I vividly remember sophomore year of college. It was 10:30pm and I was leaving my girlfriend’s apartment by car. Instead of coming to a complete stop at the stop sign, I slowly rolled on through and took a right. There was nobody on the streets, so I took a chance.

That chance cost me $60. A police officer pulled me over for a moving violation, and I was gutted. At the time, I had maybe $500 to my name after grinding away at McDonald’s and doing temp work for $4.25 an hour. I was so annoyed that when I mailed in my check, I attached a note saying I hoped they’d do something positive with my $60.

That was the first time I felt true financial despair. It would not be the last.

The Feeling Of Financial Despair Returned

Recently, my wife took the car to do some volunteer work at our children’s school. When she returned, she parked in our driveway, then walked over to substitute teach at the first preschool our son attended. I’m proud of her for taking online education courses to become a certified teacher. With her kind, patient demeanor and motherly instincts, she’d make an excellent one.

Unfortunately, the pay is low at $24 an hour. But when you don’t have healthcare benefits, retirement benefits, or steady active income, every dollar helps. Further, teaching gives her a great feeling of purpose. So when I stepped outside around 4:30pm to pick up the kids, I saw a ticket on our windshield. How could this be? The car had been parked in our driveway for hours.

Then I looked closer at the $108 ticket. The car had apparently been on the side of the road during the street cleaning window near our children’s school that morning. Sigh. No good deed goes unpunished. My wife drove over to volunteer for one hour, and got rewarded with a ticket that will take her six hours of wrangling toddlers to pay off.

I couldn’t help but feel annoyed, because I’ve already sunk thousands of dollars into fixing the car. After 60 consecutive days of a “system will shut down in 1 minute” warning from some electrical gremlin nobody can find, hopelessness starts to feel inevitable.

So on top of financial despair, I felt angry. With so many problems tied to the simple need to be somewhere, I started fantasizing about ditching the car entirely, taking Ubers everywhere, or just never leaving the house again.

Overcoming The Feeling Of Being Unable To Get Ahead Financially

I write this post partly because some readers criticized me for being out of touch with my piece, “Of Course $10 Million Is Enough To Retire Early.” I thought I was being emphatic in arguing that folks who don’t think $10 million is enough simply haven’t done the math. However, maybe I wasn’t critical enough?

Or maybe the mere act of writing about larger than average numbers is a violation of one’s sense of well-being. I’m not sure. Either way, I figured I’d swing a complete 180 and talk about surviving dire financial circumstances instead. I have a feeling that some people prefer to read about tragedy as it makes them feel better about themselves.

Getting a ticket or having an accident that wipes out a day or a month of pay is unfortunate. But there are far more serious circumstances we can face.

The Main Events That Will Create Financial Despair

The first thing that comes to mind, given I just wrote about the topic, is what happens to your surviving spouse and children if the primary income earner dies prematurely. The solution, even if you’re already FIRE, is a term life insurance policy that covers the household until the debt is paid off and the children are independent adults. I pray you all live long and healthy lives.

The second source of despair is losing your job while carrying debt and supporting others. Hopefully your company offers a severance package that holds you over for a couple of months. After that, the despair grows with each day another company ignores your application, and you start wondering whether you’ll ever work again as your expenses march on, unbothered by your panic.

The third is losing your job and watching your investments tank 20% or more in a bear market. This is the double uppercut to the chin so many felt in 2008. I was so worried about getting laid off that I skipped submitting my MBA tuition reimbursement for $25,000 in early 2007. The cracks were forming, so I read the room.

The fourth is a catch-all. It comes from finally hitting one financial goal, only to be handed another quest the moment you exhale. Foolishly, I thought my financial quests as a parent ended once our two 529 plans covered four years at the priciest private universities. Then a fellow at the Diamond Head pickleball courts told me he was “saving money” on eldercare by paying only $18,000 a month for his mother’s group home. Just like that, I felt defeated again, staring down another $1 to $3 million to care for four parents.

How To Overcome Financial Despair

Here’s the good news. After 30 years of bouncing between broke and comfortable and occasionally back to broke, I’ve learned that despair is a feeling, not a permanent condition. And feelings respond to action. Here is exactly what I do to climb out of the hole.

1. Shrink the despair down to an actual number. 

Despair feeds on vagueness. “We’re going to be ruined” is paralyzing. “We owe $108, which is six hours of work” is just a Tuesday. The moment you convert a fuzzy dread into a concrete figure, your brain stops spiraling and starts solving. Write down what the problem actually costs, then write down the next single action that chips away at it. Crisis is just a math problem wearing a scary mask.

2. Keep a despair buffer separate from your investments. 

Most people lump their emergency cash in with their portfolio, then panic when both drop together. Instead, hold three to six months of expenses in boring cash whose only job is to absorb the parking tickets, fender benders, vet bills, and broken water heaters. The point isn’t return. The point is that small disasters stay annoyances instead of becoming catastrophes. A buffer is permission to exhale.

3. Refuse to rely on a single income stream. 

One income stream is a single point of failure. Three is resilience. Eight might create perpetual financial security. Even a tiny side hustle changes how you sleep at night. Focus on building as many streams of passive income as possible. Do not wait until you lose your main source of income to start.

4. Insure the catastrophes, eat the inconveniences. 

The events that truly wreck families are death, disability, and lawsuits, so insure those aggressively with term life, long-term disability, and an umbrella policy. But don’t file a claim on a $108 ticket or a $500 fender bender. Self-insure the small stuff, transfer the ruinous stuff, and you remove most of the scenarios that keep you awake.

5. Zoom out to the ten-year view. 

Time fixes most financial mistakes. We find new jobs, recover from market losses, build bigger buffers, and level up our skills. Ten years from now, this week’s ticket won’t even be a memory. The despair you feel today is real, but it’s also temporary, and it’s often the exact discomfort that forces you to adapt and build more wealth.

6. Stop comparing up. Compare back. 

My pickleball friend handed me a fresh $3 million problem in under five minutes, simply by raising my bar. Comparison is the fastest path to despair ever invented. So compare yourself to where you started, not to the wealthiest person at the courts. The college version of me, mailing in a passive aggressive note with a $60 check, would be stunned at where things ended up.

7. Do one thing today. 

Despair is what happens when you sit still and ruminate. Action, any action, restores a sense of control. Cancel a subscription. Sell something on Facebook Marketplace. Apply for one job. Move $50 into savings. Momentum is a feeling too, and it’s the opposite of despair.

In 2023, I created a self-inflicted financial wound by buying a dream home we didn’t need. My family was perfectly happy in our old place with its panoramic ocean views, side-by-side parking, and quiet location. But my obsession with climbing the property ladder blew up our passive income by $150,000 a year and drained our liquidity.

The last time I’d lived paycheck to paycheck was 2005, except back then I had a six-figure job I suddenly learned to love. In 2023, I had no steady paycheck. I still don’t. So I made the passive income loss number concrete, took a part-time consulting job with a startup, built a new income stream online, and reminded myself that nothing good or bad lasts forever. The despair faded, as it always does.

You Will Do Whatever It Takes To Get Out Of Your Financial Rut

When people depend on you, you discover a resourcefulness you didn’t know you had. Financial despair is deeply uncomfortable, but discomfort is also the most reliable motivator I’ve ever found. Nobody upgrades their skills, picks up a side gig, or finally builds an emergency fund when life is easy and the portfolio is hitting all-time highs.

So if you’re in the muck right now, staring at a ticket on your windshield or an inbox full of silence, take comfort in this: the despair is temporary, and it’s pointing you somewhere useful. Make the number concrete. Build the buffer. Add the income stream. Then go pick your kids up from school, because that part was never about money anyway.

And maybe, just maybe, take your time and double check the confusing parking signs before leaving your car to the city vultures, eager to nickel and dime you to death.

Reader Questions And Suggestions

Readers, have you ever felt true financial despair? What triggered it, and how did you eventually climb out? And what little tricks do you use to talk yourself off the ledge when one expensive surprise after another keeps landing on your windshield? What other types of financial despair are there?

If you carry debt and want to sleep better as a parent, check out Policygenius for an affordable term life insurance policy. You can get customized, no-obligation quotes in minutes. My wife and I locked in matching 20-year term policies through Policygenius, and the relief of knowing our kids are protected, no matter what, has been worth every penny.

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