Steadfast FinancesDoes a Stock Market Plunge Affect Your Disposable Income?

Does a Stock Market Plunge Affect Your Disposable Income?

Filed in Banking , Financial Crisis , Index Funds , Investor Psychology , Market Themes 1 comments

Earlier today, I heard a financial journalist say one of the most peculiar statements I’ve ever heard about a down day in the stock market.

It’s good to have something bad happen to keep you on your toes.

I’m not sure who came up with that old adage, but I’m not sure a 778 point drop in the Dow Jones Index was exactly what the creator had in mind.

However, it did get me thinking on one particular topic.

When the market performs poorly, do you cut back on your disposable income?

Being an active investor, and knowing that my S&P 500 index funds are down 13% to 14% for the month of September alone, I have found myself (maybe subconsciously) cutting back.

Normally, I keep a mental budget.  Meaning I don’t keep a budgeting account at Mint.com or actively track my expenses in Quicken like the rest of the old timers.  But being a fairly structured person, I know almost from habit alone that I’m spending too much, or too little, when it comes to monthly expenses.

So as I’m reviewing my online bank statement, like I do each week to make sure no errors are charged on my account, I found that I’ve got next to nothing in the disposable income department.

No beer and pretzels night with the guys.  Nothing out of the ordinary when it comes to eating out or superfluous charges for the ridiculously expensive hobbies I allow myself.  The only thing that really stood out was the dog food and vet charges for my new puppy.

I can’t say that I’m purposely throwing soup cans on the floor like Adam Sandler and the included clip from Big Daddy here, but I found that the “doom & gloom” mentality from the news has likely affected my spending habits.

So what about you?

Have you cut back?  Stayed strong and spent as a you normally would each month?  Perhaps went a little overboard?  Please share your thoughts.

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Posted by CJ   @   29 September 2008 1 comments
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