A Cautionary Tale

[krenwren]

Just read this interesting article about the slippery slope of over extension.  http://priceonomics.com/what-its-like-to-fail/?src=longreads

I am currently working in a stable environment. But even but even  healthcare is experiencing downturns and layoffs.  A good friend, outstanding professional in her field, was just laid off after 20 years of exemplary service.  I am currently working toward FI but won't get there for a few more years, if I lost my job tommorow, I would be in a real jam.  Anyway, thought the article was good.

[dcheesi]

I would love to see a deeper analysis of how he went broke. I mean 8 kids is a lot, but still... 

I do get the job difficulty, though. As many people found out during the 2008 recession, once you're out of work for a year or so, no one wants to touch you. It took a while for my brother to find a simple retail job after taking a year or two off, and his prior career was in retail management (albeit at a higher level). This poor guy had experience not one but two rapidly imploding industries (print magazines and scripted comedy TV), so it would have been even worse for him.

[SunshineGirl]

This was a great article. And -- if anyone buys the kindle version of the memoir, I believe the author would receive 70% of the $5, which is $3.50. A nice way to help out a guy who seems really nice, and in need of some kindness.

[Peony]

This was great. Thanks for posting it.

[Exflyboy]

Wow..

But it seems his greatest mistake was not realising when he was at the top of the hill.. and when he was heading down the hill not doing a hard and fast MM180.

The guy was comfortably off, that house should have been paid for. This is precisely why I advocate paying off the house before anything else (almost). Why did the kids need private schools etc etc?

He clearly lived within his means, but did'nt take advantage to make himself FI.

Sad.

Frank

[expatartist]

Beautifully-written story, thanks for sharing. Yep he's in a tough field. In the creative industries your shelf-life tends to be pretty short, particularly anywhere near Hollywood: you're only hot stuff if you make it to a certain level before 40/30. That's why FI and other income options are so important for us.

[abhe8]

it is a sad story. from the MMM standpoint, though, he was making 390k + 650k per year at one time. did have a big house but said kids went to private school. after many years of this, he only had a 500k nest egg and some home equity. so to me, doesnt' sound like he saved very much. it makes me feel so sad for his children. wow. i can't imagine living with 14 different families while in high school.

[expatartist]

Good schooling was our priority. But there was no way we could send eight children to private schools, even with an enormous salary

He didn't send his kids to private school, but they moved to an expensive neighborhood in LA with good public schools.

[golden1]

I think there is huge pressure in Hollywood to "live large" and he fell prey to that.  Also, like many people, he figured that he would have this type of income forever and had no contingency plans for if something went wrong.

I like these types of stories because they remind me of why I chose a house that I could afford on only one of our salaries, so that we would never be overextended.  It is very tempting to buy up when all of your friends have much nicer homes. 

[dcheesi]

I think this is also relevant to the "Crisis Resistant" discussion in other threads. He looked at his nest egg and figured that he could go without working for a couple of years (usual definition of CR). But then he took that as a voluntary sabbatical, leaving him with little or no cushion by the time he actually started looking for work.

The lesson there is to not mistake your crisis reserves for money that's available to spend. If you want to take a sabbatical, you should build up your savings for it in addition to your CR savings.