What If You Lost It All?

brokeImagine yourself in a beautiful home, publishing bestsellers and teaching a lucrative series of workshops. Your retirement will be comfortable, because you’ve invested all of that income – every cent – in a stable fund that’s been earning good returns for decades.

Your marriage is great. You feel great. All’s wonderful with the world.

Then one day you get a phone call. The money is gone.

Geneen Roth, and many others like her, had precisely that experience. When Bernard Madoff went down in flames in December 2008, he took at least 13,500 different investors with him, according to the U.S. Bankruptcy Court in Manhattan’s 2009 ruling. Some were universities, banks, hedge funds, charities – but many were individuals, some of them famous. Prosecutors for Madoff’s case estimated he’d defrauded them of at least $64.8 billion.

Madoff’s guilty plea and sentencing in June 2009 (150 years in the pokey, restitution of $170 billion) hasn’t changed that figure much. Nearly three years later, some of the money has been recovered – most has not.

In her book Lost and Found, Roth chronicled her shock at losing everything…and shame that she had given her money away so easily, without asking questions. She and her husband took the advice of an advisor they respected. (He also lost a substantial amount of money.) What really surprised her was how much, on hindsight, Madoff resembled her father – a man who also appeared rich, but lied and stole systematically. Why had she ever trusted him?

Roth did what she could. She formed a support group, stopped beating herself up for not paying off the house mortgage…then went back to work. Alexandra Penney, who lost the money she’d been using to supplement a photography studio, sold her vacation home…and went back to work. She also wrote a series of articles, and a book of the same name, The Bag Lady Papers, about her experiences with Madoff. (The MF, she calls him…think about it.)

Penney’s title references an interesting event now known as the ‘Bag Lady’ study. A 2006 survey of 1,925 women (and 1,258 men) conducted for Allianz AG, a banking and insurance firm, showed that 90% of the women surveyed said they feel “somewhat or not at all financial secure”, regardless of how much they made. (And some were very comfortable.) Almost half worried about losing it all and becoming a ‘bag lady’. (That uncertainty, Allianz AG reps felt, explained why more than 18% of those women also had a secret stash of money – something that had occurred to only 9% of the men surveyed.)

Madoff scam victims aren’t the only ones to express themselves in print about losing it all. Sarah Ban Breathnach, the ‘Simple Abundance’ mega-selling author, found herself totally broke, thanks to poor business decisions and a new husband who systematically stripped away her assets. In her book Peace and Plenty, Ban Breathnach admits she’s been a fool. That’s the whole point, after all: “It’s time…to stop cringing from the money mistakes we’ve made…the first step to sanity is taking responsibility for our mistakes…”

That admission is one of the most difficult things for anyone to do. But it is critical for moving on, according to these authors, and many others. Only then, Roth said, could she begin to address basic needs like mortgage payments and groceries. If she made more money – and like Ban Breathnach, she was confident that she could – she resolved to give 10% of it away. (Ban Breathnach’s foundation has given away more than a million dollars in grants.)

Penney’s “best ways, so far, to deal with adversity” are more basic:

*Stay active; get back to work. (Sound familiar?)

*Discipline yourself not to think about the future.

*Discipline yourself  to SNT. (“Stop negative thinking”)

*Recognize and enjoy each good experience (no matter how big or small) to the fullest.

*Don’t eat too much.

*Make a list of good things that came out of your bad experience. (Include: ‘write a book about it, and make lots of money!’)

*Allow self-pity for only a limited time each day. (Three minutes at most.)

Penney’s last rule is harsh, but true: Suck it up – it could be worse. “I learned something important,” she writes. People do feel sorry for you. They do pity you. They don’t know what to say to you….It is like  a death and you’re treated with great fragility – and often, you’re held at a distance. But unlike a death, you can do something about your losses. You can get right back to work. And waste no time about it!”

It’s good advice, even if you haven’t had enough money to invest anywhere – let alone with the MF. Sometime in your life, though, you may well have lost money, time or energy you didn’t have to spare. Admitting that – and getting on with it – may be the start to a new and rewarding life.

“The Madoffs of the world profit because we let them,” Geneen Roth writes. “They’ve had their chance. It can be our turn now.”

“If we take it.”

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Cindy Brick

Cindy Brick is a personal property appraiser, judge and national teacher who loves to write about frugality and other personal finance topics. She has written six books and hundreds of articles, but often focuses on quilting, her teaching specialty. She lives in Colorado with her husband, two golden labs and a flock of very suspicious chickens. Find out more at Brickworks, http://www.cindybrick.com, or visit her personal blog: http://www.cindybrick.blogspot.com

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