One problem with bad luck is that it seems to beget more bad luck. Hence the term downward spiral. It's common knowledge that one fourth of this country is now sub-prime, with credit scores of less than 600. The recession, irresponsible buying / saving patterns, and the foreclosure crisis have hit the point where they will affect everyone, including those who still have a good credit rating. Here's why.

Featured Credit Card

Experts say that low credit ratings may prevent people from recovering economically and fixing their low credit ratings (the circle of financial death). Because what do many folks do when the economy tanks in their region? Look for work elsewhere and move. Except that most employers look at your credit when deciding if they want to hire you. And most landlords consider credit when determining who they want to rent to. So securing employment and moving -- the normal corrections that could facilitate economic recovery -- can't take place. Which drags the whole country down.

If you're in an economic toilet, you may have to swim in it for a while.
If you are still employed but living in a depressed area, housing is cheap, and you may be able to secure a bad credit mortgage and a good deal on a home. Which actually could help you rebuild a respectable credit score and start you on a good upward spiral. Landlords in depressed areas are more understanding about foreclosures and bankruptcies, and rents are getting cheaper in those areas as well. Or you may be able to find a deal on an owner-financed property. If you are less desperate than others in your desperate area, you can still come out ahead.

Expectations need to be reset.
Blogger DebtKid says that we need to reset our expectations for the time being, live "poor" for a time, and appreciate what we do have. Even a mediocre existence in the US is still very good when compared to much of the rest of the world.Thinking "poor" is a habit that many wealthy folks have (it's probably what got them wealthy in the first place). Imagine what living "poor" is to you. Try it for a month and put the money in an emergency fund. If unemployed, think about taking a job that is maybe not as good as your previous one but gets you out there again. Cut loose that dream about the condo in Hawaii (unless you already live in Hawaii). Everywhere you look, people with less money than you have still manage to be happy. Join them, save money, and prepare for your own economic recovery,