Eric Tyson's Top Tips for Defeating Economic Anxiety

Personal finance expert and best-selling author Eric Tyson-says you can feel in control during uncertain economic times.

New York, NY (January 2002)-One of the worst things about this lagging economy is the uncertainty we're feeling about the future. When will things look up? Will I get laid off? If I do lose my job, should I cash in some investments instead of using credit cards to make ends meet? And what about my investments? Should I pull everything out of the stock market-or should I hang in there and hope things get better soon?

If you let it, this kind of questioning and second-guessing can keep you in a never-ending state of anxiety. The remedy, according to financial guru Eric Tyson, is to take control of your personal money situation now.

"You can't control what goes on in the financial world," he says. "Therefore, there's no point in worrying about it. However, you can plot out a 'road map' for yourself and follow it. Flying by the seat of your pants, which some people got away with in the '90s is never a good idea, but in this economy it's particularly uncomfortable. Having a plan gives you a sense of control, which will make you feel better no matter what."

Tyson is the author of Personal Finance For Dummies®, 3rd Edition (Hungry Minds, Inc., April 2000, ISBN: 0-7645-5231-7, $19.99), a one-million-copies-plus Wall Street Journal and Business Week bestseller and won the 2001 Ben Franklin Award -for "Best Business Book."

Here are several tips from Tyson that will help you regain a sense of control and get you through the economic downturn with your personal finances intact:

If you're having trouble saving money or dealing with consumer debt, it's time to analyze and reduce your spending. A few suggestions:
Pay off credit cards. "I cannot emphasize enough the psychological benefit of having a zero credit card balance," says Tyson. "If hard times do hit you, at least you won't have to watch that 18% interest mount up."
Do not purchase large items-cars, vacations- on credit. Use debt only to make investments in things that gain value, such as real estate, a business, or education.
Build a source of emergency funds. You should have at least 3 months worth of living expenses in an accessible account. Should you lose your job, you'll have a "cushion" to sustain you until you get back on your feet.
Don't let short-term worries affect your long-term financial goals. Do some number-crunching and figure out how much money you should be saving for retirement. As a general rule, you should be investing at least 5 to 10 percent of your income in a retirement savings account. Not only will this ensure your future financial independence, it will reduce your taxes. "Taking concrete steps to shore up tomorrow's security will help take your mind off today's financial worries," says Tyson.
Do an insurance check-up. Many people lack sufficient life and disability coverage, for example. Pinpoint the gaps in your insurance coverage and take steps to fill them. Just as with the economy, your individual health and well being are uncertain. Building a good safety net will bring you peace of mind-and that in itself is a great return on your investment.

Speaking of investing, other of Tyson's bestsellers, Investing for Dummies, 2nd Edition and Mutual Funds For Dummies , 3rd Edition (Hungry Minds, Inc., 2001, ISBN: 0-7645-5329-1, $21.99), offers a wealth of timely (and timeless) advice for folk worried about the gyrating stock market and rock-bottom interest rate level.

Here are a few of Tyson's tips on investing in an uncertain economy:

Diversify, diversify, diversify! "Now is definitely not the time to put all your financial eggs in one basket," says Tyson. "Diversification is vital to making you feel comfortable. For instance, retirement accounts should be in stock funds worldwide. Also, hold some bonds and be sure to include some best bonds. And this is a great time to consider real estate and small business opportunities."
Concerned about getting whipsawed by rising interest rates in the future? Consider inflation-indexed Treasury bonds. Mutual Funds For Dummies explains all about this relatively new type of bond.
Do not make emotionally based financial decisions. Investors who panic and sell their stock holdings after a major market correction are missing a buying opportunity. History has shown that continuing to buy stocks during down markets increases your long-term returns.

"I see many similarities between our current period and the troubled years of the early 1970s," remarks Tyson. "After Nixon resigned in 1974, the Dow Jones Industrial Average plunged below 600. Those were dark times for many investors-but those who had the courage to buy were handsomely rewarded. Risk and uncertainty are part of investing. The market rewards those who stay in the game despite their fears. Think long term and don't panic."

"And though this may sound odd coming from a financial expert, realize that money isn't the end-all, be-all," he concludes. "'Invest' in your health, your education, your relationships with friends and family. These are the things that really matter in life."

About the Author:
Eric Tyson is a syndicated personal financial writer, lecturer, and counselor. He is dedicated to teaching people to manage their personal finances better. Eric is a former management consultant to Fortune 500 financial service firms. Over the past two decades, he has successfully invested in securities as well as in real estate, started and managed several growing businesses, and earned a bachelor's degree in economics at Yale and an M.B.A. at the Stanford Graduate School of Business.

An accomplished freelance personal finance writer, Eric is the author of three other national bestsellers in the For Dummies series: Investing For Dummies, Home Buying For Dummies, and Taxes For Dummies (co-author). Eric was an award-winning journalist for the San Francisco Examiner. His work has been featured and praised in hundreds of national and local publications, including Newsweek, Kiplinger's, The Wall Street Journal, Money, Los Angeles Times, Chicago Tribune, and on NBC's Today Show, PBS's Nightly Business Report, CNN, The Oprah Winfrey Show, ABC, CNBC, Bloomberg Business Radio, CBS National Radio, and National Public Radio.

Personal Finance For Dummies®, 3rd Edition
By Eric Tyson
$19.99, 470 pages
ISBN: 0-7645-5231-7
Publication Date: 2000

Mutual Funds For Dummies®, 3rd Edition
by Eric Tyson
$21.99, 404 pages
ISBN: 0-7645-5329-1
Publication Date: 2001

Investing for Dummies®, 2nd Edition
By Eric Tyson
$19.99, 437pages
ISBN: 0-7645-5162-0
Publication Date: 1999