How To Come Back From Financial Losses

How do you come back after you’ve had major financial losses?

The reason I write this today is that I had a conversation with a client of mine who invested with a pretty large influencer and he lost over $200,000. Money he borrowed against his house and life insurance policies no less.

I have personal experience with this having lost a very large amount of my net worth a few years back due to investment fraud. I was almost at the bottom (except for my Sacred Accounts) and I’ve managed in the last 2 years to climb my way back and achieve Financial Independence.

In this article, I’ll share with you how I did it.

Firstly, I am not the only person who has lost money due to the lack of financial knowledge. Even in my cause, having been defrauded as an investor, that experience comes down to the fact that I was missing knowledge and that lack of knowledge is what led to me losing money. In 2023 alone, Americans lost $388 billion, directly linked to their lack of financial knowledge. Investment fraud was only about $10 billion of this total number (which is still a very large amount).

In my conversation with this particular client, I could relate and I shared with him some of the things I am going to share with you about how to bounce back.

Now, what I am going to share here does not just apply to losing money to fraud. It applies to losing money in anything (fraud, debt, investments, taxes, etc.)

Because a loss is a loss and ultimately they all stem from one root cause:

The lack of financial knowledge.

When I was 19 years old, I was learning how to sell. I lost a sale. It was a client I thought for sure was going to do business with me and this person didn’t. I was excited going into it and by the end, I was down in the mental dumps. My mentor at the time taught me a valuable lesson that I still use today. He said “the money you lost out on with that sale is tuition you’ve just paid. You already paid it, it’s already gone, and you can’t get it back. Your only choice is to do what anyone does after they pay tuition: Learn as much as you can from the tuition you just paid.” So I did.

When I lost money, after the emotions settled, that is what I did. I counted up all of the “tuition” I had just paid and made the decision that I was going to get more educational value from my “tuition” than what it cost me. It started with the decision that I would use this as an experience to learn and grow.

Now “learning” is funny because we sometimes “learn” things from bad experiences and our learning doesn’t actually help us. Learning that “all investments are bad” or “don’t trust people” or any polarized, extreme conclusion based on lower emotions isn’t real learning. Real learning advances you. And remember, the thing you learn needs to be worth more than the tuition you just paid with your loss. A cheap sentiment like, “never invest again” isn’t worth more than what you lost because it doesn’t create more value than what you lost. Make sense?

Learning is great, but in my case, I had to get into action and go to work. My finances were hurting and I needed to stop the bleeding and get things under control. You can’t rebuild on a shaky foundation. There’s a system I teach my clients and members from my book, The Blueprint to Financial Freedom, that takes someone from square 0 of having income and no savings, having debt, etc. and helps them work their way towards greater and greater financial freedom. So I followed that to the letter.

I immediately increased the amount of studying I was doing and the amount of income generating activity I was doing. I call this “the 90 day challenge” and I went maniacal with it. I was only saving the bare minimums into my Sacred Accounts, I had expenses and interest costs associated with the investments I had just lost, and I needed to buckle down. Everyday I studied, everyday I worked on increasing my income, and everyday I monitored my expenses and applied good control so that I could maximize my savings.

For a little while, I didn’t even have income and was living off of credit cards. So as my income increased, I began to borrow against my Sacred Accounts to pay off the credit cards.

It went on this way for basically a full year with relentless intensity on these 3 activities of daily financial training, daily increasing my income, and daily controlling every last expense. This was a grind and it was hard work, but I knew it was what needed to be done to turn things around.

While I was doing this, I started slashing my expenses as well. Now, it is really important to note that I increased my income before I slashed my expenses. I want you to think of a sinking ship. It’s taking on water because there is a hole in it right? Increasing income is blocking or patching the hole. Throwing items overboard is slashing expenses. If you’re in a sinking ship and you immediately default into the mode of throwing things overboard, that’s great, but you’re still taking on water and haven’t solved the problem. Almost all financial problems are a knowledge problem and an income problem. Not an expense problem. The correct thing to do is patch the hole as best as you can so you stop or reduce the flow of water and then begin to lighten the load by throwing things overboard. Finances work the same way. A person who goes into slashing their expenses first will end up making their situation worse and their personal economy will wind up smaller. I’ll give you an example, because even I am not perfect. I sold off a large asset toward the very beginning of all of this because I wasn’t thinking this way. All I knew was that there were costs associated with this particular asset and if I sold it I would have some extra cash and feel more secure. Had I kept that asset and just increased my income to cover the costs and further increased my income to have extra cash on hand, it would be worth an additional $136,000 today. This one little violation of not increasing my income before cutting expenses cost me $136,000. That itself is some “tuition” and I’ve learned to never sell an asset out of fear or uncertainty.

But, after correcting myself on this, I did increase my income and I cut my living expenses, my transportation expenses, and even moved to a cheaper state. I was once again, ruthless with my plan.

After about 10 months, I was back to saving 40% of my income again. So I opened more Sacred Accounts with them just like I teach my clients.

I continued to increase my income and keep my expenses as low as possible. I did this for another year, saving 40% of everything I made and putting all of it into Sacred Accounts.

I had a business that I had stabilized and got it to a point where I no longer need to run it and it still pays me every month with almost no effort. As a CEO, I call this “Phase 2” where I get paid every month from the company, but it takes little to no effort from me (maybe a few hours per month).

I also began to invest in real estate again. Now this one was tricky because investing is where I was defrauded. I actually hired someone to help me find my blind-spots that caused me to miss the fraudulent activity before. I realized that before, I was investing in someone else’s business (a private investment fund, which is an LLC that invests, which means it is someone else’s business that is in the business of investing). My intention wasn’t ever to invest in someone else’s business, it was to invest in the assets I like and understand. So, I learned that I only invest directly in assets now, not “funds” and other businesses. I found a way to invest in real estate that is completely turnkey and allows me to be the bank, rather than the landlord, and earn passive income. So I started buying houses with this method and building up my passive income. I also began investing in Precious Metals Leasing, where I own physical precious metals and lease them out for passive income as well.

Now at the 2-year marker, I am saving more money into my Sacred Accounts than I’ve ever saved. I own more Sacred Accounts than I’ve ever owned. I have a company that pays me passive income every month with almost no work involved. And I am rebuilding my investments. Plus I got married, have a stepson, moved, managed to travel several times, and have done a significant amount of personal development during this period.

If you have lost money in anything, these steps will work for you too.

Here is a brief summary:

1. Confront the dollar amount you’ve lost

2. Realize this is your “tuition” and decide to get more value out of the “tuition” than what you paid

3. Take responsibility fully for the loss. You lost money because you lacked knowledge. Even if you can “blame” someone else (In my case I certainly can. The fraudster was caught and went to jail and I could 100% blame him for the position I ended up in) blaming someone else doesn’t fix your situation. Blaming yourself doesn’t even fix your situation. Self-blame isn’t the same thing as responsibility. And blaming others makes you a victim and for me personally, the idea of being a victim disgusts me and I refuse to be one. You’ve got to take full responsibility with no blame.

4. Study something every day that will help you become for financially trained and develop your mindset

5. Do something everyday that increases your income

6. Look at your expenses everyday and keep them very, very low

7. Take all of your savings and put it into Sacred Accounts

8. Use your Sacred Accounts to pay off your debt

9. Build up and start investing in passive income producing assets

10. Keep this level of intensity for no less than 1 year

I promise you, if you do this the way I did, no matter how much you lost or how you lost it, you will rebuild and bounce back bigger and better than you ever imagined.

In closing, my mission in life is to help good people build more wealth who make the world a better place.

So, if you’re a good person who wants to help make the world a better place and this article helped you, I want to encourage you to join our free Facebook community, Fetta Financial Alliance Group.

I want to encourage you to start putting this into practice. And feel free to write to me and let me know how it went. Or if you’re a client of mine and you’d like help leveling up, send an email to my team with “Level Up” in the subject line to [email protected].

If you’re a follower and have not read my book The Blueprint to Financial Freedom yet, that is the place to start. This book covers the specifics for each level in the various chapters and you can grab the book for free as my gift.

Click here to get a copy!

The Blueprint to Financial Freedom by Jerry Fetta

To Purpose, Wealth & Freedom,

Jerry Fetta - Financial Expert

Jerry Fetta is a nationally recognized financial expert featured in Forbes, Yahoo Finance, Fox, Chicago Weekly News, New York Finance, interviewed on 100+ podcasts with world renowned experts, earning endorsements and affiliations throughout his career with names like Kevin O’Leary, Grant Cardone, Dave Ramsey, and Pamela Yellen.

Jerry’s mission in life is to help create millions of financially educated and solvent families achieving greater financial freedom and sharing the truth about money with those around them.

Learn more at https://fettafinancialalliance.com

(DISCLAIMER: The information in this content should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Fetta Financial Alliance can and does not provide advice unless/until engaged by you.)