Lots of alarms go off daily which try to get our attention. Most have some selling proposition behind them which is why the alarmist puts in the effort to get us to perk up. But most alarms are false alarms and at best disruptive. In this post I’ll discuss common alarms which are worth ignoring in order to maintain your sanity and keep your money in your pocket.
Financial alarms
Let’s talk about some financial alarms, the ones I’ve had on my radar and what to do about them. And what to make of them.
Interest rates
The most common alarms are financial alarms. After the 2008 crash, alarms were going off that interest rates were going to go up … any minute now…. interest rates will skyrocket… wait for it… It’s 2018, a decade later. Toddlers have turned into teenagers and the interest rate needle has barely moved.
Interest rates will likely go up but it’s less likely for them to suddenly shoot up. Possible, but unlikely. With rising interest rates we will see more businesses fail as securing loans will become tougher. Bonds will drop in value as new higher-value bonds will be issued. Variable interest rates on car loans and mortgages will force some consumers to have to give up those assets.
I’m an anti-debtist. Mortgage, credit cards, auto loans, business loans – don’t give a fuck. I think it’s best to not owe anyone any money. I’m told that I’m wrong because with low-interest debt it makes more sense to pay on it for as long as possible. Sadly, I have a feeling that many banks will agree.
Stock market crash
In 2013, after the stock market had started to get hot and most investments had recovered, alarmists started predicting the next market crash. It’s right around the corner they said. Some very, very, very famous people in the finance world published some rather embarrassing statements which didn’t come true. It’s 2018, and other than a 15% market correction, there isn’t a lot of excitement going on.
Could the market crash and could we see a 40-50% drop in equities? Certainly. However, it’s less likely to affect us because those of us who have a high stock exposure are likely young and either far from retirement or or have multiple sources of income.
If a 50% stock market crash will adversely affect your household spending or quality of life then you have no business having a strong position in stocks. You should instead be in CD’s and bonds and a mix of rental income properties – shit, maybe even a SPIA. That’s why asset allocation is such an important topic – and has much less to do with your stock/bond ratio than your risk tolerance.
US debt
The US debt crisis alarm has been and is still sounding strong. However many trillions it is now, it’s a lot and growing. In order for the US to pay back its debt, we would need to increase taxes. Since every other finance topic is concerned with saving on taxes, that’s not going to happen.
In the US, prevailing patriotism is displayed by owning guns, wearing camo, and enlisting in the army. For some reason, paying taxes isn’t patriotic, even if it could abolish the US debt. ?♂️
If the US defaults on the debt and if the US dollar loses all value, your personal finances will be the last of your worries. Nothing I write in a post would offer insight into that kind of scenario.
Housing crash
We just came out of a housing market crash, and so, many are predicting another imminent housing market crash. The fear is that some households will default on their mortgages, foreclosures will flood the market, and with rising interest rates, few will qualify for a mortgage to feed the real estate market.
I don’t have any physician friends whose homes are worth less than $700,000. All of my physician friends live in the most posh of posh neighborhoods. These are the kind of neighborhoods which don’t get affected all that much by traditional stock market fluctuations.
If you are worried about your finances with a potential housing market crash then you are likely overleveraged. This is the time to assess the value of your home and the value of the debt you have on that home. If you need to make any changes, this is the time to do it.
It’s been a shame to see so many of my colleagues jumping on the real estate bandwagon once the housing market recovered. Even worse, over the past year, many have started opening HELOC’s. Talk about overvalued real estate.
Indexing strategy
There are some alarms being sounded that too many Americans are investing in index funds. With so many of us indexing – as in, investing in broad passive index funds – we are going to fuck the markets up.
But are there a lot of people in index funds? Most of my friends don’t know what they are invested in. The rest still buy individual stocks. And many have their money in cash or CD’s or simply rotting away in their savings account at Bank of America.
The wealthy physicians all jumped on the crowdfunded real estate train, and before that, many of them jumped into peer-to-peer lending. We’re talking hundreds of thousands of dollars per individuals. So, no, not everyone has all of their money tied up in index funds and even if they did, when the market does crash, a healthy percentage will freak out and sell out, securing the viability of this investing strategy for the long-term market timers, like yours truly.
Health alarms
Health has always been a big issue in the US. Not only because healthcare is incredibly expensive, but because human health is a popular media concept and few individuals have a concept of what health means to them. In fact, what does health mean to you?
Retirement healthcare costs
I’ve written multiple posts on this topic. Many predict that the average retiree will spend over $200k on health during their retirement. Since the average retiree has less than $200k, this, of course, is absurd. But, it is true that most of the wealth lost in the US will come from market anxiety and health anxiety. This includes medical professionals – we’re not immune to this phenomenon.
You have control over your health and can decide to what extent you are willing to be treated. You can decide whether you will let the traditional US healthcare system create more disease in you than mother nature ever could. Much like you can budget for your home, you can budget for your healthcare costs.
Antibiotic resistance
Yes, antibiotic resistance is high. No, antibiotic resistance isn’t as high as the media would like us to believe. Yes, many die because of antibiotic resistance, but they die in hospitals after being bombarded with multiple broad-spectrum antibiotics which create the same resistant bugs which is then spread from one hospital ward to another.
Just like an Ebola vaccine miraculously appeared within 3 months of the recent Ebola outbreak, even though vaccines normally take years to get through the FDA, antibiotics will pop up like food carts as soon as bacterial resistance hits a high enough ratio. They are kept nicely locked up until genetic targeting can be patented.
For the individual, not getting infected in the first place is probably the best strategy. So, don’t go skinny dipping without a wetsuit – gonorrhea is a bitch. Next, avoid hospitals, at all costs. It’s the gift that keeps on giving. The doctor keeping your overnight in a tele bed for your next-morning stress test is only doing that to protect his ass, it’s not for your safety. How many tele codes have you responded to that were legit? AMA your ass outta there.
EKG tracings
Ever since the Apple watch graduated to detecting Afib, there is a lot of interest in EKG’s and heart tracings floating around on the www. For the medical professional who reads these things, it’s become a weed. I’ve interpreted more of these in the past few weeks on Just Answer than anything else. I love the income but the alarms going off are ridiculous.
Much like pulmonary embolism, UTI’s, Influenza, and Strep Throat, and many breast cancers, we’ll diagnose many more of these cases because we’re screening for them and finding them, but we’ll see minimal changes in the morbidity and mortality outcomes. So, sound the alarm, but be careful what actions you take.
Ignoring alarms
The point of this post is to just make me and you better consumers of information. I wish it was as easy as taking that shit in and ignoring it. But news is meant to invoke emotions. And even though we can usually ignore the facts, the stress of the emotional response remains.
I vote for turning off all mainstream news in regards to health and finances and economics and politics. Tuning into unique individuals on YouTube or on blogs or podcasts can be a great way for us to get our news but those guys rarely produce long-term. The money eventually runs and out since we don’t pay them, they bring on advertisers, and that eventually changes their bias. Finally, they disappear and take on a better paying jobs.
There is nothing wrong with not knowing. Rather than trying to predict the future to calm your fears, protect yourself against potential disasters. I’m not talking about storing ammo and gas masks.
- diversify income sources
- protect some of your money against inflation
- expose yourself to less risk
- become less dependent on external systems
- educate yourself about the basics and don’t get lost in details
- pay for solid experts to be on your team
- live on less money
- get rid of your debt any way possible
- learn skills instead of memorizing baseball scores
- spend $ on SEO courses instead of purses (Yoast)
- treat yourself with home remedies before taking Rx meds
- ignore anything mainstream, it’s likely wrong