Your Credit Score
Ignore all those TV commercials threatening you with financial ruin if you don't sign up for a credit-report service. There's no need to bother with all that. As long as you review your credit-card statements every month for unauthorized charges, you only need to check your credit rating once a year. (I suggest going to MyFICO.com, which costs $15.95. That's the score most lenders care about.)
Your Home's Value
I'm all for technological advances, but one of the most damaging assaults to our collective financial psyche over the past few years has been the advent of sites such as Zillow.com and HomeGain.com. These services allow you to punch in your address and voilô, up pops an estimate of your home's worth. While the instant gratification was a blast during the 2002–06 housing boom, when prices were climbing into the stratosphere, it's borderline masochistic now that they're falling so drastically.
So let go of your computer mouse and get a grip on what really matters—the long-term performance of the housing market. Even when you figure in the past year's 10 percent dive, the national median price for existing homes has gained nearly 25 percent over the past five years, according to the National Association of Realtors. Over time, housing will revert to its historical norm: an average annual appreciation rate about 1 percent above the inflation rate.
Your Stock Portfolio
If your 401(k) account has lost value over the past six months, I say that's good news: It's a sign that you've invested in stocks, which recently slumped by about 15 percent. Assuming that your retirement is at least a decade away, a stock-centric portfolio is exactly what you need because it offers the best potential for long-term inflation-beating gains. Over the life of the stock market, stocks have gained, on average, about twice as much as bonds or savings accounts.
If you're 55 years or younger, your best strategy in this current market is to do nothing. The biggest mistake I see people make is to panic and bail out when the stock market falls. That exposes them to another risk: missing out on its recovery. All it takes to throw your retirement off course is missing a few good days. Consider that from 1987 through 2007, the S&P 500 stock index delivered an average annual return of 11.5 percent. But if you were to subtract the 10 best days during that 20-year stretch, the return would be just under 8 percent—and if you missed the best 40 days, you'd get only an annual 1.3 percent return.
Don't stop putting money away for retirement, either. Think about it this way: Investing in your 401(k) when the markets are down is akin to hitting the outlet mall—you get more for your money.