For those of you who are not familiar, here is a short back story. David and I used to have FICO scores above 800 before the 2008 fiasco. We never used to carry any credit card balances. Then 2008 happened. It wasn’t just that the market crashed. Three months prior to the crash, our house was destroyed by fire due to a lightning strike. It was one of those situations where you would call it truly “an act of God.”
We needed to get our house re-built. A year later, when the bills came due, over and above what the insurance had covered, we found out that no bank was lending any money. Not to any business entities. Not to anyone. Not even to those who had higher than 800 credit scores, like us!? So, we had to pay cash for it with our retirement funds.
This situation ended up depleting our funds to the point where we had to start carrying credit-card balances and paying high-interest rates, just to keep our businesses running. Our FICO scores tanked to low 600’s and remained there since. It bothered us a lot. Oh, and, adding more rental properties? Forget about it!
Fast forward nearly 12 years: Less than a month and a half after having sold our house, the numbers rebounded back up to above 800. Our financial-management habits have not changed at all. The only difference? We paid off all our outstanding debts.
Despite the bumpy and scary ride every step of the way, I have no regrets having taken the path that we did, getting to where we are today. In fact, I’m glad we jumped into the unknown when we did. From my perspective, we had no choice but to do so because I was no longer able to trust the faceless Wall Street entities to be the fiduciary for my hard-earned retirement funds in 401(k).
It feels fantastic to not have financial worries any longer once again. Before the 2000 crash, it was by having a well-paying job; i.e., based on the old paradigm. Today, it is by owning passive-income properties; i.e., the new paradigm. The best part? No one can fire us except for ourselves. Boom!
Happy investing!
