Investors describe how downturn affects them

ShareThis

As Congress debates a mammoth bailout and Wall Street struggles to regain its footing, here's how the pain brought on by the national financial crisis is being felt on Main Street, in the living rooms that lie at the heart of the economy.Denise Hillman, of Martinez, Calif. says she has lost sleep over her investments, but hasn't made any changes to her portfolio."I think I'm pretty diversified. That's the whole key. I'm 10 years from retirement. Long term, I think I'm OK. So I don't want to panic," she says.Over the shorter term, Hillman is nervous because she has taken on more debt to upgrade her home's foundation and remodel two bathrooms.In the middle of the project, "I went to draw on my home equity line of credit, and it was gone," she says. To get it reinstated, Hillman had to get a full appraisal on her house, something she didn't have to do when she established the line a few years ago.Because she had enough home equity, her lender reinstated the line and reimbursed her for the appraisal fee. Rather than risk losing it again, she drew down the remainder of the credit line and stashed it in a money market fund."It turned out fine, but it was very anxiety-producing," she says.Hillman, who works for Wells Fargo, says that as long as she's working, she'll be fine."I think for the next six months, my job is secure. But nobody really knows. I think it's going to be at least a year before things turn around," she says.As far as spending, "I'm just considering every major purchase a lot longer," she says. When shopping online, "I'll put things in the cart," but she removes some -- or all -- of them before checking out.Once burned, twice shy:This year Marc Itzkowitz of Palo Alto, Calif. lost money in a short-term bond fund that was marketed as a higher yielding alternative to money market funds but lost value when its mortgage securities went bad. Once burned, Itzkowitz is shy about holding anything that says it's safe but is not guaranteed.That's why, a couple of weeks ago, "I rolled cash out of money market funds into certificates of deposit," he says. "I think interest rates are going up so I laddered the CDs," mixing short-term ones for safety with longer-term ones for better yields. "My theory is you cannot trust the markets over a 3-year time horizon. If it's going to be shorter than three years, play it safe," he says.In his long-term portfolio, the 41-year-old hasn't made any changes. "I'm maintaining it. I'm not panic selling," he says.A few weeks ago, he bought shares in an exchange-traded fund that owns financial stocks. "I'm probably a little early, but my favorite saying is, 'You'll never get the last eighth or the first eighth,'" he says.Itzkowitz, who works in product management for a software company, is not worried about his financial situation."I have rainy day funds. I'm employed at a very good company. I make it a rule to live below my means. It's one of the reasons I don't own a house," he says. Paul Meaney, 68, is a retired auditor for insurance companies. He lives in San Francisco on Social Security, his 401(k) plan and other investments. He has not made any changes in response to the crisis."A long time ago, I split my investments into about half cash and half stocks. I'm one of those who believe cash is king. I'm a little more worried now that some of these banks are going to fail. I sure hope this FDIC stuff works."His stock portfolio includes index funds and "a couple other funds that are supposed to be growth and income, but they all seem to be getting smaller and smaller," he says.He "piddles around" with individual stocks. "About a month ago I bought Citigroup at $15 a share. It went to $19 in three days, and I sold it," he says."I was almost ready to buy some AIG. I'm an insurance guy. They're the biggest insurance company in the world," he says. But Meaney held back because he couldn't believe how fast the stock had dropped. "Look at them now. They're a penny stock."The financial meltdown "hasn't really affected my life so far," he says. "I plan on taking a cruise to South America in November." The price -- $2,500 for 32 days -- was too good to pass up.If things get really ugly, "I could probably live on Social Security if I had to because I have no debt. My day-to-day expenses are pretty small. It might hurt the way I entertain myself. But my basic needs look like they are covered."(E-mail Kathleen Pender at kpender(at)sfchronicle.com)(Distributed by Scripps Howard News Service, www.scrippsnews.com.)