Dealing With Financial Ups & Downs in Your Career
So as some know, I’ve been a sufferer of Bag Lady Syndrome for some time now. I suppose it originated with my father who was obsessed with money and my mother who refused to talk about it – and who both did just fine financially in their lives (not that my father left me a thing when he died…but boy did his other daughters from his “real” family travel the globe soon after his death!). Beyond a “Personal Finance” class in high school that taught me how to balance a checkbook (because we all still carry those around, eh) and a savings account opened when I was maybe 10 or 11 years old, I had zero training in how the world of money worked.
Fortunately in my early 20’s I took a job working at my retail employer’s credit division as a collections rep, and learned very quickly what bad credit could do to people. I learned about credit scores and bankruptcies and consumer credit counseling. I saw bad behavior stemming from creditors’ willingness to give $5-10K credit lines in the form of a gold card, watching twenty-somethings fill their closets without full wallets. I knew that a 620 score was the minimum we’d take and saw five digit balances more than I care to remember, and how a quick look at a customer’s credit could ultimately close their account even if this was the first time they’d ever missed a payment.
Because of that, I never, ever have missed a payment on anything in my life. EVER.
My first credit card was with Meier & Frank with a $100 limit, followed by a visa with a $500 limit. I thought I was so cool. Soon thereafter there was Nordstrom (do you know I still remember my credit card number, as I’d tear it up but they’d let me just tell it to them if I wanted to buy something…wow.), then Saks and Victoria’s Secret and something called a Bravo card for a short time.
Pay it off every month? Ha! That was a concept I’d never heard of.
But I was a good little customer, paying regularly, sometimes more than the minimum, making those suede thigh high boots the most expensive Friday night accessory ever after interest was calculated. My credit limits were slowly raised and life was good.
Don’t worry, I’m not leading you over a cliff with this story of mine.
As the years passed and I reached 30, I decided to go back and finish my degree. I first took out a private loan for photography school (Why private, you ask? Nothing like completing a FAFSA and have them tell you that yes, you CAN afford to pay $20K a year towards your education based on your $38K salary! What a joke.), and $30K into that, knew that it’d cost triple that to finish my degree, and would never be something a gal like me could pay off in that profession...nor could I ever get approved for a mortgage. So I took a final $10K, transferred to an online degree program and graduated with my BS in HR instead. I finally left college, over 30 and $40K in debt...plus $20K in credit card balances.
Yet somehow because of that credit score, during the housing bubble of 2006 the powers that be approved me for a conventional home loan at 5.9% with zero down and no closing costs. I was shocked but hugely grateful, and knew that I would do right by my finances and get myself in gear. And through career advancement, adjustments to my lifestyle, renting out rooms, living car-free, and ultimately starting my own business? I was able to pay off all of my debt, minus my mortgage. The day I paid off my student loans, I cried like a baby.
But I'm still subject to what is often referred to as “bag lady syndrome”. More magazine’s article, How Much Money is Enough?, spoke of the character in Blue Jasmine as it relates to many women’s relationship to money:
“Jasmine is women’s fears given flesh: that we are just one pink slip, catastrophic medical bill or failed relationship from homelessness. The anxiety runs so deep that nearly half of all women…fear becoming bag ladies.”
So, so true. While I’ve done very well in my business, if I'm not completely slammed with work, with clients pounding my door asking for my help, I often feel on the edge of financial devastation. What if no one ever wants me to recruit for them again? What if the economy goes south? What if my luck runs out? WTF WTF WTF!!!! Panic! Panic!
To answer my panic-laced questions:
I have been working in this field for 20+ years. Hiring may have evolved, and recruiters may have to move around to stay working, but us good ones? We get creative. I have built a strong reputation based on the work I’ve done. I’ll be fine.
And what if the economy does tank again? It did in 2009, and I adjusted, and I worked, and I paid my bills. I’ll be fine.
Luck? This is not luck that brought me to where I am in my life. In the immortal words recently uttered by Taylor Swift: “Someday when you get where you’re going, you’ll look around and you will know that it was YOU and the people who love you who put you there — and that will be the greatest feeling in the world.” I’ll be fine.
When you work as a consultant and bill by project rather than by an hourly rate, your income can be similar to selling cars or real estate. Basically, it can be profitable, but you cannot predict how or when that business will come. Because of that, my solopreneur business model has made me much more conservative in how I approach money. If you don’t know until the client signs on the dotted line and you receive their first check if the deal is truly going to happen, you have to put in contingencies to make sure you are protected financially in your own life. You need to have backup plans as well – i.e., if business gets really slow, what are the “in case of emergency” tactics to keep you afloat?
Along with those contingencies, you also need to know what you will do with any windfalls. Where are your priorities?
Early on in my business, when I could see I’d be making more than I did in my former corporate life, I promised myself that my debt came first on the priority list. Before healthcare, before retirement, that debt MUST go. I could not be owned by a bank.
You see here’s the thing- financial planners will often tell you to never ignore your retirement planning, and that advice has value – to a point. But there’s also what I simply call “financial sanity” – meaning, eliminating what gives me the greatest emotional stress financially is of a higher priority. And for me, those were credit card and student loans. I needed to make sure I wasn’t being dragged under by interest rates that had me dogpaddling.
Once I got those paid off (I only have one credit card, mind you, which is a mileage card that has been worth its weight in gold, as I put all my purchases and bills on it, then pay that off each month. Those miles have flown me to Australia and France.), I attacked my home equity loan, which was part of my 80/20 mortgage financing. After that, I started making extra payments on my mortgage.
How did I do this all? Yes I did okay financially, but most of it was out of sheer simple living, including:
Before getting remarried in 2014, renting out my basement bedroom.
I was car-free for 8 years, walking, bike commuting and taking the bus.
Grow and/or pick most of our own produce in our garden.
Shopping in the bulk aisles and cooking a LOT.
Most of gifts are homemade or experiential (my husband surprised me with a drive out to the botanic gardens last week – way more fun than a trinket!).
No “clothing budget” - we shop for that maybe once or twice a year at most.
No makeup and I get my hair cut once a year at most. My husband cuts his own hair.
We aren’t fancy when we go out, we don’t drink a ton, and we aren’t fixated with accumulating ‘stuff’. Buying potting soil is usually the big splurge.
We use miles to pay for airfare and hotels while on vacation.
My husband now does basic bike repair and maintenance so no paying for tuneups.
We love DIY and repurposing projects - it's a hobby, not an obligation!
And as a solopreneur, I’ve made it non-negotiable that we have 6 months’ worth of bills in our bank account at any given time, so when it’s slow, we’re not living hand to mouth. It’s super hard at times to not spend it, but it’s SO worth it.
Along with that, we invested in a financial planner for a couple of years to help us calculate what we need to do to meet our goals, from how much I should set aside for estimated taxes, to paying off our house even earlier (like refinancing to a 15 year mortgage, SO glad I did), to retirement planning. As a business owner, I got bad information in the past about retirement, and our advisor’s education has been invaluable in pointing us in the right direction. She (yes, SHE! I wanted to talk to a fellow female so spent time vetting a few in the underrepresented industry) lets me question her, doesn’t get frustrated when we need clarification, and communicates in channels I work best in – shared docs, emails, etc. – along with being available onsite as well.
My husband and I discuss our finances regularly – something that I’ve found to be so vital not just for our bank accounts but for our relationship. He feels more included in a process that he’s not had much experience in (he never had a credit card or owned a car or home before we were married), and I feel like we’re facing this important aspect of our lives with our heads on straight.
Our financial and life goals aren’t always aligned with the outside world. And because of that, I’d often doubted myself for wishing for things that aren’t “textbook”. Then in 2012, I read the book that changed my life: Radical Homemakers. It gave me permission to make new decisions, opened my eyes to the creative ways others are living simply, and spurred me to start in a new, clearer direction in my own life. From making the decision to pause health insurance initially to choosing stressbusters like holistic healthcare, yoga and massage, to understanding exactly how little I needed to make to live on in my home, it woke me up. It gave me courage.
“Our society has indoctrinated us with a lot of fear. Fear of living without a formal job title, the security of a regular paycheck, stepping outside of our educational infrastructure or even the corporate food system. Radical homemakers are pretty tired of all that fear.” ~ Shannon Hayes, Author of Radical Homemakers
So we are headed fiercely in the direction of our next goal: to pay off our home within 5 years. We have a dollar amount that our advisor has given us to make that happen (along with her advice about retirement savings, which I’ve taken and modified to my ‘sanity’ requirement), and are plugging away. We are talking about ways to economize even more. I am looking at ways to expand my business. Our goal has always been to NOT need to make a lot of money to live simply - i.e., if something happens, we can live on one income.
update: in the pandemic, this strategy has truly paid off. while our mortgage still exists, we made huge progress and by living simply out here in the country, when my recruiting business dried up as i saw my clients lay off so many and some shut their doors for good? we were able to keep breathing.
"When you own your breath, nobody can steal your peace." ~Author Unknown