Buy Less, Save More, Calm Down

With the onslaught of discouraging economic news, many Americans are struggling to figure out how to keep their heads above water and come out on top.

Home values are declining, the stock market is volatile, returns on "safe" investments barely beat inflation, and employers are cutting jobs by the thousands. Lenders have tightened standards in the risk-averse market, making it much harder to take on new debt -- or even hang onto the existing level of home-equity lines.

The average American household's net worth fell by just over $15,000 during the first three months of the year due to plunging home values and a turbulent stock market, according to data released by the Federal Reserve last week. The cumulative effect was a $1.7 trillion decline in wealth, which doesn't factor in further economic woes in the second quarter.

With the dollar still weak, it also promises to be a costly summer. Cooling a home, traveling abroad, driving to work or simply buying groceries has become more expensive. U.S. gasoline prices hit a new record over $4 per gallon on Monday, on average, according to the AAA and Oil Price Information Service. High fuel costs are following oil's surge, which hit an all-time high of $139 per barrel last week.

Still, there's hope for those who follow three key pieces of advice: Buy less, save more and calm down.

Vincent Barbera, a director of financial planning at TGS Financial Advisors, notes that although home equity has reached a level below 50% for the first time on record, it has been declining for years -- even through the height of the housing boom. He advises clients to look at things in broader terms and weather the storm by limiting discretionary purchases and socking away savings.