Why paranoia is good for you

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:

• 10 money lies we tell ourselves
• What if a thief gets your wallet?
• Earn more or spend less?
• 'Frugal' doesn't mean 'deprived'
• 9 dangerous financial products