Good Luck and Recessions

Note: This is being written during the spring of 2009, as the economy seems to be getting worse.

Good luck is not always as random as it appears to outsiders. Lucky people do things differently from others, and think differently as well. The cultivation of these "good luck habits" explains much of the good fortune some people have, and this is evident even during an economic recession that seems to bring nothing but bad news.

To begin with, those who are called lucky usually are better prepared than others. How do they prepare for a future that is unpredictable? They have decent positioning, such as time to deal with the unexpected and several income sources coming in instead of just one. They also have money set aside, so they can take advantage of any opportunities.

Consider what that money is worth at the moment (early 2009). If you measured it by real estate, it has increased in value by 30% or more. Cash that has been saved can buy 100% more shares of most stocks now than it could just a year and a half ago. That's an opportunity.

Another area where lucky people generate their own luck is with attitude. The drop in the value of their homes is seen as a negative thing by most people, and they feel poorer. However, "positive" and "negative" are largely a matter of perspective, so let's consider how those with better attitudes and perspectives might deal with this "problem."

Those who have a lot of good luck usually habitually ask themselves, "What good can I make of this situation?" Starting with that question, a man might realize that if his house is worth 30% less he can probably get his property taxes lowered, since they are based on value, and he may even find cheaper home insurance. Consider this for a moment: if he pays less to live in the house, and had no intention of selling soon anyhow, how is this a problem? It's a good situation, isn't it?

Remember that lucky people look for the opportunity in every problem and have some time and money set aside to take advantage of whatever comes along. Now, is a 30% drop in real estate prices necessarily a problem for someone who acts and thinks like this? Let's look at what else such a person could do with this "bad" situation?

Suppose, for the sake of our example, that a woman owns a home that was worth $150,000 three years ago. Now it's worth only $105,000. Being a lucky woman with good habits, she naturally has some money set aside and lives below her income. She also is always looking for the "bright side of life." As a result she notices that the $275,000 homes she has wanted for years are also down by 30%. This means she can buy one for around $190,000, which she does.

She could sell her existing home, having lost $45,000 in value since the peak of prices. She would be happy with that because she is saving $85,000 on the home she is buying, versus the price it was at the peak of the market. However, she decides to rent it out to cover her costs. A few years later when the real estate market recovers she sells it for $160,000. By that time her new house is worth 290,000 - a gain of $100,000. Notice how the lucky sometimes get luckier - even when tough times come.

This makes it sound too easy perhaps, so what about those who lose their jobs during this economic recession? Can they really turn that to their advantage? Probably. Eight months of unemployment checks buys the time to start a new low-risk, low-investment business. It also could provide an opportunity to change careers, to find something more interesting work.

Why not adopt the perspectives and actions of lucky people? By doing so you can generate your own good luck even in an economic recession or depression.

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