Saturday, November 1, 2008


I knew I wanted to be rich at a very young age. I didn't know why, didn't really have a purpose for money, I just knew I wanted to be rich. I wanted to live in one of'em big ole' houses on the other side of town. You know the ones with the big driveway, the big ole' house with pillars in front, and the fancy cars in the driveway. I knew from the time I entered the 7th grade I wanted more than an average life. Even though I lived an average life, I never thought too much of myself but I never thought of my self as average. Oh, I have insecurities, but not then I didn't. I was young wide eyed and full of energy. During my teenage years and early in my twenties I worked a variety of jobs and each one had an impact on shaping how I manage work and money.

Wanting to be rich is what possessed me to get up everyday at 3:30 AM while I was in the 7th grade to shovel ice and load catering trucks. I started this job during the 2nd week of the school year and I earned more during my 3 hours of morning work in the the first week on this job than I did the entire time I had a paper route for the previous two years. But I also had a weakness, baseball. So to accommodate my desire to play baseball I quit this job during the spring. I tried to do both but the early hours didn't leave me with much energy at the end of the day and I also started falling asleep in between loading trucks while waiting for the grocery shopper to retrieve things from the commissary. I bumped around from part time job to part time job when I was 13 and 14. If I wasn't working at a job it was because it was baseball season and I was on the field playing.

My best teenage job came when I was 15. I was hired to work in a gas station and unfortunately the owner of this station had some habitual problems and the other teenage employees were robbing her blind through cash shortages. After working here for a couple of months and seeing this I tried to talk with her but she was in a bad place and just couldn't focus on her business. Then one early summer Saturday afternoon she called into the station while I was working a shift and told me she would be taking a vacation and wouldn't be back to the station for two weeks, and I should tell everyone they would be working the same shifts they worked last week for the next two weeks. After I got off the phone I started the register closing procedure for the day as we were closing and sure enough just like any other day the till was short by several hundreds of dollars. This caused me to make my first executive decision, it was a bit risky since i didn't own the business and I most certainly wasn't a manager but in my view it was absolutely a necessary executive decision. I called everyone who worked at the station and told them to come in the next day and pick up their last paycheck which I would pay in cash. I told my coworkers the owner made me manager of the station and I was firing them for stealing. There was not a one of them that denied my accusation and each one came in the next day and picked up their last paycheck. The owner ended up being gone for 5 or 6 weeks and I worked the station 15 hours per day during this period. This was obviously good for my pocket book and the owner was understanding after I pointed out I had saved her approx $2k per week in thefts. I used the money I earned from this summer to buy and fix up my first car, a 1954 ford pick up, still the best car I ever owned.

I truly believe you are a product of your environment. Now I need to stop here and point out that just because the dog has been taught only certain tricks doesn't mean he can't be taught new ones. If you weren't raised in an environment which was conducive to good money management then that should sound off alarms correcting any deficiencies should be one of the most important tasks you ever do. My parents were good people, good parents, and good providers. They managed their money well considering there were six in our household, mom dad and four kids, and both worked union jobs. They instilled in me a work ethic and a commitment to character which lives in me today. They worked hard to provide for us kids and to give us everything within reason we wanted. My siblings and I never wanted for nothing. Both of my parents had a strong work ethic. My dad was a meat cutter who would rise at 4:00 AM and go to work. He worked for 30 plus years in the grocery business. My mom worked as a clerical worker in the bakery business driving 40 miles everyday into the City from our suburban home. These examples of working hard and taking on responsibilities shaped how I look at work and responsibilities. I have a work ethic which is strong, stronger than most, and my character drives me to live up to my responsibilities. Now before we go much further, you might be saying to yourself, you know you're telling us you don't have money to make good on your responsibilities but then say you have a strong desire to live up to responsibility, what gives. Well you would be right in wondering why I could claim I have that type of character. I claim and own it because prior to my business failure I did live up to all my responsibilities. If I bought on credit I made the payments. If I paid for something with a credit card I either paid of the balance in full at the end of the month (something I often did) or I made the payments. My current situation is more a result of a business failure, not the direct and sole result of consumer behavior. However, my consumer behavior certainly exacerbated the business losses. Think of throwing gasoline onto an open flame. This wouldn't start the fire but it certainly would create some additional heat. I will work my way out of my current business and personal debt mess and will come through it a stronger, and more prosperous person. There is no doubt in my mind this opportunity to struggle is a vehicle for learning and just masquerading as a nightmare.

When I was a kid my family wasn't anywhere near being rich but my family lived a good life. We lived in a house my parents owned (with the bank of course) in a suburban middle class neighborhood. You know, one of those neighborhoods where the neighbor kids next door were your best friends and played out front from daylight till midnight with safety almost an after thought. We always had an abundance of food, durable (not fashionable) clothing, and of course ample entertainment. Movies once a week, bicycles, roller skates, lots of baseball and football, motorcycles, and plenty of play time. I can truly say I had a great childhood. But as I matured I still wanted more.

In my early twenties just before my wife and I married we made a decision to sacrifice to reach our financial goals. Rather than pay rent we scrimped and saved, lived with our folks, and with some help from family bought our first house. We had just barley turned twenty. In fact, the first 15 years of our marriage we never really spent much money other than for investments, businesses, our houses (we moved up twice), and our kids education. Any other potential purchase was put on the back burner and or just not purchased. We did well in the stock market, good in real estate starting in the 1980's (remember the early 80's 18% interest rates), and started businesses. My first self employed gig was as an all commission salesman. I made this transition from a salaried governmental job during the recession (some would say depression) in the early 1990's. This lead to much success as a commissioned salesman. Within three years I was making seven figures and making more money myself personally than the entire company. I quickly outgrew the company which prompted me to look for other opportunities. I found one in a slightly larger firm in which I accepted a partnership. Big mistake.

As I settled into my new partnership roll I got to know the partners better, and I can say today I think I was getting taken advantage of on many different levels. In addition to being the new kid on the block I also happened to be the one person reeling in the majority of new larger business. I was so busy producing I didn't have the time to pay attention to the details of the financial accounting within the company. I also didn't have the entrepreneurial experience to setup and review company finances. But after bringing in large deals and still not receiving the kind of net profits I was looking for and expected I started to look more closely at the reasons why I wasn't receiving the returns I thought I should be receiving, and this turned out to be our company expenses. Holy cow did I get an eye opening view of runaway expenses. For a company our size to spend as much as we were spending on any given line item was just ridiculous. Towards the end of my first year I was forced to deliver an ultimatum to my partners either make the hard decisions to reduce expenses or I would be forced to leave. They reluctantly agreed to make the necessary changes, some of them personnel changes to long term employees, to get our expenses to a level that allowed us to operate within industry norms. But the biggest disappointment in taking this partnership was that the company growth we had talked about when I joined the firm was just an illusion to get me to make the move. My partners were 20 plus years my senior and they were comfortable with the present size and scope of the company. I knew not long after my ultimatum my time was limited here, I just didn't know it would take me another 4 years to execute on my exit plan.

After five (5) years in my new company I was ready to make another business move. The five years had been good to me. I was able to earn millions of dollars and buy several large real estate investments. My retirement account had fattened up with maximum annual SEP contributions. My savings increased substantially and my monthly income from the real estate investments was healthy. With all of this I was ready to now make my move. However, because I had worked so hard to create the business activity I had enjoyed at this company I didn't want to just resign my partnership. So I reach an agreement with my partners. They agreed to allow me to continue to work on projects with my current and former clients as part of the company in exchange for the continuation of me paying our monthly partnership expenses which totaled approx $3-4K per month. Good news, so I thought. With this new agreement in hand I moved forward to open a new business with my new business partner.

My new business partner and I decided to open this business from our individual home offices. We each operated from our own office but met regularly each day to go over strategy and business execution. This arrangement worked out extremely well and helped us to start our business with a minimal of expense. I would highly encourage anyone to open a business you could operate from home. Don't listen to those media pundits cautioning you about a home office, if you can't make the decision to work hard from a home office because of the distractions or lack of camaraderie then you shouldn't be opening up a business. If you need friends at work then go get another job or keep your current job. As a business owner you need to be able to do business from anywhere, coach, couch, dinner table, hotel room, office, cleaners, ball field, etc. Our business timing was good. We did some business early on and parlayed this into other business activities which resulted in a good level of business activity. The only bad part was this business activity didn't translate into income. These business activities actually were costing us thousands of dollars plus lost wages. We had gotten ourselves into so many different projects we couldn't afford to support them while not having any income coming in. And remember I also had to support another business which was proving to be a losing proposition for me. While we sacrificed and supported the business after two years we had no choice but to call it quits. My losses from this period were fairly substantial but the real killer is I had to sell some really lucrative real estate assets to meet my business obligations. This one element of this business failure still hurts but it was what was needed at the time. If I could reverse just this one element the equity in this one asset I had to sell would be worth somewhere around $5MM in today's values. To pour more salt onto that open wound I almost had this investment paid off when I sold it. I owed 2 more years worth of payment on a ten year note when it was sold.

As I said in the beginning I always new I wanted to be rich. I have been, and I will be again. This gets us through to about the Y2K period. Keep an eye out for the 2nd part to this two part article. The challenge now is to stick to my new personal financial plan and create new wealth. Follow me on my journey to sacrifice whatever it takes to create wealth again.

To your Health, Wealth and Happiness

The information contained in this site consist of a series of articles and are the sole opinion of the Baron Von Savings. The Baron is not a professional money manager, tax expert, accountant, attorney, or stock broker. You should consult with an appropriate professional before making decisions concerning your finances.

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