On September 15, 2008, Lehman Brothers went bust. I remember this day clearly because I made a $200 side bet with my friend over the weekend that the US government would bail them out. To my surprise, the US government didn’t rescue Lehman, and the stock cratered that Monday and never recovered.
Despite all the economic devastation, I wish I could rewind time. I’d rather be 31 than 41, simply because I love life and want to live as many years as possible.
The period between 2008 – 2018 was the most exciting 10 years of my life. Here are some of the lessons I have learned since the financial crisis.
Lessons Learned Since The 2008 Financial Crisis
1) It’s really hard to go all-in, even when you know you should. Despite telling myself over and over again that we were in the buying opportunity of a lifetime, I couldn’t convince myself to invest much more than my usual 401(k) maximum because my world was falling apart. A couple dozen friends had been laid off, including my best friend at the time, who worked at Lehman. I feared I might be next and would need as much cash as possible to hold me over just in case.
In 2005, I had taken a $1,200,000 mortgage to buy a single family home. I already had around $380,000 in mortgage debt from the first property I bought in 2003. With property prices in San Francisco falling along with the stock market, bankruptcy was a very real possibility if I had lost my job.
Therefore, I built a significant CD portfolio with most of my excess cash instead. The best 5-year and 7-year rates were at 4.25% at the time, so I decided that was where most of my savings went.
The only things I did right were keeping my job and not selling any real estate or stocks in the middle of the downturn.
2) Chaos is a great motivator. I had been putting off starting Financial Samurai since 2006, but once the financial crisis hit, I decided to finally launch in the summer of 2009. If I got laid off, I needed a backup plan.
I also decided it was time to get married. I had known my wife since college, and she would be turning 28 in 2008. For some reason, 28 always stuck in my head as the perfect age for her to get married. Further, I had also wanted to focus on my career until 30 to see how far I could get.
The difficult times of 2008 made me want to hold onto her even more. I could lose everything, but I couldn’t lose her. Relationships were more important than money back then, and they are more important than money today.
3) You gain a tremendous amount of confidence and expertise in 10 years. Previously, I’d always been embarrassed to ever say I was an expert in anything. But once I turned 32, I felt I had developed some expertise in the Asian Equities market. And now that I’m in my 10th year building Financial Samurai, I have no problem believing and saying I have expertise in digital media.
Because of this experience, I also no longer fear financial ruin. If Financial Samurai shuts down and all my passive income goes away, I know I can get a job back in finance, fintech, or online marketing. The base pay would range between $150,000 – $250,000 + stock, and my family would be fine.
Age discrimination is no longer a fear either. Instead, you realize experience makes you incredibly valuable. Once you’ve been able to earn income by yourself for so many years, nothing will stop you from living the life you want.
4) The more things change, the more things stay the same. I met many disgruntled people before 2008 who complained about the government, taxes, inequality, racism, bigotry, sexism, and more. I also met lots of people who told me about their days as dotcom millionaires in 2000, including the guy at work who made my breakfast bagel each morning.
10 years later, we still have the same complaints. Yet, instead of losing money in dotcom stocks, it’s losing money in cryptocurrencies. Instead of hearing complaints about other people’s problems in person, complaints are simply amplified all over social media ad nauseam!
You’re either going to let things get to you, or you’re going to do something to change your dissatisfaction. Just think about how much you could accomplish if you worked for one extra hour a year for 10 years. We’re talking about 3,650 hours of extra productivity to learn a new language, build a business, become an expert at work, or make a difference in a kid’s life.
5) You’ll regret more the things you don’t do, than the things you try. Conrad, my 56-year-old colleague who worked in the mailroom told me this a couple weeks before he was let go. He had been reminiscing about all the things he wished he’d done in his 30s when I asked him what he would have done differently if he could rewind time. His layoff angered me into figuring out an exit plan since he only made about $40,000 a year and needed the money more than most.
As I look through the years to 2008, my only regrets are not taking a guaranteed offer to work for a new company in NYC in 2010, not starting Financial Samurai in 2006, and not trying to have a baby sooner. For the last two, better late than never.
I should have jumped at the work opportunity to move back to NYC with a big pay raise. An upstart firm had offered me a 50% bump for two years guaranteed. Now, who knows if they would have honored the second year guarantee if I underperformed. But I’ll always be left wondering what if. I had been too comfortable at my then job and had used my house as an excuse to stay. Given I left my job two years later, not getting that last bit of extra cash was a mistake.
Given this regret, I’ve learned to try more things such as coach HS tennis, be a foster kid mentor, write and copyright a song, create a podcast, and do more outreach. The biggest thing I want to try now is to leave San Francisco once my boy turns three. This will be a significant move since we’ve been here since 2001.
Realization post publication: One positive for not leaving for a new firm is that I was able to negotiate a really nice severance package given I had been with them for 11 years. If I had gone to the new firm, I might have been stressed out of my mind, and may have sold my house in 2012 instead of in 2017 prices after prices shot up about 80%. I definitely would not have gotten a severance package if I decided to leave two years later since they’d be annoyed I was leaving after paying a large guarantee.
6) Even if you see the future, it’s hard to take advantage. During the first year after leaving, I wasn’t entirely sure leaving was the right thing to do so I kept in contact with colleagues, met with recruiters, spoke to ex-competitors, and applied to various tech startup jobs online. Here was my chance to potentially try something new without worrying about earning maximum income.
The first place I applied to was Airbnb because I thought it would be a big hit. But I didn’t even get a chance to interview. See my rejection letter below:
A couple months later, Airbnb raised money valuing them at around $2.5 billion. If I had been able to get $200,000 of equity and stay for the full four year vesting period, that equity would be worth roughly $3 million today since Airbnb is valued at around $38 billion. I’d be rich! Alas, no such luck.
7) You have more abilities and strength than you realize. Even though I wasn’t able to get a single full-time tech/startup job offer, I was fine with the rejections because I wanted to fully experience this new life with Financial Samurai. The rejections gave me comfort knowing that at least I tried to find something. Now I could move on with no regrets.
Financial Samurai’s growth has actually exceeded Airbnb’s growth so far, but with the added benefit of pure control and autonomy. I learned how to mix creativity with sharing practical financial knowledge. Before then, I was so restricted in what I could write due to compliance, it was frustrating. I also learned I had more endurance than I thought possible.
Whatever you think your limits are, know that you’re probably utilizing less than 50% of your potential. It’s only when you’re hanging off a cliff with one arm, will you find your true inner might to pull yourself up.
8) Time fixes and breaks everything. Even if you had gone all-in the day the S&P 500 peaked on July 1, 2007 (1527), despite losing ~50% by October 2008, you’d be up about 90% if you had held on to today (2,889). Add on dividend reinvestments, you’d be up much more. It’s hard to lose money in the S&P 500 over a 10-year period.
Real estate, on the other hand, may not recover as easily given its local nature. After 11 years, I’m pretty sure my Lake Tahoe vacation condo is still ~20% below what I bought it for because the condotel mortgage market dried up. The property is cash flow positive at my higher valuation, but people aren’t able to buy as easily as before because they can’t get loans.
These past 10 years of playing sports have truly taken a toll on my body. My left knee feels like it may have permanent ITB/TFL damage. My right shoulder clicks with every motion and probably has a tear. Meanwhile, my lower back constantly aches after softball or a tennis match. It’s sad to no longer be able to move like I once did. Cherish your health! Spend the time to do more stretching and warmups. It’s not worth going all-out in sports anymore due to injuries.
9) Friends come and go, family is forever. I no longer hang out with the same people that I used to hang out with in 2008. My best friend from Lehman was never really the same after the layoff. I got him an interview at my firm to work with me, but one of my Australian colleagues nixed him. In 2012, he got let go from his new employer a little before I engineered my layoff. His employer reached out to me to see if I was interested. He found out and wasn’t happy, even though I had no intention of returning to the industry. After that, he viewed me more as a competitor instead of as a friend since he had also interviewed for my position back in 2001 when I first moved out to San Francisco.
I used to hang out with several client friends for drinks, golf, and dinners. But after I left the industry, I no longer had a corporate card or the enthusiasm to keep hanging around in a business I no longer enjoyed. It really takes a lot to maintain relationships.
I’m very lucky that nobody I’m close to has passed away since 2008. But I’m not so sure the same can be said over the next 10 years. Therefore, I plan to spend more time with my loved ones than in the past, especially now that I have a new addition to the family.
10) Being wealthier won’t make you happier. Most of us have more than doubled our wealth since the previous peak in 2007. But do we feel much happier? I venture to guess most will say no. I don’t feel happier because I was never an unhappy person to begin with. I’ve always been around a 7.5 – 8 out of 10 for my steady happiness state. I will occasionally shoot to a 10 when amazing events happen such as the birth of my son. But that elevated level of happiness never lasts.
Instead of stressing over doing well with a work client, now I stress over whether my boy will be alright every time he starts crying. There’s a helplessness I feel as a father when I can’t make him feel better after going through a checklist of culprits. It’s got to be the teething.
Instead of worrying about whether I’ll get promoted, I worry about whether I can continue providing for my family without burning out for the next 20 years. There was a high likelihood of calling it quits in 2019 on Financial Samurai’s 10th year anniversary. Not so much any more.
Thanks to having more money, I do appreciate not having to stress about getting a $110 parking ticket or having to eat less to save on food expenses. But I’ve also become accustomed to such convenience, and therefore, can’t help but take my wealth for granted.
The only thing I’ve found helpful to combating being ungrateful is to show gratitude, volunteer to help others, and write things out. If you don’t want to start a site, at least start a gratitude journal.
Focus On The Future
It’s unlikely the stock market and real estate market will perform as well over the next 10 years as it has over the previous 10 years. I’m investing heavily in the heartland of America because I think there’s going to a multi-decade trend of shifting away from expensive coastal cities. We shall see.
Over the next 10 years, I plan to focus most of my time on being a present father. My hope is that my investments stay far in the background so I don’t have to think about them much at all. My time for trying to build a fortune is over. I just want to keep what I have, especially since we’ll probably have another recession by 2028.
In order to keep this ship going, I’ll keep writing on Financial Samurai as usual. In the meantime, I want to make sure my family really enjoys life for the next 10 years. I don’t want to be writing this post at 51 and saying I wish I took more adventures.
I’ve got until the summer 2020 to get all my ducks in a row. Then it’s goodbye San Francisco and hello Hawaii or some other wonderful place!
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