“As life gets longer, awful feels softer.” –Modest Mouse
Today the DOW closed above 11,000 for the first time in 18 months. The S&P is approaching an important psychological benchmark of 1200. Companies added 160,000-ish jobs in March, the biggest jump in three years. Obama got his health care plan and the world didn’t end. The pandering of Republicans about imminent socialism and an end of free markets as we know it doesn’t seem to be playing out. The National Bureau of Economic Research says it’s too early to tell if we have come out of the recession, but it doesn’t take a weather man to look around and see the weather. It feels like the sun is peeking through some thick clouds at the end of a long thunderstorm.
I’m not posting this to brag about my circumstances or tell people what decisions to make with their lives. I still have friends who are tirelessly looking for jobs or taking jobs that they are grossly under qualified for. In hindsight, I have been extremely lucky the past 2 years. Even though the Great Recession really hurt (really, REALLY hurt) and there were times when I felt like all of my hopes and dreams were never going to come true, I now look back and appreciate the prudent choices that Essie and I made.
I have a stock market job. I was one of those d-bags who did really well through most of 2007 and 2008. While it was happening, I had this constant anxiety that my prosperity could be taken from me at any time. One should always be weary of euphoric markets. I was right. I remember landing in Colorado at noon on a Monday, turning on my blackberry to learn about the collapse of Lehman Brothers and the subsequent tanking of the stock market. Essie had two more semesters of grad school and we were supposed to start building our dream house in Austin within months. Please realize that we cut tens of thousands of dollars in architectural extravagances already, to get our costs in line with a realistic, affordable mortgage. (Meanwhile the bank never told us “no” and bent over backwards to over-leverage a frightening jumbo loan.)
Game over.
For the next year and a half my commissions were less than a third of what they were in 2007. Yes, I was extremely fortunate because my firm kept me on. Essie was working and we were ok. The house, however, would have to be postponed, lending dried up literally overnight. We now had to save 20% of the building costs in order to start construction (weeks prior we had been quoted as little as 5%). We now had two mortgages: One on a condo in Boston that we occupied and a note on the land we purchased in Austin. Neither mortgages were ridiculously high, but with the real possibility of lay-offs, we had to make some tough decisions, fast.
I think back on the Great Depression and realize how bitchy and spoiled we are. When families subsisted on one meal a day, we were losing our vacation homes to foreclosure. Essie and I made many lifestyle changes and cut out a lot of fat (sometimes literally) only to end up with more net worth than we had back in 2007.
Here’s what we did:
1. We immediately put our Boston condo on craigslist, found a renter and moved in with Essie’s parents. Not ideal for a couple of late twenty-something’s, but we made our biggest asset work for us and became cash-flow neutral after taxes. We put away a few thousand a month for our dream house down payment.
2. I interned at a wine shop. I had always wanted to learn about wine and since I couldn’t afford the good stuff, I worked the shop and got a 20% discount. Essie was in class most Saturdays so it gave me something to do while he was finishing his MBA.
3. I stopped shopping and using credit cards. There were some days when I could do some real damage at Barney’s, and thankfully, most of those items were still in style and would hopefully last me through the recession. Keeping my weekends busy (see #2) also kept my mind off materialism.
4. We stopped having hundred-dollar dinners. In Boston, the drinks, apps, entrees, desserts, and drinks can add up really quick. Dinner for two in the Sound End can easily get up to $200 before you know it. Multiply that by Friday and Saturday night and you have a car payment for a brand new BMW. We cooked at home or with friends or went out for Mexican instead of French.
5. We kept driving a crappy Honda Civic. It was (is) a beat up 2003 EX that has been nicked, scratched, and dented by the inconsiderate drivers and snowplows of Boston. She’s not pretty but she is paid off and gets us around. We are still going to keep her until after the construction has begun and we can put a big chunk of cash down on a new car. Donald Trump or some other wildly successful white straight guy once said to never finance a depreciating asset. Whenever I see people my age or younger with a nicer car, I remind myself that my most valuable asset is not my car. Bwah haha! How many properties do YOU have?
6. We used points. I had gobs of hotel and airline points saved up from all of my business travel. We were able to enjoy a couple of long weekends in New York thanks to Marriott and even traveled to Rio De Janeiro last March on American Airline points. NOTE: We were in the beach in Ipanema on the day the market hit bottom. When the points ran out, we went camping. Can’t afford to rent a beach house on Cape Cod? The B&Bs start around $150/night with a 3 night minimum. A campsite runs about $150 for 3 nights for 4 people. Not a horrible way to get your beach on for the 4th of July.
7. Keep investing. Even though I really could have used the extra cash flow, I actually increased my 401k contributions because it was very likely that I would never see stocks so cheap again in my life.
8. Lose weight. Whenever my life feels like it’s spiraling out of control, I hit the gym. My physical body is something I can control when external forces seem turbulent. You feel a sense of accomplishment and progress when headlines are full of doom and gloom. Exercise is a great way to reduce stress. Essie and I both dropped serious poundage last year.
9. Take a chance on a new city. All along we had planned on moving to Austin. My job would transfer me and Essie worked in technology, the dominant sector in Austin. It was risky moving when Essie had no job but we made a leap of faith. We packed up a POD and shipped out to Texas. We drove the Honda cross-country and settled in to a loft apartment (gigantic by Boston standards) about 2 blocks from where we hope to build our house. We have been able to get to know our neighborhood and talk to others who have built in the area. Essie found a great job after a relatively short 6 month search. Austin turned out to be one of the best decisions of our lives.
10. Communicate. I totally understand why people get divorced when they fall on hard times. If Essie and I hadn’t talked out our fears and anxieties, I think it would have been easy to direct the anger/frustration on each other. We didn’t. We still like each other. Home building together might be another story.
Chances are we will never see a recession like this again in our lifetimes and I hope the statistics tell the truth. However, if we find ourselves in a financial predicament again in the future, I know that Essie and I can be nimble and thrifty and can block out the talking heads on TV who foretell the Economic End of Days. We will start construction (hopefully) in August and our mortgage will be about $1,000 less per month with our 20% down payment. We will get a new car when we can pay cash for it, we’re still using points to go to New York and I plan on buying some gorgeous new loafers at the Barney’s summer sale this July. We are also counting down to a fun vacation rental on Cape Cod with our best friends this summer. Camping fucking sucks.
Today the DOW closed above 11,000 for the first time in 18 months. The S&P is approaching an important psychological benchmark of 1200. Companies added 160,000-ish jobs in March, the biggest jump in three years. Obama got his health care plan and the world didn’t end. The pandering of Republicans about imminent socialism and an end of free markets as we know it doesn’t seem to be playing out. The National Bureau of Economic Research says it’s too early to tell if we have come out of the recession, but it doesn’t take a weather man to look around and see the weather. It feels like the sun is peeking through some thick clouds at the end of a long thunderstorm.
I’m not posting this to brag about my circumstances or tell people what decisions to make with their lives. I still have friends who are tirelessly looking for jobs or taking jobs that they are grossly under qualified for. In hindsight, I have been extremely lucky the past 2 years. Even though the Great Recession really hurt (really, REALLY hurt) and there were times when I felt like all of my hopes and dreams were never going to come true, I now look back and appreciate the prudent choices that Essie and I made.
I have a stock market job. I was one of those d-bags who did really well through most of 2007 and 2008. While it was happening, I had this constant anxiety that my prosperity could be taken from me at any time. One should always be weary of euphoric markets. I was right. I remember landing in Colorado at noon on a Monday, turning on my blackberry to learn about the collapse of Lehman Brothers and the subsequent tanking of the stock market. Essie had two more semesters of grad school and we were supposed to start building our dream house in Austin within months. Please realize that we cut tens of thousands of dollars in architectural extravagances already, to get our costs in line with a realistic, affordable mortgage. (Meanwhile the bank never told us “no” and bent over backwards to over-leverage a frightening jumbo loan.)
Game over.
For the next year and a half my commissions were less than a third of what they were in 2007. Yes, I was extremely fortunate because my firm kept me on. Essie was working and we were ok. The house, however, would have to be postponed, lending dried up literally overnight. We now had to save 20% of the building costs in order to start construction (weeks prior we had been quoted as little as 5%). We now had two mortgages: One on a condo in Boston that we occupied and a note on the land we purchased in Austin. Neither mortgages were ridiculously high, but with the real possibility of lay-offs, we had to make some tough decisions, fast.
I think back on the Great Depression and realize how bitchy and spoiled we are. When families subsisted on one meal a day, we were losing our vacation homes to foreclosure. Essie and I made many lifestyle changes and cut out a lot of fat (sometimes literally) only to end up with more net worth than we had back in 2007.
Here’s what we did:
1. We immediately put our Boston condo on craigslist, found a renter and moved in with Essie’s parents. Not ideal for a couple of late twenty-something’s, but we made our biggest asset work for us and became cash-flow neutral after taxes. We put away a few thousand a month for our dream house down payment.
2. I interned at a wine shop. I had always wanted to learn about wine and since I couldn’t afford the good stuff, I worked the shop and got a 20% discount. Essie was in class most Saturdays so it gave me something to do while he was finishing his MBA.
3. I stopped shopping and using credit cards. There were some days when I could do some real damage at Barney’s, and thankfully, most of those items were still in style and would hopefully last me through the recession. Keeping my weekends busy (see #2) also kept my mind off materialism.
4. We stopped having hundred-dollar dinners. In Boston, the drinks, apps, entrees, desserts, and drinks can add up really quick. Dinner for two in the Sound End can easily get up to $200 before you know it. Multiply that by Friday and Saturday night and you have a car payment for a brand new BMW. We cooked at home or with friends or went out for Mexican instead of French.
5. We kept driving a crappy Honda Civic. It was (is) a beat up 2003 EX that has been nicked, scratched, and dented by the inconsiderate drivers and snowplows of Boston. She’s not pretty but she is paid off and gets us around. We are still going to keep her until after the construction has begun and we can put a big chunk of cash down on a new car. Donald Trump or some other wildly successful white straight guy once said to never finance a depreciating asset. Whenever I see people my age or younger with a nicer car, I remind myself that my most valuable asset is not my car. Bwah haha! How many properties do YOU have?
6. We used points. I had gobs of hotel and airline points saved up from all of my business travel. We were able to enjoy a couple of long weekends in New York thanks to Marriott and even traveled to Rio De Janeiro last March on American Airline points. NOTE: We were in the beach in Ipanema on the day the market hit bottom. When the points ran out, we went camping. Can’t afford to rent a beach house on Cape Cod? The B&Bs start around $150/night with a 3 night minimum. A campsite runs about $150 for 3 nights for 4 people. Not a horrible way to get your beach on for the 4th of July.
7. Keep investing. Even though I really could have used the extra cash flow, I actually increased my 401k contributions because it was very likely that I would never see stocks so cheap again in my life.
8. Lose weight. Whenever my life feels like it’s spiraling out of control, I hit the gym. My physical body is something I can control when external forces seem turbulent. You feel a sense of accomplishment and progress when headlines are full of doom and gloom. Exercise is a great way to reduce stress. Essie and I both dropped serious poundage last year.
9. Take a chance on a new city. All along we had planned on moving to Austin. My job would transfer me and Essie worked in technology, the dominant sector in Austin. It was risky moving when Essie had no job but we made a leap of faith. We packed up a POD and shipped out to Texas. We drove the Honda cross-country and settled in to a loft apartment (gigantic by Boston standards) about 2 blocks from where we hope to build our house. We have been able to get to know our neighborhood and talk to others who have built in the area. Essie found a great job after a relatively short 6 month search. Austin turned out to be one of the best decisions of our lives.
10. Communicate. I totally understand why people get divorced when they fall on hard times. If Essie and I hadn’t talked out our fears and anxieties, I think it would have been easy to direct the anger/frustration on each other. We didn’t. We still like each other. Home building together might be another story.
Chances are we will never see a recession like this again in our lifetimes and I hope the statistics tell the truth. However, if we find ourselves in a financial predicament again in the future, I know that Essie and I can be nimble and thrifty and can block out the talking heads on TV who foretell the Economic End of Days. We will start construction (hopefully) in August and our mortgage will be about $1,000 less per month with our 20% down payment. We will get a new car when we can pay cash for it, we’re still using points to go to New York and I plan on buying some gorgeous new loafers at the Barney’s summer sale this July. We are also counting down to a fun vacation rental on Cape Cod with our best friends this summer. Camping fucking sucks.
2 comments:
Great advice Andy. Thank you.
Freshness is the heartbeat of Little Ways. The commitment to sourcing the best ingredients is a testament to the restaurant's quest for perfection. With every bite, you're transported to a world where quality and flavor intertwine to create a dining experience that's both vibrant and exceptional. https://www.littlewaysnyc.com/about-us/
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