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3 Lessons From The Great Recession

Banksy Follow Your Dreams Cancelled — *By Banksy*

“We learn from history that we do not learn from history.”
— Georg Wilhelm Friedrich Hegel

Making and losing money during the Great Recession

In 2007-08, the stock market dove. We entered a massive “Great Recession.” I had a measly amount in an investment account and sold every stock. I couldn’t afford to lose any more. The panic was great and I followed it.

I held mostly cash, but bought a dangerous ETF that shorts stocks at 2X investment. For every dollar down in the market, I’d make two. Although, for every dollar up in the market, I’d lose two. By buying the ETF, my future would be tied to the demise of the global markets. It felt sick, but I was making money seemingly every day in the tough bear market. As others clambered to secure positions, I was profiting. The demise of other’s portfolios meant I was in the minority, making money.

At the time, I kept telling my mom to sell out of a large, inherited position in AIG. The major insurance company was spiraling out of control, and the public would soon realize how much debt the company hid. I wasn’t prescient, but dead set on her selling much of the position. The wealth was directly tied to the most risky industry.

Her financial advisor asked her to sit still. His sentiment was simple: don’t worry, don’t panic, and everything will be alright. I remember urging her over the phone, “Mom, you’ve got to sell at least a bit. The portfolio isn’t diversified and could be destroyed by this market.” She followed the trusted advisor’s approach and held on to the position. She stayed with the stock until it was a small fraction of the inheritance, and AIG was unrecognizable to its predecessor — what it used to be.

A reminder of the Great Depression

My grandparents had their own economic tumult: the Great Depression. They were a product of a time when food was scarce, fortunes changed, and many suffered. Both my grandmothers — at separate times — would talk about this time of disparity. They seemed weathered and changed by this period.

The Depression had a lasting impact. In their adult lives, they saved nearly everything, invested, and were constantly frugal. Eating out was a privilege — a true rarity even when they had wealth. They got creative with meals, celebrations, and travel. They learned to travel with and for less.

Not everyone suffered, though. A select few — the richest elite — continued to enjoy the spoils of wealth. Robber barons, corporate titans in the 30s and 40s, held disparate levels of wealth. They suffered, but not like most of society.

It wasn’t until President Roosevelt, his new deal, and World War II that the economic despair lifted. A vision for the future came into the picture. My grandparents served bravely, and were able to cultivate a middle class life afterwards. They were never “rich,” but always well. Their goals weren’t for mass consumption, but for peace and calm.

Lessons from a time of scarcity

Just like my grandparents before me, this generation’s financial calamity changed me. The Great Recession permanently shifted my life and that of my parents. The following are a few lessons learned along the way:

1. Who you know counts, but gratitude is greater

I left high school at the height of the Recession, and graduated college in 2011, as things began to look brighter. Still, I applied to countless jobs and found nothing. I submitted applications to Starbucks, Target, Wells Fargo, and a host of smaller companies. No one answered. The jobs were scarce, and money was tight. Everyone — including companies — became more conservative with their money.

A dean changed my life and gave me a chance. She gave me a paid opportunity to study and prep for graduate school in counseling psychology. I considered the offer, realized I had nowhere else to go, and embraced the opportunity. I’m forever indebted to her offer and help.

Without that helping hand, I’m not sure where I’d be, how much I’d be making, or if I would be the man I am today. An age-old lesson for business people is to network unmercilessly, but for me, I learned about gratitude. It’s vital that we remember who helped us succeed.

2. Modest living matters, skip the material mementos

I saw countless Americans lose everything material in the Great Recession. Crying families on TV and in documentaries exclaimed how they had lost everything. They were leaving houses — foreclosed on by banks that “afforded” them way more house than is necessary.

Those with modest means and mindsets braced through the economic tumult, but usually were able to maintain their lives. Those whose lifestyles were paycheck to paycheck or near their means suffered greatly.

Living through this time cemented a new ideal towards minimalism and reduction of material worth. Now when I travel, I try to avoid “collecting” and taking physical mementos. When I get something new (to me or the world), I research everything about it and try to buy based on value.

Last year I was interviewed by USAToday on the topic of buying homes. I might be a kook, but I don’t believe I want to buy a house unless I have all the cash necessary to do so. This Great Recession taught me to distrust debt and mortgages.

3. Save like it’s the last day on the job

In struggling to find work and seeing others do the same, I’m uncertain about my ability to hold one consistent job in life. Employers don’t necessarily have the incentive that they once had for employee sustainability. Everybody seems to be replaceable in this new, globalized economy.

While the unemployment rate has recovered from the depths of the Great Recession, salaries have stagnated or decreased. People are employed now, but they aren’t making what they once made.

Whatever reaches my pocket today, I’ll fiercely protect. But protection cannot mean selfishness.

Despite the economic uncertainty that will forever be a hallmark of my adolescence, I refuse to believe that we cannot continue to help each other. Whether that means serving and giving your time, or scrounging for a few dollars to give to charity, it’s still important to give selflessly.

What’s Your Most Prized Possession?

By Frugaling 29 Comments

Hello, roomie!

The windows were open, and I could smell the grass outside. It was green and sunny — not a cloud in the sky. A prototypical Colorado day followed me around, as I moved what little I owned into a small cubby, under a lofted mattress, and into a petite wooden desk.

It was move-in day for college — fall 2007.

I rolled out a single-bed mattress sheet, chintzy comforter, and single pillow cover. The mattress was an ocean blue, and perpetually felt uncomfortable. But it was my new home.

Somewhere in this process, I learned to live with less. I didn’t call it minimalism back then. It didn’t feel like minimalism.

Forced space? Mandated minimalism

I wasn’t given the option to live any other way in college. My closet only accepted a few shirts, shoes, pants, etc. My bedroom didn’t allow for larger mattresses. And my desk only had room for the basic necessities: pens, paper, and laptop.

After my first year of college, I moved into another residence hall to become an “RA” or resident assistant. I loved my position. It was and still is my favorite job. But even then, with a little more room, I was forced to stay minimal.

Now, minimalism doesn’t always mean being frugal. Despite my enclosures, I cycled through lots of things. There was a $1200 road bike (kept outside and then sold), a mini fridge (under the bed and then sold), electronics (a desktop computer and then sold), and more. For everything I bought, I sold something else — both to afford the new item and make space.

I was hardly frugal. I was mad with the need to consume away my problems, concerns, and stresses of school. No matter how much I purchased, the feelings remained.

Where I failed budgetarily, I seemed to succeed in minimalism. My room was still neat and tidy, and presentable to residents and their parents. I didn’t have a need for lots of stuff — nor could I put it anywhere.

While I wasn’t ready to change my spending habits until years later, an inclination towards minimalism was cemented. All it took was a forced restriction from many years of residence hall rooms to prevent the purchase of more than I needed. I developed an affinity for a clean, organized room. I didn’t need or want to have tons of things.

The losses hurt immensely

Another component pushed me towards minimalism: loss. In college I was exposed directly and indirectly to losses in life. Three of my grandparents passed away, three people died by suicide on campus that I knew, and I went through some pretty nasty breakups.

These losses encouraged me to look beyond the petty grievances and consumer comforts of society. What was important was the life of those around me, and spending time with those I cared about. Again, things weren’t as important as people.

During this period of tragedy, I realized how loss of material possessions didn’t matter. Suddenly, I stopped worrying about people stealing my stuff, things failing, and/or leaving my home unattended. Renters insurance seemed irrelevant and unnecessary. I had nothing “priceless.”

What’s going to fit in the trunk?

After college and the losses, I moved for graduate school. Again, it was a time of forced minimalism. I could only take what would fit in my Honda Civic coupe. And there was an added caveat, as my brother would be occupying the passenger seat.

To lighten the load, I listed items on Craigslist and asked friends if they needed odds and ends. Then, my brother and I filled the car with deconstructed IKEA furniture, clothing, and other household items. Our seats were forced upright — unable to recline — by the tightly packed vehicle.

Everything I owned fit into one tiny little car. It felt freeing, but frankly, all I could think about was the truly precious cargo: my brother. If everything else disappeared, let it not be him. That’s all that mattered/matters.

What really matters in life is…

I never sought to be a minimalist in my younger years, it found me. When I entered a small space and shared it with a roommate, I was forced to have less. When I lost loved ones, I was forced to reflect on what was most important. When my brother helped me move, I pictured what I would really need.

Stuff never came first.

Recently, I was grabbing a drink with someone and this question came up: “What would you grab if your apartment/house were on fire (excluding pets and humans)?”

I thought briefly about this question and almost cried. I couldn’t come up with anything. Nothing mattered beyond the human and pet connections in my life. Nothing. I feared the loss of… nothing.

Being “The Best” Made Me Miserable

By Frugaling 13 Comments

Growing up, I wanted to be “the best.” Whether it be a pilot, firefighter, or investment banker, I needed to be the best. I was compelled to be better than the rest – always wanting and seeking hierarchical successes.

I competed over grades in school. Another’s “A” threatened my goals. Before I got into graduate school, I ruthlessly pestered professors with questions and looked for ways to improve my final scores. But I couldn’t compete in the hard sciences (i.e., chemistry, physics, and biology).

I purchased designer clothes like Diesel that were more expensive than others could afford. A sweater that cost over $125 was seen as a necessary cost to stand out. But secretly, I couldn’t afford them either — there were tens of thousands in student loans.

I played poker with my friends, and wanted to make more money than they ever could. First place was a sweet spot, and I reveled in knocking them out of the tournaments. But I lost money more often than I’d like, and felt ethically miserable when winning their money.

I wrote articles that were published in various journals and newspapers. My words created conversation and controversy — exactly as intended. But I saw writers my age publishing in Rolling Stone and massive online news sites. There were others publishing books, when I could merely squeak out 700-word columns.

I pictured running marathons with packs of people behind me. I imagined passing more and more people. But when I ran them, thousands finished before me.

My younger years were filled with the pressure to conform and my budget hurt because of it. Each time “the best” motivated me, I spent more money, competed in unhealthy ways, and looked for ways to put people down.

When I look back at my childhood, I realize how susceptible to American exceptionalism I was. My country was “the best” — better than the rest. And I needed to be a player in that world. I wanted to be a patriot and represent my country, as another best.

Eventually, I got burned out fighting to be the best; then, something powerful happened. In relinquishing this drive, I discovered that there’s always someone better than me (or you). There are nearly 7 billion people on this beautiful globe. Talent, expertise, and “the best” is everywhere you look.

As I let go of this need to be the best, I embraced another emotion. It was something like peace combined with acceptance. But not about being lesser than. It sounded like, “I’m okay as is, and I’m happy doing my personal best.”

There was a secondary consequence of letting go of my compulsion to be the best. My spending plummeted.

I stopped spending as much on food and travel. I sold my car, and got rid of hundreds of dollars in monthly costs associated with ownership (from gasoline to insurance to maintenance to car loan payments). My clothing costs fell, and are nearly $0 every month.

Ironically, I felt healthier and saved more money than ever. The buzz of inadequacy that had promulgated my inner voice quieted. I started to feel comfortable and humbled — happy to be me.

Consumption and affordability are warped and twisted by our drive to be the best. Imagine what your life would be like if you stopped competing with others reputations and talents. It influences everything about our lives.

What if we throw away this cultural norm and embrace who we are today? Would the brand new blazer or dress be as important? Would we finally be happy?

8 TED Talks That Will Inspire You To Become A Minimalist

By Frugaling 18 Comments

Zero Inbox Emails Minimalism — *Here’s a screenshot of my email account with zero emails! Happens twice a year. 🙂*

I call myself a “frequently failing, but always aspiring minimalist.” There’s a powerful consumer drive inside of me, but I work effortfully to reduce its hold. Sometimes that means going to a store and picking up an item — temporarily — and then returning it to another shelf. I can be captivated by new things — quickly dreaming of what happiness they could bring.

When I’m really struggling to save money and stay minimalistic, I return to some favorite role models’ messages. The following are 8 of my favorite TED Talks on the subject of minimalism, living with less, and learning to love yourself in the process. Hope you enjoy!