What we learned and how we overcame the financial crises of 2008.
Losing HALF Our Savings
2008 was a devastating time for people all over the world. The only comforting thought was that we were all in it together.
Having just watched the new Netflix docu-series: "Madoff: The Monster of Wall Street," it brought back some bad memories, but had me reflecting on the valuable lessons that difficult time had taught us.
We lost half of our savings which left me thinking, "how in the world are we going to make up those lost funds in time for our kids going to college."
It's only now that I'm thankful for those hard years. It was a wakeup call, realizing that no-one will care about our money as much as we do.
It forced us to seek out other opportunities and investment vehicles outside of stocks.
Fortunately, we were able to recover, but it didn't happen overnight.
We had to completely rethink our investment strategy to minimize our risk.
The saying still rings true today, "if it's too good to be true, it probably is."
Every investment includes inherent risk, so it's critical to only invest what you can afford to completely lose.
While overcoming financial setbacks is difficult, it isn't impossible.
Here are 6 ways our family overcame losing half of our savings in 2008:
Communication: It's important for everyone in the family to be on the same page about the financial situation. Make sure to discuss your financial setbacks openly and honestly with your partner and all family members. History has a tendency to rhyme over time, so rather than shield your kids, let them in on your financial hurdles. They will have more wisdom in the future and be able to better leverage future obstacle of their own.
Budgeting: Creating a budget can help you get a better understanding of your income and expenses and identify areas where you can cut back. This can help you prioritize your spending and find ways to stretch your budget further. By saving, you can actually take advantage of opportunities that present themselves when others are contracting.
Skill Stacking: The best way to increase your income is by learning new skills. You can find a course to teach you any skill your desire nowadays. Leverage those skills by starting a business or educating others about your skill.
Cut Expenses: Look for ways to cut back on your expenses, such as by reducing your spending on non-essential items, cutting back on your bills, or finding ways to save on groceries.
Seek help: If you are having trouble paying your bills or meeting other financial obligations, don't be afraid to seek help. There are many resources available such as mentors and coaches that can teach you ways to handle your money.
Make a plan: Come up with a plan for how you will overcome your financial setbacks. Set financial goals, pay off debt, or invest in a new skill. With a clear plan in place, you can take the steps needed to get your finances back on track.
Invest in yourself and build skills so that whatever happens, you can provide value and in turn be financially free.