Keep doing the things you should be doing in a good economy: saving, paying down debt, budgeting for the future and investing in a diversified basket of investments through solid techniques sych as dollar-cost averaging. Consider Series I Savings Bonds to help beat inflation (www.savingsbonds .gov). While the various facets of economics have hit all of us, from high gas prices to lower interest on our savings accounts, there are always opportunities in down markets. Think contrarian — e.g. rather than stopping your 401(k) investing because you are worried your account will continue to drop, continue to invest and buy low — everything is on sale — rather than jumping in when the market is hot again. If you have been renting for a while, now might be the best time to consider buying your first home. They are also “on sale.” We have to wait this down cycle out but that does not mean you stop your planning and investing.

Guessing what inflation will be in the short term is always tough to do. The only thing you can do is look at long-term averages and weather out the storm in the short-term. Changing investment strategies based on what you might think will happen usually means making the wrong decision. You should always have a long-term investment strategy and stick to it. There is no doubt that with fuel process as high as they are that all goods and services will go up in cost. The counter to that is that people are reducing what they are spending, which makes it harder for producers of goods and services to pass the increase on to the customer. In normal inflationary times, increases in costs of production are passed on to the customer but today with the economy in the shape that it’s in, businesses are worried about increasing prices at the risk of losing business. This in turn is and will have an effect on the bottom line of many businesses as their margins are getting thin. The best thing that you can do in the short-term is look for ways to reduce your spending and keep your investment strategy. In the long-term, investing in assets that can grow is the best answer to keeping pace with inflation.

Never forget the way you are feeling now, “I’m as worried about the future as I’ve ever been.” That will prove to be one of, if not the most valuable lesson you learn from this economic downturn. If you were to go interview 50 individuals who lived through the great depression, I bet you would be hard pressed to find one that got overextended on credit or bought too big of a house and financed it with some funky mortgage. My point is, these people, and some of their children, learned to conserve and not live beyond their means. That is exactly what you should do from this point on. By the way, turn off the media whenever possible when it comes to the current financial mess. Many of the headlines would have you believe that not only is the sky falling, but it’s only going to hit you. I totally disagree with the comparisons of our current economic situation to the great depression, even when it comes to housing. As far as your investment strategy, it should have been crafted based on your true risk tolerance and timeframe and adjusted accordingly prior to these events. So I’ll say again, don’t forget how you feel right now, and remember, it was bad behavior that got the country into all of the problems you mentioned, and it will be good behavior that gets us out.