My fall into debt and the journey out of it
A few months back (April 2016), on the way to school, I had a heart to heart talk with William, my 7-year old.
“Will, if it’s okay with you, for the next few weeks or even months, we will need to limit our spending a bit, because daddy’s in debt, and it’s so bad that I had to borrow money from your aunt last night.”
He kinda understood the concept of debts, but still, in his innocence, he asked how I got myself into debt.
And here’s the story.
It has always been any consultant’s dream to secure a huge, long term contract. Personally, it took me a couple of years before I landed such a deal. Prior to that, it was smaller, often one-off gigs, and together with the public workshops and conferences I ran, I make decent money. However, landing that huge contract caused me to fall into a trap that many entrepreneurs and consultants go through — complacency.
In the excitement of the huge contract, many would forget to leverage on the security and expand the business, open new markets and explore new territories. I made that mistake, and when the contract was put on hold mid way for 6 months, I drained my savings, missed a few bill payments and for the first time in 12 years, lapsed on my credit card bills.
And boy, did the banks teach me a lesson or two about compounding interest. Before I knew it, my cards was maxed out and blocked, and for the first time since my college days, was that afternoon when I inserted my ATM card into the machine, fingers-crossed, cold sweat down my back, and the balance that came back was less than RM100.
Did I realise the mistake too late? Yes.
Did I not do something the moment the contract got suspended?
Yes, but due to the market conditions, new deals were slow to come in, and the marketing engine — dusty and rusty due to the long abandonment — was slow to jump start. Cash out was faster than cash in, and the nights of anxiety attacks came back.
To make matters worst, an investment I made turned sour and RM15,000 was lost, and RM5,000 was a friend’s money which I had promised to pay. Trimmings were made all over my expenses — lesser travels, cafe-hopping and lifestyle indulgences. I was back to working longer hours again, as I desperately tried to stay afloat with any quick deals I could make here and there.
The lowest low was when the due date of Will’s school fees came around, and I had to reach out to my sister for a loan.
So that was the reality just merely five months ago. Though today (8th October 2016) I’ve cleared off all debts, settled my loan to my sister and paid back my friend, thinking back, I can still feel the invisible grip around my neck, and the shortness of breath that I had grown familiar with, but never really got used to.
What lesson do I walk out of this experience with that I can teach Will?
- Never stop marketing.
- 6 months savings is not really as much as you think.
- Watch the baseline incomes, and be realistic with the stretch ventures.
- Fuck the ego and ask for help.
- In the time of greatest challenge, new skills can be learned, new partnership can be formed, new believes can be adopted, new habits can be developed.
- Shit don’t hit the fan out of random, so pay attention to the little things.
- Be open to your life partner and have honest conversations.
- Be mindful of your spendings.
- It pays to keep a low monthly overhead, both in business and in life.
- Reward yourself when you’ve walked out of the dark.
- Don’t bother praying that you won’t be in deep shit again. Instead, learn, do and be smarter.
- It sounds like a cliche, but seriously Son, what doesn’t kill you makes you stronger.
As much as I wish you will not face the hardship and tough times I did, in truth, there is no such wish. In life, we will be tested on all fronts — health, money, relationship, faith, family, losses. Some called it a test from the higher power; believe that if it assures you of the good that will come from the hard times. Others called it the training of the mind; believe that if it assures you of the untapped potential within you. Some called it the test of character; believe that if it assures you that you will only walk out sturdier, stronger, and smarter.
I simply called it as what it is — life — and the faster you can believe, accept and embrace that fact, the sooner you’ll truly start living.