Here are some steps that I ran across today:

1. Get in Touch With a Better Reality
The worry: The broad consensus among economists is that the recession ended in the middle of 2009. Yet in a February survey by Gallup, about half of Americans said they thought the economy was getting worse, only slightly less than the number who felt that way six months earlier.
Why the disconnect? Put part of the blame on a psychological phenomenon finance experts call “recency bias” — the tendency to believe that what happens in the future will look a lot like what happened in the recent past. Today two straight years of bad economic news is coloring your take on the economy, leading you to gloss over positive news and focus on the gloomier headlines you see.
Plus, because of the complex way our brains comprehend risk, it takes far more good news to build our confidence than it takes bad news to destroy it, notes University of Oregon professor Paul Slovic.
In one study on risk perception, Slovic showed people fake headlines, some reassuring and some dire, about a nuclear power plant near their home. The good headlines only raised the subjects’ trust in the power plant slightly, but the bad headlines had a huge negative impact. “In the past few years we’ve seen a lot of things that caused us to lose faith in institutions that we’d like to be able to trust,” Slovic says. “These feelings tend to override our ability to analyze things in a logical way.”
The fix: Don’t fret about what the economy will do next; it’s a loser’s game. Instead, calm your anxiety by making sure you’re covered if bad stuff does happen.
• Boost your emergency fund.
Already got three to six months of living expenses in the bank? With long-term unemployment at a record high, many planners now suggest setting aside a year’s worth of income, especially if you work in a troubled industry like autos or real estate.
• Tap the power of a Roth.
What if you’re hard-pressed to come up with the extra cash? Redirect a portion of the money you’re saving for retirement. Put only enough in your 401(k) to get the full company match; put the rest into a short-term bond fund in a Roth IRA. Unlike a 401(k), contributions to a Roth can be tapped without penalty in an emergency because you’ve already paid taxes on that money. But earnings withdrawn from a Roth before age 59 1/2 will typically be taxed and hit with a 10% penalty.
• Cut out big-ticket money drains.
Like many families these days, you’ve probably already reined in spending. But the cutbacks people tend to make — eating out a little less, say, or vacationing closer to home — probably wouldn’t make that big a difference to your financial stability if you were to lose your job.
So identify major expenses you could cut if your income were to take a big dip — Do you need that second car? Is private school really necessary? — since many laid-off workers who have found a new job lately have had to take drastic pay cuts (as have staffers at some downtrodden companies).
“Some of my clients are doing the same work for 15% less than a couple of years ago,” notes Atlanta financial planner Mary Claire Allvine.
What if you go to all these measures and nothing bad happens? Hey, having some extra savings never hurt.
2. Work on Your Plan B
The worry: In a recent Gallup poll, three out of 10 Americans named unemployment as the biggest problem facing the country, the highest number since 1983. Having a big cash cushion will help tide you over if you’re laid off, alleviating one source of anxiety. But you’ll still have to find another position, and that feels like an especially tough task lately: The latest consumer confidence survey found that nearly half of all Americans now believe jobs are hard to get.
The fix: Act as if you’re already job hunting.
• Do a hard-nosed assessment of the danger.
Be brutally honest with yourself: Are fewer high-profile projects coming your way? Has it been a while since your boss asked for your advice? The answers to these questions may reassure you — or spur you to get your resume in order and reach out to a few headhunters, ASAP.
• Expand your network — before you need to.
A survey by the job-search site ExecuNet found that 73% of six-figure earners had landed their current position through personal contacts. But, says Herminia Ibarra, a professor of organizational behavior at the international business school INSEAD: “Most people are lousy at networking. They feel like they’re trying to manipulate and put on a show.”
Building relationships now, not after your job is already shaky, will help get rid of the awkwardness. Notes Ibarra: “Networking is easier if you aren’t thinking the whole time, Can this person get me a job?”
Make it a priority to engage in a networking activity once a week. Go to an industry event; join a task force at your company; drop a friendly e-mail to an old colleague who now works for a competitor. And diversify your network, which will help you explore opportunities you may not have considered, says Ibarra. So sign up for that softball league and look for like-minded peers on a social networking site like Ning, which connects people based on common interests.
• Plot a career change, just in case.
Most people wildly underestimate how long it takes to make a drastic switch, says Ibarra. Brainstorm now about what your next act might be. Is there a healthier industry in which your job skills and experience would be applicable, a career path you’ve long fantasized about pursuing? Then try to put together a mental game plan about how you would pursue that second career, if need be — for example, what course you would take to beef up your skills in a new area, or who you would call for an informational interview.
3. Focus on the First Step
The worry: Thinking about all you should do to shore up your finances (make up for lost ground in retirement savings, expand your network, stuff cash into your emergency fund) is dizzying. Watch out — puting too much on your plate at once is often a recipe for spinning your wheels.
The fix: Break the goal down into smaller tasks, which betters the odds you’ll stick to it (“I’ll exercise for 15 minutes twice a week” vs. “I want to lose 20 pounds”).
• Automate.
“Save more” is a tough goal if you rely on willpower alone. Take the thinking out of the process by arranging to have an extra $100 a month automatically deducted from your checking account or paycheck and funneled into your IRA or savings account.
• Pick one expense to cut.
That’s more effective than simply vowing to chop your monthly spending by 20%.
• Tell a friend.
Research shows you make better progress toward your goals if you feel you’re being held accountable. So let family and friends know your plans. Or make a “commitment contract” on Stickk.com, which forces you to cough up cold hard cash if you fail to meet your goal.
4. Don’t Be Guided by Fear
The worry: As stocks and home values declined by double digits, investors poured money into cash investments: The amount Americans held in savings accounts and money-market funds increased 18% between October 2007 and March 2009, according to the Leuthold Group.
In fact, fear of losing money is one of the greatest drivers of money decisions, according to behavioral finance experts. Research shows that when faced with choices that involve a certain amount of risk, we overwhelmingly choose small, certain gains over potentially larger but uncertain ones. Adds economist Tyler Cowen: “The idea of any loss at all matters more than the size of the loss.”
Right now, the instinct to avert losses may be causing you to select overly conservative investments that can leave you even further behind in your goals.
A recent T. Rowe Price study compared two investors who had $10,000 in stocks at the end of 2006, and added $100 a month to their accounts over the next three years. The first investor avoided the worst of the market crash by selling his equity holdings in September 2008 and moving his portfolio and subsequent contributions into cash. The second investor stuck with stocks throughout the downturn. While he had lost considerably more than Investor No. 1 at the market’s low point a year ago, by February of this year Investor No. 2 was in the lead, some $2,000 ahead of his skittish pal.
The fix: Being conservative is okay, but do it smarter.
• Ratchet down your equity holdings.
Done right, this approach may not reduce your long-term returns much. A portfolio invested 70% in large U.S. stocks and 30% in bonds and one invested 60/40 have both averaged gains of 11.1% a year over the past 30 years, says Ibbotson Associates; but the 60/40 mix had far fewer dramatic losses in the down years. The key to keeping returns relatively robust is to put the nonequity portion of your holdings mostly in bonds rather than cash.
• Get income you can rely on.
For older investors, creating a steady income stream is the key to staying calm during tough times, says Houston financial planner Tom Jackson. Research has shown that retirees who have a reliable income source (such as a pension) are happier than those who don’t, even if the amount of money they have to live on is the same. No pension? An immediate annuity can serve the same function.
5. Put Down the Mouse (and the Remote)
The worry: When the stock market was on a tear last year, checking your 401(k) balance every week (or day) seemed like a harmless pastime. Trouble is, the inevitable fear of losing money that results from watching the constant ups and downs of the market can lead you to make some less-than-ideal moves with your money.
Economist Richard Thaler, along with psychologists Amos Tversky, Daniel Kahneman, and Alan Schwartz, studied the behavior of a group of investors who looked at a hypothetical portfolio monthly vs. those who checked just once a year. At the end of the experiment, the investors were asked to make a final permanent portfolio allocation. The monthly checkers moved a large portion of their money into low-risk fixed-income funds; those who didn’t watch the market regularly were far more likely to stick with stocks.
The fix: Set limits on monitoring your portfolio.
• Do quarterly checkups.
That, along with an annual re-balancing of your portfolio, is all you need, says planner Allvine. Checking more often just amps up your anxiety.
• Force yourself to take a breather.
Check your portfolio after the markets have closed for the day and tell yourself you’ll reconsider in the morning, suggests planner Gianola. Or erase the saved passwords to your brokerage accounts on your computer and put those passwords in a separate room in the house from your office area. You’ll be far less tempted to switch up your investment mix frequently if it takes some effort to actually make the move.
6. Stop Keeping Score
The worry: One reason you may be feeling so lousy about your money these days is that you’re measuring your progress against a goal you created when the financial markets were at the peak of the last boom, says behavioral finance expert George Loewenstein.
It’s a common phenomenon known as “anchoring,” in which we create a standard against an arbitrary number. If, say, your 401(k) balance was $250,000 two years ago, you may have in your head that the “right” number for your 401(k) today should be higher, and feel disappointed that you don’t have more even if the investments in your plan returned 30% last year.
The fix: Learn creative mental accounting.
• Rethink the buckets that you put money in.
Behavioral economists have found that we tend to think of money differently depending on its origin or our intention for its use. Most of us tend to place “found” money, such as a tax return or a bonus, in a separate category from our regular income and see it as cash that can be frittered away.
Conversely, we’re less likely to spend money that must be pulled from a savings account, even one with no withdrawal penalties. So if you get a $5,000 tax return, tell yourself it’s your annual raise, not a windfall — and then use the money to bump up your Roth contributions.
Similarly, before you drop a few hundred on a fancy new espresso maker, ask yourself: If I had to withdraw this money from my son’s college fund, would I still spend the dough?
7. Simplify Your Financial Life
The worry: If you feel like it’s tougher than ever to manage your finances, well, that’s because it is. “People are expected to take more responsibility for their finances, and they’re increasingly complicated,” says Davenport, Iowa, financial planner Eric Kies.
But research shows that trying to stay on top of too many details can impair your ability to make sound financial decisions. In one University of Minnesota experiment, two groups of students were told to write an essay on any topic; one group was also instructed not to think about a white bear. Afterward, each student got $10 and was told he could take it home or spend it at a nearby store. The students who were trying not to think about the white bear far outspent those given the less mentally taxing task.
The fix: Get rid of financial overlap.
• Pare down on plastic.
You don’t need 14 credit cards — two to four will do. Holding fewer cards also reduces the chances you’ll miss a payment and get hit with a hefty late fee.
• Consolidate your accounts.
Roll old 401(k)s into a single IRA, and keep your investment accounts with a single brokerage. Getting one statement will make it easier to keep track of your assets and get a snapshot of your financial life. Maybe you’ll find out you’re doing better than you think.

According to BizNicheMedia, I am also guilty of a few other things:

Biggest Mistakes Made by Poor People That Will Keep Them Poor

Although there is money to be had, poor people seem to have trouble taking all that they can get. It’s very easy to remain poor if you don’t actively do something about it. So what is it that they are doing wrong? Here’s a list of ten mistakes that poor people make that serve to keep them poor forever:

1. Delay action: You probably have good intentions to save and get a budget together, but intentions can’t replace action. When is the right time to get your financial house in order? Right now. Delaying savings and investments can cheat you out of valuable interest earnings. Put this off too long, and you may find yourself penniless without a plan.

Yes. I have no savings. The extent of extra money ends with me finding a few washed dollars in the laundry. I don’t think I have ever been able to save money but yet I believe “someday” I will.

2. Using credit irresponsibly: Credit cards represent real money that eventually must be paid back. Maxing out your balance for a cute pair of shoes might seem like a good idea at the time, but you’ll likely end up paying more than they are worth in interest fees. Irresponsible credit use will also wreck your credit rating. If you have a poor rating, you’ll be subject to high interest rates when you want to buy a house or a new car. These high rates can translate into thousands of dollars over the life of a loan, cheating you out of money that would still be yours if you’d only used credit responsibly.

Credit cards are so arbitrary to me. I owe $3000+ on two credit cards, yet I still buy unnecessary items with cash. This cash should be going toward paying off these kinds of debts. Why? Why? Why do I do this?

3. Frivolous spending: What’s more important, going out to eat this Friday night, or being able to buy diapers for your child? It seems like an easy answer, but many people have trouble prioritizing their needs versus wants. If you’re working with a limited budget, first buy the things you absolutely need, then create a savings fund to gather money for the things you really want: a your own home, nice vacation or college education.

I am guilty of this. I have remedied it a little by using a list (when I remember) when I go shopping. I buy nothing extra. Only problem? When I add things to the list that I really don’t need — fog reducer for my mirror, new sunglasses….

4. Living in a world of make believe: Don’t ignore money problems. Yes, they are real and no, they will not go away if you ignore them. Forgetting about credit card payments will only serve to make your debt higher. Get real about how much you owe and make a plan to pay it down.

I do operate under the assumption: Out of sight, out of mind. I ignore my bank statements and bills like they are some mythical creature.

5. Not being ambitious: A job at McDonalds may provide a steady paycheck, but if you’re out of school and still working the drive-thru, you’re simply not doing enough. Don’t be complacent; get out there and pound the pavement. A better job and more money is there to be found: you simply have to look for it and be willing to put forth the effort.

I will admit–I am not ambitious. I found a job that I love doing that also pays (some) of my bills. I thought it was the price to pay to be able to do what you want–jobwise. But I also want to do things that involve having money–like vacations, doctor appointments, car repairs.

6. Lack of planning: College and retirement have two things in common: both require lots of money and can be foreseen well in advance. Why do some people end up scrambling when these events come around? Because they failed to plan for them. After a child is born, you’ll have approximately 18 years to create a college fund, and retirement savings can start as soon as you receive your first paycheck! Plan ahead and save for major monetary events in your life to avoid wrecking your finances. No kids here but I am in college myself — for the second third time.

7. Believing that college is always good: Not everyone is made for college. Some don’t have the discipline and some just don’t need it. If your child has a tendency to blow off homework for partying, test the waters at a community college before spending big money on a four-year college. Does your child have interest and aptitude in a trade that doesn’t require school? Let them get straight to work. Education is expensive: you shouldn’t waste money or time on it if it will be of no benefit.

Oh my God! This is me. I was such a slacker in school. It took me almost eight years to get my BA and all that this got me was Grad School, more debt and more opportunities to slack in the real world.

8. Living without health insurance: Insurance may seem like a luxury reserved for the wealthy, but you cannot afford to live without it. One accident or major illness can absolutely ruin your finances for many years to come. Even worse, avoiding the doctor because you lack insurance can allow a small problem to grow large, resulting in a catastrophic health and financial event.

See #5 above.

9. Having children too soon: If you’ve just been married, you’ll have lots of people advising you to have kids while you’re still young. They’ll tell you that money problems will sort themselves out, but in reality, they may not. Children require numerous expenses that can derail your budget and savings before they even start. Get your finances in order, then start planning for a child.

See # 6 above. Kids???? I can barely take care of myself at 36. Hummm –I think this is one count I can’t be charged with.

10. What savings? Most people who have trouble with their finances claim to be unable to save any money. They don’t have the discipline to set aside some money for inevitable emergencies. This means if they run into a problem, they may have to apply for high-interest payday loans. Loans of this sort can contribute to a downward spiral of deepening debt.

See #1.

I plead temporary permanent insanity.

How Wealthy People Think About Money
1. Wealthy people believe, “I create my life.” — Poor people believe, “Life happens to me.”
2. Wealthy people play the money game to win. — Poor people play the money game to not lose.
3. Wealthy people are committed to being rich. — Poor people want to be rich.
4. Wealthy people think big. — Poor people think small.
5. Wealthy people focus on opportunities. — Poor people focus on obstacles.
6. Wealthy people admire other rich and successful people. — Poor people resent rich and successful people.
7. Wealthy people associate with positive, successful people. — Poor people associate with negative or unsuccessful people.
8. Wealthy people are willing to promote themselves and their value. — Poor people think negatively about selling and promotion.
9.Wealthy people are bigger than their problems. — Poor people are smaller than their problems.
10. Wealthy people are excellent receivers. — Poor people are poor receivers.
11. Wealthy people choose to get paid based on results. — Poor people choose to get paid based on time.
12. Wealthy people think “both”. — Poor people think “either/or”.
13. Wealthy people focus on their net worth. — Poor people focus on their working income.
14. Wealthy people manage their money well. — Poor people mismanage their money well.
15. Wealthy people have their money work hard for them. — Poor people work hard for their money.
16. Wealthy people act in spite of fear. — Poor people let fear stop them.
17. Wealthy people constantly learn and grow. — Poor people think they already know.

I found this very helpful. I do think like a poor person. In order to change my financial status, I must first change how I think and view the world and my abilities.

Now, I have walked out of the door without cash before (like to go for a jog), but I really think he only had a dollar to his name. Poor guy. I felt bad for him. How did he get to be so destitute? I couldn’t imagine being that broke.

But then I started to think—-I am that broke. In fact, I’m probably worse off than that guy. I just started a Mint.com account. This site itemizes all of your financial accounts and adds them up for you. It is a great online tool you can use to get your finances in order.

I definitely don’t dream about being poor. I knew I was living in debt, but to see it all added up with a big fat negative sign was a huge eye opener. I’m doing all I can to get out of the hole because, like most poor people, I have my rich life all planned out.

I have been going over and over my finances. I have no idea why I don’t know how much I actually make. If you asked me what I made last month, I’d have to look at my bank statement. Part of the reason may be because I am paid per student and by how many times they take a lesson with me. I never have a fixed income.

I am starting to realize that I really can’t live off what I make. It is next to impossible. I love the job I have now, but it just isn’t getting me anywhere. Either it is time to stretch myself even further, or continue on to the corporate ladder.

I already cut down on all frivolous spending. I do have a lot of bills, but nothing that is going away anytime soon. And as soon as I graduate, I’ll have two student loans to pay off.

I have already calculated, after I pay my bills this month, I will still be in the red. I gig on the weekends, but now I have to put 30 percent of that away for taxes too. According to my accountant, this year alone, I already owe $1568 in estimated taxes (not including some of the gigging money).

I just feel trapped. How can you get money from nothing? I’m already living paycheck by paycheck. I guess it is all about sowing seeds. If I would have planned better last year and struggled a little bit each month, I wouldn’t be so far down in the hole today.

I have been trying to brainstorm about second jobs. Here I go again. This sucks. Right now, I am going to focus on getting some more money coming my way without any more going out.

Option #1: Get more students for lessons (maybe I can advertise on craigslist)
Option #2: Sell some stuff (how much is Felix the Cat stuff worth?)
Option #3: Get a third job (I just don’t do windows)
Option #4: Marry a millionaire (highly unlikely)
Option #5: Strip (how did this even make it on the list?)