My Worst Financial Mistakes
Confessions of a Financial Advisor
They say the house most neglected belongs to the carpenter. After laboring all day driving nails for the benefit of others, there’s just not enough motivation left to address internal needs. In keeping with this adage, some of the messiest financial tangles I’ve witnessed are the makings of supposed financial industry professionals.
Most catastrophic financial mistakes can be traced back to some poor decision(s) anchored in greedy motives. Fortunately, my creed provides a system of motivational checks and balances. My financial mistakes, while unfortunate, have not been catastrophic. In fact, the lessons I’ve learned from them have strengthened my resolve, setting up a stronger financial foundation for my family.
This is a brief history of my biggest financial mistakes, what led to them, and what my wife and I did to rebound. To set the stage, you should understand that being a financial advisor was not my first career choice. I fell into the business by circumstance, having graduated from Pepperdine University with a Bachelor of Science in Business Administration in 2006 directly into a contracting economy.
The timing wasn’t exactly ideal. Many businesses were already on hiring freezes. “Come back in a few years when you have some experience”, was a common response from potential employers. Then I came across an ad on monster.com (yes, it was that long ago), inviting interested parties to come interview for the position as financial advisor. There were over twenty people in the first group interview. Weird, I thought.
I wasn’t naïve going into the interview, having had an internship with a money management firm in college. I knew it was going to be a miserable sales gig but, what else was I going to do? The only thing more humbling than the job description was the compensation, hence the employer’s need to cast a wide net during a recession. Thus began my career in financial services.
Fast forward several years and I am now married with one child, struggling to navigate the economic storm known as the Great Financial Crisis. My career, now four years in, has taken me through one spinoff, a fire-sale corporate takeover, multiple position changes and four employers. My wife and I are upside down on our town home mortgage, a property I bought with my brother with 0% down, mistake one.
The second mistake was spending more than I earned, and you can guess where that led. A mountain of credit card debt. The insidious thing about consumer debt is that it creeps up on you like a car accident. Disaster by distraction.
The final mistake I made, which dove tails into the second mistake, is that I did not properly value my labor. In fact, this issue was so severe that my income declined from 2009 through 2012, even though I had more experience and was working harder than ever!
This all cumulated into a massive issue: we owned a property we were upside down in, digging a debt hole with a shovel provided by American Express (ironically my first employer out of college), an escalating cash flow demand to feed a growing family, and a shrinking income. My net worth was a whopping -$65,000. Ooof!
This mess was not the fault of the GFC. That’s a lazy scape goat. Nor was the fault my employer’s for not paying me what I was worth. My wife did everything she could to support the household. This mess was on me, from top to bottom.
The first thing I had to do was admit this and be the agent for change. When my employer didn’t play ball in seeing that I was appropriately valued, I went and found another. And I didn’t shy away from entertaining any and all options. I completed a comprehensive career assessment and determined that going independent as an advisor was the way to go.
Knowing that I had a non-solicitation agreement in force, I signed up to sell cable service door-to-door for a local telecom company as an evening gig. During the day, I would stand by the phone and rebuild my practice. It worked, and beyond my wildest dreams! I worked my butt off, harder than I knew I could. My absence from home also meant my wife worked harder than ever. Both sacrificed.
By late 2013, we sold our town home for what we owed, paid off most of our consumer debt and bought the home we live in today. My client practice has grown tenfold, and I am now co-owner of National Wealth Management Group, an SEC Registered Investment Advisor with twenty affiliated advisors throughout the country. And, I no longer need to sell cable service door to door, as fun as that is.
Correcting financial mistakes requires you to not only admit they exist, but, more importantly, be willing to sacrifice to solve them. This may mean going through a stressful employer change, crimping the budget, or working a second job. Regardless, it’s going to suck. Relying on some bailout from on high, or playing victim to the economic “crisis” du jour, is not going to solve your issue. You are. Period.
And like a phoenix rising out of the ashes, you will come out tempered, ruthless in your mission toward financial independence.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial LLC. Member FINRA/SIPC. Advisory Services offered by National Wealth Management Group LLC, an SEC Registered Investment Advisory and separate entity from LPL Financial LLC.