Walking the Tight Rope of Financial Recovery: The Mental Game

By Sarah Winfrey on 11 August 2009 9 comments
Photo: hpb_pix

It’s been in the papers, on TV, and all over the Internet. In fact, if you haven’t heard yet that the economy seems to be recovering, you must have been living somewhere remote or taking a real vacation (in which case, kudos to you). And it seems to be true. Though some economists are tentative and a few disagree outright, the majority of people in the know believe that the worldwide recession has hit rock bottom and we are now, slowly but surely, climbing our way out of the financial doldrums and back into prosperity. Bully for us.

However, most of America (and I would assume much of the world) feels tentative about approaching this with anything other than a wary skepticism. We want the economy to recover, and we hope that it is, but we won’t believe it and embrace it until we see it. The truth is, most of us haven’t seen much change yet, and probably won’t for at least several months.

Since the hunker-down mentality hasn’t proven particularly successful in the past, we have to discover a way to walk a tightrope of a middle line—to actively embrace the recovery while still living with the present mess and acknowledging the fact that we might not erase its effects for quite a while.

As it turns out, most of preparing ourselves for whatever lies ahead comes down to how we think about it. Whether we succeed in walking this line or fall off on one side or the other comes down to how we think about the current economic situation and our places in it. Like Yogi Berra said, 90% of this game is mental.

Some Things to Think About

The economy is not going to recover quickly. We fell, and we fell hard, and now we get to fight our way back up the cliff’s face until we are, once again, standing on top of that mountain. As we all know, falling is easy, but crawling uphill is much more difficult.

What does this mean for us? It may take years for our investments to regain the ground they held before. Jobs might be slow to rebound, as companies have become leaner and meaner as they’ve had to slim down. House prices may not bounce back as fast as we’d wish.

None of that sounds positive, except that at least things aren’t getting worse. Knowing it, however, helps us know how to live in this awkward time of recovery. It helps us plan for the future, because we won’t count on things that won’t necessarily happen. It also helps us know how to order our lives right now, as our priorities will change as the economy recovers.

Another item to consider: any recovery, no matter how strong, may not undo harm done during the recession. If you’ve filed for bankruptcy or are deep in credit card debt, an economic recovery isn’t going to solve those problems. It might make them easier, but they’re still there. If you took a lower-paying job because the one you wanted wasn’t available, you may have an easier time getting a better job but you’re still stuck with the one you have for the time being

The Attitude Adjustment

Whether you believe it or not, I didn’t say any of that to depress you. It’s the truth of our times, and it’s only when we’re living in the truth that we can accurately assess our own situations and walk that fine line. In fact, that’s one of the big attitude adjustments we’ll need to make if we’re to navigate this situation successfully: live in the present. It’s great that things might improve, and even better when you’re pretty sure they will. If that better situation isn’t actualized, though, you’re better off embracing the situation you have than gambling it all on the future.

Alongside that, don’t expect miracles. It’d be great if the market climbed this fall like it fell last year, but there’s no reason to believe that will actually happen. If we plan our resources to cover a slow recovery, we’ll be pleasantly surprised if things rebound faster than expected but won’t be left disillusioned and disappointed if they don’t.

And the final attitude adjustment we can make is to look back at the lessons we’ve learned during this recession and determine how we want to carry them into our post-recession lives. Most of us have made budget cuts—we’ve learned to spend less in certain places so we can cover our bills. Maybe we’ve learned to make our own food or furniture or clothing. We can let all of that go, relieved that we’re done with it, or we can take it into the future with us, making our lives after the recession different than they were before.

How are you approaching financial recovery? Tell me in the comments below.

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Guest's picture

That still sounds to far out there for me..

Taking it easier (on myself), enjoying my family and friends, not focusing too much on the job (from a personal validator, that is) as that can vanish in an instant (it did for me late last year), managing our spending wisely, and pursuing my dreams (as the come to me, though sometimes I wish they'd come allot quicker!).

Life's too short to waste it thinking someone else will make it better for you, or that money will be tipping point, or that an additional material item will make a difference.

Smile and enjoy those around your right now, because, honestly, right now is all you have :-)

Guest's picture
Peter T

> How are you approaching financial recovery?

With an eye on Japan in the 1990s. Japan never fell into the depth of a depression but went in and out of extended recessions many times. I see it as a model what will happen to the US.

Guest's picture

Recession recovery may take time, however if we all live well below our means always, it will have a less effect on us. Alas, easier said than done!


Guest's picture

My husband has been in construction for the last 15 years. Construction was good to us for a long, long time. We were even optimistic that our region (E. Texas) would stay afloat--it's been one of the healthier markets. But this summer, business has completely dried up.

We're reorganizing our finances, cutting where we can, and making plans that will ultimately lead to higher and stabler incomes. My husband is looking for another job to get us through the first several months. Next school year, I'll put one of my advanced degrees to work and apply for a higher-paying administrative job (I'm currently a teacher). That will allow my husband to go back to school and focus on getting his nursing degree. We have decided that we're willing to sell our home if necessary. Our only non-negotiable expense is our son's preschool, and it's pretty reasonable.

We're fortunate, though. We've got a decent amount of savings, all of our health insurance is through my employer, we have no credit card debt, and there are several places where we can cut expenses.

For our family, devising a plan and talking very frankly about priorities and realities has helped tremendously.

Guest's picture

At least it isn't getting worse. That is something to celebrate. I've never been the domestic type, I like eating out and travel. The recession trapped me in a place I don't want to live with no means of survival other than unsteady freelance work. I learned how to be frugal, how to cook at home, how to cut corners in some places. Though my haircare and skincare products are still as pricey, there's no way to cut corners there as I have learned the hard way when I tried it and woke up with a face full of zits and unruly, uncombable hair.

I learned the value of the clearance rack, how some people had to survive without getting clothes except for every six months including me now, how to take care of my things since there was no way to replace them, and how to be assertive to get what I need.

Now that the economy is recovering, we can celebrate! Even if it's slow at least we know we've survived the worst of it and there will never be another Bush in office. All of the pain is almost over and we may just finally get free health care. There's a lot we can hope for now.

Guest's picture

Excellent article. The optimists, those people in the "know",who are telling us that the worst is over, are the same people who failed to recognize the financial tsunami that has become a nightmare for millions and millions around the world. I will forever take what these "experts" say with a grain of salt.

Guest's picture

Good blog here, very true what you said about the "attitude adjustment". Take care!

Guest's picture

and I haven't seen anything getting better, my markets aren't loosening yet and I'm still losing my job at the end of the year - and I consider myself lucky that they let me go part time till then rather than a straight layoff.
My husband had to take a job he didn't want that paid lower than he made at his prior position (prior company shut down) and doesn't involve his MBA, which he just graduated with. He couldn't take the time to find a job that did utilize his MBA since my job wasn't secure.

We're in a good place though, no debt other than a mortgage which we refi'd to a low rate, savings, good health plan and we started being frugal before any of this happened to the economy or us. I've trimmed our monthly expenses where I could (and these are real cuts not superficial ones), we don't eat out, we grow most of our food, we have laying hens, the goal is to be able to live on his salary as best we can because who knows how long it will take for me to find another job (markets have frozen up in my industry).

I feel good (and not denied) about what we've done though - we have discovered the joy in living a simple life. I agree with the poster who said 10 years of these 'doldrums'. I think that's where we'll be too.

Guest's picture

The Obama administration projects the overall economy will shrink by 1.2 percent this year, but rebound with solid 3.2 percent growth in 2010, followed by 4 percent growth in the three following years.