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AS WE GET OLDER, the financial hits often grow far larger, for two reasons. First, we’re typically wealthier, which means the potential dollar losses are bigger. Second, as we age, there’s greater risk of hefty health-care costs, notably long-term-care expenses.
Almost everybody endures at least a few big financial hits during their lifetime. Perhaps you lose your job, and it then takes many months to find work. Maybe your parents need nursing-home care and you end up footing part of the tab. Maybe your longtime spouse leaves you, and suddenly you’re saying goodbye to half of everything. Perhaps you buy a home and discover a huge problem, such as a leaking underground oil tank that requires a costly environmental cleanup.
When I lived in New Jersey, I knew two families who suffered this last fate—which is why I breathed a huge sigh of relief when an abandoned oil tank on my property was found to be intact. But while I dodged that bullet, I’ve lately been on a five-year losing streak.
No, I haven’t had any significant health issues, thank goodness. But I’ve suffered some notable financial hits. My younger self would have found the dollars involved unfathomable, and even my current self doesn’t like to dwell on them. Still, today—in my more philosophical moments—I classify these losses as the “price of success,” because they were made possible by the moderate amount of wealth I’ve accumulated.
A failed business. In 2016, I was contacted by two financial planners I knew about getting involved in a financial startup. The project and the participants morphed over time, and the whole thing came to an acrimonious end in early 2018. This debacle cost me around $10,000, plus huge amounts of time.
I would never have got involved in such a longshot venture early in my career—because I simply couldn’t have devoted the necessary time and I would have balked at the financial risk involved. There was, however, a silver lining: The original version of the Two-Minute Checkup was developed as part of the startup, and it now resides on HumbleDollar.
Two bear markets. Like anybody with significant stock exposure, my portfolio took a huge hit during 2007-09’s market crash—as measured by percentages. But my dollar losses in early 2020 and in 2022 were much larger because, by then, my portfolio was far bigger than it had been a dozen years earlier.
But among the misfortunes detailed here, these were the losses I was most sanguine about. Big short-term hits are the price we pay to earn healthy long-run stock market returns, and I’ve never been much bothered by the financial pain involved.
Another divorce. It’s a long and painful story, and—because it’s not solely my story—I don’t feel I can reveal all the gory details. But this much I will share: In July 2019, my second wife demanded a divorce. A member of her family, who had previously been unstinting in his praise of me, advised my then-wife to “hire the best Manhattan divorce attorney you can and screw him over financially”—an incident I heard about not only from my then-wife, but also from her sister.
Fortunately, while the divorce wasn’t cheap, there was no financial screwing over. The marriage had been relatively brief, and I’d been careful to keep my finances entirely separate, so my assets never became our assets. Still, it seems my earlier financial success made me a tempting target—another problem that comes with age and growing wealth.
The long goodbye. Amid the divorce negotiations, I decided to decamp from New York to Philadelphia. In September 2019, I put my apartment on the market. It finally sold in March 2022, a grueling two-and-a-half years later.
Along the way, we had a pandemic that nixed interest in living in close proximity to others in an apartment building. I reached deals with two separate buyers, but both subsequently backed out. I even hired an architect to create plans to turn the apartment—which was really two apartments combined into one—back into two apartments, figuring that way they might be easier to sell. But after paying for all the architectural plans, I discovered the construction costs would be far higher than I was initially led to believe.
Eventually, I reached a deal with a third buyer. The buyers’ attorney conducted not only a title search, but also a municipal records search, which didn’t turn up any paperwork proving that the apartments had been legally combined in 1964, almost six decades earlier. That perhaps wasn’t surprising, given that the town’s records from that time were chaotic. Still, before the apartment’s sale could go through, I had to obtain a certificate of occupancy, which required architectural drawings, some upgrades, and inspections by the town’s buildings department.
To be honest, I can’t bring myself to calculate what all the delays and additional work cost, but I’m confident it’s comfortably over $100,000. It was an expensive apartment in an expensive part of the country, and that meant the various headaches were also expensive. When I was younger, I would have simply stuck it out and stayed in the apartment, because the cost of moving would have seemed so prohibitive. But I wanted to get on with my life and, fortunately, I could afford to do so.
Wall-to-wall problems. In September 2020—for those keeping score at home, this was 18 months before I managed to sell my New York apartment—I bought a small, 100-year-old townhouse in Philadelphia, not far from where my daughter and her family live. The house was a little dated, but it was of the size and in the location that I wanted.
After living in the house for a while, I came to feel it was a bit dark, and Elaine—who was now living with me—agreed. We decided to install much bigger windows at the back of the house, both downstairs and up. As part of the work, which began in May, we opted to upgrade the kitchen. Many Philly townhomes from the 1920s have what my architect refers to as “the shed,” an add-on at the back of the house that was once a mudroom but has since been fully incorporated into the house.
It turns out these sheds often weren’t well constructed—or, at least, ours wasn’t. As the remodeling project’s lead carpenter put it, “Nobody good has ever worked on this house.” I’ll save the full gory details for a future article. But the bottom line is, shoring up the back of the house with a new foundation and new framing will cost at least $33,000.
That $33,000—and the other dollar sums mentioned here—pain me. Could I have avoided the losses involved? It’s a question I’ve asked myself many times.
Maybe I should have pulled out of the financial startup earlier, when my doubts about its prospects first emerged. Perhaps I should never have remarried. What about my two real estate debacles? I’d never heard of a municipal records search and nobody suggested conducting one when I bought the place, so I don’t know how I could have avoided that pitfall. Meanwhile, I had my current home thoroughly inspected by a firm that came highly recommended by an architect. But even a top-notch inspector can’t see what’s under a concrete floor or behind wallboard.
When we make financial decisions, we make the best decisions we can with the information available at the time. But that’s no guarantee of a good outcome—and the more money that’s at stake, the bigger the potential hit. No, we usually can’t predict when these financial hits will strike. But, at a minimum, we can make sure we’re financially prepared.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.
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Jon, like many have long appreciated your candor, obviously from the financial perspective but also for how it’s impacted your own life. Sorry to hear of the more recent events but wish you the best, money wise and otherwise.
What a wonderful perspective! So many financial items seem so daunting as we age just because of the sheer increase in numbers. This shows a practical application in relation to life, Jonathan’s signature move. Thank you!
A divorce lawyer asked me if I knew why divorce was so costly. I didn’t know. He said “because it’s worth it”. I chuckle whenever I think of that.
Thanks, Jonathan, for your openness about experiencing such difficult mistakes in your life. Like other people said, even though they were quite steep prices to pay for your overall (financial) success, at least you can take comfort in not getting sick so badly that require people to pay huge OOP money and on top of going through the difficult health scares health insurance companies like to play ‘screw over’ games with such patients. That’s a very serious ordeal deal with in this country.
OTOH, I think you gained some good lessons during your first divorce because you didn’t get “screwed over” the second time when you said “<…I’d been careful to keep my finances entirely separate, so my assets never became our assets.>”
I am wondering though how you did it if you’re willing to elaborate a little. I am guessing you asked your 2nd wife to sign a prenuptial document or is there another option to protect your assets and not lose 50% in a divorce?
No, we didn’t have a prenuptial agreement. But in a divorce, you can typically keep everything you brought to the marriage, as well as any gifts and inheritances you received during the marriage. If, however, you combine those assets — say, stick them in a joint account or use the money to buy a home that’s jointly owned — the previously separate money can become a marital asset and hence at risk during divorce negotiations. I was careful to keep the money I’d brought to the marriage completely separate.
Jonathan, I’m sorry about your string of bad luck. Let’s hope that mean reversion comes into play here and that your future will be trouble free. Thank you for the courage to be vulnerable. I believe we all have painful stories, whether they be financial or otherwise. I know that I do.
When my son bought his first house, he was thrilled that his mortgage was cheaper than his rent. I could only laugh as he had yet to experience what every home owner discovers: owning a home is not cheap. We bought our current home (built 1912) in 2000 and have easily put as much into repairs and improvements as the house originally cost us. I guess we’ll make some money when we eventually sell it, but it will have been more of an enforced savings plan than a return on investment.
I’m sorry about your divorce. Always sad. My father is 4x divorced. My plan like everyone’s is zero times.
I am counseling a friend who will be filing bankruptcy on about $6MM of debt from a business her fiance started using her credit. Comparatively you fared pretty well.
That’s a seriously rough five years, I hope the next five make up for it. Still, I’d say a financial hit is better than a bad health scare.
So true — time and good health are much more valuable than money.
Jonathan,
Thanks for your willingness to share some of your own misfortunes. As others have said, if someone as financially astute as you can have an occasional stumble, it becomes a little easier for the rest of us to make peace with ours.
As for the issues with your abode, I’m very sympathetic as our 37 year old house, which we love, needs constant attention. A favorite saying of mine: “A house is always hungry.”
Few people recognize the true total costs of owning a house, especially an older one. We did major work on both of the houses that we have owned and really enjoyed living in them. But I don’t dwell on the amount of cash we put in!
Luck, both good and bad, plays a significant role in our lives. As you said in your final paragraph, the best we can hope to do is to plan based on the limited information we have. And as you’ve written before, to be flexible and willing to modify those plans when appropriate.
Jonathan, thank you for sharing. I moved to a new location and after a year, I received a note from the city saying the home had only a Temporary Certificate of Occupancy and since they could not get a response from the builder, it was my responsibility. Everything turned out fine, but I never thought to check for a Certificate of Occupancy before buying the home. One never knows.
Wow. My condolences. That is a lot of not good stuff to happen to one person
When I had a serious medical situation that scared me down to my toes, my doctor said two things to me at different times that soothed me and gave me comfort and confidence. The first thing he said was “We see this every day.” The second thing he said to me later when I had a different complication was “I’ve seen far worse.” Both of those took away all my anxiety and fear, and let me know that I’d live to see another day. My doctor had no idea of the impact his statements had on me when he said them. I later told them that he should say those things to every patient to relieve their stress.
Let me say those two statements to you about your financial hits. Everyone makes missteps that cost them money. Some things in life are not fair (like some of the support presumptions for older Americans in divorce law). But life goes on. And time heals. You may make additional missteps. If you do, my comment will be: “We’ve seen far worse.” Soldier on.
Thanks for the wise words!
Good article Jonathan! You are correct. We all experience big financial hits at some time or another.
We made the decision to stay in place in our home upon retirement. In the past 13 years we have spent lots of money on home maintenance and renovation. We have a 2 acre wooded lot with lots of beautiful trees. Trees are like people. They get diseased and die and then have to be removed. I have spent somewhere between $15 and $20k on tree removal. I had to encapsulate my crawl space at a cost of $15k. Those are just 2 of many things we have had to deal with. After all the things we have done, I think we would have come out ahead moving to a new home.
As it is, we may wind up buying a newer home anyway, because I am no longer able to keep up with everything.
I completely understand the house issues. Having occupied my current home since March of this year, I have replaced a leaking roof, repaired several electrical issues, (why are their no neutrals in my 3 way switches,) two leaking faucets replaced, a fireplace insert whose only maintenance was Santa sliding down to break the ceramic logs, and a water leak due to some poor quality siding installation is about to be replaced.
On the bright side, I’m now 3 blocks from my daughter and her family, and retirement allows me to enjoy that. The house has cost me money, and I do have more concerns. But overall, this is where I want to be at this stage in my life. The cost is worth it.
Thanks so much for sharing this article. I thought you financial types never made financial hiccups. After reading this article I feel much better about my bad decisions/bad luck. I think a lot of us non financial types out there are relieved knowing that we’re not the only ones who get hit by Life. Getting hit with financial mistakes took a toll on me for years. I can finally forgive myself and stop feeling so useless and hopeless. Thanks for helping me move on!
From my experience doing renovations on our home over the last 10 years, you got off pretty easy at $33k for that work. It’s a blessing to be counted. All homes have surprises behind the drywall or sub flooring.
I like the two minute checkup as quick & easy reality check of my in-retirement financial plan. Overall, it looks fine, but I am now rethinking how to incorporate 5 years of cash & short term bonds into our IRA’s.
I also sent a link to my (working) daughter so she can do a check without Dad asking her nosey questions 🙂
Thank you for sharing all this Jonathan. If all this happened to you I don’t feel so bad about having feet of clay. American divorce is unlike most others in the world. I have read that 70% of divorces now are initiated by the wife. Unless minor children are involved behavior isn’t taken into account. In 2003 my then wife ran off to Australia for a brief fling with her yoga instructor shortly after celebrating our 25th wedding anniversary. I was caught completely unaware and she filed for divorce despite the fact that he dumped her when they returned to the states. I had amassed a goodly amount of money of which she received 55%. The judge gave me a choice of giving her a 55% lump sum or a 50:50 split with monthly alimony until she turned 65. I opted for the lump sum since I didn’t want to be reminded on a monthly basis of what had befallen me. It has taken me 20 years to gain back what I had accumulated at age 52. I have since remarried a wonderful woman but as I look back on the mistakes I made I think the lesson to be learned is to marry a co-equal earner or professional so that if a marriage dissolves each can go their separate ways with nearly all their assets intact.
“American divorce is unlike most others in the world” Not according to this chart: https://en.wikipedia.org/wiki/Divorce_law_by_country
A recent article said that the right is moving against no-fault divorce, which would be a serious step back if true.
Yikes. That’s a rough five years. I’m so sorry. But it makes it more impressive that you ran Humble Dollar so well the whole time all of that was happening!
Amid the bad, there’s been much good — and the growth of HumbleDollar ranks high on that list. Indeed, at times, it’s proven to be a great distraction.
Thanks for that frank discussion on your losses. I truly learn so much on this site and it’s these types of articles that help put the proper perspective on the balance of life and finances. I have also found as I have aged it’s easier to roll with the setbacks though having financial stability helps. Again thanks for sharing.
Jonathon , another tremendous article. I learned a very valuable lesson , also, I had a home inspection done when I purchased a home here in Massachusetts, he failed to notice that the brick veneer at the front entrance of the home was not to code and it was hidden in plain site. There were no weep holes or flashing at the bottom , nor were there any under the windows or over the windows, etc.
I found out , to the tune of $ 49,000 , that brick is very porous and if proper techniques are not implemented, water gets trapped behind the brick and causes a litany of problems. Thankfully, only a relatively small section of the northeast wall was brick veneer, 12 feet wide and thirty feet high. But, that nearly fifty grand was painful. And the masonry contractor told me that if that had been the southwest side, it would have been even worse, due to solar drive.
Home buyers, please, when you want to buy a house with brick or faux stone , check very carefully to make sure it was done properly, if you do not see weep holes , etc., run away from that place. Brick and stone are much more expensive than other sidings and builders cut corners to save money.
Older houses and their brick, are different. That masonry is not a veneer, rather it is structural , etc.
That disaster made me terrified of any masonry coverings on a newer home that when my wife and I had a home built two years ago, we rejected the no extra cost partial faux stone veneer, and stayed with vinyl siding.
I now have a bad habit of checking all sorts of masonry walls for weep holes, and it seems that most commercial structures are done properly, and a vast majority of residential properties are not to code. I have yet to see even one home with the correct number of weep holes. And even if there are holes, you cannot see the flashing, and I would guess that it doesn’t exist or it was not done properly.
Alas, I did not keep a close enough eye on the masonry guy whom, ” fixed”, my problem, and he needs to find another occupation.* I sold the house, but it was a huge, expensive and very stressful experience.
*Getting masonry sealer on the wood siding, and mortar droppings on the air conditioning units and abandoning two huge piles of extra materials in the middle of the driveway, in addition to still not enough weep holes, did not sit well. Clearly, my contractor will not be a candidate for an appearance on ” This Old House”.
Thanks for the great story. I’m a big proponent of your last paragraph –
“When we make financial decisions, we make the best decisions we can with the information available at the time”.
That applies to many areas of our lives as well, not just finances. I recall many issues over my career that were, in retrospect, bad choices. But, at the time, they were the best choices given the situation, resources, … I’ve been humbled a few times by these types of situation. I try to use that experience to be patient and forgiving of other’s foibles.
Rick, let me quibble with you. You say you made some “bad choices” during your career. I believe they were good choices, with a bad outcome. Sometimes we forget that good choices can have a bad outcome. They were the best choices given what you knew at that time. As Jonathan says, and you acknowledge, we strive “to make the best decisions we can with the information available at the time.”
Thanks Larry. I’m sure we’ve all experienced the aftermath of a “good choice” that didn’t go as planned. The reactions of customers or bosses sometimes made it seem like it was a bad choice.
Thanks for sharing! Makes me feel super lucky but also wondering when the of shoe will drop.
For your sake, I hope never!
Sounds like another book opportunity.
Or another genre of HD article—-My Money Detours.
Many thanks for sharing…sometimes it’s hard to be human.
Those losses seem trifling compared to losing 60% of your net worth and a seven figure amount to the Bernie Madoff Jr. who ran our respectable equipment leasing business on which we received annual glowing audits and 20%+ annual returns for multiple years, until we didn’t and realized him for the crook he was in 2007. Thankfully the ensuing bull market and over saving allows us to retire now as we both approach our 60’s, but the lesson is NEVER put too many eggs in one basket, no matter how great that basket looks.
Wow, I’m so sorry you got caught up in the Madoff fraud.
Ouch!