The Best of Ed Welch – I Want My Money Back
The Business of Doing Business in Antiques
By Ed Welch
I have been self-employed all my life. It is my responsibility to make enough money to support my family. I need money for mortgage payments, car payments, and household expenses such as lights, heat, and clothing plus, money for family vacations and outings.
I have been able to meet my obligations except three times when world events, beyond my control, kicked me in the pants, slapped me across to face so hard that I fell to the ground, and while I was down took money out of my pocket.
The first time that I was not able to make enough money to support my family was in 1973 through 1974. Because of the Yom Kippur War, October 6-26, 1973, Arab nations decided to stop selling oil to America. At that time I owned a large auto repair business, sold gasoline, and traded in antiques on the side. In 1974, OPEC (Organization of Oil Exporting Countries) raised the price of gasoline. The lack of gasoline and the high price for the little that was available caused business in America to come to a stop. By the time the things got back to normal, I was in debt more than $30,000. It took seven years to pay off that debt.
My family went without or did with less for those seven years. I am still angry at Arab nations and OPEC for putting my family through seven years of hard times. I felt at that time, and feel today, that OPEC owes me $30,000 in 1974 money. They actually stole money from me personally just as if they had stuck a gun in my face and robbed me of most of my possessions.
The second time I was kicked in the pants, knocked to the ground, and had my pocket picked was homegrown. Black Monday, October 19, 1987, the stock market experienced the largest one-day loss in history. This was caused by the selling of junk bonds (worthless financial instruments) to finance corporate to corporate buyouts and takeovers. One can compare junk bonds of those days to sub-prime mortgages of today. Neither is worth the paper on which it is written.
I was a full-time antiques dealer when junk bonds caused the economy to crash. I lost tens of thousands of dollars in business that never happened. In order to feed my family, I had to sell my stock of antiques at any price I could get. I had twenty-three country cupboards in original paint in stock. I lost money on every cupboard. In total, Black Monday set me back nearly $60,000. It took me eight years to pay off my debts and recover from Black Monday. Junk bond traders and the large corporations that used junk bonds to finance their expansions owe me $60,000.
On October 27, 1997, the stock market experienced what is now called The Mini Crash. I lost a few thousand dollars in hard cash plus antiques did not sell for almost a year. In 2001 the high-tech stock sell off hurt my business yet again however, I was ready for this decline.
During the Mini crash of 1997, I came to realize that the stock market went through some type of a crash every 8 to 12 years. When the stock market goes south taking the economy, as a whole, with it, people lose money. Worst yet, people who are financially over extended and people who have not saved enough money to ride out a downturn in the economy can loose everything they own.
After reading several book and taking a course on personal finances, I made two major changes in how I handle my personal finances. First, I concluded that credit cards are bad for me. I had five active credit cards. Over a two-year period, I paid off the balances on all five cards and destroyed four cards. I then opened a business credit card that pays cash for the points I gained making business purchasers. I now have two credit cards, one for personal use and one for business use. My business credit card put $1500 cash into my pocket last year. It feels good to have a credit card that pays me.
My second major personal financial change was to start saving money for the next business downturn. Most business downturns last between one and two years. I opened a savings account with the goal of saving enough cash to pay my mortgage, car payments, and household expenses for two years.
I started small, ten dollars a week. I soon realized that this amount was too little to be of any use in a two-year market downturn. I increased my savings to twenty-five dollars a week. Again, this amount was too little.
I then looked at my inventory and my sales. I spend a lot of money on inventory. I took guidance from the auction business and imposed upon myself a two and one half percent buyers premium. If I pay $100 to buy an item, I tax myself $2.50 and put that money into my savings for the next market downturn. I also tax myself two and a half percent of the profit I make selling an item and put that money away. In total, I tax myself five percent on every item I buy and sell.
I managed to save 18 months worth of everyday household expenses before the current economic downturn began. I believe that we have been in recession for more than a year and still have a year or so to go.
When I lost money in 1973, 1987, and 1997, it was Arab nations, OPEC, and the idiots on Wall Street who bought and sold junk bonds that made me lose money. Today, the greedy people on Wall Street, bankers, and the financial markets trading in sub-prime mortgages are picking my pockets. I have lost money and will continue to do so for at least another year.
However, for the first time in my life, I have not had to go into debt to cover everyday living expenses. I have not had to worry about making mortgage and automobile payments, paying household expenses, and selling my stock for less than it is worth.
I regret that it took me a lifetime to figure out that I am responsible for my own personal finances regardless of the state of the economy, even if I lose my job, in my case, my ability to sell antiques and collectibles.
Even as I muddle my way through the current economic downturn, I continue to put money into savings for the next time.
When you consider all the nations, corporations, companies, banks, mortgage brokers, Wall Street traders, and government regulators whose stupidity, arrogance, and greed contributed to all the market downturns, to whom should I turn to demand my money back?
Perhaps it is time to stop giving tens of billions of dollars to the individuals and corporations that caused the problem and spend just some of that money making whole the lives of people who really work for a living.
As many of you are aware, our friend Ed Welch passed away in October, 2012. His wisdom and entrepreneurial spirit will be greatly missed. At the request of many of our loyal readers we’ve decided to publish some of their favorite columns from past years.