Review: Lifelines for Money Misfortunes

Every other Sunday, The Simple Dollar reviews a personal finance book.

lifelinesA couple years ago, I reviewed Stephen Pollan and Mark Levine’s earlier book Die Broke. I found it really interesting for the first half – which focuses on investing in yourself – and completely faulty in the second half, which talks about specific investment choices. The first half, though, was thought-provoking enough that I actually returned to some of the early chapters of it again in the future.

Recently, I had the opportunity to read Pollan and Levine’s latest book, Lifelines for Money Misfortunes and I found it quite enjoyable. It’s composed of a lot of short chapters that focus on how to deal with various money problems, from losing a job to not having enough money for college.

Because there are so many of these short chapters, I won’t review them in detail. Instead, I’m going to focus on the five central principles of the book, ones which Levine and Pollan apply to each of the problems.

Accept the Problem and Own the Solution
When something goes wrong in our lives, it’s easy to try to blame others. Here’s the thing, though: when something is wrong in your life, thinking about blame doesn’t help – at all. Instead, you need to accept that this problem exists in your life and focus your energies not on figuring out who to blame and getting “revenge,” but on actually fixing the problem.

At the same time, you also can’t just sit around and wait for someone to solve the problem for you. You need to step up to the plate yourself and solve the problem. If you don’t, you’re not only vastly increasing the odds of locking yourself in a downward spiral, you’re also denying yourself the chance of building a lot of personal fortitude and skills.

Unburden Yourself
Bottling things up inside – your frustrations, your pain, your anger – is never a good thing. It will either explode at an inopportune time or it’ll fester inside of you.

When you have a money misfortune, talk about it with the people important to you. Tell them about your frustrations, as well as what your plans are for overcoming them.

Not only will this provide a psychic release for you, it will also give your friends an opportunity to give you advice and help as well. You’ll often be surprised at how helpful and insightful the core people in your life can be.

Diagnose the Impact
How bad is it, really? Quite often, when a misfortune hits us, we either radically overestimate or radically underestimate the impact the event has upon us. Step back for a moment and figure out exactly what the impact of the event is in your life.

Does it change your ability to earn revenue in the future? Does it alter the income or revenue of people you care about? Are you losing something of value in your life – or in danger of losing it?

Work through the ramifications of what just happened to you and figure out how it affects the important areas of your life. Know the impact before you start flinging around “solutions.”

Take Your Financial Pulse
What’s your actual financial state right now? What resources do you have available to you to solve the crisis?

Quite often, people look at their situation from too narrow of a viewpoint. They don’t look at nearly all the assets available to them to solve the crisis. Many life misfortunes allow you to use retirement accounts and other assets without penalty, for example.

Look at what you have, then investigate whether those things can be used to fix your problem.

Start Pallative Measures
Pallative measures are things that reduce the immediate pain of your misfortune. What can you do in the ultra short term to minimize the pain?

Maybe you need to take some job – any job – to get some revenue moving in. Maybe you can sell some things. Maybe you can ask for a little bit of help from the people central in your life.

Figure out what can take the edge off the pain in the short term, but don’t make that your long-term solution. Pallative measures just help you to the point where long term plans can be put into place.

Launch Revenue Rehabilitation
Most financial misfortunes result in a serious revenue shortfall. To put it simply, there’s not enough money coming in to cover the money going out – and that can result in a serious downward spiral.

Don’t allow this to happen or the problem will be exacerbated. Do what you need to do to rehabilitate your income quickly. Start applying for jobs now – and while you’re job-hunting, get a night job. File for unemployment. Tap any funds you have to make up for the shortfall. Start living cheaper immediately.

No matter what, try to avoid going into debt because of the loss of revenue.

Cultivate Antibodies
What can you do to ensure you’re not smacked by such money disasters again? Launch antibodies, of course. “Antibodies” are things you can do to ensure that such disasters don’t blindside your life in the future.

Emergency funds are one type of antibody – they provide the funds you need in any kind of pinch. A greater array of personal skills are another type. Knowing how to live cheap – and practicing it – is yet aother type.

The more antibodies you have in your life, the less likely a money misfortune will strike you and take you down.

Is Lifelines for Money Misfortunes Worth Reading?
The advice in Lifelines for Money Misfortunes is accurate and straightforward. The book does a very good job of outlining a plan of attack for a lot of different personal finance situations.

However, most of these plans of attack are very similar. They all more or less follow the structure outlined above with just a few tweaks for each situation. If you’re flexible in your thinking, you really only need to read a few chapters in the book to get the idea.

If you have a specific money misfortune, the advice in this book can be a great guide to you. Once you’ve recovered, though, and reflected on the situation, using this advice in future situations might seem a bit repetitive. It can be a lifesaver once – after that, it might feel like the same old, same old.