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"
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.