This month has been quite a mess in the market. With positive news of company earnings, there’s still been a steep decline in investments across the board. When I log on to Facebook, I read of people frantically selling positions they hold as fears of “the big one” looms. What’s the big one? It’s another stock market crash like 08-09 or ’00, maybe ’87 or even ’29. An event like that would be very scary and tough to handle for most. We have been in the longest bull (positive) market in history at this point and many experts are warning that a crash is due, some say overdue. The reality is that most investors in my generation haven’t been investing long enough to remember the ’08 crash. I mean we remembered that it was bad, but many of us weren’t participating in the market at that time. If we had been then it’s unlikely we had much to lose. I was 18 in 2008 and I hardly knew anything about investing or the stock market. I’d watch on the news and couldn’t avoid hearing people say things like “this economy is so bad”. I remember working at pizza hut that year and noticing fewer and fewer customers come into the store. When they did come in to eat they would leave slimmer tips then say something like ” I wish I could leave you more, but this economy”. This is after they spent $50 on pizza, but whatever. The economy has been in an uproar since then and it’s seemed like no one could lose. Now, however, there seems to be growing fear about the possibility of a crash. I’m not worried though, in fact, I’m pretty excited. Why am I excited, because I’m armed with the knowledge that the market recovers from every downturn 100% of the time. With that knowledge, I don’t see a crash, rather a discount. Warren Buffett, one of the greatest investors of all time has said “you make money when the market rises and get rich when it falls” or something like that. It’s like a sell at your favorite store. When the item you want goes on sale you rush out and buy that item you’ve been eyeing, maybe two or three. It’s the same with the market, however, when you are dealing with money it’s very tough to get out of your own way. I can admit, it’s tough seeing an account balance diminish in a few days. Throughout the month I’ve tried very hard not to look at my investments, but I failed a few days ago. I’d seen the downturn from social media and every time I look at my phone because of my stock app.  So I knew I’d lost money. I just wasn’t sure how much. In the end, I was fine with it and here’s why:

I live well below my means.

There is something so great about being debt free. This is something I preach to people about. Being able to direct all of my money and not owe anyone anything brings a joy that can’t be understated. I started my online presence because I hope to share my experiences and help others attain this same positive feeling. The way I remain debt free is to live below my means. I have been talked about a ton because I’m frugal or cheap as my friends say. The truth is I spend a lot of money, I just spend it on things that will help me reach financial independence faster. I think that’s more important than having the fanciest car or clothes. I make sure that I have the things I need and I get them at a reasonable price. I don’t spend money without knowing what obligations I need to meet in the future. I operate on a budget monthly and plan for large expenses in advance if I can. This allows me to have money at the end of the month. So when the market is down I’m not worried because I know I’ll be fine.

I have a steady income

It’s no secret that being in the military offers great benefits. One of those benefits includes financial stability. I know with absolute certainty that on the 1st and 15th I will get a paycheck. It won’t be late and it won’t unexpectedly end. The military has an awesome track record of paying its people on time no matter what. I can remember at the beginning of 2018 the government shut down threatened our pay. USAA ( a well know military friendly) bank said they would pay our salaries if the gov’t was unable to. Now that’s customer service! The gov’t did pay us of course. in fact, within hours congress passed legislation that said despite the shutdown military members would still get paid. This is the second time in my career a shutdown has happened and fear of not getting paid was thrown around, but like I said the military always pays. This steadiness allows me not to be worried during a market downturn.

I have money saved

I think it’s just ingrained in me to save money. You never know what could happen and it’s so important to have an emergency fund to draw on when the unknown comes knocking. I tell people that I set aside anywhere from 50-85% of my money so I can get to financial independence as soon as possible. As I mentioned before its something that’s very important to me. From an early age, I’d always been a saver. I can remember when I was 15 or 16 years old I bought a box of envelopes. These envelopes were to help me divide the tips I’d receive from pizza hut. Every day after work I’d come home with anywhere from $20-$120 in tips. I wrote on each envelope a different task. One for gas, saving, lunch and on and on. I developed this before I know that I could have multiple accounts with my bank. This helped me to understand the importance of saving and assigning money. To this day I keep a savings three savings accounts. One which is my emergency fund which has never had to be used, one which I keep about $1,000 and one I keep $300 in case my budget is off that month. This allows me not to be too worried about the markets.

I don’t need the money now

The money I have in the market is there for a reason. I have it there to be waiting for me once I get older. I know the money I have invested is money set aside for the future, thus I make sure I don’t need it now. I don’t need it because I follow the things I listed above. The money invested is something that I am very aware is there, but at the same time, I don’t count it as “mine”. One reason I don’t count it as mine is because I can’t access it. Well, I can, but not without steep penalties and taxes. That’s how I like it. I know it’s in a safe place (the market) and it will grow for me many times over. I have already made up in my mind that the money that I have invested to grow in the market is going to be there for decades later. The money that I will use in the meantime will come from my steady paycheck and savings. Living below my means makes it very easy to generate enough reserve cash from my paycheck. This knowledge allows me not to worry about the market.

It will all come back

Did I mention that the market recovers 100% of the time? This year so far hasn’t been the best. Right now it looks like that market will either be negative or barely positive with only two months left. This month alone I have lost nearly $10,000. I have to admit when I finally looked at my account and saw the damage I was hurt. That’s a lot of money, but I quickly remembered that it will all come back. It will come back because the market always recovers. Then I started to think of how fortunate I am to have lost 10k and be absolutely fine. To many people that would be a life-altering event. That’s why I think financial responsibility is such an important skill to attain and master. If I didn’t have the understanding of the above mention items then the loss would have been devastating. I understand above all that the money lost today is only a loss if I sell. The money isn’t an actual loss/gain until I cash out and make the numbers on the screen dead presidents (or future freedom fighters) in my wallet. I’m excited to watch the fall and rise of the market because that’s what the market does. I have no reason to be worried.

I get a discount

This could be a great opportunity to buy. As I mentioned before when your favorite store is having a sale that’s when you show up. It’s called a “stock” market because they sell stocks. I am constantly buying through a technique called dollar cost averaging (DCA). This is just a financial term which means buying consistently. The logic is that when that market’s down you buy shares and when it’s up you buy shares. Over the years your dollars will average out to get you the best price of the market. This eliminates you from trying to time the market. Timing the market is a loser’s game and most professionals can’t do it with a high degree of consistency, but they spend billions so you don’t know that. While it’s impossible to time the market, a downturn is typically easy to spot. When the downturn comes to continue to DCA, but if you have extra money remember it’s discount season. Increasing the amount you buy will pay dividends in the future. What if the market continues to fall then what? Put more money to work if you have it. I know its counter-intuitive, but that’s the magic sauce which makes some of the richest people in the country richer. Warren has made famous the quote “be fearful when others are greedy and greedy when others are fearful”. I mentioned that I’m a bit excited about the discount so it’s no need to be worried.

I’m mentally prepared

I have had the opportunity to be tested with this sum of money that I have already “lost”. I know for a fact it will be worse at some point, but I feel really good about how I handled it. The day I’m able to lose 100K in a day, month or year I’ll know I’ve made it. No rush tho. I understand how the market operates and I appreciated going through this process. When I sit down with people and discuss their finances often they want to talk about investing. Investing is sexy. It’s got the ability to make you very wealthy and that’s what people want. I want the same thing, but you have to be mentally prepared for the bad times. You also have to be prepared for the good times. Not pulling your money out when you make 1K in a week is just as important as not pulling out when you lose 10k in a month. I know it sounds difficult, but that’s why you have to be mentally prepared. It would be much tougher to be mentally prepared if I had debt looming over my head, no cash in reserves and a lifestyle that required me to live check to check. I made sure that was not a reality for me so I could have a mindset that could focus wholly on the end goal. The US economy makes me hopeful not fearful so I’m not worried.