Rolling Out From Under a Rock: Debt and Beyond
Friday, August 7, 2020, 6:00 PM | Leave Comment
In the “before time,” before everything decided to go all “unprecedented” on us, I was an avid trail runner, hiker, car-camper, and traveler.
I’ve had many chances to head out solo since we all started the lockdown, but to say things are different would be an understatement: instead of traveling together and hitting the trails that I used to with my friends and family, I’ve had to make trips on my own. In that time, I’ve had plenty of time to reflect on my life, and where I’m headed to.
I’ve seen too many “Ma and Pa” type establishments—scattered across the western United States—closed due to the scourge of Covid-19: some possibly forever, never to open again.
I’ve felt the indelible squeeze on my own purse strings; I’m pushing hard to keep the “online” aspects of my gym business up and running, but in this climate, online clients aren’t a guarantee.
Every time I head out on a solo trip into the great outdoors, I think about what might be waiting for me when I return: mounting debt, and far too many bills.
Fortunately, as I look upon what’s left of the businesses all around me—some in shambles—I keep my head up thinking of one thing: that no matter what happens, there’s always the chance to start over.
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My Own Start-Up, and Start Over
It was on one such trip years ago, while I traveled northward to run an extensive portion of the Pacific Crest Trail, that I first decided to follow: opening my own coffee shop. After all, I’d just spent the better part of a week traveling through America’s coffee belt, and there was something about the experience that had inspired me to grab a pot, a kettle, and some free-trade beans, and really make a go of it back in Utah.
All seemed well for the first few business quarters; I was constantly stressed and stretched thin, but I felt fulfilled working for myself and making a product I believed in and wanted to share with the public. I tried to do everything right: I decided to pay myself with a “draw” rather than a salary; I hired the best employees; and I invested in plenty of community events and local ad campaigns to get the word out about our product.
Even after lots of hard work, though, the timing for me was all off. I had started planning for the business in 2006: right before the major financial crash. After a few years, things collapsed, and I wound up filing for bankruptcy.
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The Shame Cycle
We live in a culture that revels in the defeat of others—you can’t turn on a tv set without some story of a fallen hero, and It’s almost impossible to completely ignore your past traumas when it comes to failure. It’s like the perfect storm of shame cycles. I felt as though I’d been condemned by the public at large for having to file, and then attempt to rebuild themselves from the ashes.
However, as my financial advisor informed me, I was using bankruptcy exactly as it was designed to have been used. The law permits us a fresh start after we get in over our heads financially. It took me a while to fully understand that there was no “bankruptcy clause” that said that I somehow needed to earn the approval of all of my friends, neighbors, and entrepreneurial peers to be permitted back into the public sphere.
Soon enough, I started looking towards the future: I wanted my own apartment in a nice area, and to do that, I had to start a plan that improved my credit. It took years, but I consulted with professionals and broke the shame cycle. Ironically, even though I was setting out on my own—just like many small-business owners feel like they are during this pandemic—it was in that isolation that I developed some resiliency. I am bombproof now.
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Adapt and Overcome
The following are some tips for rebuilding your finances and credit after a bankruptcy:
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Restructuring your budget: carefully and painstakingly (with an expert preferably) attend to every detail of your new budget. Chances are, even though I had thought at the time that I’d done my due diligence, that I’d let too many expenses slip through the cracks.
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Consolidate Your Savings: save your first thousand, designate an emergency fund, and consult with an expert over your investments.
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Start rebuilding your credit: look over your credit report to the most minute detail.
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Start investing: the prospect of “getting back out there” can be daunting after a bankruptcy, and you shouldn’t invest in high-risk investment assets just yet focus instead on slowly and steadily growing your capital through asset-backed securities and mortgage-backed securities, two of the most important types of asset classes within the fixed-income sector.
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Out of the Frying Pan…
As I rebuilt myself from the ground up after my bankruptcy, I found that I was able to satisfy that “entrepreneurial” itch within myself by continuing to diversify my financial portfolio with varying investments: I improved my credit, and I started saving up to rent my own apartment.
Amid the tumultuous seas of our current global pandemic, small business owners are probably afraid that no matter how positive their attitude, and despite their incredible work ethic, things just won’t work out. And maybe they’re right—and everything will go wrong. But, it could just be the start of something new.
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