Can You Outearn Financial Bad Luck?

The odds are against you, so you’ll need to make tough choices

In the movie series Final Destination, a group of teens try to escape death after one of them has a premonition of a fatal accident. They soon discover that death is not so easily cheated, and they are killed one by one in elaborate and gruesome ways by an unseen force.

The horror series is known for its use of Rube Goldberg-like devices to create complex and fatal scenarios for the characters. This is done to reinforce the idea that even if you can think two or three steps ahead, death has a plan for everyone, and no one can escape it forever.

As morbid as this may sound, managing your finances can often feel like a Final Destination. No matter how much you make, no matter how much debt you pay off, there is always something lurking around the next corner, happy to take money off your hands.

One of my favorite sayings is, “Nature abhors a vacuum.” It simply means that in the animal kingdom, any ecosystem that gets weakened and eventually dies off will quickly be replaced by something else. Maintaining balance requires constant vigilance. An example, literally close to home, is the weeds in my front yard. You can spend years adding fertilizer and tending to the soil; miss one season, and the weeds come back with a vengeance. Apparently, my HOA also abhors a vacuum.

There is absolutely no room for taking a break.

But sometimes, we are our own worst enemies when it comes to bringing on financial burdens that turn into financial bad luck.

The problem is that we see it worked for Person A, so we assume it can work for Person B and Person ME.

I remember listening to a real estate radio talk show where the host was interviewing an investor who had called in. This person had over 100 single-family homes. The host shuddered in disbelief commenting he could never own that many, even if he had the financial means — too much responsibility, too much liability. While this top investor mentioned he had systems in place (processes and people) to handle all the issues that inevitably crept up each week, it was clear that this investor was able to handle it.

While I don’t subscribe to the belief that everyone’s fate is sealed at birth, I do firmly believe that everyone has a purpose in life, and some people (for whatever reason) will have a lot more obstacles and hardships in their path on the way to their goals.

This investor undoubtedly has horror stories on his way to investing in 100 homes, but they have not been bad enough for him to give it all up.

I, on the other hand, remember dealing with a potential lawsuit on the very first property I owned, and it was only a condo. How was it I couldn’t get through my first investment before hitting a brick wall? Whether it was an experience, a mental block, or a sign that I wasn’t built for being a property owner, the fact remained… I was getting hit with a huge financial burden before even getting started in my real estate investment journey.

Whatever the reason, we learn, we fall, we try to get back up.

But what happens when you need an emergency fund to the emergency fund? How many backup plans do you need before you say, “This is just not meant to be!”

This is the question I have often asked myself on my journey to get closer to financial independence.

Some people are able to dig themselves out of a huge financial hole or risk everything to launch a business that eventually is worth millions, but these are edge cases.

Everyone these days wants it all — including me. We want a nice home, nice cars, family, investment properties, etc.

But with added desires comes added complexity or what I like to call from my engineering days, more points of failure.

My wife and I made the mistake of not traveling enough when we were younger, now with this increased desire it’s too late… at least until we get our child through college and pay off other expensive debt.

Every choice you make has the potential for additional financial bad luck.

I have friends who are single (or maybe just dating), have no kids, and live in an apartment and they are at peak earning potential.

They will never get an unexpected unpaid bill from their child’s university.

They will never be surprised by roof repairs that cost tens of thousands of dollars.

For some who live in the heart of the city, they will never get the USD 5,000 car repair bill that I got in November.

The price of having and wanting nice things brings the potential for more costs into your life.

Did I tell you that the $5,000 car repair bill came just 4 weeks after I got laid off from my job? When it rains, it truly does pour.

Life tends to give more fights than favors…

My wife and I are in too deep to truly move to a minimalist lifestyle, but I understand and truly respect people who find this option very early in their lives. It is one of the simplest ways to outrun financial bad luck. But there’s a fine line between being a hermit to avoid all financial burdens and living a much simpler life to avoid the endless onslaught of rising costs for everything.

I don’t think you can outearn financial bad luck — I’ve tried.

Obviously, things that were caused by you may be easier to correct — talk to Dave Ramsey and Suze Orman, but the real problem is the stuff that comes along while you are trying to finally do right.

This is why you can only outearn financial bad luck for a fairly short period.

If you’re living a life where hundreds of dollars are constantly being evaporated in financial emergencies, it probably requires you to make an entirely different shift in life.

It’s selling the home, selling the cars, and joining the military to get free food.

While my example sounds extreme, I say it only half-jokingly as not all of us are going to get lucky breaks.

If you have two cars, can you make it with one?

It sounds like it’s cheaper to stay in your older house than to start paying rent until you factor in the water, electricity, gas bill, and property taxes.

Can you cut your meal intake or meal costs by 1/3? Based on the size of my waist, I can miss about half my meals.

Recurring bills won’t have any mercy on you, so you’ll need to have no mercy on where you cut back.

When I started my first financial newsletter years ago, I called it Step Change to signify that most people need a step change in their finances to get them onto a new financial playing field. Gently saving and paying off debt doesn’t always get it when you’re getting hit with multiple financial problems at once. But getting a 20% bump in salary or paying a car off one year earlier, gives you that financial step change.

Figure out what extreme measures you may need to take without joining the army if you feel you’ve been treading water for too long. It’s no fun to run a marathon only to pass out with a mile left to go. Figure out what’s necessary before getting to that point.

Life tends to give more fights than favors, so prepare accordingly.

Visit my profile to read more viewpoints and stories from me!