Beyond Paycheck to Paycheck

That a US Airways plane landed safely in the Hudson River saving all 155 people on board is beyond simple explanation.  A headline describing a plane losing both engines is supposed to be followed by an article featuring words like “tragedy” and “death,” and phrases like “much too soon” and “unfortunate victims.”  I doubt anyone actually on the January 15 flight will ever read what I write here, but there are plenty of lessons for the rest of us.

What We Learned From The Pilot (Chesley B. “Sully” Sullenberger)

Lesson One:  Realism Matters

By some accounts, the pilot momentarily considered landing at an airport (perhaps returning to LaGuardia or proceeding on to the other side of the river and Teterboro, New Jersey).  But Sullenberger quickly eliminated an airport landing as more risky than putting down in the river.  Rather than stay in denial or try to “force a recovery,” he chose to make the best of a particularly bad situation.

Financial lesson:  If an investment is no longer attractive because the facts have changed for the worse, be realistic.  Don’t try to get back to where you started - it’s irrelevant to your current situation.  Make the best of your facts.  Sell the loser and go with a different investment, a plan you truly believe in now.

Lesson Two: Know What You’re Doing

Sullenberger was no rookie. With 29 years of commercial aviation experience preceded by a career as a fighter pilot, he’s clearly an industry veteran.  But it’s hard to imagine he ever practiced descending into a river, as he did successfully on the 15th. Still, I’d bet dollars to donuts he’d contemplated, on numerous occasions, landing a plane with no engines.  Not necessarily in New York and not onto a river, but the concept of powerless flight is something he probably considered with all the hours of flying experience and training under his belt.

Of course, he was caught off guard.  But he possessed an immense amount of experience to draw upon when he  encountered something no one ever expects to have to deal with. No one wants a rookie pilot at the helm during that kind of episode.

Financial lesson:  Understand what you’re doing in the markets before you take a substantial risk.  If you simply can’t wait to get the experience you need, bring an expert with you (like a mutual fund manager or a highly regarded financial advisor that you’ve vetted personally.)

What You Can Learn From The Passengers of Flight 1549

Lesson Three: Stay Calm

There have been no reports of pushing and shoving to get out of a plane that was rapidly filling with water.  Think about that for a minute. Remember the tragedy at the Wal-Mart store over Thanksgiving where an employee was trampled by eager shoppers?  Now here we are with a life or death situation and women and children get out first from a plane sitting in rising water.

What an amazing contrast.

Furthermore, no one tried to jump out of the window when the plane was just a few feet above the water.  When it became apparent that there was little room on one wing for standing passengers, some passengers simply went to the other wing.  All this despite ridiculous cold air and water temperatures right after a six-minute flight from hell.

Calm.

No doubt the flight attendants led by example.  Fortunately, people clearly listened to their reason not to their own emotion.

Financial lesson:  If you’re in a really bad situation through no fault of your own, that’s not the time to ask “Why?” Instead, ask “What can I do to get through this?”  You can ask “Why?” later.  For now, ask “What can I control?”  Making important decisions while you’re not thinking straight is a recipe for disaster. Find a way to take a deep breath, look for solid guidance from those who’ve been trained to deal with a situation like the one you’re in and take one step at a time, be it out of debt, out from under a bad investment, or onto a financial life raft.

Lesson 4:  Have Faith

While the majority of the people on the plane couldn’t have completely appreciated what was going on as it happened, they clearly understood their predicament as a life or death situation; one in which death was the more likely outcome of the two.  Over the three minutes the plane descended after the collision with the birds, there was incredibly little, other than by staying calm and by praying, the passengers could do to increase their odds of survival.  They must have felt incredibly frustrated and powerless.   Yet by having faith in the pilot and flight crew, they were able to survive not only the water landing, but also the aftermath.

Financial lesson: We had the worst stock market year in decades during 2008.  There was little you could do to avoid being hit and being hit hard.  Most of the passengers will fly again and my guess is that some have already made it to Charlotte or beyond.  Likewise, you must once again get in the market (if you left it). You can get to Charlotte by driving in the same way you can get to retirement without stock market investing, but it will take you a lot longer and that path is fraught with its own set of risks as well.  Believe in what you are doing and you will get there, even if it’s bumpy at times.

Lesson Five:  The Unexpected Happens

Many of us just learned that birds take out jet engines with apparent regularity.  I suppose the FAA also knew that it was theoretically possible - but highly improbable - that birds could take out both engines at the same time.  Yet with enough flights and enough years, my unfounded mathematical conclusion is that such an event was likely to occur - eventually.  Maybe not on 1/15/09 on a flight from New York to Charlotte, but sometime somewhere.

Financial lesson:  Just because it’s unlikely doesn’t mean it isn’t possible.  You could have your identity stolen - protect it.  You could be laid off - save for an emergency.  Stocks could go down further in value - diversify.  You could become disabled or die early - have appropriate disability and life insurance policies, not to mention a will.  If birds could take our two engines at one time, you could be simply unlucky.  Will you be ready for something unfortunate to happen?  Sooner or later, it will. Be prepared.

What a wonderfully happy ending to this absurdly unlucky flight crew and passengers.  It would be a shame if we didn’t learn from it.  I’m sure they did.

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