With the arrival of the new Millennium a few years ago, it was impossible to avoid the feelings of many that this was a good time to look forward, learn from the past and truly plan the rest of your life. Most likely, you probably reflected back to the previous months/years and weighed whether they were great…good…so-so…or dismal. Usually that measurement is based on money—did it increase? Because we are in a new century, I would like to challenge you to probe deeper, asking yourself, “Are you rich?”
The Past Changes the Future
To help set the tone, let me probe into my own past decade or two. I had great years…good years…so-so years…and absolutely dismal ones. My own answer to “What does being rich mean?” started with a phone call in November of 1981. Back then, my family had “it” all. A beautiful home (including pool and hot tub) in an exclusive section of Northern California, two Mercedes, investments, kids in private schools, a vacation condo at Lake Tahoe, a prosperous business, respected in our community and unlimited friends. Life couldn’t be better. . .or so we thought. That phone call was from one of the banks I worked with in San Francisco. It changed our lives—radically and overnight.
In the old days—the great, good ones–I use to raise money for various ventures, usually in the millions. I loved old buildings, buying and restoring them was something I felt immense pleasure in doing. One of my favorite projects was the restoration of an old laundry. Its new life would be that of a small European type hotel with 17 guestrooms. The financial projections looked terrific. All the partners would get tax deductions, annual cash flow and a handsome profit when the project was projected to sell in five years. What more could we want?
The day after the November phone call, I had a “Be here with your most recent net worth statement” meeting with the bank that had underwritten the construction loan. It was a horrible meeting, with a series of other meetings following in quick succession. I discovered that my partner of two years and her partners had taken on another partner. Unfortunately, she didn’t advise me of the relationship and I was too naive and trusting to discern all the warning signals. My partner and friend was deeply involved in drugs. The other investor partners and I had unknowingly paid for them.
After an audit, we determined that over $450,000 was missing from a construction loan that I had personally guaranteed. Gulp. The loan officer (at what was quickly becoming my un-favorite bank) wanted to know how I was going to pay off the discrepancy—could I write a check to cover it? The only answer he wanted to hear was, “Of course.” I was stunned. And angry, incredibly angry. My husband walked around in a cloud, not fully comprehending what “paying off the loan” meant to us.
A family “powwow” was called. Everything was laid out for all to see and hear. Our three teens had no idea how much their life style would change in the coming months. They were told that there was a very high probability that we would lose everything–the house in the tony neighborhood, the resort condo, private schools, no more expensive vacations. And they were told, “We did not want any BS from any of you. No demands–we our fighting for our lives.”
Where did the fight take us? Down an incredible journey. In the end, we lost everything that we had worked for. The home, the condo, both cars, jewelry, antiques, artwork, the business, private schooling, investments, savings–everything. Over $1,000,000! Our comfortable net worth was now in the red. We even lost many of our “friends.” In the middle of it all, my health took a nosedive, landing me in the hospital for three surgeries, including cancer. I felt that my life was a mess, that I would never be able to make the money I had in the past, that my reputation would always be mud, and that I was a total loser. The childhood ditty—nobody likes me, everybody hates me, think I’ll eat some worms … or just disappear, forever… ran through my head.
Truth be told, I didn’t feel rich. I felt homeless, which I was; I felt lonely, which I was; I felt betrayed, which I had been; I felt hurt and angry, which I was; and I felt sick, which I was. Did I recover? Yes I did. Did I become rich? You bet. So can you.