What to Do If You Wake Up Tomorrow with $0 - A Step-by-Step Guide to Rebuilding Your Live In Less Than 10 Years
What would you do if you woke up without a penny to your name?
Recently, I came across a post by @AccidentallyRetired on X (Formerly Twitter) Accidentally Retired (Also has a website AccidentlyRetired.com) proposed the questions “If I woke up tomorrow with my net worth at $0 and aimed to retire by 50, here's exactly what I would do, step by step”.
At first I thought the questions was a little silly, but after a few moments of reflection I realized it’s the unfortunately the reality for many people who have had a bit of bad luck. Maybe they worked for a company like Enron, or they experienced an extended period of joblessness like many Americans did in 2008. Or maybe you are one of the many Americans who go thru an expensive divorce, filed bankruptcy, or suffered an extended health issue. You find yourself back to square 1 with $0 to your name and instead of being in your 20 something straight out of school your now in your mid 30’s or 40’s. .
It got me thinking; this actually happens to a lot of people! Thru no fault of their own they wake up one day with $0 and the realization they're running out of time as retirement age quickly approaching.
This article is an outline of exactly what I would do if I ever found myself in this situation.
Find a Job!
I know, I know – everyone online says "passive income is the way" or you need to start a business to get rich quick. I’m going to be brutally honest in this situation we don’t have time to mess around with silly gimmicks and long shots. The fact is, a solid 9-5 job is the quickest way to get positive cash flow into your budget.
If I was currently un employed I’d be getting a job ASAP. not thinking about putting a resume together, not look at companies. But actually sending resumes out, knocking on doors, and going to interviews well prepared.
Ideally, find a job with stable hours and benefits such as health and retirement accounts.
Now at this stage of recovery, I’m not saying go find the best job… That takes time… time you currently don’t have. You need cash NOW!! So just get something. The goal here is to keep a bad situation from getting worse
Personally I’d probably go to a big box store like Lowes or Home Depot. They pay reasonably well, have benfits, and are almost looking to hire. If that’s not working their is always gig work such as Instacart, Uber, Door Dash. Ect. it doesn’t really matter what it is, just get some cashflow coming in the door while you work on steps 2 and 3.
Sell Everything
Again I need to emphasize we are in crisis mode, sell everything except the car (if necessary). Clear out that storage unit, get rid of clutter, and free yourself from possessions.
The Storage Unit
The boat
The House
the baseball card collection.
I mean EVERYTHING
Cut loose what costs you money to store and move forward, .
Find an inexpensive place to live. It’s likely that whatever opportunities come your way may require you to move, but if they don’t at least you don’t have a bunch of expenses from things you don’t need weighing you down with monthly costs.
This cash will help keep you out of debt while you work on the next step
"The more you have, the more you are occupied. The less you have, the more free you are." - Mother Teresa
Land a Job with Good Benefits
Find a better-paying long-term job with benefits. Consider pay, retirement benefits, medical benefits, and disability benefits.
The reason this isn’t step 1 is I’ve found that for every $10K/ year a job pays over $60K it usually takes an additional month to find a new job. This means if you’re looking to land a $120K/year job it may take 7 months. That’s a long time to go without a paycheck!
Now if you are exceptionally skilled in a high demand field this process may be quicker, but if you were laid off due to slow economic conditions, then this process may take longer. try to keep your head above water while to hunt for a solid long term employment situation.
Evaluate your skills, find a niche, and find a good paying job, if it takes a little time to find the right fit that’s ok (that’s why we did step 1 first)
Ideally, you’ll find an opportunity that you believe in, is a good fit for your skills, and offers some career growth opportunities. You should plan to settle in for a while once you’ve found the job.
Once you’re hired, set up your 401K to at least get the employer match on day one.
Lower Those Expenses
After landing the long term job, it’s time to get serious about cutting costs. Go scorched earth on expenses – no streaming services, dog walkers, or eating out, vacations, or unnecessary spending. Your savings rate will dictate how long you have to wait to retire.
As Dave Ramsey would say “You’re on rice and beans for a while!”
I know this sounds hard core, but you don’t have time to spend 5 years saving your first $10,000. You need to get your financial situation jump started and your hard earned money working for you again. Once the ball is rolling again you can ease off the gas pedal a bit, but not before then.
If you don’t like this step go get a second job to accelerate this process.
Build an Emergency Fund
Rebuild your emergency fund is going to be critical. In this scenario, I’d consider $10K for every family member a minimal lean but crucial safety net that must be in place before moving on to step 6. You may want to do more, but $10K per person is the BARE MINIMUM
Automate My Savings/Investments
Once you’ve hit the minimum emergency fund levels divert the surplus into investments like broad-based index funds, automatically deducted from your paycheck. Set it and forget it, with the emergency fund as a safety net. This should be going directly into a brokerage such as Fidelity, for ideas on what to investin check out my 3 Fund Strategy article for some ideas
Now there are some tax sheltered accounts you may want to consider at this stage. your money won’t be as accessible, but you’ll get the benefit of tax free growth. my 2 favorites are
ROTH IRA ($7,000 contribution limit 2024)
401K ($23,000 contribution limit 2024)
Then there is the standard brokerage fund from institutions such as Fidelity, M1, Robinhood etc. great for anyone who wants to save more than the contribution limits or doesn’t have access to a 401K.
By automating these investments every paycheck you won’t feel the pain of having to pull money out of your bank account for a long term goal. It’s like it’s being paid to your future self instead of you.
Get 8 Hours of Sleep
Prioritize sleep for better work, clear thinking, and reduced stress. Trust the process above. Some things will take time. Make sure to get the sleep you need to be physically and mentally up to the challenge ahead.
"The best bridge between despair and hope is a good night's sleep." - E. Joseph Cossman
Stay Fit and Healthy
Wealth is nothing without health. Stay active, eat well, and minimize bad habits. Healthy habits like walking are free and contribute to your overall well-being, and they are free to do.
This isn’t an article about how to get healthy, but at a minimum try to get your 10,000 steps every days and stay away from fried foods.
Conclution
So there you have it! If I woke up today with $0, this is exactly what I would do. It may seem extreme, but it's intended to address the problem before it grows into something more severe. If you don’t get ahead of it quikly you turn a 10 year problem into a 30 year problem.
Follow these steps to quickly get back on your feet and contain the situation.
What would you do? Did I leave something out? Is my approach too intense? Let me know in the comments below!
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