“The problem with Mr. Money Mustache”, some people say, “is that he has led this blessed and privileged life where nothing ever went wrong for him! He never makes any mistakes, and that’s just not the case for most people.”

I can see why you might think that, since I tend to write to you about only positive things. It’s a habit I picked up about twenty years ago after reading The Magic of Thinking Big, and I’ll never let it go. People who know me will notice that I’ll never say “I’m coming down with an awful cold”. Instead it will be something like “I’m just recovering from a bit of a cold, it should be on its way out by tomorrow morning”. You simply get no benefit from telling others about the problems in your life. At the borderline between useful and non-useful things to talk about, you might mention a life problem you’re working on solving, while talking about what you’ve accomplished so far in your plan to fix it.

But since you asked, I think it would be educational to share the story of The Biggest Fucking Mistake I’ve Ever Made In My Entire Life. Just to show how even a BFM doesn’t have to ruin your life, and indeed you will almost certainly come out happier in the end after you get through it. So pull a log up to the campfire and start roasting a marshmallow – because this is a scary one.

It was the year 2004. I was happily working as a software engineer, and my new wife and I were living a great life. We had no kids, great friends, great jobs and we were busily ‘stashing and just a couple of years from financial independence.

“This is fantastic”, I thought, “What will I do next, after finishing my regular working career?”

One day, while passing the time between flights in an airport bookstore, I picked up a discounted copy of “Rich Dad, Poor Dad”, by Robert Kiyosaki. Despite the more recent widespread criticisms of that book and its author, at the time the book screamed to me, “You should start your own business and lead a big exciting businessman life!!”

To me, starting my own business meant turning my most cherished activity into a post-retirement job, which of course meant building houses. I already knew a few custom house builders at the time, and they were all doing great business here in Boulder County buying empty lots in good locations, and building luxurious but not overly large houses on them. When I reviewed their numbers and toured their houses, the work and the profits looked great, so I decided to jump in as well.

I happened to have a very good friend at the time, let’s call him Dean. Dean and I had met five years earlier, when we randomly ended up as cube neighbors in a high-tech company in Boulder. We had both come to Colorado at the same time in the fall of 1999. He was just off the plane from San Francisco and I had arrived from Canada. We had a good run together in that little company, working on innovative projects together and mocking the more Dilbertesque aspects of our company’s senior management. We bought houses at the same time and helped each other with the renovations and hosted alternating parties almost every weekend.

Even after I moved on from the Dilbert company and started a more serious engineering job in the same city, we remained close friends. We hiked, biked, and snowboarded together. And we both had entrepreneurial dreams, inventing dozens of hypothetical plans together and working out sketches of the business ideas.

So it was natural that when I decided it was time to start a house building company, that I’d invite my best Colorado friend to be a partner. I thought he would do great, because he had a beat-the-system attitude that I valued. He was the one who taught me that you can argue with credit card companies to have charges removed, that you can buy whatever you want at the hardware store and just return whatever doesn’t work out, and that you could call the town council and ask to have a rule changed instead of just obeying it.

Of course, looking back I can also see the obvious warning signs that I was blind to at the time: he was also the one that taught me you can slack off at work, and still get paid the same amount. He used to award himself extra vacation days as “comp time”, even while his regular working hours were 9:30am – 4:30pm with plenty of time for personal phone calls and web surfing in between. He even told me of some youthful moneymaking adventures at earlier jobs that seemed to surpass anything I had attempted in my own non-innocent childhood.

“Wow, that sounds kind of illegal”, I thought at the time, but I figured it was many years in the past and it was just a typical young person’s testing of society’s boundaries. And he justified it all with such intellectual and socially-responsible explanations. He did volunteer work and helped out friends in need. Wiser readers will at this point recognize the signs of a shifty and sociopathic character, which I now see in retrospect.

But at the time, I was just star-struck, as we took two-hour lunches to eat Jamaican food on sunny Boulder restaurant patios and play basketball with our coworkers in the court behind the building, in the time I’d normally assume we should be writing software.

So when I presented my new House Building Company idea to this adventurous guy, he immediately latched onto the idea and the planning took off. He persuaded the owner of perhaps the hottest New Urban Design neighborhood in the country to sell us two plots of land despite being unproven new builders. I negotiated with one of the best and most well-known architects in Colorado to take us on as a customer at a drastically reduced rate. The owner of the firm had a soft spot for the young fresh-faced businessman with the same goals as he had – to build housing that was Human and Earth-friendly instead of ostentatious. We teamed up with a sagely old builder as a mentor to watch over us as we built the first house, to prevent newbie mistakes. We were on a roll as we signed on subcontractors to help out, selling the dream to everyone and pre-selling the house before we had even finished building it.

But in the background, little warning signs were continuing to pop up. Our financial agreement was that I’d bankroll the whole downpayment for the project, while my friend would only put in the $20,000 or so he happened to have sitting around. We worked on arrangements for compensating me for my increased risk in the project, until he came up with this “brilliant” idea:

“Well what about this, if the company loses money, we’ll share the losses equally, so you are NOT at any more risk than me. I’ve got my 401k as a backup plan, and I’ll cash it out in the worst case if we get into hot water”. “Good idea”, I thought, “Now we can just be equal partners! I sure feel good not being the only one at risk”.

Ahh, naive little Younger Money Mustache. Trusting to a fault. I never thought my best friend would go back on his word – we’d done everything together for the last half decade!

So the project went on. I put in a heap of my own cash and also took out a $90,000 line of credit on my house. I poured every paycheck into that company for a year, to minimize the outstanding balance on the high-interest construction loan. “What could possibly be safer than investing in your very own company at a guaranteed return?”, I thought.

One day, an email came from my friend, entitled simply “Need 17k”.

It turned out he wanted to move out of the place he was renting and buy a house instead. I expressed some concern about this, since it would take his investment down to zero even while mine had now reached about $200,000. He pooh-poohed my concern, reminding me that I already owned a house, and of course it was only fair that he should be allowed to have one too.

We worked like DOGS on that construction company. Well, I did anyway. I snuck time out of my office job to answer emails and work on marketing materials. I worked every night until midnight on budgets and material selection and design ideas. I negotiated a four-day workweek from my employer and started spending every Friday building alongside with the framing crew, to learn, prevent problems, and speed the house along in any way I could. I worked on the site with a carpenter friend on weekends to get even more done.

My business partner seemed devoted at times as well. He made some good contributions throughout the project, and he was a smart and organized guy. But I couldn’t help notice that he was still taking weekends off, still volunteering in local organizations, and he happened to take two trips to the Caribbean during the first year of the company. While I worked on our company’s house, he worked on renovating his own new house, drawing a handy monthly salary from our company even while I made contributions to it every month.

But our success masked these problems. We sold our first project before it was even complete, for our full asking price. My own labor had cut our costs considerably, leading to a healthy profit margin. But then a long argument started about dividing the profits. I had kept track of my labor hours, and I suggested that I be paid for them at a low rate, since I had used them to reduce the cost of outside contractors. He disliked this idea, thinking that the profits should simply be split 50/50. “It’s not an hours competition”, he said. “We each contributed in our own way. What you brought to the company was your ability to work like a workhorse, and what I brought is strategic ability. If I make a phone call to the city that saves us $2,000 in re-zoning fees, and you do fifty hours of work that saves us $2000 in contracting fees, should you get paid more than me?”.

Of course, my own phone calls, such as the one that I made to the architect that saved us $30,000 in architecture fees, and other similar efforts negotiating with subcontractors and materials suppliers, were somehow not considered equal to his own strategic brilliance.

By this point, I realized that our partnership was not meant to last, but our company still owned one more plot of land and we were already building the second house on it. The housing market was strong, and I figured we could finish it, sell it and I’d be out of this little situation. So I gritted my teeth and tried to smile.

But it happened to be the year 2006, and the US housing market was just about to take a plunge into the shitter.

The second house went up beautifully, and problem-free. My now-semi-friend did a competent job at repeating his role in organizing the contractors. And being fully retired from my day job by this point, I was able to spend every day at the site watching over things and building. Potential buyers toured the house every day and we came close to selling it several times before it was done.

Then the recession hit, and the house began a long period of sitting on the market. It was shiny and new and luxurious, with its airy, empty superinsulated rooms and cool thermal mass effortlessly battling the hot dry summer of 2007. Then its huge South-facing windows and bright halogen lighting and warm bamboo floors challenged the cold winter of 2007. So much work and care went into that place, and yet there was absolutely nobody interested in buying it. And every month we were going $3000 further into the hole.

We got desperate and rented the house out to a group of tenants who eagerly promised to buy the house very soon, as soon as their current financial problems were resolved.

Chase Bank backed out of their promise of an open-ended construction loan and insisted that we refinance into a mortgage. This would be no problem, they explained, as long as I could pay down the principal by another $67,000 so it would be a conforming loan of $417,000. At a 7.25% interest rate.

My friend was of course grateful that I was able to come up with the $67 grand, since he was in debt from having to live on the low pay our company had given him for the past two years. I noticed, however, that he did not offer to move out of the house he had renovated for himself, or even to sell the top-of-the-line stainless steel LG appliances he had purchased for himself with money drawn from the company. His wife still worked, of course, and her former condo which was now serving as a rental house for them, was also not up on the auction block. “Her finances are separate from mine”, he explained. My wife surely wished she had thought of that trick.

Tenants came and went from this house. We kept trying desperately to sell it, and dropping the price. For every showing, we had to visit the house and clean up after the tenants in hopes of having a presentable house. Every month, we split the difference between the $3,000 mortgage payment, and the $2,100 rent, in order to keep the house out of foreclosure. He reminded me often of how ethical he was to keep making these payments, despite his own financial hardships.

This went on for a little over two years, but it felt like twenty. But somehow I adapted to the “new normal” and managed to lead a happy life, focusing on raising my young son and taking on carpentry projects to help rebuild my savings. We cut our family’s spending drastically and Mrs. Money Mustache increased her work schedule to increase income as a precaution as well.

Finally, in late 2009, we caught a lucky break. A wealthy US businessman who was returning from a long overseas corporate position fell in love with our house. He toured it extensively, spent hours running his eagle eyes over any potential flaws, and eventually made us a lowball offer. He was a shrewd negotiator, but given the state of the housing market at the time, his offer of $450,000 was not that far below market value (which was in turn about $200,000 below our original budgeted selling price). But after the hell we’d been through, I was ready to make a counter-offer and get the deal done.

But guess what Dean said?

“Ohmygod, guys, my accountant just told me that because I’ve taken so much out of this company, I have a negative tax basis in it. If we sell this property, I will owe over THIRTY GRAND in income taxes, and I just can’t handle that. I’ve already got 50k in credit card debt!! Since I’m a co-owner of this property, I’m not going to sign off on the sale. I think we should hold onto it for a few more years, and sell it for $650k instead. Then I will get enough share of the profit to pay my income tax bill”.

“Umm.. Buddy”, I said, “Do you realize my wife and I have over two hundred thousand lost already in this company, and you have about negative fifty, and that you have proven yourself less than faithful in coming through for the company when it is in financial need?”. “I would firmly suggest that you fuck off about your petty thirty grand, sell your LG appliances or your rental house, and let me end the personal hell that we’ve all been battling for the last several years.”.

“Well shit”, he said, “That’s just like you, MMM, always thinking everything has to be your way. I wish you could see things from something other than your own perspective. I wish you could hear yourself right now!”.

I actually recorded the three-hour conversation where he said this – our final business meeting for that company. Someday I’ll listen to it again, but for now the very idea still upsets my bowels.

To make the rest of this long story shorter, I hired a lawyer friend to apply the necessary pressure to have him sign off on the deal. Even so, the deal still required me to pay off the mortgage on this property because both of our names were on it. To accomplish this, Mr. and Mrs. Money Mustache had to scrape together a final $409,000 in cash, the outstanding balance on the mortgage, and pay it to Chase Bank.

Dean would still owe me over $100,000 because of the difference between in our investments in the company, but he quite confidently informed me that he did not intend to pay me back, because he was already on the verge of bankruptcy. He reminded me that if he did file for bankruptcy, his creditors would very quickly lay claim to the house we had built, because he was a part owner. My lawyer confirmed that he was right, and that I had no legal way to force him to keep his original promise of splitting the company’s losses. The best we could do is get him off the property’s deed to avoid further problems. Dean had an opinion on this as well:

“I can’t sign off ownership on the house”, he explained, “while my name is still on the mortgage. That could be disastrous for me.”

Yeah, we wouldn’t want a disaster, would we?

But then an interesting thing happened. The SECOND we all signed those final papers at the title company, shutting down the home building company, wiping out the mortgage, and separating my fate from Dean’s forever, I felt a weight equivalent to the entire chain of the Rocky Mountains lift instantly off of my shoulders.

Finally, the emotional damage could start to heal. During the peak of the crisis, I had lost my ability to sleep, lost my appetite, and lost 25 pounds of bodyweight over a period of just a few weeks. I could think of nothing but rage, revenge, and worry. To fight back I read several books about stress, its underlying causes, and how to deal with it. I also learned more about happiness, and started keeping a journal where I’d write about my level of worry and my goals for the next day – one day at a time, and then one week at a time. I was feeling better every day, even before the underlying problem was solved.

After the deal was done, all this preparation and research compounded with the natural relief of the situation and made me a freakishly happy man. And when I say happy, I mean jumping up and down, sprinting around the block, and then punching a punching bag while laughing out tears of joy until you collapse, happy. I’ve continued to be roughly this happy for the two years since then, taking a life that was already pretty good, and ending up with one that is as good as being a an immortal superhero who lives on a cloud playing a Golden Grand Piano while his best friends accompany on the bass and drums, as the entire population of Earth gathers below the cloud every evening at sunset for an all-night dance party*.

And the financial damage has slowly healed too. Extra work, frugality, and even a small boost from the developer of the neighborhood who took pity and decided to forgive a loan my old company owed him, all contributed. I took good care of my expensive new rental house, the rental market grew strong, and I found great tenants who now pay reliably even as they add gardens and lovingly maintain the house as if it were their own. It took a long time, but we’re now finally ahead of where we were before making The Big Mistake.

In the end, I spent somewhere in the range of $200,000 on this educational experience. But in the long run, I would dare to say that I’m going to make a huge profit on it when measured over a lifetime.

I learned mind-altering lessons about business, law, personal character, and hardship. I learned how to be more frugal and button down when a storm hits. I learned how to be happy even when on paper, very shitty things are going on in your life. And I learned to appreciate the incredible good fortune I have now that I’ve come though that hard time.

I’m also working on learning about forgiveness. My goal is to someday be able to see this “Dean” character, pat him on the back, and say “Hey man, I’m sorry about the hard times we went through together. I know it was a tough time for you, and I forgive you.” I’m not yet at this stage, since I still have the odd fantasy about breaking his neck in the crook of my arm after stabbing 450 ballpoint pens several inches deep into his eyes, abdomen, and neck while calmly reciting a poem I would write about how selfishly he handled our business situation. Oh yes, it would be an event that would have Hannibal Lecter himself taking notes**. But over time, as I become wiser and more mature, I will grow past this, and I’ll be a happier man, and a better father and husband, for it.

The best revenge is living well. So I make a point of exacting this type of revenge with gusto every day that I live.

So why, you ask, has Mr. Money Mustache, the Commander in Chief of the No Complaints Nation written this novel-length complaint to you?

It is meant to be an example of how even bad situations can turn good, how pain leads to happiness, and how expensive lessons can still lead to riches. You just have to keep working at it, and hammering through it, one day at a time. Just make sure you end up a bit further ahead each night than you were when you woke up that morning, whenever you can.

Your problems WILL. BE. CRUSHED!!!

*I do not mean to imply that I am anywhere near as cool as this hypothetical piano player, just that I have been roughly that happy.

** Update: Over three years have passed since I wrote this, and the anger has almost completely faded. I still have no desire to ever see the guy again, but feel that with my new life as great as it is, there is really no reason for anger or regret over anything in the past.