I've always believed that when something bad happens -- even something very terrible -- one can somehow learn from what occurred and turn it into a positive learning experience. Perhaps in some cases the bad experience could be a sign to do things differently or change direction in life, gain new insights about oneself. This is not to say in looking back that one is glad about what happened, but to say: "OK, this happened; now how can I used what happened in a beneficial way for myself, for others, or both? There are a number of popular expressions that reflect this approach to turning a bad experience around -- "If life hands you lemons, make lemonade" -- and "What doesn't kill you makes you stronger." I think that's true. In the middle of encountering the calamity you may not be ready to think this way -- you are just trying to get through the difficult challenge as quickly and as best possible. But later, you might go back, think about what you have gained, and see how you might better deal with another crisis situation more effectively in the future.
That's what I did in thinking what to do when I encountered the mortgage meltdown as described in Living in Limbo: From the End to New Beginnings after Wells Fargo and the Bank of America dropped my credit line by $30,000 and there was no way I could pay my mortgage anymore and later in thinking about what I did to successfully maneuver through the crisis for about six months. I was able to sell my house for enough to move, rent a flat in a house in San Francisco, and ultimately I turned things around to become successful again. But things could have easily turned into a disaster, since at one point I had about $500 left. But after an initial period of being stunned and shocked, I used this turn-it-around approach to make a series of right decisions at various crisis points that helped me get through the ups and downs over the next four months and led to success.
These are insights that might help others facing any kind of crisis or very difficult situation. Thus, here I want to describe what I learned from my experience, along with the key things I did -- and others can, too, to turn things around for themselves.
As quickly as I could, I put aside my feelings of being stunned, shocked, depressed, and unnerved by what had just happened to think about what I could do to take action to deal with what occurred. I shifted my focus from feeling to doing.
I focused on the future rather than the past. I didn't dwell on regretting what I had done wrong, such as taking a BofA's rep's balance transfer offer to reduce my interest rate, since she had to just get it approved by the bank's credit department, which led to the bank cancelling my card. Rather, I thought about what I now needed to do each day by day to move on to something new, whatever that might be.
As I have throughout my life when anything goes wrong, I thought of how I might turn it into creative and potentially profitable projects later. I began thinking in this lemons-into-lemonade mode in October 2011, as I saw my credit line lasting only a few more months. As I thought about what I might do if I couldn't pay my mortgage and lost my house, I came up with the idea for the Suicide Party film about a once successful man who is about to lose his house and everything he holds dear. So he decides to hold a suicide party with the help of his friends, which turns into a media sensation with unexpected results. I then got a group of volunteers together in November to film a trailer and a first episode, thinking I might use this to find an investor or producers for the film. In January 2012, after I suddenly faced the loss of my house and everything in it for real, I thought of other creative projects: two documentaries and a trailer about the Middle Class Homeless and the Bad Bad Banks song.
I reached out to find support groups and others in this situation, which led me to go to a Volunteers in Oakland day, where several presenters spoke about the housing crisis. In turn, realizing I was not alone, that there were millions more in a similar situation, I began telling my story to others I encountered -- from my hairdresser to business associates and neighbors -- rather than conceal my experience out of feeling ashamed or embarrassed that this was happening to me. As a result, I discovered that almost everyone I spoke to had experienced the mortgage crisis personally or had a family member, friend, or business associate who had experienced a default, short sale, bankruptcy, or was otherwise affected by the mortgage mess and job loss.
I imagined various scenarios for plans of action and prioritized them. One was to stay in my house as long as possible through a loan modification or forbearance, while I got back on my feet. Another was to sell the house for enough money and move. A third strategy, as I learned from local real estate agents and a few attorneys was to stay in the house as long as possible without paying the mortgage and taxes -- commonly one to two years -- and save as much money as I could. This way I could build up a nest egg to help me get back on my feet once I had to move.
I was on the alert for any possible things I could do to respond to the crisis. For example, when I took a photo class a few days after my credit crash, I discovered that another classmate was a real estate agent I had met a year before on a restaurant walk through the Montclair village. I took this coincidence as a kind of sign to act on, so I called her about putting my house on the market. After she came over and told me my house had great potential, but needed to be cleaned out to better present it to potential buyers, I began clearing out the house as she suggested over the next six weeks -- from early February to mid-March. This way, I would be in a better position to sell my house if I chose that option, and I had a series of garage sales and give-aways to charitable pick-up organizations, like the Salvation Army. The agent even came over to help me pack and organize boxes for my sales.
I knew when it was important to set boundaries and say no. Early on my agent said she thought she could get top dollar for the house -- maybe even $900,000. But each time she came over with someone to look at the house -- a stager, another real estate agent, an appraiser -- her estimate of what she might get for the house went down. Eventually, she suggested a short sale, though the likely price would be below my initial minimum to clear out all my credit card debts and have about $10,000 left over for a deposit on a rental and moving expenses. But with a short sale, I would have to move and have zero money to go anywhere with all my things. So I said no, and later I read about someone who listened to bad advice from his bank to short-sell his house and lost about $250,000 in equity and ended up with only about $20,000 to move and rent someplace else, whereas he could have sold his house for a $250,000 profit on the open market.
Later, after my first real estate agent bailed out because I said no to an unexpected extra $500 inspection fee, I said no again when a local successful real estate broker who left me pumpkins each year said he would like to represent the house, but on one condition. I would have to move out, put everything in storage, and stay in a hotel while he showed the house. I said no because that condition made it impossible. How could I work this way? And how could I afford the storage expenses?
In short, once I saw the credit cliff looming, I looked at the various things I could do to turn what could have been a disaster around.