while I am on the other side of the continent and my wife is alone with the kids. Thankfully, all is well.

5. Complete Stock Market Meltdown - yes, it's unlikely, but a global 1929 style market crash could happen again. As someone who has a very considerable portion of his net worth invested in the markets, that would be one massively scary turn of events. What could trigger such a crash? Who knows? But it is possible that if we had a massive terrorist attack, such as nuclear terrorism, we could face a very different economic reality.

6. Homelessness - I have repeatedly spoken out against treating houses as an investment. I prefer to rent rather than buy, at least for now. However, homelessness is a very scary prospect for me. Can you imagine not being able to provide basic shelter for your family? Well, there are many homeless families out there. I believe that one of our greatest failures as a society, is our inability to eradicate homelessness and hunger in this country.

Those are my personal big, bad, six nightmares. I would love to hear about your own personal finance fears and concerns.

In an upcoming series of posts I will discuss personal finance crises, and ways to prepare for them and to mitigate their most adverse consequences. Let me know if there are any specific topics you would like me to cover.


Russ said...

Everybody has different lifestyles therefore different "financial nightmares" Mine is quite simply letting my little 8 year old daughter down.. If she needed something for a school trip or such and I couldn't afford it then the look on her face would kill me..
People with property finding themselve getting into difficulty should alway act sooner rather than later.. Nine times out of ten it's careless credit card spending that gets most of us into trouble. Consolidate them QUICK. If you leave it - it's only going to get worse.
Unsecured loans are obviously available for people who don't own their home. These loans are also available to people with
Adverse Credit History. The main advice however is that one should never borrow money that you can't afford to pay back. Always ensure the monthly payments are within your capability to pay back. Consolidation Mortgages and Loans offer consolidation loans as well as loans to people with adverse credit history and will do all the necessary checks and make it a very easy process.

frugal zeitgeist said...

I have deep-seated Bag Lady Syndrome. This means that I have a constant, underlying fear that something will happen that will knock my financial life sideways, leaving me homeless, jobless, and eating cat food. It's probably compounded by the fact that I'm an army of one, but I felt this way even when I was married because my former husband was such a loose cannon where personal finance was concerned. (That's a lonely place to be in a marriage.)

More than anything else, though, Bag Lady Syndrome is a huge source of energy and motivation to do the best I can to take the ambiguity out of my financial future.

Shadox said...

Russ, I can't tell for sure, but I think you just left an ad as a comment on my blog. There was one other such comment in recent days, which I deleted. I am going to leave your comment intact, but please do not leave commercial comments on my blog.

Frugal, dog food is far superior and less smelly than cat food, should the worst ever come to pass... ;-)

About Me said...

Great article. It is pretty easy to hedge youself against possible disaster. Just buy the proper insurance.

Dorian Wales