A Penny Saved

There’s a lot of noise going on in the blogosphere, the news, and around the water cooler. Basically it can be summed up by - What do I do? Interest rates falling, Stocks on a wild ride, Congress and the President proposing tax rebates. Which leads to questions like…

• Do I buy or sell stocks now?
• Should I refinance my loans now?
• Is now a good time to buy or sell a home?
• What should I do with my rebate check?

And you can go just about anywhere for advice. But I’m not. Believe it or not, I actually learned something in business school! The basic premise that I was taught is that you develop your financial plan, then you apply it, then you make adjustments as needed. Or as I like to say - You plan your work (finances) and work your plan. And that is what I am doing.

For example, my current plan is to invest in a 403-B plan at work (similar to a 401-K). My employer takes x amount every month and sends it to my stock fund of choice. I invest it in Vanguard Index funds. Since I believe one of the best ways to invest is by not timing the market, but by regular and systematic investments, in the short run I do not care what the stock market does - if it goes up - I buy fewer stocks with my fixed amount. If the market goes down - I buy more stocks. Either way I am following my plan (buy fewer stocks when the price is high, buy more stocks when it is a good value). I do not let the hysteria and foolishness of others affect my plan.

Likewise, if I get a “rebate” from the government, I will follow my plan - which is to put any extra available money towards Home Equity Debt reduction. That has been my plan for the past year, which I have done whether money comes along from expected or unexpected ways.

The bottom line is that if you have taken the time to plan, really plan, then outside events like these are opportunities. Obviously as new information or significant events happen you may have to realign or adjust your plan, but that is a lot better than just being tossed about in a sea of change without a compass.