The next stage of my life involved finding a business that I would enjoy, find fulfilling and that would keep me local to the North Bay Area. Only a couple of months after I left the graduate Economics program at UC Davis, I was introduced to the mortgage business. Actually, I chose the mortgage business, and was lucky enough to decide to enter that business in early 2003. As many of you know, 2003 was the middle (and as it turned out, the end) of what was then called "the Refi Boom." So it was very good timing for someone who wanted to get into that business. It took me less than a month to find a job and I hopped onto the roller coaster ride that was the mortgage business of the last decade.
The thing is, I saw the writing on the wall almost immediately. By that I mean that it was clear to me that the mortgage business was in a pattern that was unsustainable, with interest rates at all time lows and production volume at all time highs. That volume simply couldn't survive even a modest increase in rates, not without wrenching changes inside mortgage origination outfits like ours. From talking to others working in the business, it was clear that companies in the business were more than willing to cut loose large numbers of its employees when times changed. I don't know whether I thought I'd be one of the lucky ones that was kept on or if I liked what I was doing too much to leave the business. Maybe it was simple inertia. Anyway, I stuck around and started building a network of contacts in the business and buckled down to work loans.
Even prior to entering the mortgage business, I'd always been a saver. I'd always geared that saving toward future goals like higher education and my retirement. The mortgage business changed all that. I really started socking money away from day one, knowing instinctively that I needed to plan for the ups and downs of this oddly counter-cyclical business. I had heard about various gurus that recommended having six months worth of expenses saved up just in case you ever became unemployed. I took this to heart and decided to take it even further.
At the same time, I read and became enthusiastic about the ideas of Robert Kiyosaki of the Rich Dad, Poor Dad series. The key advice I took from Kiyosaki was that even as an individual and employee, I needed to maximize the amount of my personal income that was "dropping to my bottom line", meaning money that I would be able to save and invest. My personal goals became two-fold, 1. To maximize the amount of cash flow from from my assets (using Kiyosaki's definition of assets) and 2. To increase over time, through my assets, the number of months that I would be able to go without working to a point where I could "retire" on my own cash flow and savings. So I started systematically setting aside a certain percentage of my income every month in accounts for savings and investing.
This savings cushion served me well when I was laid off for the first time from the mortgage business toward the end of 2003. Yes, that's right, I was laid off less than a year after I started. And you're asking yourself why I didn't just leave the business right then and there? I almost did. In early 2004, I found work at a little telecom place in Petaluma as a temp while my wife was pregnant with our first child. If they'd offered me a permanent job in what I felt was a timely manner, I probably would have taken it. But they didn't, so I left in June as the birth of our child grew near. And a week later, I was working at another mortgage company. Back on that roller coaster and loving it.
Once back in the business, I redoubled my efforts at saving and investing. Having that first layoff experience under my belt convinced me even more that saving money and also developing available credit were essential to my survival in the business that I had grown to love. I knew that periods of unemployment were a likelihood for anyone in the business and I became a professional saver. We also resolved to keep our expenses low. Over the next three years, the temptation to buy a new car and especially a home, could have been very dangerous for us. The parking lot at my office was filled with giant SUV's, and much of the talk in my office revolved just as much around my coworkers' mortgages and homes as it did around the clients we were helping to obtain HELOCs. However, when I ran the numbers (which I loved to do), I couldn't get them to work. Even on the amount I was making as a loan officer, I couldn't see how I could afford to buy a $400,000 to $500,000 home. And I wasn't about to move an hour away to where homes were more reasonably priced at $300,000 (which would still have been quite a stretch for us). So I kept saving and investing.
My cash flow plan wasn't working out as well as I'd hoped and I still was nowhere near that goal. My savings plan was doing quite well, though. I had what I thought was at least a year's worth of expenses saved up and I was continuing to look for ways to invest. And I had a strong foundation of available credit which I knew I could draw upon if the need, or a strong investing opportunity arose.
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