The media has accurately predicted 33 of the last 4 recessions. -- Zig Ziglar

We all know that the media tends to feed on drama, reporting bad news when it's available, and finding bad news to report when nothing horrible is happening. They have a lot to report these days!

One fear the media is feeding on right now is people's fear of losing a lot of money and savings due to the stock market's wild fluctuations lately. While there is no way of denying the roller coaster ride going on down on Wall Street, we thought we'd throw some history at you to ease your fears this Monday morning.

• 1974 - President Nixon resigned, causing the market to drop by 42%. Five years and one month later, the market had gained back everything it lost.
• 1987 - On the day known as "Black Monday", the market dropped 23%, and regained everything it lost within the next 6 months.
• 2001 - The World Trade Towers collapsed and the Dow Jones Industrial Average lost 14% of its September 10 high of 9605 in one week (the largest one-week drop in history). 58 short days later, the DJIA closed at 9608.

Did you know that no matter how you measure it, 100% of all the ten year periods in the stock market's history have ended up? Which means that for those of you holding money in retirement accounts or long-term savings, holding on to those investments for ten years historically guarantees that you'll earn more than you put in?

"The stock market on the short term is a spoiled brat who throws hissy fits, but on the long term, she's a beautiful woman that's very predictable." (Dave Ramsey)

The thing to remember is that playing around with stocks is very risky, especially in volatile times like these. But as far as Wall Street is concerned, good things come to those who wait. Instead of worrying about your investments, take the time to sit back and relax, knowing that your money will come back. It may just take a little time.

One thing we Dutchies are famous (or infamous) for is being cheap.

Growing up, we almost never ate out, and when we did it was McDonald's. We weren't allowed soda, and we had to eat our meat because that was the "expensive" part. Buying new clothes was a treat, as most of them were hand-me-downs from older cousins or from the thrift shop. The first time I remember taking a plane anywhere was when I was 17; we would drive everywhere else.

Okay, okay, most of that was not due to the Dutch thriftiness, but rather because a pastor's salary doesn't stretch that luxuriously between a family of 6. When I grew up and gained control of my own money, I lost a lot of the frugal habits of my childhood. I will admit to spending over $100 on a pair of jeans.

Now that the economy is slithering and sinking to a Depression-reminiscent bottom, all the frugality of my childhood is coming back to me. I'm actually really enjoying learning to save money again, and bargain hunting where I can. Here are some of my top tips for avoiding spending more money than you have.

1. Take your credit cards out of your wallet - in their place, put a slip of paper titled "Wish List". When you see something you want, instead of whipping out the plastic, write the item down on your list. After a few weeks, revisit the list and see what on it you still want. A lot of what we buy is purchased on impulse, and simply suspending the impulse can save a lot of money.

2. Cut down your meals out - if you eat out 5 times a week, bring it down to four. A grilled chicken breast sandwich with fries might cost $8 at an inexpensive restaurant (before taxes and tip). The same meal at home would cost $2-3.

3. Eliminate unnecessary monthly expenses - magazine subscriptions, though inexpensive, can be a big drain, especially when so much information is available online, and you can go to a local bookstore and read the print version with a cup of coffee in a comfy chair. If your car is older, talk to your insurance agent about eliminating comprehensive & collision coverage (the part that pays for damage to your car). I just did and I'm saving over $30 a month.

4. Take advantage of membership discounts - one thing I love to do is see movies in the theater. Through my Costco membership, I can get two tickets for $15, which saves about $5 per movie or up to $15 for Imax showings. Through my significant other's student id, tickets can be bought for $6 apiece.

5. Clip coupons - I have an aversion to this one since it always made me feel poor, but I had to remind myself that a lot of items are sold on a huge markup. Using coupons doesn't mean I'm poverty-stricken, it just means that I'm stealing back some of the producer's profits.

There are approximately 752 million other ways to save money if you're keen on finding them. All it takes is a little preparation and a bit of creativity to stretch that dollar just a little farther than usual.

When you live in Orange County, it's almost impossible to escape from the Irvine Company.

When I wanted to find a nice apartment to rent a few years ago, it was hard to find anywhere that was NOT owned by the Irvine Company, but since its prices seemed to be at least $100 a month more than elsewhere, that was my goal.

We had a similar issue when looking for office space recently. The Irvine Company seemed to own almost every property listed, and the prices per square foot were not what we were willing to pay.

Of course, in return for those high prices, the Company delivered a higher-value product which is part of the reason that a lot of Orange County has such a reputation for affluence. It has been responsible for transforming Irvine Ranch, which makes up more than a fifth of Orange County, into shopping centers, office buildings, and homes.The Company reportedly pays the most taxes of any other entity in Orange County, so it is certainly an important part of life in this area.

It was announced today that 100 employees have been laid off due to the economic downturn. This is the first time since 1992 that the firm has done this sort of layoff.

It just goes to show you that it doesn't mater how much money you make or how well known you are, when bad times hit, they hit us all equally. My heart goes out to those who have lost their jobs and will have a much harder time finding a new one than they might have a year ago.

Don't get me wrong, I have my opinions about politics. Generally I just like to keep them to myself. I'll make an exception when it comes to Big Government.

I don't like it. Not one bit. Get your hand out of my wallet, Uncle Sam.

So when I heard the news that the US government plans on creating a separate fund to buy bad debt off of the books of struggling banks and other Wall Street players, I got on my high horse and started preaching to anyone who would listen (ie, the cats and the trash collector) about the folly of making taxpayers take the brunt of the financial mess in New York.

I am off my high horse now, and ready to see the error of my ways.

We are in a big mess right now. I'm not saying that to get people scared, and I'm not being paid by some Wall Street short selling scam artist to create panic in the market place, but the fact is we're not in such a hot position. This week we saw a modern-day run on the banks with investors hastily pulling money out of all sorts of investments. We're seeing record-setting foreclosures and high unemployment. And our dollar has lost a lot of global confidence recently.

The actions of the Treasury to somehow triage this mess are not ideal, but I will have to admit that to a marketplace foaming at the mouth with panic, the Treasury's announcement to guarantee money market funds was like giving the nation a giant paper bag to calm down its hyperventilations. And people are responding: check out the action on Wall Street this week:

One of the big determinations of financial success is consumer confidence, and we were sorely lacking in it this time yesterday. Now we have some reason to believe that there's hope, and we're taking tentative steps toward the light at the end of the tunnel.

I'm curious to see if this will be the big turnaround that we are all craving. Or maybe, as some of the Chicken Littles out there are saying, this is yet another bandaid over a severed artery. As always, time will tell.

We've been hearing a lot lately about the smokin' deals on foreclosures and REO properties that are available. Newscasters rave about cheap homes over which buyers are fighting tooth and nail. In Orange County, however, these "incredible" deals can still seem out of reach to many buyers.

Although home values have dropped considerably in our neck of the woods, we have to remember how high they were in the first place. We then have to remember that 20% of value lost on a home that would sell for $750,000 in the peak of the market is still a hefty $600,000.

Seeing that something is "for sale" doesn't necessarily mean it's cheap, although people often get suckered into that kind of thinking. How many of you out there have gone for a buy-one-get-the-second-half-off deal when you only needed one in the first place?

All that said, when our clients come to us wondering whether they should try to get in the market on a "cheap" foreclosed home, we don't always answer with an enthusiastic "yes!" Often, the financing takes a lot longer to set up on these homes. Banks are less willing to negotiate than an individual seller would be. And other deals are out there with less fierce competition.

The moral of this post is: if you're in the market for a new home in Southern California, make sure you speak with an experienced real estate agent or mortgage broker. You may be a good candidate for an REO home if you have the time and energy to see the deal through to completion. In reality, however, you can probably find a decently-priced home, not owned by the bank, with a lot less hassle and just as much satisfaction.

And when you do get that new home, make sure to invite us to the housewarming party!

Many of us, myself included, dream about the day that we will become truly independently wealthy. I personally picture a house in the mountains, lake nearby, and lazy days spent drinking tea and reading on the back porch.

The unfortunate truth is, I’m not very close to living that dream. I don’t have nearly as many assets working for me as I’d like, and instead of a lake out my back door I have my neighbor’s backyard.

On the other hand, I’m in a unique position to benefit from the lessons taught by wealthy people. Here are a couple things I’ve found that a lot of wealthy people have in common:

They don’t throw their money around in the stock market – Instead, they carefully manage their investments, researching and choosing wisely. Some people, when given a lot of money to invest, might be tempted to “play the market” and tamper with the powerful feelings of a risk-loving investor. Wealthy people choose steady-growth vehicles with historically promising returns.

They have no boss... except themselves – The Federal Reserve reports that 12% of Americans own their own business, but 21% of the wealthiest Americans (top 10% of income) own their own business. I would guess this has something to do with the passion to work hard that a lot of us feel when we’re working to pay ourselves and not our bosses.

They buy used cars – Sure, maybe that used car is a Jaguar, but wealthy people understand that a car loses up to 25% of its value when you drive it off the lot, and up to 70% of its value over the next four years. Wealthy people let someone else take the brunt of the value loss, then enjoy a nearly-new vehicle with a less shocking price tag.

They don’t mess around with debt – Wealthy people understand the folly of high-interest debt, and instead opt for the debt that will give them the most leverage. For example, many have the funds to own their homes outright, but still carry a mortgage. If they can pay the bank 6% interest but earn a modest 11% on their home’s equity, that’s a 5% interest rate that they’ve gotten, basically for free!

You don’t have to be wealthy to live like the wealthy. Start practicing these habits now and you’ll be a step ahead of the game when you do finally achieve the wealth you seek.

I am glad I reminded you all last week how to breathe, because the news this morning is sure to have a few of us at risk of hyperventilation.

After all the tumultuous news last week, Lehman Brothers Bank finally filed for bankruptcy. LBB's demise is not unexpected: we knew since last week that there would be no government bailout (thankfully). But it's still something of a slap in the face to an economy on its knees.

You and I aren't going to feel the effects of the collapse directly, as there are no consumer loans or bank accounts involved with the bank. We are, however, going to feel it indirectly. One major concern is that a lot of retirement funds have bought into various Lehman Brother securities, and with a share price drop of 95%, hanging onto those shares isn't getting any of us closer to lazy afternoons on the golf course.

On the positive side of things, Merrill Lynch, also in big trouble, has been rescued by Bank of America. As the BBC puts it, there was some fear that with the trouble first for Bear Stearns, and now Lehman Brothers, investors would be going on something of a "witch hunt" for the next troubled bank. Bank of America's actions are a nice little bandaid to put on the hurting banking system.

What we're seeing here, dear readers, is Murphy's Law in action. When you think it's bad, don't worry, it can always get worse! I'll be honest, sometimes I feel grateful that I'm in "sleepy" Southern California and not heading to Wall Street every day. I don't think my nerves could take the constant stress of bad news.

On the other hand, SoCal is full of good news, and I have the power to change my mindset from stress to bliss in light of it.The sun is shining, but not too hot. There's a hint of fall in the air. Gas is cheap (ish). It's almost lunchtime. What else can a person ask for?

We began this life with an inhale. We will finish it with an exhale. All the stuff between we assume is life. -- Steve Ilg

In many languages, the same word is used to denote "breath" and "spirit". In English, we have the word "inspire", which is based on the Latin word for "breathe". More so than food or water, your breath is an absolutely vital aspect of your livelihood. Yet while many of us are careful to eat well and drink our 8 cups of water every day, how many of us truly pay attention to our breath?

Breathing accomplishes many things. Its main purpose it to bring oxygen into your blood in order to give you energy to live, and to take out the toxins that are built up by all the different cell changes going on all over your body. It ventilates your body in the same way that opening windows ventilates your house. Deep breathing can also be incredibly energizing and calming, all at the same time.

Here is your project for this Friday:

1. Inhale fully - allow your belly to expand as though you have a mini beer belly.
2. Exhale slowly - try to take at least 5 seconds to expel your breath, giving your body lots of time to throw all the toxins out of your bloodstream and into your breath.
3. Pay attention - and do it again, at least four more times.
   

Deep breathing exercises like this are important for both your mental and physical health. If you can, try to breathe deeply like this every hour to truly allow your body to benefit.

Remember what Ramana Maharshi said: "One moment of conscious breathing is one moment of purity."

Lehman Brothers shares dropped 45% on Tuesday, leading the stock market on the whole to decline by almost 3.5%.

I was expecting a lot more drama and to-do about Lehman Brother's tribulations, and was surprised at the comparatively small amount of press that it got, at least compared to the Fannie Mae bailout and Bear Stearns a while back. In a flight of Sherlock Holmes-ian fancy, I hopped onto the information superhighway (specific destination: Google) to try to solve the mystery.

One of the search results was a blog on the Wall Street Journal that did a great deal to explain why the Lehman Brothers issues are small potatoes in the world of journalism. If you're truly interested in this kind of thing, please read the whole post here.

For those who want the Cliff Notes version, here goes. On a personal level, the fate of Lehman Brothers is, of course, extremely important to its 25,000 employees. But on a global scale, the firm has a market value of only $5 billion. As the blog's author, Evan Newmark, points out, plenty of Russian millionaires are worth more than that on an individual basis.

Contrast this to Fannie and Freddie, who carry $5 trillion in mortgage debt. Quite frankly, when it comes to the US Treasury bailing out Lehman Brothers, there are bigger fish to fry. We're talking sardines vs. swordfish here.

To paraphrase the author's summary, I'm interested to see what happens with Lehman Brothers. In reality, how ever, it doesn't really matter.

I was lucky: I got to grow up in Canada.

Canadian culture is very similar to that of America, almost like how fraternal twins look very similar but not quite the same. Moving to the US in 2003 was therefore not a huge shock to my system (although I'll admit to being a little overwhelmed by the speed on California's freeways).

Another difference was that in Canada I studied health science and linguistics, and admittedly knew little of economics or finance. When I moved to the US, I began studying to get my finance degree and news items on that topic gained new importance to me.

This is a very long introduction to say that, due to my almost non-existent knowledge of the history of the markets (and also due to my age and therefore lack of personal memory), I find the current economic situation incredibly fascinating.

For example:

* Unemployment rose to 6.1% - "wow! I've never seen anything that high!"
* 84,000 jobs are lost - "my goodness, what a lot of jobs! That's incredible!"
* Markets around the world are losing value, and fast - "what a fascinating display of inter-market dependence!"

You see, my reaction to these things tends to be more one of wonder than of shock and anger. This is the first maybe-it's-a-recession that I've personally experienced and paid attention to, so each new wrinkle of economic decline holds a delightful novelty that mercifully spares me the reality of needing to be concerned.

Problem is, no matter how my brain likes to spin it, these news items are not good. And they do affect me, at the grocery store, gas pump, hairdresser, bookstore, etc.

You know what though? I'll take my naive wonder over furrowing my brow any day. No amount of stress or hand-wringing can really change the situation. In reality, the only thing we can do is keep working, keep whistling, and be content knowing that it will get better again someday.

Right?

I don't know anyone who would buy a home and not get it insured. So why are so many renters going without insurance for the place they call home?

The OC Register reported today that up to 65% of renters in Orange County go without renter's insurance. Those who have it often get the policy only because it's required by the landlord.

Many tenants are under the mistaken impression that the landlord's insurance policy will cover them in case of a loss, but that simply isn't true. Landlords will typically get enough insurance to cover the structure as well as a small amount of personal property in the home (to cover a washer, dryer, stove, etc.).

A standard renter's policy will cover the insured person's belongings in case of theft or fire, and often has some liability coverage included as well in case the tenant were to get sued. The liability coverage also includes any damage to the home or apartment caused by the tenant (such as a kitchen fire).

The policies are reasonably priced, and shouldn't be more than $100-150 per year. In fact, an insurance broker friend of mine knows one company whose multi-policy discount for car and renter's insurance combined is actually cheaper than the car insurance on its own. Go figure!

Please, if you rent or know those who do, consider bringing up the topic of renter's insurance. Risk to your home and belongings can't be predicted, and being prepared in advance is always a good idea.

Back in our cavemen days, we spent almost every waking moment in a quest for food. Our bodies were ready at a moment's notice to spring into action if prey was at hand.

These days, we still spend a good deal of time in a quest for our next meal ticket, but the difference is that for a lot of us, that time is spent hunched over a computer. Of course, getting out and exercising daily along with eating well is the best way to stay healthy in a desk job. But what else can you do to keep yourself healthy during your workday?

9 am: Do some calf raises - while sitting at your desk, lift your heels up and down off the floor at least ten times. This will keep blood circulating in your legs and help avoid swollen feet and varicose veins.

10 am: Skip the coffee refill and have a glass of water - H20 is absolutely vital to the efficient functioning of our bodies. Don't neglect it! 64 oz per day is a good target to set.

11 am: Stop and breathe - push your chair away from your desk and breathe in and out deeply at least 10 times. This simple exercise will help you refocus, clearing your mind so it can properly work on the tasks at hand.

12 pm: Hit the stairs - find a stairwell and head up and down it a few times. Keep that blood circulating!

1 pm: Get laughing - take a few minutes to do a google search for clean jokes. A dose of humor is a great mood-lifter and can help change the course of a gloomy day.

2 pm: Do some spinal R&R - to help realign your spine from its hunched over position, sit up straight, then roll your shoulders back and let your head fall back as far as it will comfortably go. This is a great tool for helping relieve the tension that can build in your back over a day of desk work.

3 pm: Skip the Cheetos - your tummy is rumbling, but it's time to gather all your self-control and reach for an apple instead of the vending machine. Fruit is a great source of fiber and vitamins and can provide just as much energy as those damaging packaged snack foods.

4 pm: Spend a minute to dream - take three minutes to dream about all the big things you want to accomplish in your life, whether a new car or a new home in the Bahamas. It's easy to get caught up in the day-to-day, so don't forget to look at the big picture of your future for inspiration.

5 pm: Smile! It's time to go home - don't let traffic get you down, find a good radio station and settle in for the ride. The rest of the day is yours to enjoy.

If you’re struggling with the monthly payments on your mortgage in these difficult times or know someone who is, read on!

January Financial has evaluated a few different services and has partnered with one that we feel very good about. It comes highly recommended from a long-time trusted advisor and offers services that we haven't seen out there so far.

What is loan modification?

Loan modification is when a lender agrees to change (modify) the terms on a mortgage. For example, let's say I'm currently paying 6.5% on a 5-year fixed loan but I can't afford those payments. The bank may agree to lower the rate to 3% for the next 5 years, and 5% for 25 years after that, so I can afford the payments.

Why are lenders willing to do this? Two reasons:

1. They're getting a LOT of pressure from the government to avoid foreclosures at any cost.
2. They realize that they're better off to be making at least part of what they should be making, as opposed to nothing if the house goes to foreclosure. Foreclosing is a lengthy and expensive process, and it depresses the local market, actually making the problem worse.

Although a loan modification means that the lender takes less money than they were getting originally, it's better than making nothing and having to pay for the foreclosure and guaranteeing they take a loss, most likely.

Loss mitigation is much better than loan modification (which is what almost all other companies out there are offering). First they attempt the loan modification. If that doesn't work for whatever reason, they will then assist the client in negotiating either a short sale or a short-pay refinance A short sale is when you agree to sell your home for less than what you owe on the mortgage, and the bank agrees to accept less than what they are owed in order to make the sale happen. This means the job doesn't stop with the loan modification, and your files are assisted to completion. Credit restoration, debt settlement and credit counseling services are also offered, meaning we can assist if you don't own a home.

This process covers one property (as many loans as are on one property) and loan size is unimportant. Some companies charge progressively higher prices for higher loan amounts and extra liens. We offer a 100% guarantee if we are unable to obtain a loan modification, and will also refund a pro-rated amount of the original cost if a modification is obtained but the client declines. We have seen results of fixed rates as low as 2-3%, principle reduction in the 6 figure range, and payments dropped by as much as 50%!! (We can send you some documented cases)

Here is the procedure for starting a loan modification:

1. We will do a consultation with you and explain the pros and cons to see if loss mitigation is something worthwhile for you.
2. Fill out the required paperwork and explain payment information.
3. After reviewing your file, our provider will contact you to make sure you are positioned as well as possible for a favorable outcome. If things look good then they will begin the process.
4. The process typically takes between 5-16 weeks for completion.

We know that there's a lot being said out there about loan modification and debt consolidation. If you're struggling with your mortgage payments or credit card balances, you owe it to yourself and your family to see what options are available to you. Please don't hesitate to call or email us to learn more.

One is an Olympic record-breaking swimmer; the other led GE from a $14 billion market value to $410 billion in 20 years. But what do these two highly accomplished men have in common?

Like so many great men before and after them, these two men got into the habit of setting goals so high, so lofty, that many thought them simply unachievable. Winning 8 gold medals sounds pretty unachievable to me. So does increasing a firm's market value $396 billion in 20 years. But they did it.

Phelps has said that he didn't do what a lot of "normal" kids do, hanging out on the weekends. He was willing to give that all up to train hard in order to reach his goals. Welch made a habit of setting "stretch goals". These goals were so high that when he set them, he had no idea how he would ever get there, but he made the goal anyway.

We've all heard of S.M.A.R.T. goals before (specific, measurable, attainable, realistic, timely), and the importance of writing these goals down. I think neither Phelps nor Welch would really think much of S.M.A.R.T goals. They probably just had S.M. goals: specific and measurable. Attainable? Who knows. Realistic? Probably not. Timely? Eventually.

All this is something of a soul-searching moment. I wonder if my goals are high enough. If I'm setting the bar at least a foot higher than I really know I can jump. If I'm going to look back on my life and know that the only way I got as far as I did was by setting the finish line a mile farther than I knew I could run.

What are your goals? Are they realistic? Or are they laughably out of reach?

Cyara Pott - Market Specialist