Wall Street Implodes: What It Means for Your Personal Finances

Things are getting ugly right now on Wall Street, as more investment banks go down. This bloodbath is likely to affect you in a variety of ways, depending on your personal finances situation:

• Your retirement account is likely to take a major hit. Try not to panic. Review your holdings and decide which are mostly likely to recover. If you have a few years to go, sit tight on the investments likely to recover. Chances are, you'll be okay. If you have less time to go, now is a good time to consider extending your time in the workforce and possibly considering living off something other than your investments.
• Inflation could become a very real concern. Right now, the Bank of England and the European Central Bank are both getting ready to inject cash into the market. This could be something considered here in the U.S. as well, if the Federal Reserve decides that all this hemorrhaging is damaging liquidity. And as more money enters the market, the more likely inflation becomes.
• The economy could affect your personal finances. This economy is already in bad shape. The current problems on Wall Street can only exacerbate the problem. This means that you need to be prepared for the possibility of job loss, inflation and all sorts of other issues that could affect you. Now is the time to reconsider your budget, as well as make sure your emergency fund is in good shape.
• Dividend stocks are about to take another hit. If you rely on dividend stocks as a form of monthly income, be aware that these stocks are likely to take another hit. Dividends have been slashed left and right as companies attempt to improve their capitalization. This will affect your income if dividends stocks make up part of your passive income stream.
• Another hit to the mortgage market. All this illiquidity means that banks won't be lending to each other. Why would they lend to the rest of us. Mortgage loans, and even consumer loans, may soon be feeling the squeeze.
  

• Free From Broke looks at this morning's scorecard, and what it means for world stock markets.
• My Two Dollars considers the Merrill Lynch acquisition's affects on Bank of America stock.
• Consumerism Commentary wonders what all this havoc means for Washington Mutual.
• The Street reports on a new loan pool for big banks.
• Calculated Risk points out that financials are going to have a hard time for at least the next year.
• BloggingStocks takes a look at how AIG could cause even more trouble than Lehman.