Right, this couldn’t have happen.
Yet it did.
Over the weekend, I listened to a very good interview by Joshua Sheats over at Radical Personal Finance.
He was at Camp Mustache, which is a gathering of folks who aspired to reach financial independence earlier than most. He chanced upon an interesting conversation of a lady striving towards financial independence but with an unique past.
You can listen to the interview here. (If you are a podcast Listener do subscribe to his podcast. There are much standard financial planning, wealth management stuff but also alternative stuff such as hacking funeral, insulating your home and investing in ammunition)
This lady’s situation is unique because from the start, her husband and herself have subscribed to good personal finance information, and practicing them well.
They lived a very financially concious life and was able to build up a portfolio of 20 real estate properties that provide an income of $4000/mth.
Yet they still end up filing for bankruptcy and divorce.
Some of the tidbits covered:
- How they got a deeper interest in their own finances
- Some of the books they read very early
- How they build their 20 real estate properties initially
- Their progression in living and flipping real estate, becoming an agent and then mortgage lender
- What got them to declare business reorganization bankruptcy
- Why they got divorced
- What did they do to keep things alive
- The downside of real estate that many do not talked about (recapture depreciation, active management when you are 25 years old versus 45 to 55 years old, effort difference)
- The nuances of difficulty in managing rental properties
- Why she prefers index investing versus real estate
Here are some reflections after listening to this podcast:
What you deemed as doing right might not be foolproof
I always feel a certain sense of insecurity that while the plans that I worked out is well thought out, these plans will still fail in actual application.
The actual implementation is often not so straight forward. I have to agree that they did a lot of things right, but it is scary how actively managed leveraged real estate can unravel.
The ability to suffer well is a very good skill to accomplish
I find it remarkable that people in difficult situations can push forward and work out their problems one by one. Through the interview, you can sense that keeping a marriage together, negotiating with lenders, managing very young kids finally took a toll on the couple.
I believe the lady develop a rare skill of being able to suffer well, or what we termed stoicism.
It is perhaps something that many folks that is trying to build wealth to work towards financial independence need because you will face many setbacks. These range from disagreeing spouse, family that are incredulous this can be done, making hard choices by forgoing stuff common in normal society.
Financial independence is still a worthwhile goal, if you understand it very well
It turns out that, she didn’t lose her head in this ordeal and was still enlighten to push for financial independence despite her setback.
Some goals, if you understand what you want, how realistic they are, is still worthwhile to pursue, despite the difficulties that you face.
You should always reserve taking your opinion all the way because there are some exceptional situations
Case studies like this taught me that, sometimes despite how well you could try to understand the situation, there will be situations you cannot fathom.
I have seen people I considered very smart make decisions that does not make sense. Circumstances pushes us to carry out irrational decisions.
It is easy for us to label people as irresponsible, it might be more worthwhile not to jump the gun and come to a conclusion, and to listen to what happen exactly.