I just read an article that says the financial turmoil has wreaked havoc on workers’ 401K plans. I say…”tough.” First of all, my plan has fluctuated +/-1% each day over the last few days, and would have probably been up if my own company stock was performing better over the last year. I have a relatively conservative split of 70/30 stocks to bonds and a total of about 30% of my portfolio is in company stock. Had I been keeping an eye on my company stock I would’ve reduced it to 15% a while ago…shame on me. However, now that it’s near historic lows and business fundamentals seem to be relatively sound, I’m going to continue to buy – buy low, sell high that’s the rule. Investments in energy, good assets, versus mortgages which are bad assets (even if undervalued) will stabilize our economy even in the near term.

However, the real reason why I say “tough” is because of the larger social trend of the last 25-30 years. Corporations moved away from pensions towards 401K plans, reasoning that the burden guaranteed payments were too costly and stifled investment and growth. Even though during this same era from 1980 to 2000, we’ve seen CEO pay grow from 100 times the average worker’s salary to more the 400 times that average. By not having to meet guaranteed pension payments, even corporations beyond the financial sector were actually more risky in hopes of earning greater returns, like dumping cash in unproven Internet business at the turn of the century or more recently purchasing mortgage backed securities.

The biggest sin in all of this is that the average worker, primarily in the private sector, was all for it. Many of us loved the idea of rugged capitalism, even though we owned very little capital – disqualifying us from actually being capitalist. We trusted the system…largely because many of us kept getting appraisals telling us that our homes had tripled or quadrupled in value within a very short amount of time. Everything was working fine from outward appearances and political agitation was for leftist radicals. By in large, only the working poor were motivated to maintain a strong labor and student movement in this country. Now the middle class has to pay as shareholders and pretty soon, the poor and working poor as stakeholders. Due to a smaller tax base, social services will be diminished accompanied by higher unemployment – creating an urban landscape much like the 80’s. Let’s just hope the new crack-cocaine doesn’t hit to complete the picture.

Nonetheless, here are a few of tips to help manage your finances in the meantime:

* Change your portfolio to include some bonds (20-30%).

* Track your allocations at least least once a month, especially those that are all one stock (most likely your own company stock).

* If things are tight, reduce you 401K contribution just enough to get your company match.

* If you don’t have any investments, just try to stay liquid. You would rather have debt you can’t pay off right now with cash, than no cash at all.

* Try to negotiate your credit cards down and/or transfer as much as you can to lower interest cards. Keep flipping those cards to keep those rates down – but read the fine print.

* Credit is going to be tight so do what you have to do to keep your FICA score above 700.