Time to Hit the Reset Button on Life
Personal_Finance / Employment Jul 08, 2010 - 05:10 AM GMTBy: DailyWealth
Dr. Steve Sjuggerud writes: "We're going to have to write a big check to get out of our house," a friend told me over the Fourth of July weekend.
He's moving far away from here.
"We close on our house this month," he told me. "I'm trying not to see it as a big loss, though. I figure we're just trading out... I figure the house we're buying where we're moving is probably at the same kind of discount."
My friend and his family have to recalibrate their lives...
Back in the real estate bubble, they were living high, hardly working. They'd borrowed heavily and put it into real estate, which gave them a large and ever-increasing net worth... until the bubble ended. I'm not sure how much of that net worth has disappeared – but there's a chance that most of it is gone.
The regular vacations and extravagant lifestyle are things of the past, for now. He is back to work – hard at work – in a new town, with a new life. With his willingness to change, and his work ethic, my friend will be a success at whatever he chooses.
He is one of the few smart ones out there now... He is moving on. He has changed careers. He's moved far from our bubble area. And he's recalibrated back to a more normal standard of living.
Surprisingly, many intelligent folks haven't acted as smartly as my friend.
You see, where I live on Florida's east coast, real estate and tourism were the top businesses in the bubble. Now, both of these are dead. Yet the guys who were successful in the bubble haven't moved on. They're still sitting on their real estate or their tourism-related business, hoping for a return to old times.
While the tourists will return and real estate prices will bottom some day, the brutal reality is, we won't see the same levels of spending and real estate prices for possibly a decade or more – longer than that crowd can wait.
So what can you do?
Taking a huge loss on your home doesn't sound like fun. Finding a job far away in a non-bubble industry is a tough decision to make as well. But my friend is doing the right thing, and he has the right attitude.
In short, instead of sitting around hoping the good ol' days return while his investments fall in value, he bit the bullet. He's making a new life with a more normal standard of living.
In a decade, he'll have the money to buy all the real estate around here he wants. Meanwhile, the guys who sat around moping and hoping won't have the money or the optimism in a decade to buy.
If you're in a position like my friend was – in a bubble town in a bubble industry – don't forget you have a choice. You can stay and hope the bubble days return. Or you can leave and try to create a better life.
I realize 99 people of out 100 will stay and hope. But it might be time to do something bold... something like my friend did. He can always come back, and it will be just like he left it. But now that he left, he's succeeding... I'm not sure when he'll return.
Good investing,
Steve
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