Why your debt story matters

I have been compiling articles into a book based on wealth and succession – a series written by Bruce Sheppard and some of his professional colleagues. One such article was “Why your family wealth story matters.” It encourages you to talk about how your family’s wealth was created. Various reasonings, but essentially the advice was to share your stories so that the next generation doesn’t make the same mistakes.

We all want better for our children and the generation after us. And after reading these articles, I felt a little… left out. I wasn’t raised in a wealthy family, and neither had I made my own wealth.

Then it clicked. The other day, I was having lunch with my now left-home grown-up daughter and was able to share some of my debt stories. I learnt that that this has just as much, if not more power than a wealth story. Here’s a summation…

My career ended in a burn out. Literally. At the age of 28 I hadn’t learnt how to say no, and when I was almost at the top of the ladder, I burnt out. I was juggling a career and being a single parent to a toddler.

After some time away, regaining my mental and physical health, my first step back onto the ladder was working when I could – selling websites on a commission only basis. This was round-number-one in the business world.

The first lesson was in systems. I ended up being so successful that I outgrew the commission arrangement. They ended up owing me thousands, which I planned to use to pay the IRD in tax and GST. The relationship failed and I never received what they owed me.

My round-number-two continued with marketing services as well as websites. It was a cycle of getting the work… doing the work… getting paid… and then back to the beginning again.

When you own your own business, it falls into one of three categories…

1. It’s a hobby or something you do with your time; your lifestyle is not dependent on it.
2. You’ve created yourself a job and you rely on it as your sole income.
3. You are growing something so that one day, you don’t have to work.

There is also a 1.5 and a 2.5 category – a little in between the ones defined above.

Mine was #2 and the first and second time around, I wasn’t interested in growing. So, when I was ‘head hunted’ for a role in another business, I took the ego-stroke, the regular pay (and an increase) and shut the business down.

Nine months later and with my new income, my primary-school-aged daughter and I, moved into a nicer place to go with our nicer lifestyle. I signed a one-year fixed lease and one week after moving in, my employer went into liquidation. I talked with the liquidators and set about restarting my business to help the clients who had been left hanging in the middle of their website developments (this included Gilligan Sheppard). I applied for, and received, a small benefit to tide me over until I could generate some income from the business again.

I didn’t get the liquidator’s permission in writing. They eventually sold the client list to another company, and I was subsequently sued for ‘stealing clients’. It didn’t make it to court, and in the end, I was able to negotiate an ongoing and collaborative relationship with them. However, the government decided that they had overpaid me with the benefit, and I now owed them thousands.

This time, I made the decision to grow. By hook or by crook, the only person who could help me was myself. I planned my trajectory based on the experiences I already had, applying the lessons learned and I grew my recurring revenue until I had a budget I could use for growth. I moved into a commercial space and sub-let half of it until I could afford it by myself. I got all my ducks in a row from a legal standpoint and brought on my first employee.

You can plan for something to go wrong, but it is unlikely that three of the potential setbacks would happen all at once. They did.

I lost a large recurring-revenue client, the shared-space situation ended up at the Disputes Tribunal, and I had to hand-hold the employee I had hired in telling her sister that her partner had been cheating on her… with my partner… for five years.

I was done.

I had no energy left. All trust was gone. And now my debt had amassed to $250,000 with no assets.

When I poked my head back out into the real world, it was to have discussion with my clients. To let them know I would no longer be continuing in business. I wanted to be employed again – salary in, bills out. Normal hours – those who are in business know that it never turns off, you’re always thinking of how to improve and what needs doing.

One of those discussions was with Gilligan Sheppard. And it changed my life.

Their suggestion was that they buy my client list and I begin as an employee with them. It was a no brainer. I’d seen from the outside what kind of a company they were.

They became my new accountants, helped me wind up the business, and provided advice to get me get out from under the debt. The first decision was whether to go bankrupt or not.

I have seen people who start a business, spend up large, then go bankrupt to wipe their slate clean, only to do it all again. I did not want to be one of those people.

When people and situations let you down, its very easy to blame everyone else – even if it’s the truth. But at the end of the day, you are stuck with you, and only you can make decisions to change the situation.

It took courage and it was incredibly hard.

Through a series of decisions, opportunities, negotiations, family help and working three jobs, I have now reduced that debt by more than 80% over three years.

But the one question that underpinned all of it… who do I want to be at the end of this?

As I was sharing parts of this story with my daughter, she came to some realisations. She wanted to do archery as a sport, but I just couldn’t afford it. She didn’t know that at the time. I had encouraged her to participate in team sports, so she played netball for a couple of years. Now it made sense to her.

Her confession was that she had no idea how hard our life was. It was a proud parenting moment, perhaps I didn’t do such a bad job. But also, a realisation that whilst we protect our kids from the real world so they can have a blissful and happy childhood, there comes a time when we must also pass on the lessons we have learned.

It’s not over yet. But now I am sharing my journey so that others can have better than what went before.