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IcHARD AND eAMELA MAcK are making a big bet on the future of
Detroit: They've just purchased a huge house in a city that's been hol-
lowed out by the Great Recession and the near death of the American
auto industry. One in 10 homes here stands vacant, accordingto Data
Driven Detroit, and unemplo;rment in the metro area is at a staggering
15%, reports the Bureau of Labor Statistics. Some would say it's crazy tobuy
properby in this city right now, but a good value investment always looks like a bad
idea to most people. That's what makes it a value.
For the past year MONEY and its sister Time Inc. magazines have chronicled
how Detroiters like the Macks are coping with what's happened in and around their
hometown. The stories are different, but what's universal is that while Detroit may
have become a synon)nn for economic decline, those who live and work in the area
don't have the option of standing by idly. On the following pages you'll meet people
from the Motor City and its environs who found that to move forward, they had
to take calculated risks-switching careers, starting a business, even moving away.
You may have encountered simila4 if less daunting challenges in the recession and
so-called recovery, or you may well indeed down the line. The smart, realistic strate-
gies laid out here can help you get going when your personal economy gets tough. -)

M0NEY November 2010 Photographs by ERIC 0GDEN

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The Big Decision
She's Starting a Business
> Paula Batchelor, entrepreneur
When Paula Batchelor took a buyout last year-figuring
she was likely to be laid off if she didn't-she wasn't wor-
ried about landing another gig. Having worked l1 years as
a graphic-design project manager for a health insurance
company downtown, "I knew I had skills," she says.
But Batchelor, a single mother of a 6-year-old, quickly
realized just what it meant to live in one of the worst job
markets in the country. Byyear's end, the resident of Royal
Oak-a suburb north of the city-still had no work and
couldn't make her mortgage payment. "I was feeling the
pressure," says Batchelor, who's now 55.
Months of financial struggle followed. Then, in June, her
older siste4, Karen, an attorneywho'dgone into life coaching
had a proposal. She'd used social media, including Facebook,
to market her own biz; Paula had skills in project manage-
ment and graphic design. Why not combine their talents
and help small businesses with social-media marketing?
The firm they founded, Color Me Social, had $1,500 in
sales in August, a promising if modest, start. While the
money isn't coming in fast enough for Paula to save her
home from foreclosure-she and her daughter are moving
in with Karen-Paula is hopeful that this is the beginning
of her turnaround. "You have to stick your neck out and
take a chance," she says.
Howto Make ltWork
the first idea. Startup activity in 2009 was at its
> Beware
highest level since the late '90s-no doubt because so many
people were untethered from regularjobs. But novice entre-
preneurs face fierce odds: Only halfofnew businesses survive
five years, reports the Small Business Administration. And
companies begun by unemployed people, who are scram-
bling for a quick idea, have dimmer prospects. Whether
you're looking for a sideline or a full-time business, know
that "the ideas you can easily come up with are the most
Iikely to fail," warns Scott Shane, author of The lllusions of
Entrepreneurshrp. That's because entrepreneurs oft,en start
with what they want to do, rather than what people want to
buy, he says. The Batchelor sisters were unusual in that their
idea came out of a market need: Karen was inspired after
having been bombarded with questions from
friends who wanted to use social media in
their businesses but didn't know how. ASSIGNMENT
> Leverage what you know. "Experience is the
most important asset you have to have," says
Mel Ettenson, a counselor at the Detroit
chapter of SCORE, a volunteer organization that assists
small businesses. Between Karen's experience marketing her
coachingbusiness and Paula's work in project management,
the Batchelors thinktheyhave the right skills. But ifyour idea
is not in an area in which you have expertise, moonlight in
the field or take a class that will introduce you to it.
> Focus on process as much as product, Many would-be en-
trepreneurs get caught up in fantasies of their product
or service, says Ettenson. "But to convert a dream into a
profitable business, you must have a plan," he says. In other
words, even if you bake the world's greatest pastries, you
won't be able to make a viable business of it if you haven't
figured out how to manufacture, deliver, and sell them.
Mindful of this, Paula and her sister thought early on about
what back-office systems they'd need to efficiently handle
product management, billing and other essential tasks.
The Big Decision
They're Making a
Value lnvestment
> Richard and Pamela Mack, attorneys
The real estate crash has been tough on Richard and Pa-
mela Mack. Their condo overlooking the Detroit River-
where Pamela lived before they married-was appraised
at $80,000 in 2003. Now the apartment, which they're rent-
ing out, is worth closer to $25,000, based on asking prices
for other units in the building. The house they've been liv-
ing in-a four-bedroom in the upscale University District
they bought for $200,000 in 2003-is around the corner
from similar-size houses listed for $100,000 or less.
The decline in their properby values is hardly unusual for
the city. What rs surprising is the fact that the Macks are
buying another house. Over the past yea4, the two attorneys,
who have a 2-year-old son, have made offers on 17 properiies. ora
Finally, this September they closed on a six-bedroom home. what
The 1925 Tudor-style in the historic Palmer Woods neigh- > Thi
borhood had sold for over $500,000 in 2005, but it cost the tate
Macks just $114,000 in a foreclosure sale. Their plan: Move in, retu
rent out their University District home along with the condo, from
and in 20 years have a real estate nest egg for retirement. ers
"I get to support the city that I love and be a part of a very
good investment," says Richard. "It's win-win." anyti
hood,1
Howto Make ltWork
>Have a margin of safety. The Macks'invest- ham,
ment entails plenty of risks. Although their if they
house looks like a bargain, there's no guar- if they
antee that real estate prices will rebound- out
 ,i? i:\

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I ior or that they won't fall further. So when does a "deep value" > Be prepared for care and feeding. As a real estate investo4
ere investment make sense? Take the counsel of famed investor be ready to put in sweat equity. That means fielding calls at
"i
ne]-s. Benjamin Graham and be sure there's a margin of safety, 2 a.m. complaining about a burst pipe, or paylng a property

nies. or a comfortable gap between the price you're paying and manager to handle such issues for you' And because a bad
.ome. what you conservatively think it's worth. Which leads to... tenant could cost you thousands in rent, damage, and legal
z
eigh- > Think income, not capital gains. Most of us think of real es- fees, you'll need to do due diligence upfront-including back-
it the l tate as a capital-appreciation investment-meaning that the ground checks, credit checks, even a Facebook check, advises
r-e in, return comes from a rise in the properby's value. But income Shuki Haiminis, president of real estate brokerage Lofts.com.
cndo, ,z- from rent can cushion the margin of safety, and many advis-
:<z
nent. ers think it's more profitable to view real estate as an income
investment anfvay, since values aren't expected to balloon The Big Decision
.Yery .>\
.=A
any'bime soon. At current prices, in a nice Detroit neighbor-
3;
-r= hood, you can get more in rent than your carrying costs, says
She Switched Careers
-f>
'lo realtor Christine Winans of Prudential IIVWIB in Birming- > Barbara Stachowski, community organizer
n'est- ,.o
ham, Mich. That improves the cushion for the Macks, even
their -O if they plan to live in the house. (They can always rent it out Barbara Stachowski, who worked on land development
guar- :L
ifthey move again.) A real estate agent can help you figure projects for an engineering firm, was making photocopies
rnd- -/r out whether the prospects are as good in your area. at work one day in 2006 when her supervisor asked, "Hey,
you got a second?" By the time they got to the conference it is more cost-efficient to takea few courses that would
room, Stachowski knew what was coming: With business sharpen specific skills you know you need for the transi-
having slowed down, she was being laid off. tion-or go for a highly focused degree, as Stachowski did.
"It was scary but exhilarating" recalls Stachowski, now >Play up your transferable skills. You may not need to acquire
53. She'd been contemplating a career change for years, and more training ifyou can convince hiring managers that you're
this was her chance. In 2OO7 she entered a master's pro- a shoo-in. That comes down to your sell. "You have to posi-
gram in social justice at Detroit's Marygrove College. And tion yourself relative to v,'hat you want to do in the future,
today she has ajob she loves: a contract position directing not what you've done in the past," says Ibarra. So if you're a
a crime-prevention and community-revitalization program marketing specialist trrying to get a job as a project manager,
in Hamtramck, a small city that's surrounded by Detroit. talk about howyouVe completed projects on a tight deadline
It hasn't been easy. She's taken a 25o/o pay cut and is rather than sharing details about campaigns you've led.
paying for her own health insurance, all while shouldering
$25,000 in student debt. "But reinventing yourselftakes
time," she acknowledges. And already people are starting The Big Decision
to recognize that she's good at what she does. "Just today
I got two calls for possible consulting jobs," she says. He's Cutting His Losses
> Mark Munteanu, engineer
Howto Make ltWork
> Give yourself time. Stachowski is right about how hard it is Trained as an engineer, Mark Munteanu moved to the De-
to change professions; it rarely takes less than three years, troit area from his native Romania in 1996, exactly as his
says Herminia Ibarra, a professor at the Insead international brother, Gabriel, also an engineer, had done a year earlier.
graduate business school. That's because you need to figure The U.S. was Mark's "dreamland." And he made a good
out what you're looking for-a trial-and-error process for living working for the Motor City's automotive firms-until
most people-and then gain relevant experience and make November 2008, when he was laid off from his job at a
connections. So ifyou're thinking you could use a backstop seating manufacturer.
career; start moving on it, whether by moonlighting or taking Soon after, he attended a job fair held by a military-vehicle
a night course, beforethe layoffcomes. manufacturer. "They had 100 positions open, and there were
> Focus your retraining. Going back to school can be a good 8,000 people there," says Munteanu. "It was utterly a night-
tool for jump-starting a career change, but you'll need mare." The experience got him thinking beyond Detroit.
to do a cost-benefit analysis. In your forties and up, you Searching online, he found a contract job with airplane brothr
don't have as much career left to earn back your tuition manufacturer Airbus in Mobile. "When I saw this chance, happl'
expenses. Besides, a general degree, like an MBA, probably I said, 'I have to take it.' I don't know when I'm going to Munte
won't buy you much-most of the benefit comes not from get it again." At first, he was flying back and forth between
what you learn but from the implication that you've met a his family in Michigan and the job in Alabama. But soon Howtr
certain standard, says New York City career coach Stanley the position became permanent, and Munteanu's wife and s Reme
Back. Since a long r6sum6 can serve the same purpose, two sons joined him down South. It was tough to leave his logical
with a
in your
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Stachowski and Batchelor, like lots of people in Detroit and arounC the country, both had to confront a loss of jncome. Financiai Lewis,
planners suggest thesc ways of clealing r;ith long-lastlng and signif icant pay reductions, whether from alayoff or a salary cut.
Profesr
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re brothe4 who remains employed in Detroit. And he's not
g,
happy that his Michigan house remains unsold. But, says
to Munteanu, "I took it like a new challenge in my life.,'
)n
In Howto Make ltWork
rd > Remember, you've done this before. Major change is psycho_
is logically difficult any'time. Ironically, when you,re dealing
with a job loss, you may have the strongest urge to stay put
in your current location or career field. ,,It,s twice as hard
to let go ofthe rest ofyour support structure," says David
Lewis, an executive at the staffing firm Express Employment
Professionals. His advice: Recall another time when you've
made a big move to remind yourself that you're capable of
adjusting. That kind of thinkinghelpedMunteanu makethe
transition: "I moved from Romania to Detroit. Shouldn't I
have the courage to leave Detroit for a better life?" he asks.
l
> Blend in with the locals. Even
l when you,re willing to move
z
on from a citywhere your opportunities have faded, you face
a big practical baryiers. Out-of-town candidates typically don't
o get past the first round ofscreening as hiring managers don't
a after bad, or move on to better prospects? r
=
o
o
o
want to deal with logistical hassles, says Lewis. Thus, Lewis
suggests not including your address or the location ofpast
jobs on your r6sum6. Or tap into your network to help get
special consideration of your application; Munteanu had an
Airbus engineer he'd met at a conference put in agoodword.
> Don't get stumped by
"sunk costs." Aversion to loss doesn't
just make you cling to the familiar, it also messes up your
internal calculators. Most of us are more susceptible to the
sunk-cost fallacy-the notion that past investments commit
us to future ones. That's why a blackjack player says to him-
self, "I won't get up from the table until I win back the g200
I'm down," why it's so hard to dump a losing stock, and why
the prospect of selling your house at a loss might prevent
you from taking a better job in another city. While Munteanu
was able to avoid getting bogged down in the sunk costs of
his unsellable home-"I don't see my future being tied to a
house," he says-few people can be so unemotional in assess-
ing their own situations. So pretend you're giving advice to
a friend, instead: Would you suggest he throw good money
M0NEY November 2O10