Comparison is truly the theft of joy.
Whenever we compare ourselves to the Joneses across the street, and weâve all done it before, although we may know absolutely nothing about their financial situation, we still judge based on oneâs looks, what brands they use or wear and their most prized asset: their primary residence.
As hard as it is to believe, most people look better off than they really are and those that do are usually broke.
Believe it or not, you can loose everything faster than gaining it.
Just think about it. It takes a lifetime to build your reputation but in a few minutes once an identity theft has stolen some of your information, it can get hacked and they can ruin your life forever.
A way to prevent this is by simply ripping up anything that has your name on it. Those bills and packages that have your address labeled on them take 5 seconds to rip it up and can save you immense hassle down the road because garbages are theftsâ best friend.
Or with your Peloton bike or Facebook account. These companies donât need to know your real birthday or SSN. If itâs required, lie about it. Itâs worth it.
Your confidential data is your most precious commodity and without it, you have nothing.
Itâs something you must cherish and protect forever.
Same thing with people who found their lucky break.
Catch Me If You Can
Ever wonder how your friend who came from nothing after years of gambling with the lottery finally won, and won too big he lost it all and is in the same spot he started in?
Or an NBA star who flashed his gold chains and fancy sports cars all over the media is now living on the streets?
People with no financial backing or understanding loose it all the fastest. They cannot comprehend the value of money and what it can really provide in life.
What Money Can Buy:
-Get you access to clubs and networking events to propel your career
-Can help you invest in yourself though education, books, teachers
-Help you eat healthier organic food or less healthy by driving
-Can make you go insane and buy junk
What It Canât Buy:
-Prolong your life
-Fix relationships
-Make you a better person
-Make you feel better for a certain period of time-after $75k base salary for financial stability and security happiness starts to plateau
Pick your poison but whatever path you choose to take with you winnings, remember just like a hacker, it can be gone in a flash.
The folks that are obsessed with looking rich but are actually poor believe money is a means to an end and will solve all of lifeâs problems. If it did frankly it would be even a worse situation since everyone would be chasing it for the wrong reason and depending on it too much.
What To Do ASAP
Life happens but loosing your net worth shouldnât and doesnât happen often.
These are the reasons/scenarios you could loose all your money fast:
-No prenup agreement when you marry someone with nothing and you went into the marriage with all the wealth and they took all when divorced
-Expenses > Income
-Live in a high-tax state with a low-income job
-Rely on 1 source of income = usually earned income for majority of Americans
-Never plan for the worst, hope for the best
-Rent out your time and have to physically be present to work or not get paid
-Live off of a pay-check to pay-check salary
-You took out too large of a mortgage and cannot afford to pay = kicked out, bank takes your home and turned into a foreclosure
-You spend your money on drugs, alcohol, tobacco because you believe you have no future
-Marry or have kids too young
-Rely on 1 single dependent to support you or even worse a family
-Put all your eggs in 1 basket; from trading to real estate there are thousands of scenarios the market could flip!
-You donât go to school, believe in education or invest in yourself
-Waiting for lucky break
-Bite off too much than they can chew = too much debt cannot pay back with extraordinary amount of credit card interest and mortgage or started a company without saving at least 1 year of expenses + income without realizing that 99% of startups fail
-Not social and donât connect with more ambitious people to help you
-Always chasing the next new trend or glamorous gadget
These are the most common actions that can lead you into debt, divorce, suicide, broke or all. During a recession, if you loose one income source, letâs say your job, youâre more likely to loose another such as your rental income since your tenants could also loose their job and not be able pay the rent or the stock market plummets for a few months and you were relying on it too heavily.
Iâm sure you can think of more but if a story breaks in the news about a celebrity getting trapped, itâs usually because they followed one of these regimens.
Stuff
If you loose it all especially after winning the $900m jackpot, I have no remorse for you.
You absolutely blew it on junk and I canât even imagine how you can loose that much money!
You didnât think it through and withdrew the lump sum too quickly without making a game plan. Too much money truly does mess with our heads.
Obviously if you win the lottery, you want to enjoy it and pat yourself on the back for taking a chance. Itâs always nice to dream but not too hard since it wonât get you anywhere.
If I were to win the jackpot, I most likely will buy another rental property possibly this time in Europe because international real estate is a great diversifier and a private jet so I donât have to go through TSA or wait in the airport for 3 hours but after that, I have nothing on my list and I know my life wonât change that much anyway.
Plus Iâve witnessed my dream before and the grass isnât greener on the other side. During the pandemic I had to flew cross country and took a jet just to be safe. There was not only a lot of turbulence in a smaller plane but the staff on board kept bothering me asking me for a 6th drink. In a normal plane, the staff completely forgets about you because there are crying babies in the back.
With more money, I wonât necessarily be any more knowledgeable, if in fact dumber since I didnât earn it myself or have better connections. Iâll be the same person but once again, barely anyone believes it until it happens.
Plus, the more stuff you have, the more you have to deal with. Of course everything that you donât have looks beautiful and glamorous until you have to pick up that dogâs poop, wash that car, make sure all your 16 doors in your mansion are looked, turn off the fountain in your hallway to make sure your house doesnât turn into a swimming pool and lock the garage with your precious cars.
All of this is a pure hassle and a waste of time that only the true wealthy would understand.
From the Ground Up
So letâs say youâre one of the unlucky folks from your college graduating class. You not only graduated with $400k debt attending medical school, you got married at 21, have kids and bought a house only putting 5% down with a $1.3 million dollar 30 year fixed mortgage.
You must be thinking, great for you!
Youâre a doctor and your spouse is as well. Thatâs one of the highest paying professions (someone with no understanding of the breakdown of the costs would say).
Not too fast.
To become a doctor or obtain any role in the medical field, you have to expect to use up a lot of time and money for the majority of your career before earning a cent. Thatâs why most doctors already come from wealthy families.
Most surgeons are from the top 10% in their country who went to Ivys, didnât qualify for any scholarship or federal aid and possibly went into debt but got it paid off after daddy sold his yacht.
After paying for undergrad, you then have to go to residency where you arenât earning a dime yet and most likely studying at the same time ripping your health apart to finish medical school. Then by the time you graduate, there are a few more years of practice, shadowing, late-night shifts and finally you can work at a small hospital making $90k per year.
What a great deal! Unless the doctor opens up an individual practice, they arenât making anywhere close to what would put them in the 40% marginal tax bracket (10% income earners), not that you wanted to anyway since taxes are a killer.
Thatâs why income is deceiving. Pay attention to net-worth instead. You can make less, pay less in taxes, live in a cheaper state and still earn more.
With only a slim number of doctors being able to afford opening up their own practice after years of training and debt, majority fall into the mid-life crisis. They are fully educated and experts but with a family to take care of and an unexpected divorce coming their way, both doctors are struggling and find themselves broke.
At this point, these are the steps I would take:
Assets
Understand and divide up your assets.
Asset classes come in 3 buckets:
Equities: Common stock, preferred stock or convertible bond
Fixed-Income: Municipal bonds, Treasury Bonds, Notes, Loans, STRIPS, TIPS
Money Market: Debt securities, Highly liquid, T-Bills, Jumbo CDs or municipal notes
These will be a part of your portfolio, presuming you have one still as a doctor.
If you never got into investing, your first priority is to pay off any outstanding debt.
Thereâs toxic and good debt:
Good Debt: student loans (in this case pay them off since they didnât act as an investment in your future), business loans (if you started a business, in this case they didnât) and mortgage (refinance especially during low-interest rate environments-depends on your credit score)
Bad Debt: depreciates in value = luxury good, car loans, clothes, credit card debt
To pay off any debt, you have to focus on your credit score. Surprisingly the average credit score in the U.S. is 720. It went up a bit during the pandemic as people have been hoarding cash, paying off their bills on time, refinancing and saving not spending.
After the financial crisis of â08 when banks were supplying faulty collateral mortgages with no credit defaults, millions of Americans defaulted on them because they simply couldnât pay.
Now with tighter restrictions on who can borrow, the higher credit score you have the better. This simply starts with paying off your credit card balance in FULL each month by tallying up your expenses and saving up to 50% of your after-tax-income and making sure you have enough cash in your checking account so it doesnât bounce and you end up incurring interest!
If you are applying for a loan from the bank for your business or a mortgage, they prefer if the borrower has steady W2 income. just like co-op boards for an apartment. If youâre a freelancer, youâll get a worse interest rate since you are seen as someone who is less likely to pay off the mortgage even if you make double what a traditional employee makes! It sounds strange but they prefer you work at stable big corporations with steady paychecks.
A cash cushion is key as well. Especially when you are out of work, you must have at least 20% of your net worth in cash in case of an emergency. If you are renting in a non-rent controlled building, you could get evicted any time if you stop paying the landlord and if your pipes break, you donât want to sell your stocks for cash. Keep your investments since theyâre an inflation hedge!
There is no reason you SHOULDNât have a will. Every American, let alone citizen of the world should have one because whatâs guaranteed is that you will die. It will lessen the burden for your heirs when you pass so they know how your assets should be split and who should take care of your children or you when you are incapacitated.
If you donât have one, donât wait. It takes 20â30 minutes for $50 and is set in stone forever. You can change it but at least itâs done. The last thing you want to do when you are dealing with a death in the family is go through probate, hire a lawyer, the government take half of your familyâs money and end up having a judge assign who takes care of who!
What if you hate your sister? I donât think you want that nasty woman to be your childrenâs mother do you?
Read more about wills and trusts here.
Get her done!
Beyond your intangible assets such as investments, cash (tangible), patents, intellectual property, look towards your physical assets such as your most expensive possession: your primary residence.
Get creative. Possibly rent out the other half to a college kid next door or look to sell your clothes, junk and stuff thatâs just hanging around at home accumulating dust but also profit!
Did you know the average American household holds $20k worth of merchandise and collectibles?
Do you need that piano anymore or 2002 laptop?
No matter how beaten down or broken they may be, if you need the money, you need to do anything.
Relationships
These days, itâs not about what you know, itâs who you know.
Whether you worked as a freelancer where you had clients or worked in the emergency room establishing close bonds with patients and fellow doctors on those late night shifts, make sure to have their contacts handy.
Of course since everyoneâs lives are busy and their responsibly isnât you, donât be too reliant on them or budge but if you do need help whether itâs with recommending a lawyer or an accountant to real estate broker, call them up and ask them to lend a small hand.
The worst thing you want to do is ask for money because it shows you want to take advantage of them and never cared about the relationship. You knew them for a reason and if they do want to help, they really want to help with their generosity not their bank account.
It doesnât matter who it is just call anyone up that you know and is trustworthy to help you save money, possible move out and start all over again. It can be from the dentist to a client. Someone you paid or if they paid you!
It takes years to build up a friendship and a pushy approach to turn them off.
You
Being selfish needs to be your superpower, especially when getting started from scratch.
In the case of a divorced and bankrupt doctor, understand what led you to become a doctor and what were you good at?
Even if you felt you didnât actually practice medicine yet, what helped you get through the tough exams and want to pursue this career path?
Pushy parents, grit, energy drinks or pure determination to help those in need?
Understand your Why and drill into it to help you expand into other fields.
If you have education, use it wisely. Itâs not how much you have but what you can do with it after all! There are thousands to millions of graduates from top-tier schools each year that end up nobodyâs! Donât become them!
Lower Your Cost of Living
This can either be a really hard thing to do or easy breezy. Since we are talking about a doctor, Iâm presuming they didnât care too much about a spacious home, unless of course they had kids and in that case, a backyard, basement and large living space were a must and costs triple.
But if you are still a student doctor on residency, you probably rent out the smallest studio you could find just to be close to work. The highest paid professions which include lawyers, consultants, bankers and somewhat doctors, as weâve learned, are typically located in coastal cities where there is also a high cost of living to make up for it.
Also, they end up working the longest hours. They rent their time out for money and practically live in the office.
If you work hard and play hard, then itâs going to be tricky. Living in NYC isnât cheap and earning $100k may seem splendid but after accounting property and income tax, health and life insurance, food, utilities, maintenance and possible mortgage it adds up fast!
Living expenses are by far the hardest to reduce because that means you have to move which is costly but the number one reason Americans go into debt is through medical bills.
If you are in good health, knock on wood because youâre saving yourself thousands per month but that doesnât mean you donât need insurance! Food, clothing, night outs and transportation are the easiest to cut out. Focus on the small expenses such as that Starbucks too. It adds up quick.
And remember, you can still live a beautiful, fruitful and grateful life living with less.
Set Super Crystal Clear Goals
Know where you want to be in the next 30 days and 3 years. No one can plan for the future but what you can do is do everything you can in your control to set yourself up on the best path forward.
This starts with having a game plan.
Do you have supplemental income a.k.a several passive income streams?
Cash on the side?
Dependents to take care of?
Health insurance in case medical bills skyrocket and you need to cover them?
Do you have someone you can rely on such as your parents if you need to move back in?
Asking these questions will help you feel more at ease and be able to tackle what you want to create and meet in your lifetime.
Earn Money Immediately
No joke. The best way to do this is to invest in yourself the right way.
Thankfully these days employers donât care as much as they use to where you come from or what school you attended.
They just want to make sure you can do the job efficiently and are a compatible team player.
For quick change, become comfortable with being embarrassed. You have to sacrifice your image to preserve your livelihood and progress in life.
Take on delivery jobs, work minimum wage jobs that will keep you humble and prudent about the future and set up side-hustles to earn money while you sleep.
If you work for your time, you will work till death. Be vigilant on where itâs distributed.
Build Confidence
Soft skills are necessary in every field. I firmly believe that being an open-minded generalist is 10x better than being a close-minded specialist in 1 individual field.
Times are changing and so are industries.
Weâre witnessing transitions in various sectors and more disruption than ever and you need to be agile by knowing a bit about everything than a lot about nothing!
There are training programs at companies for a reason. Focus on your character that counts the most. People just want to be able to work with someone that is easy going, a good listener, helper and dedicated to their craft. Not a lousy, narcissist that always complains about the cafeteria food.
Change your attitude, change your world.
Improving your life starts within. You have more than you think and it starts with reaching back out to who youâve connected with in your life, what youâve done and starting from scratch the more effective way.
Life isnât a race and you arenât stupid if you start something new.
No one needs to know unless you tell them.
Gary Vee, motivational speaker and founder of Vayner Media once stated,
âIf I could go back and start with nothing, I 100% would because I have absolutely nothing to loose and the most excitement.â
Be like Gary. Embrace the path, utilize and be savvy with what you have.