The Positive Power of Choice

Major changes are coming for the lifestyle of the average American. The economic winter means less buying power and higher living costs. The bottom line is a serious reduction in disposable income for most Americans, and possibly the elimination of disposable income all together for many people. This means a forced change in the shopping, luxury and consumption habits of most Americans.

To get an idea of the effects that you and many other people may well be facing, imagine what it would be like to live on half your current income for the next five years. What would you need to cut out? What simply can't be paid? If you can't make the payments on high-debt credit cards, what will be like to manage the bill collector's calling? What luxuries, services and spending would simply no longer be available to you?

I'm not saying everyone's income is going to be cut in half. No, the changes in buying power and cash flow will be varied, but they will all be unwelcome. Sudden job loss. Extended unemployment. Lower wages for new jobs. Sky-high medical costs. Companies defaulting on pensions, leaving retired parents and grandparents needing help. Market wipe-outs of 401K funds. Loss of homes in the mortgage mess. And other horrible messes. It all irons out to be a net effect of a huge loss in income. Half of your current buying power is a realistic planning number.

There's no debt rescue through bankruptcy, either, in case you were thinking that was an option. With changes to bankruptcy laws that took effect back in October 2005, people can no longer simply wipe the slate clean anymore. You can't just discharge $30K, $50K or $100K of credit card debt these days. Instead, creditors now get to petition the courts for long-term, court-enforced payment plans, with interest. ["The New Bankruptcy Law", Nolo press]

All this to say that this is going to be serious. This isn't the recession of 1991 or 2001. This is one big storm, and we are all going to end up getting economically cold and wet to one degree or another before it's over. To quote Chris Martenson, "the next twenty years will not be like the last twenty years."

With that mind, there is something that you can do that will make a real difference to your personal future mood, capacity, confidence and outlook.

Choose to Adapt Now
The psychological impact of choice is subtle but powerful, especially over the the long term.

You have the opportunity right now to choose to reduce your living expenses drastically at your own command and timing. Or, you can wait and see what happens, and likely have even more severe reductions in your standard of living forced upon you at the whim of the economy, your employer, maybe a health crisis, and so forth.

The difference between these two scenarios are actually much more enormous than you'd first think.

The Costly Choice
When something is forced upon you without your choice, it creates an emotional base of bitterness and anger. It feels as though your lifestyle has been taken away from you. It is easy to feel victimized and some people will want to act out retribution, even if it is against the wrong people or organizations.

Even if you don't think you would react this way now, and even if you think you are an easy-going person that would tend to roll with the punches, a deep level of emotional effect will happen from changes like these. It will take time and energy to process and unfold these emotions, consciously or unconsciously, and that process will distract you from better activities and outlooks during a time when you need your best wits about you. Depression, resentment, blaming, loss of hope, and perhaps eventual resignation - these kinds of feelings only suck away your energy and ability to solve problems and make big choices.


The Empowering Choice
Or you could decide yourself that you are going to reduce your overhead, pay off debt, and get yourself to a point where you could live on half your income if you had to, and get there on your own schedule. Make cuts to things in the order you choose and at the moments you choose.

The difference is subtle but quite powerful. Even though, at first, it may not "feel good" to cut back spending and cut luxuries deeply, it pays off in spades year after year of your future. And make no mistake, it'll not be pleasant nor fun in any way. You'll need to cut back deep and hard. But the fact that you did it under your choice changes everything.

First, you'll feel good because you took smart action before "the storm hit." A little preparation goes a long way in crisis.

Second, you'll feel good because you chose the changes, even if it was only just the timing of them. That means you took control of your life, rather than the economic winter taking control of your life.

Third, by making these changes early, you'll actually command more resources and be in a better position than if you had waited: you can allocate some cash to savings, pay down as much debt as possible, and more, all while you still can. This avoids the "kick-yourself" scenario of "if only I had paid that off when I still had my high-paying job."

Forth, you'll come to understand that, if nothing else, you chose to avoid the morass of negative emotions and feelings that come unavoidably with forced loss. You will still have to deal with the change of lifestyle and big challenges, but you now have more resources, more confidence and a can-do outlook in the mix to meet the challenges.

Finally, when other people are just starting to suffer with the forced lower standard of living and shopping withdrawals, you'll already have adjusted. You'll be living a life that will be much more able to handle the changes without much affect on your already trimmed-down lifestyle.

Remember, it isn't just about you squeaking through this economic winter; people you care about will need help. Getting yourself in the strongest position possible means that you'll be able to help someone else when they need it most.

Flow with the Powerful River
For the next twenty years will certainly be very different from the last twenty years. Different rewards, different kinds of satisfaction, different ways of thinking, different levels of family and good friend relationships. Make yourself a winter fire and be a source of warmth for you and others.