Don’t Worry; Be Resilient

At some point, absorbing more information about the unsustainability of modern society yields diminishing returns. It becomes emotionally draining and thus counterproductive.

Part of this exhaustion results from recognizing our powerlessness within the Status Quo, where independent thinking and structural innovation are intentionally winnowed out as threats to existing institutions and industries.

Another part arises from the burden of knowing that the supposedly permanent Status Quo is far more vulnerable than generally believed. I have described the psychology of knowing what lies ahead in The Burden of Knowing.

A related factor that is never publicly discussed is the negative impact on our mental health of all the propaganda that we are force-fed by the Mainstream Media (MSM).  When truth is incrementally undermined by massaged data and behind-the-façade manipulation, we lose faith in key State and media institutions and suffer from a propaganda-induced disconnect between what we see and what is reported as fact. 

These 'burdens of knowing' can diminish the small but real joys of the present: work we like, a home-cooked meal, and time spent with our friends and family. As a result, many smart, well-informed people consciously refuse to dwell on our systemic problems because doing so “is a downer.” These folks hold the perspective that anxiety about the future should not get in the way of the simple pleasures of living.

This attitude can be described as “don’t worry; be happy.” And it certainly makes sense when life is still comfortable and enjoyable.

But the philosophy of “thinking about the future is a downer, so I live in the present” ultimately rests on a false confidence that the future will take care of itself, regardless of what happens to the large-scale systems of State, finance, and resources.

It overlooks the reality that not all responses to instability or devolution are equally successful. Those who are totally dependent on the Central State and speculation-based markets will have a much more difficult time maintaining their "happy” view if the systems they depend on erode or fail.

Perhaps the wiser response is “don’t worry; be resilient.”  The resilient household can be happy not only in the present surplus of energy, entitlements, goods, and services, but can also thrive in a future where the current surplus of cash, credit, and speculative gains has dried up.

What is Resilience?

What is resilience?  A dictionary definition is “an ability to recover from or adjust easily to misfortune or change.” In other words, it is on the other end of the response spectrum from fragility, brittleness, and vulnerability.

In terms of individual psychology, resilience can be characterized as being able to roll with the punches, maintaining a positive attitude through difficult times, and focusing on developing successful responses to misfortunes and challenges.

American culture extols individual resilience, and we are taught to think that the individual can overcome anything and everything with the right attitude. But if the Status Quo is vulnerable to disruption on a systemic level, then it is prudent to think of resilience in a systemic way as well.

One way to describe the difference between systemic vulnerability and resilience is to conduct a thought experiment:

What if it didn’t matter to you and your household if the Dow Jones Industrial Average (DJIA) was 14,000 or 4,000? Or if gasoline cost $3.50 or $7.50 per gallon?

What if it didn’t matter to you and your household if Central State entitlements were slashed by half, or vanished altogether?

What if it didn’t matter to you and your household if your land and house were worth $1 million or $100,000?

In other words, what if the machinations of Wall Street, the Federal Reserve, the Central State and, indeed, all of Central Planning’s promises and speculation-boosting had little effect on your life or well-being? Would this make your household more resilient or more vulnerable?

Clearly, the less we are dependent on systemically brittle Central Planning systems, the fewer adjustments we will have to make should these large-scale systems devolve or fail.

The important point being made here about resilience is that it does not require a sacrifice of present happiness. Nor does it profit from the devolution or failure of Central Planning. The resilient household is perfectly able to enjoy the present surplus of energy, credit, State entitlements, and consumerist abundance, but it doesn’t rely on it.

If the Status Quo is indeed as permanent as it is presented, the resilient household has the same measure of happiness as the household that is totally dependent on Central Planning promises and boundless credit. The difference between fragility and resilience is how much security and happiness will be available to the two households should the Status Quo credit-based consumption and speculative wealth turn out to be decidedly impermanent.

Debt, Fragility and Vulnerability

The easiest way to increase resilience is to reduce fragility and vulnerability.

We can understand the dynamics of what we might call anti-resilience—debt, fragility, and vulnerability—with another thought experiment:  

Household A’s gross income is $5,000 a month and their net income (less Federal, state and local payroll and income taxes) is $4,200 a month.  The mortgage is $2,000 per month, both wage earners have substantial monthly payments on student loans, and the household also has an auto loan. The household’s healthcare insurance is partly paid by payroll deductions, and the household remains responsible for a percentage of any major medical costs.  Basic living expenses eat up the rest of the net income; the household saves nothing and has minimal savings.

Household A hopes housing valuations keep rising, as they plan to borrow money off this resurgent home equity to fund a vacation, something they haven’t had for four years.

This household’s financial situation is precarious because its expenses equal its income, and most of these expenses are debt-related and cannot be trimmed. This greatly increases their fragility to financial misfortune; any reduction in take-home pay or any increase in expenses will push this household into default.  To increase consumption, they plan to borrow more money once their only collateral—their home equity—increases enough to support more debt.

Household A has a high and inflexible cost-basis. Any significant reduction in income cannot be offset with equivalent cuts in spending.

Household B owns their land and home free and clear; the only housing-related payments are property taxes and property insurance.  (Recall that 30% of all homes are owned free and clear in the U.S., so this is not as unusual as you might imagine.)

One wage-earner paid off her modest student loans within a few years; the other never took on student loans in the first place. They own two older vehicles free and clear. They are debt-free. Their gross income is $4,000 and their net income is $3,200. Since they have no mortgage interest deduction, their income taxes are higher as a percentage of income than Household A. Their living expenses total $1,500 per month, so they save 50% of their net income.  If one of the wage earners loses their job, the household can maintain its current budget without sacrifice. Their substantial savings protect them from unforeseen medical expenses not covered by healthcare insurance, and they can pay for vacations with cash, not credit.

Let’s say that one wage earner in each household loses their job and must take a job that pays 20% less. Household A cannot cover its expenses and must default on one of their debts. Household B’s monthly savings decline, but they are still saving a substantial portion of their income.

Which household is vulnerable to even modest financial misfortune?  Clearly Household A. Will a positive attitude be enough to save the family from insolvency?  It will help it transition into and hopefully through bankruptcy, but a positive attitude alone is no substitute for financial resilience.

Though Keynesian economists argue that nations are not like households, in truth debt/financial fragility is scale-invariant, meaning that rising debt, a high cost basis, and zero savings/investment lead to fragility in households, enterprises, communities, and nations alike.


The United States of America shares a lot in common with Household A: It has a high and inflexible cost-basis, and it is dependent on borrowing to fund future consumption and on speculation to create collateral. It is also tied into spending a significant share of its income-servicing debt. History offers few examples of major nations that prospered by borrowing vast sums for consumption.

In Part II: How to Increase Your Financial Resilience, we examine the key strategies for increasing your financial resilience, whether you are an individual, a family or a business. We explore the 5 Rules for Financial Resilience, as well as strategies for the critical goals of lowering your cost basis and creating value that others will pay for. 

Click here to read Part II of this report (free executive summary; enrollment required for full access).

This is a companion discussion topic for the original entry at

Y'know, a few weeks ago or so, at the local Costco, I got some nice, beautiful, large, plump, crisp, chilled cherries flown in from Chile (and organic blueberries).
Now these are delicious out-of-season indulgences unheard of for people alive 50 years ago. They might not be sustainable, and they certainly are guilty pleasures. But my gasoline-purchasing habit isn't sustainable in the long run, either. Neither are many other of our daily habits and luxuries.

Sometimes it's nice to just enjoy the "washing machines and dishwasher" because they are here and they are still easily affordable. And it sure is nice to have the Internet.

Amazing as it may seem, we are living at the peak of human technological development geared primarily to satisfy the mass consumer, in a relatively peaceful and prosperous country. Let's savor these happy golden years.



I am gratified to hear I am part of 30% of Americans who own their homes free and clear.  I had no idea there were that many of us. It's kind of a relief not to feel like such a "freak," actually.
Wearing my fiction editor hat, I want to relate a conversation I had last year with one of my authors. She and her husband were nervously waiting for things to "get back to normal." I exlained that I thought–was convnced–that there would be no going back. Those days were gone. What was holding her back from admitting this was not a "Don't worry, be happy" attitude.  It was fear.  Raw, naked fear.  You could hear it in her voice. I suggested steps to resiliency. Not sure if she followed my advice, but I found that doing something positive beats the heck out of fear and worry.

When I said I felt like a freak it was becuase hof how people think we CAME to the state of a paid-off home. People conistently tell us we are "lucky."  Luck had nothng to do with my husband paying off his home. It was hard work over many years, facing all sorts of medical bills and misfortune. He had enough,  but got ahead by consistenly living below the culturally expected standard of living. So did I, although I did have a small inheritance that helped with my student loans I was well on the way to paying everything off myself. We wre attracted to each other and married 4 years ago because we found in each other a person who was more concerned with being solvent than being impressive or entertained. 

Our entire culture expects the false lifestyle they see on TV. If they cannot get it by dint of hard work, they seem to feel that debt or cheating are repsectable alternatives.  I am very, very concerned

Thanks for another great piece.  I want to tell everyone about a great resource for those of us who are stewards of this information.  It's a book called Trauma Stewardship by Laura can Dernoot Lipsky.  The book offers lots of great information about increasing resilience and preventing secondary traumatization for those of us who regularly work with traumatized individuals.  I think that applies here because it can be quite challenging to sit with friends and family as we absorb the reality of what's going on.  You can check out Laura's website at



B class maybe C. Have been my whole life as being raised with 15 Good Folks in one home will do that.
I have NO ISSUES with how anyone gets to B either by any means necessary. Just get there.

Paying yourself feels a whole lot better than paying someone else, and that's for darn sure.

I feel like I have missed nothing, and waiting three days to make a purchase has always been a good advice. Sleeping on a decision was another good one as things look clearer in the morning. Waste not, want not, is always a great measure to everything.

The only Debt we owe is our mortgage, a very manageable payment too, and that has been set aside as we have no clue what the future will bring, and if we want to move from where we are then I may not pay our mortgage, and live rent free until removed by way of foreclosure (that should take years, Gauranteed) or l just walk, rent then or rebuild. That's it.

We live on less than half my wife's net salary a year. I worked the trades and can repair everything, and maintenance any home. My Lady has her BSN degree and is Manager Ortho-Neuro and has seniority so can capture any nursing task in the hospital. I believe this gives us Resilience and our Preparations are thankfully (because of this gift of time) well stocked and organized.

All back up systems are portable, and all necessary items to maintain a home are pre-bought for future use so is portable too.

We have been tested these last few years with weather, and other events, and no stress ever materialized. On the contrary.

Learned much more too, and that was a major goal.

Thanks Charles




I really like this piece (and Part II as well).  It got me thinking, though, about the folks (including myself) who have less financial power and at least perceive themselves as having fewer options and/or more difficult choices.  I know a lot of people in this situation and I'd like to have a reasoned grip on how to advise them.
Below I've shared a hypothetical situation, and I would appreciate help sorting out the best path for the family in this story.  I am not clear on how to apply Charles’ very good principles to a situation like this one.

In this story, a lower-income family owns a home that is sturdy, solid, in good repair, and capable of being a long-term dwelling for one or more generations of this family.  They want to take advantage of the time left before the economy tanks to make as many long-term practical improvements to their home as possible.  They are particularly interested in reducing their energy dependence (oil, propane, electricity, etc.) to save on monthly bills.

They are considering participating in a program in their state designed to help homeowners affordably energy-retrofit their homes.  The program’s idea of “affordable” means coming up with a funding package including low-interest loans and incentive rebates that results in the family paying the same amount monthly as they did before the retrofit – in other words, the energy/cost savings from the improvements free up space in their monthly budget to be able to afford the payments on the loan.  The loan would likely be of short duration (5 years).

The family has a very modest amount of savings that they keep as an “emergency fund.”  It’s equivalent to about one month’s pay but could be stretched to pay for only the essentials over two or three months in an extreme emergency. 

They are already accustomed to a frugal lifestyle, minimizing waste, growing some of their own food, conserving water and electricity, participating in the local barter economy, conserving gas by working at home and living in town, trading and networking for needed items, buying secondhand when possible, and minimizing non-essential purchases.  Their car debt represents a recent swap for a smaller, more efficient car.

They fully understand that one of the key steps to resilience is to NOT take on new debt.  They are living on a cash basis already; other than their mortgage and car payment, plus an old credit card they are paying off and will never use again, they were not planning to take on additional debt.  They also understand that another key step toward resilience is to maintain some form of savings, but their current paycheck-to-paycheck existence isn’t conducive to saving much. 

They also understand that reducing their monthly financial obligations to give them more flexibility is key as well, but in their situation this would require either a) taking a loan to pay for these energy-cost-reducing home improvements (effectively converting some of their fuel and utilities payments to a fixed debt-service payment), or b) using some/most/all of their savings to pay for the improvements, and then using that new wiggle room in their budget to slowly build back their savings (effectively eliminating their emergency fund while loaning the money to themselves).

What would you recommend to this family or someone in their situation?  Should they take on the loan, decimate their savings, or forego energy-saving and cost-saving improvements altogether?

[quote=Amanda Witman]What would you recommend to this family or someone in their situation?  Should they take on the loan, decimate their savings, or forego energy-saving and cost-saving improvements altogether?
What occurs to me is the inefficiency of government programs vs. the good sense of optimizing the efficiency of their dwelling.  I would recommend doing the upgrades, but doing them in house. In other words learning  to do these upgrades themselves. They might have some pain during the learning curve, but come out the other side with new skills and a great deal of self esteem, and the project will be done with more attention to detail, and probably yield better results. 

Thank you, everyone, for the sage comments and suggestions. I am definitely interested in the concept of Trauma Stewardship because a crumbling financial situation is definitely experienced as a trauma, and one that can quickly become chronic. That can then trigger mental/physical health problems. 
Amada, you pose a very good question that highlights the key difference between consumption and investment.  The best solution is as Oliveoilguy suggests, making investments in cash and labor that will instantly yield lower energy bills. If the new loan will cost (say) $100 a month, ideally the household could devote the $100 per month toward buying the insulation, weatherstripping etc. and do the labor in-house.  Would doing this take less than 5 years of monthly payments of $100? Very likely the house could be made much more efficient in a year or two of $100 monthly investments.  This would require a lot of discipline, of course, because there are always competing demands for the the $100.

On the other hand, if a household did not have the surplus labor available to do the work because it is pursuing other ways of diversifying the family income or working flat-out as it is, then a loan that was low-interest that funded an investment that saved enough every month to cover the loan payment would be OK in my book because after the loan is paid off in 5 years the savings all accrue to the household.

Taking on a limited amount of debt to fund a high-yield investment is the one reason to take on debt.  Unfortunately Fed policies and asset bubbles have distorted what is considered an investment: a newly upgraded kitchen is consumption, not an investment.  Energy conservation projects are (or should be) relatively low cost and high-yield: insulation is relatively cheap, the labor of installing it is expensive, and as we all know, energy costs will not be going down.


@ Amanda Witman
A couple of thoughts on your question:

  1. Whenever possible, I would opt to do the work myself for a number of reasons beyond the obvious savings on the cost of paying someone else to do the labor: doing the work yourself gives you first-hand knowledge that enables you to repair and maintain the system for it's lifetime (this can yield savings and peace of mind for years to come); doing it your self gives you knowledge (an asset) that could be valuable and used as trade in your community; the experience of doing it yourself could open opportunities for a new career.

  2. If I did not have sufficient knowledge or ability to do the job myself, I would look for a contractor who would allow me to work with them (sweat equity from me, free labor for them) in trade for learning how to do the job.

  3. A factor I would include in making the decision to borrow money to improve my home would be how much longer do I have to pay mortgage, the ratio of monthly mortage payments to monthly income, and how much longer do I intend to stay in the house. The point here is - I would not borrow money to improve a home that I might have to leave before the loan was paid off and I received at least a good portion of the ROI. I see the loan as a gamble - the people in question will have to weigh the risk of leaving/losing the house before they get their ROI out of the investment, and make the decision based on their circumstances. 

…if your friends, family, or neighbor have a mortgage that is well under water where the purchase price is way more than the market price then stop paying the mortgage. Bank the cash until a modification can be worked out, and then back load the payments missed. Your friends will get a lower interest rate (3-4%), freeing up considerable discretionary cash, and by back loading the payments missed and the payments not made while the mitigating process proceeds, your friends/neighbors will have the cash to do all upgrades, a cheaper and more affordable home, and a healthier bank account. This WILL NOT effect their good credit, and their cash and carry type now anyways so who needs credit?
This is somewhat radical but an effective strategy so that survival is maintained, and in effect made more resilient. This is being done by millions as they find themselves in similar circumstances as your friends. I understand fully and respect everyone who do what they must do to protect their families.

If your friends have a second mortgage and they have a 1st mortgage that will never recover its original value then during this process of modification, and contacting the second mortgage company will result in at least a lower interest rate (typically a second mortgage is much higher), and a further add to discretionary income.

A brief summary now is that the 1st mortgage interest rate has been lowered, the second mortgage interest rate has been lowered, credit has not been effected harmfully, more cash has been added to the monthly savings, the savings already accrued has not been spent, fact may be that 6 months (at least) of new funds from not paying mortgage during modification can be added to savings, and the insulation project gets done, and the homeowner is WAY more resilient than they ever imagined. Sounds good to me.

My 2 cents worth.


I would highly advise anyone who wants to consider such drastic actions, to consult with a licensed professional. The end result may not be a modification. You may end up with more trouble than you bargained for.

…it is NOT unlawful or fraudulent, it is however a negotiation between Homeowner and Bank. The banks will work for their own best interests. Homeowners should too. That means modification, and paying less interests is certain unless of course the homes value is such that it favors the bank. It's just business Folks, and to imply that something is wrong with this strategy is to eliminate an option that may be very necessary as we move forward.Frankly, it is a morality issue that the Banks perpetuate. In addition, the only problem in considering this lawful strategy are, well, none.
There are no holes in this strategy, it is an effort to make life more secure.  
Risk is zero, and the benefits are tremendous. IMHO
Respectfully Given

I came out of the construction industry: 10 years in home improvements with my ex and then 20 years in heavy construction. Your typical contractor in the northeast charges three times the cost of the parts: 1/3 labor, 1/3 materials, and 1/3 overhead and profit . NET profit is usually between 1 &  3%. It's a rough business and corners can be cut to survive. Plus contractors often make most of their money on additional work called Change Orders: if it was not in the original contract they can nickel and dime you to death to get it done. Just like 50% of all doctors graduating at the bottom of their class, not all home improvement contractors are created equal. Some are great; some are a nightmare. And just like avoiding an unknown mechanic who's "oil change special" is a clue that the mechanic is incompetent at best or dishonest at worse (or both), the contractors who get into "deals"–often who-knows-who political deals with the utility company–are typically not the best and brightest in the industry.
Most of the time you're better off doing it yourself.

There are free how-to home improvement videos and information online at places like the DIY Network, HGTV, and in-person training (and online help) at both Lowes and Home Depot.

In our case, my son had worked for his father (my ex) doing home improvements for ten years. When he came to live with us he helped put in the screen doors and the insulated steel foam-cored doors and the reflective attic barrier - Eco-Foil. I added weatherstripping. My stepdaughter and I installed the insulated blinds, curtains and valences. I had the guy at my local Ace Hardware repair any ripped window screens (cooling is a bigger issue here in A/C than it would be in your neck of the woods!) We did have contractors put in certain things: professional installation the woodburning stove was necessary as a safety issue and professional installation of the solar-powered attic fan was required to get our 25-year warranty.  But overall, you would be amazed at how much money you save doing things yourself. And it's empowering. You learn skills you will use over and over on other projects.

Our best cost savings came from our most expensive and least expensive energy-conscious improvements - the woodstove and the Eco-foil. The airtight wood-burning stove cost $6000 installed. Even with a $1500 tax credit, and wood that's free except for the upkeep on the saws,axes and chainsaws, and at a savings so far of $1000 a winter in heating costs,  it will still take two more years to break even on our investment. One of our least expensive projects was DIY: the Eco-foil in the attic. It  cost $200, some staples in our staple gun, and some sweat equity. We saved $250 the first summer on cooling costs. No contractor required.

One last data point against the loan. What has happened in other parts of the country is that when everyone conserves, the electric company sells LESS power but has the same overhead costs. So they end up charging more per killowatt down the road, and your bill still goes up despite the improvements.

Very good points and examples Wendy. Good on ya!I too subscribe to the belief in DIY. I think the single most important thing a person can have in this regard is a healthy dose of curiosity about how things work, and how things are put together. With curiosity, one first explores the possibilities of doing things for themselves instead of going into the seemingly common default mode of paying someone else to find solutions.
About 20 years ago I took some basic woodworking courses. I then invested some money in basic equipment so that I could continue to hone my skills. I went from making birdhouses to installing my own wood flooring, replacing plastic laminate countertops, tiling backsplashes, installing mouldings, making all manner of shelving, making a beautiful fenced outdoor patio and many more things. One of the accomplishments I am most proud of are my current end tables. I live in a very small apt in the basement of an old house. The space constraints made it exceptionally difficult to find furniture. So I custom built two end table to fit the spaces I needed. All it cost me was a 4 x 8 sheet of 5/8" MDF and a 4 x 8 sheet of plastic laminate that I got for a 50% discount due to a small chip in one corner, so about $50.00 total for two beautiful and solidly built pieces of furniture.
Further investments in myself have included a course on how to maintain outdoor equipment (lawnmowers, chainsaws etc) as well as hands on work in landscaping and organic farming skills.
I cannot even begin to describe the gratification that I get from doing these kind of things for myself. Everything I mentioned above I did all by myself, with no help other than how to books. Sure there were mistakes made, and definite learning curves, but oh I how I enjoyed doing these things! There is just so much pride to walk across a floor you installed yourself, or to cook on a counter top that you built and installed yourself. Or fixing that weed whacker so that it purrs like new.
I have my eye on a fixer upper on 2 acres that with some good luck might be mine in the near future. I have every confidence from the many years of tinkering around and building up my skills that I will be able to do myself all that is required to make it the home I have dreamed of for so long. And that is soooo exciting!!
Women often sell themselves short when it comes to woodworking, mechanics etc. It's not hard…if I can do it so can you. Break big projects down into smaller individual projects to make things seem more doable. And then be prepared to be pleasantly surprised. Every accomplishment is a confidence builder. Set yourself up for small wins. There may very well come a day when you realize you are having a lot of fun doing this stuff, in addition to saving a whack of money.