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Why paranoia is good for you

Things going your way? They probably won't always. A little fear can be healthy.

By Donna_Freedman Jan 29, 2013 2:40PM

Logo: Paranoid man (Digital Vision Ltd./SuperStock/SuperStock)In one spectacularly awful two-month span, personal finance blogger Luke Landes lost his girlfriend, his job and his apartment. Initially he did what a lot of us would do: He looked for something or someone to blame.

Ultimately he was able to look at those two months with clearer eyes, understanding "the role my choices played in that mess." Our actions (or inactions) are "the biggest factor in success in life," he writes in a Consumerism Commentary post.


Landes acknowledges that some people start out in a better position to make good choices, and that some things (crime, severe weather) are beyond our control. However, we can choose to plan (e.g., get insurance), and we can choose the way we react to any challenges.

I'd go that one better: We can choose to stop thinking we'll always have the world on a string.

Are things going your way right now? Great! Don't get used to it. Otherwise you run the risk of what Atlanta financial planner Karen Lee calls "fatal optimism" -- the belief that past performance really is an indicator of future outcome.

"This is the person who refuses to buy disability insurance or live below his means because of course (he's) going to keep this job forever. . . . When they lose their job and get another one at two-thirds the pay, they can't (manage)," says Lee.

Control what you can

You can't guarantee that good grades will lead to scholarships, that a degree will lead to a dream job (or any job), that hard work will always be rewarded. You can't know whether you'll get sick or hit by a drunk driver. You can't wish away inflation or property tax increases.

So what can you do? Refuse to acquire consumer debt. Keep your car an extra year or an extra five years. Make smart insurance decisions. Take care of your health. Put in consistent effort on the job and improve your skill set to make yourself more valuable.

Look past the coming weekend in order to live below your means, then use some of that "extra" money for an emergency fund and retirement planning. Save the rest for personal goals, whether that's homeownership or a one-year sabbatical to attend every production of Wagner’s "Ring Cycle" worldwide.

The point? It's your money and your life. Making the smartest choices means you can get the most out of both, and that you'll be as prepared as you can be for any adversity.

The most important choice: to see life as it is. Challenging and sometimes horrifying stuff happens. Some of that will happen to you, whether you think that's fair or not.

It's not personal. It's just life. A little paranoia can be a healthy thing if it reminds you that the world was not invented for your comfort and convenience. No one cares about your financial and personal successes the way you do.

And as Luke Landes now knows, personal and financial setbacks have a lot to teach us. That is, if we're ready to listen.

More from MSN Money:

Jan 29, 2013 9:34PM
Just because you're paranoid, does not mean that they're not out to get you...
Jan 29, 2013 8:26PM
Helena Rubenstein once said "whatever can go wrong will go wrong."  She was an astute businesswoman and I never forgot those words of wisdom.  So.... I always have backup plans just in case.  I don't think that makes me paranoid, just a careful planner.  
Jan 29, 2013 11:24PM
We live in a harsh and unforgiving world.  But largely, I think how things go for us us determined by our own free will and personal decisions.  People can start with nothing and become successful.  People can also start with everything and end up penniless and suicidal.  If you make one bad decision after another, it's pretty likely you will have a hard life.  But to always blame circumstances, bad luck, and other people for your problems is indicative of a general unwillingness to accept the consequences of your own poor decisions.  You can be too optimistic and set yourself up for constant disappointment.  You can also be too paranoid and worry about things you can't control, and essentially remove all joy and contentment from your life.  It's a matter of balance.  Not an easy thing to achieve for the fickle and flawed human animal.
Jan 30, 2013 10:29AM
You cannot let paranoia immobilize your thoughts and decisions. Some paranoia is healthy. Not sure if I would call that paranoia, but keeping your skill st current, reading and listening about the current economic conditions, living below your means, trying to save some cash, these are all things that we should be doing as a matter of course. We live in a consumerism society that makes your feel that you are alesser person if you do not live in a big house, drive an expensive car and have certain things. I have always said: stay away from the media, the media will kill you!
Jan 30, 2013 2:37AM

You can be over cautious but it is best when preparation is balanced with basic needs.

The best advice that I have ever heard was-


Enjoy the simple things in life, live life simply, and to simply live life. Learn to be content and aspire to maintain it.

Jan 30, 2013 4:13PM
Geez, people, lighten up on the word "paranoia".  She was just trying to get your attention.  Focus on the content; it's sensible.
Jan 30, 2013 7:33PM
If you work for big corporations ..Kimberly Clark, GE, many of're virtually guaranteed to be jobless at some point.  Forced rankings requiring firing, and CYA by grossly incompetant but politically savvy psychopaths. 
Jan 31, 2013 2:26PM
Like most things in life, whether it's spending, saving, eating, or drinking... they key is MODERATION. It is always good to have a backup plan and money in the bank. As someone else said in these comments, life outcome is often a result of the choices we make. Notice I said OFTEN, but not always. We can't control the unexpected layoff that has nothing to do with our performance, or getting hit by a drunk driver. Spend within your means, keep debt zero to minimal, and always save for an emergency fund and retirement. That savings doesn't mean scrimp to the point of frugal misery or making us cheap freeloading idiots when we got out to dinner with friends. Do everything in moderation.
Jan 29, 2013 8:38PM
Only when you smoke pot.  It's a good defense mechanism.
Jan 30, 2013 11:27AM
It can be a good trait but it doesn`t make you very happy.I have an uncle that doesn`t have the worry trait and I think that`s why he`s lived so long and healthy.
Jan 30, 2013 1:07AM
look the word up in the dictionary before you say another thing about paranoia being good for you, this one is down right silly. The answer you are looking for is frugal, careful, use common sense, be aware of your surroundings, try to be prepared for things coming your way. I wish all you that want paranoia as your friend the best of luck, you are sure going to need it.
I've found that the good times and the bad come in waves. Sometimes it's bad planning, sometimes the confluence of things that you knew were coming but didn't expect them to all hit at the same time, sometimes it's the death of spouse and all that the event implies. The key is to be financially prepared to weather it all and wait for the storms of adversity to subsided. If you are prepared the up-wave will hit next.
Jan 30, 2013 12:06PM
Paranoia is bad no matter how you look at it. Emotions are like a wave and you choose wich one to ride.
Jan 31, 2013 6:23AM

A little paranoia is ok the voices in my head just said!!!!  No worries just take it as it comes and be grateful...thats my spin on it.


Jan 30, 2013 7:57AM
no, there is no reason to fear the government intrusion on your freedom. It all worked out for the Russians,Chinese,N Koreans,Cubans and let's not forget Germany in WW2
Jan 29, 2013 8:52PM
i think paranoia comes from those whom plan too far ahead and when things don't go their way, they hide personal shame and don't face themselves and explain then apologize for their assumptions. i define paranoia as the ego in overdrive and bloating inner hope. family suffers for this the most.
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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.