I Am Broke!

by Krantcents · 48 comments

Post image for I Am Broke!

I am broke, but not broken! Do I have your attention?  Should you feel sorry for me?  Do I need help?  Perhaps, I need a psychological evaluation?  My answer is simple, don’t worry about me!  You can take away my credit cards, my job and my money!  That’s right, everything including the car, home and Rolex too.  Have you ever thought about it?  What would you do?

Let’s face it is an important issue and one that you probably do not think about very often.  What if you lost everything?  Could you start over and make it again?  Fifty percent of marriages end in divorce!  One of the biggest reasons for divorce is financial pressures.  Whether you are married, divorced or single, we all have financial pressures!  You may have to go back to work, sell assets or make big changes.  Do you have the skills and knowledge to start over?

The Bad

Divorce is not the only way to lose everything!  If you bought real estate in 2008, you would be underwater!  In other words, the value of your home is lower than your mortgage balance.  This situation prevents you from selling the home unless you have the cash to pay the loss out of pocket. It also prevents the homeowner from refinancing in most cases.  If you cannot refinance through HARP, you  will probably fall into foreclosure.

Loss of job is another way to become broke!  Although the economy is improving, unemployment is still very high.  Although losing your job is bad, the inability to find work affects you emotionally as well as financially. Unless you have savings or a side business, you will certainly have to make changes to hang on while you look for work.   You may lose your home or increase your debt while you are looking .  You may have to move in with your parents or some other choice to reduce your expenses.

If you are like many of us, you have thought about starting a business and some of you probably have.  Years ago, I started businesses and some did better than others.  Starting a business in the real world is risky.  You need capital to start a business or you borrow the money to start the business.  If you borrow money from a bank, you may have to put up collateral such as your personal residence.  If you lose your business, you will  likely lose your home too.   Can you imagine losing your home and a source of income?  It is possible!

The Good

As bad as it sounds to lose your home, job and savings, there is an upside!  Successful people have made mistakes and lost money too. They may have lost their home, job and savings too.  They just lick their wounds, regroup and start over again.  They all have good skills and experience to do it again.  What is it about successful people that they keep trying despite mistakes?  They know that they rely on their knowledge and skills to get through life.  The mistakes do not even faze them!

Everyone talks about education as a basis for success, but it doesn’t stop there.  Education prepares you  for a career, but it is just a start.  In some ways, it is all the practice you do for a marathon.  The marathon is the test of your practice.  Your career and experience demonstrates your knowledge and skills.  The more experience you accumulate, the more skills you have to transfer to your next assignment. Your success is very transferable and you can achieve success again.

All employers or entrepreneurs want people who are successful!  Your track record of actual performance or accomplishment can be used to find work.  A resume that chronicles your accomplishments is exactly what employers are looking for.  Bankers want a track record of performance before they will loan you money.  This is true for personal or business loans!  That is why lenders check your credit history and FICO score.  A good score will get a preferred interest rate and a bad score may exclude you entirely or you may pay a higher interest rate.

Final thoughts

If I were really flat broke, I still have more than thirty (30) years business experience and twelve (12) years teaching experience that I can rely on to help me start another career. I am fortunate that I have a varied background with skills  and experience to draw upon for a new opportunity.  It may be easy to be optimistic because I am not in this situation, but I am confident that I can transfer my skills and experience to almost every opportunity.

I am sure many of you probably do not think about what you would do if you had to start over, but it is a good exercise to go through.  When I do long range planning and think about my choices in life, I examine both sides, success and failure.  Some people feel  that they should only consider success and never think about failure.  I approach my decisions realistically and have to consider failure.  I think it makes me think in terms of multiple income streams because I know that things can happen.  Let me know in the comments.  Do you ever think you could end up broke or do you only think of success?

Photo by:  pedrosimoes7

Carnivals:

Y and T’s Weekend Ramblings at Young and Thrifty.ca
Yakezie Carnival at Debt Black Hole
Carn. of Financial Camaraderie at Debt Roundup
Carnival of Retirement at Master the Art of Saving

Do you ever think you could end up broke or do you only think of success?

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{ 42 comments }

Greg@ClubThrifty March 7, 2013 at 4:48 am

I don’t think about going broke too often, although I’m fairly certain we’d have the skills to build ourselves back up if we did. I think the fear of going broke has held us back on occasion. It is both a good fear to keep you from doing something stupid, but it can also be a detriment and hold you back if you are too afraid.

Good article! I really enjoyed it!

Krantcents March 7, 2013 at 6:51 am

Fear can be a motivation and also keep you from taking risks. Fear for me , makes me think about alternatives or plan Bs.

Money Beagle March 7, 2013 at 5:14 am

It would take a pretty big catastrophe and sequence of events for us to go completely broke. Those types of situations are beyond what I would plan for or consider as risks for our everyday planning. So they sort of sit on the fringe. I suppose for many people who have a negative or close to zero net worth, this is probably something that is more feasible without dire circumstances. In any case, continuing the momentum forward and looking to steadily increase your net worth is the best path to avoiding the situation you bring up.

Krantcents March 7, 2013 at 6:55 am

I remember my mother being concerned about having enough money to support herself in retirement. She was in good shape financially, but she lived a very long (nearly 99 y.o.) life. I approach everything fairly conservatively, but I recognize I can’t control everything.

John S @ Frugal Rules March 7, 2013 at 6:16 am

Good post! We do not think about going broke often, though I do agree that it’s a good exercise. If we were to go completely broke, I believe that we have a diverse enough skillset that we’d be able to come back and hopefully stronger.

Krantcents March 7, 2013 at 6:58 am

Whenever you plan for success, you have think about failure! Part of my planning is always, what if?

The Happy Homeowner March 7, 2013 at 6:48 am

I don’t think about going completely broke very often, but I do take steps to diversify my income, have secure benefits and save in case of emergencies. Of course if there was a major catastrophe even my best efforts would be out the window, but I think I could scrape myself together and rebuild given the skills/experience I have.

Krantcents March 7, 2013 at 7:00 am

Normally, I extremely positive, but the last few years with budget cuts in education, I think about this more often. I too much invested in my teacher pension to walk away when I am this close (less than 5 years) to retirement.

Grayson @ Debt Roundup March 7, 2013 at 10:27 am

Well, this one was uplifting, but a great reminder. The biggest problem is that when people get knocked down, many like to stay down. They don’t want to get up and fight it out. I make sure I always fight.

Krantcents March 7, 2013 at 12:53 pm

Sometimes reality is not fun or up;lifting! We all make mistakes and maybe even fail occasionally. I just suggesting to consider failure and have a plan B or alternative.

Brick By Brick Investing | Marvin March 7, 2013 at 5:57 pm

I use to have trouble sleeping thinking about going broke. But once I got out of debt I sleep much better. While nobody thinks divorce can happen to them, I will say that if for some unlikely reason that occurs I will face that situation when it arrives. All else equal though, paying off our debts and having food insurance almost makes us full out “broke protected.”

Krantcents March 7, 2013 at 6:03 pm

I have been married forever (44 years) and no real debt. I still think about the consequences of my choices. I admit it doesn’t keep me up, but I do think about it. When the recession hit in 2008, I thought about it and was thankful I wasn’t retiring that year.

JW @ VisualFin March 7, 2013 at 8:41 pm

I don’t think about going broke, because I believe people are that way for a reason. People that are conciously aware of the importance of frugality are not the type to fall on hard times. Sure, anybody can loose their job and miss that cashflow, but if you’re financially savvy, you’ll find a means to make money.

Krantcents March 7, 2013 at 9:49 pm

A little planning goes a long way to avoid going broke although anything can happen. I believe in having multiple alternatives or safety nets too.

CT - Cashtastrophe March 8, 2013 at 6:18 am

As humans, we are strong and can bounce back from things like this. It wouldn’t be fun (at all!) but there’s a light at the end of the tunnel and always an up side.

Krantcents March 8, 2013 at 6:54 am

I agree! I use it to develop additional plan Bs when making my choices. It probably keeps me from ever going broke.

Nunzio Bruno March 8, 2013 at 7:16 am

I think this is an awesome mental exercise and can’t stress enough how even a little planning can help. I think I feel the same way you do about the low/bad times. It’s never really that bad and like you said there are always opportunities to recover. I liked this post for another reason too – it stressed how important integrity and self-respect are. You can lose all your “stuff” but it’s what you do after that, that is really important and a reflection of you.

Krantcents March 8, 2013 at 7:22 am

Thank you, it is always the skills, knowledge and values that can get you through anything. Many people fail, but successful people keep trying because I think it part of their value system.

AverageJoe March 8, 2013 at 11:48 am

What a great exercise! I love thinking about “what if” and Plan B. Maybe it’s all those years in the planning biz. You are so, so right…it’s well worth time time because you don’t know when you’ll need those plans.

Krantcents March 8, 2013 at 12:20 pm

We may have a similar background, a lot of strategic and long range planning. Whenever I am making a decision, I have to consider “all” the choices including the consequences.

KK @ Student Debt Survivor March 8, 2013 at 7:29 pm

Working with a population of formerly homeless and low income clients on a day to day basis I’ve definitely thought, “What makes me different than ‘them’” on more than one occasion. There are a lot of things, but really, if the bf and I both lost our jobs, couldn’t find other jobs, and didn’t have family we’d be in a similar situation. That’s why I always remind myself how lucky I am to have what I have, even if others have more.

Krantcents March 8, 2013 at 7:47 pm

I volunteer with an organization that feeds the homeless. I would like to think I have better survival skills, but ho knows for sure and I don’t really want to test it. I would much rather use this fear as motivation or it is a consequence to poor planning.

Billy Delaney (@Billy_Delaney) March 8, 2013 at 8:03 pm

More information here by the inch than I’ve read online in a long while. So, thanks for that.
I’ve been bankrupt…
My wife got ill, surgeries, too many. My daughter got pregnant at 15 and my wife and I raised our granddaughter, still are. My wife battled cancer. I became a care giver and a child raiser.
Then I lost a side income, my home, my side business and the hole swallowed us up.
I went to work where I could find it, baking industry. It paid the costs of living, and I learned to climb out of the hole.
I invested in learning more about a small business. I kept making mistakes, but I did not stop. I would not and will not until I have earned my way back to what success means to me.
The biggest hole was the mental one. It’s very hard to climb out of yourself when you loose what you think you are; but the climb shows you what you can be. I choose the later. You climb out one little success at a time.
I’ve been able to purchase a small home. I’ve my wife who won over cancer. My daughter is getting married to a man, hard to find in her generation. My granddaughter is doing well and living a happy life.
Some times you don’t think the crack will ever open up around you. Think again! and then think even more, again!!
Shame, fear, mental paralysis, hopelessness and the black dogs of depression will coax you into the cracks you never seen before.
But…
The fight in the dog, you, shows them all something real. Human will and resourcefulness. You can do more than the bromides of the self help BS. Most of that is written by monied ponies in fenced pastures.
So, I’m not back all the way yet, but I’m closer than I’ve been in years.
This might help someone.

Krantcents March 8, 2013 at 9:43 pm

Thank you for sharing. That is quite a story and I am glad that is getting to a happy ending. I made my share of mistakes but never actually gone broke. I do consider all th possibilities when I make decisions and definitely look at the consequences. Good luck.

Alexis Marlons March 9, 2013 at 8:20 am

This is such a sensible post. I guess what is always important is to always see the bright side of things and use failure as a lesson and inspiration to achieve more success.

Krantcents March 9, 2013 at 9:36 am

I think whenever you make decisions, you must consider failure and have a plan to avoid it.

Kim@Eyesonthedollar March 9, 2013 at 8:21 am

Sadly, I confronted this reality a few years back when a disgruntled employee filed all sorts of claims against me. It was all fabricated, but if you can get to trial, all you really need is 12 people to believe you. Eventually she filed so many claims, it was obvious she was being malicious. You might be bullied, persecuted for religious beliefs, or a whistleblower, but not all three at the same time. I’m surprised she didn’t say I sexually harassed her!

Anyway, to sort of get my head around it, I tried to imagine what would happen if she did win some crazy suit and got a huge settlement. We would have to move, as the jobs are limited in our area. I would probably have to start over working for some corporation like WalMart or Costco, which I would have hated, but I could have made enough money to start over. That made me sleep better at night just to have a plan. I didn’t need it, but it can help in a stressful situation to look at every option and see I wouldn’t end up on the street.

Krantcents March 9, 2013 at 9:39 am

If I faced those kind of issues, I would have gone into protection mode. Transfer assets, property etc to protect myself. Did yo have insurance to protect you at all?

Rob @FinancialSprout March 9, 2013 at 1:19 pm

It would be terrible to lose everything, but I think everyone has the potential to get back up and restart. It would really stink for someone to lose their home and their business. We all need a back up plan, and we all should have something we can fall back on. I really want to become a musician, but I’m going to get a double major in music and business, because I can always support myself with a business career.

Krantcents March 9, 2013 at 4:01 pm

I use going broke as consequence to poor planning. I always have back up plans, I call it security. One of our friend’s (21 y.o.) sons is a gifted composer and was a music major. He switched to business because he wants to be a music producer. In the meantime, he has avery lucrative DJ business. He has made some serious money doing college concerts.

Canadianbudgetbinder March 9, 2013 at 8:07 pm

No, can’t say that I’ve thought about losing it all and going broke. You are right maybe something we could think about. I’ve always tried to be a forward thinker, to challenge myself to learn new things. I’m confident with my new career that I would have skills that I can use to start over if I needed to. Lots to think about. Great post.

Krantcents March 9, 2013 at 9:26 pm

Thanks, no one likes to think of failure, however I think there are consequences to bad decisions or planning.

Elizabeth @ Broke Professionals March 10, 2013 at 4:10 pm

I’ve never truly worried about being broke – poor, yes; not living up to the standards I’m accustom to, yes; but really broke? No, haven’t thought about it. I’m lucky that I have family who would bail me out if really necessary.

Krantcents March 10, 2013 at 5:35 pm

You don’t actually have to go broke, but you do need to think about the consequence of bad decisions or poor planning. There are alway consequences and we should all consider them routinely when making decisions.

JStC March 10, 2013 at 6:19 pm

the point….one can not cure ones own problems…..we are all dependents on the system/other people/institutions…and that…is not reassuring…

Krantcents March 11, 2013 at 6:52 am

I disagree! I think you can always make better choices or decisions.

Paul @ The Frugal Toad March 13, 2013 at 8:50 pm

Can’t disagree more with your comment. While I am not arrogant enough to believe I am not the beneficiary of the help of others, I am responsible for my life decisions and their consequences. Do you really believe that others are responsible to fix your problems?

Krantcents March 14, 2013 at 6:55 am

I have never asked anyone fix my problems. I take responsibility for everything I do or don’t do.

Martin March 14, 2013 at 12:10 pm

A friend of mine went through a divorce recently. Instead of stressing or letting it bring him down, he made his focus to rebuild his life. This is what he has been doing the past few years. So far it has worked out in his favor. I guess the point is that if you can build it once, you can build it again.

Krantcents March 14, 2013 at 12:18 pm

Very true! You may lose all your money and assets, but not your skills and experience.

KC March 25, 2013 at 8:03 am

I never really believe in dead ends. I always think that there’s a way. If you are broke, there will be something, someone, any opportunity that will come along the way it’s up to you if you’ll grab that chance. So no. Don’t be afraid to start over again. There are a lot of careers and business opportunities out there. You just have to learn how to find them because it will not just be handed out to you.

Krantcents March 25, 2013 at 12:52 pm

Very true! I still have m skills and experience which is invaluable.

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