FULL DISCLOSURE:
I am not a financial advisor.
It is recommended that you should always consider visiting a financial advisor for independent financial advice before making investment decisions.
Do your own due diligence, RESEARCH!
I was always a driven person. I had my first business back in ’92 but I decided to pursue my career in politics in ’94 where I interned for a congressman and quickly worked my way with working with a person running for a congress to also working with one who worked in the assembly running for Lt. Governor.
In politics, having to work with the wealthy, especially putting together $500 a plate fundraisers, it was an interesting time in my life where I met driven people, but people who achieved success. Seeing the lives they lived and grateful for the advice they gave to me.
I knew that I had go back to college and earn my degree and after graduating magna cum laude, I then worked in the Silicon Valley for high technology.
And then right after, I would create my communications and design business where I achieved success.
I would read many books on business, finance and success but my life was turned upside down during the Real Estate/Market Crash of 2007-2008.
And this is the purpose of today’s blog post, “Starting Over in Life after the 2007-2008 Financial Crisis”.
It was like deja vu for me because in 2002-2003, the stock market downturn around the world following the September 11th attack.
That year, I was working as a Senior Web Services Manager for a major newspaper corporation, maintaining websites for newspaper publications in the West Coast. Developing what was an early form of social media and even creating the company Intranet.
Around the Christmas holiday of 2001, my wife and I lost our first due to a miscarriage and being in major pain, I came back to work after that weekend and was told that the corporate office were cutting costs and eliminating in house web services and I was out of a job. It was a double whammy!
2001 was a terrible year, 2002 didn’t look any better. I learned a lot about the importance of having an emergency fund, which I immediately wanted to start.
America was facing an economic downturn across the US, Canada and Europe and there was a major economic downturn where people lost jobs through 2003.
I lived through my severance pay and fortunately, my website was able to generate passive income and I planned my 2002 to start a business and I was able to open my design and communications business.
While the stock market was not doing well and many jobs unfortunately let a lot of people go. I was fortunate to start a business and see it doing well.
I was able to eliminate debt and be ahead and build my emergency fund. I was so busy getting clients, making money and not only did I have clients in the US, I had clients in Japan and I was doing business globally. My wife gave birth to my first child, during this time I eliminated my college loans and I was going after each debt on my shoulder vigorously.
Life was good, my business was thriving, so much that I was able to hire people, do full page ads in magazines and I was busy. I felt it would last…
But in 2007, I wasn’t prepared for the market crash due to exposure of securities of packaged subprime loans and credit default swaps issued to insure the loans and their issuers which led to a global crisis.
By 2008, the economy went south, my clients were no longer advertising, their business just went south and the pay that I would receive within 30 days, it would go to 60 days then to 90 days. In other words, I wasn’t getting paid in time and I was now tapping into my emergency fund.
I had to heavily consider, going back to work or continue to hope the economy would get better and my business will be profitable again. I built my business up to be successful and there was no way I was going to quit.
2009 passed, 2010 passed, 2011 passed, 2012 passed, 2013 passed…and while I made income, my main business…my income was cut by half and then another 25%. I was now having to go outside the boundaries of what I do business-wise, that meant partnering with a print broker and working with film festivals, music festivals and conventions for program guides to make income. And fortunately, I made income and on both sides to pay the bills and continue to build my emergency fund.
While still working on a real estate magazine and despite seeing the page count go lower and lower, my finances was dwindling to the point that I knew I was in a dangerous place. Advertising and media companies would tell me, “Dennis, when we get paid, you get paid”.
There is one scene in the film, “The Big Short” that sticks to my mind, where you saw those who got hit hard due to the 2007-2008 financial crisis and were looking for jobs at a job market.
In fact, as I was in charge of designing the advertisements, publications and newspapers, were changing their stance of giving away design for free and alluring clients to campaigns that would save money for each other’s companies.
I was quickly learning that my services were no longer needed, because there was no way I could compete with free. Companies didn’t care for shoddy advertising, they wanted value in a depressed market and getting those services for free, it saved them a ton of money.
I can understand.
It was hard to believe that years prior, were the years where I made so much money that I had to hire freelancers. I asked myself many times, “How long can I endure this?”, “Why is the market not getting any better?”.
During this time I discovered the lifestyle of those who practice what would become FIRE (Financial Independence, Retire Early). People who lived frugally throughout their life and eventually made smart choices which allowed them to retire early.
In 2014, I was given a chance to work again and to break away from my business.
It was tough because I started my own business for the sake of a better life, but to be truthful, instead I became a slave to my own business. I could hardly take any vacations because I had obligations and deadlines with my clients which was real estate, the largest car dealerships and a hospital.
It was not a life where I could work 8 to 5 and be with my family, I felt I worked 7 am to 2 am. But after the crash, the worries have changed from having too much work, to not enough work and trying to find a way how to pay the bills, when the paychecks were not coming in because the clients weren’t able to pay in time.
It was a bitter pill to swallow and it was preventing me from getting a job and fixing the problem. It was ego which made it too hard for me to comprehend how I was making great money, working with companies internationally, earning monthly commissions through ad revenue and to see it all gone right slowly after 2008.
It was a stressful time. It became unhealthy for me as I gained a lot of weight, grinding my teeth but I knew that I had to do something sooner and not wait. I had to take action of my life.
This is the pain which many people such as Anthony Robbins talks about. Where you can’t take anymore and you start making important life choices that would make your life better in the near or far future.
No matter how much I wanted to continue my business full-time, I knew it was time to raise the white flag. I needed stable income and so I joined the workforce once again.
And in hindsight, I wish I recognized this early and not wait it out for six years, hoping for things to get better.
In life, like the stock market, you have your highs and your lows.
You make decisions, you create strategies to help mitigate losses but also to take advantage of the depressed market by searching for opportunities.
And by holding, you take the risk of success or failure. I was holding on to memories of good financial times, but in reality, it was not going to get any better.
Like the stages where the market has crashed, life will have moments where you have incredible moments but also terrible ones as well. You need to prepare for it not later but now.
You can look back in hindsight and say that you should of done this, done that, done things earlier, made different decisions. But you need to use that pain and divert it to areas in your life where you need to improve as a person. Being a better father, better partner, better investor, better friend, better money saver, whichever way you can improve yourself.
When I first started my business, I had three student loans that split and so, I had three big college loans to payoff. I made the decision to work a part-time job at the USPS doing data entry, so I can eliminate those college loans. I worked a night job for 2.5 years.
When the market crashed and I need to make money, I sold my prized watches, collectibles, in order to keep afloat, and if I had to… tap into my emergency fund.
I’m a bit more critical of myself and the decisions I made in the past, because I wish I didn’t waste money on things that were unimportant. Did I really need an SUV? Did I really need this and that?
And while we faced another downturn with the pandemic in 2020, some financial analysts are expecting another market crash, a major correction or interest rates to go up for 2021. Will it happen? Who knows?
But I learned is that you need to play offense and defense in life when it comes to personal finances.
Being proactive and that can be living frugally in order to put more money towards your emergency fund or investments. We live in a society where people spend, spend, spend with often money they don’t have.
But the first step is eliminating debt, so you can free up money to increase your emergency fund, investments or that trip that you have dreamed of going on. You will also want to think ahead towards retirement (or retiring early) and that means making important decisions such as increasing your percentage towards your 401K (especially if your company matches), investing in a Roth IRA, investing in investment funds but also investing in your future anyway you can. I personally do this but also invest in dividend paying stocks, ETFs and REITs. I’m not a financial advisor, but these are important things that you will hear from many financial advisors. Don’t be stupid with money, don’t acquire unnecessary debt and invest.
Things happen in life which people are not able to prepare for. May it be the need for new tires, a tune up or brake change on your vehicle. May it be traveling to a sick family member in another part of the country. An unexpected death in the family. An injury that forces you away from working. May it be that you have to pay for taxes and need money for that. May it be for school related items that need to be purchased. If you have an emergency fund, it’s something that you can tap into.
But what it comes down to is being prepared. Playing offense by making actions to eliminate debt, building your finances for today and the future. Playing defense, making passive income. If you were to lose your job today, do you have other ways to make money?
It’s about making wise decisions today that will ensure financial independence or how to prepare yourself for the next bad turn in the economy or whenever things go bad in your life.
You need to prepare, become proactive and do your own research and due diligence. No looking back of when times were good or bad, but know you learned from those experiences in the past to make you a much smarter person for tomorrow.
