I build businesses that high-flying tech startup investors generally don’t like.

The businesses I build are profitable, focus on cash flow, and sell commoditized services. They’re considered unexciting to tech startup investors, who want to invest in the new hotness.

I’ve tried to contort myself into building that type of business, but it’s just not for me. That’s because, in my view, those businesses are unnatural. A business must (eventually) make a profit to survive. And many of these fancy tech startups die once they’re forced–by the economy, their investors, or the public markets–to make a profit. They can’t turn the corner.

Are We at The Top?

We are, right now, in a state of economic expansion that has lasted for 10 years. Having lived through two major downturns (2001 and 2008) as an adult, I’ve trained myself to recognize the top of the market. And though I may be wrong, I feel confident in saying we are at the top right now.

That does not mean the economy will not continue to expand. “The market can stay irrational longer than you can stay solvent,” John Maynard Keynes wisely said. Timing the market is extraordinarily difficult.

I closely watched the financial news during the last two economic expansions and contractions, and for the last 3 months I’ve seen the same indicators I saw at the top of those two expansions.

So, if we’re not at the top, the markets will certainly only get more irrational and frothy from here.

Why do I mention all of these economic indicators? Because now is the time for you to start being a cockroach.

You should irrationally focus on profitability and putting as much money into the bank (liquid cash) as possible right now. And from a personal level, you should be focused on paying down debt, not taking on new debt, and stacking as much cash as you possibly can. Get money now while the economy is at the top.

As much as you can given your time and health, take on paying gigs now. Then put that cash in the bank and keep it there. You will need it when the economy tanks, whether that’s later this year, next year, or 2-3 years from now.

Why Save?

I say “irrationally” above even though what I just wrote seems rational to me, because in our consumer-driven economy, saving money and making a profit are not considered rational. Why save money when you can always just go drive for Uber to make more? (Because that option won’t always exist.) Why be a profitable business when you can just go get more funding to pursue the next hot thing? (Because investors will shut their doors on you once the economy tanks–ask anyone who tried to raise money in late 2000 or early 2001, or in 2008.)

I am warning you now: Do not take on new debt at this time, whether business or personal. It would be rational now to pull a line of credit as backup for your business–and then refuse to touch it except for emergency. (We are in the process of doing this for our business right now. Get credit while the economy is good.)

Pay off your cars. Pay off your phones. Stop buying new cars and phones. Pay off your student loans. And stack 3-6 months of money in your emergency fund.

Why Am I Saying All This?

I am blaring this horn of urgency while the rest of the economy is still having a party, and I am doing so for this reason:

In 2001, I was a web developer, working at Sun Microsystems on Sun.com (a job I hated, and was underpaid for.) There were no other companies hiring web developers, especially ones like me who were self-taught with no degree.

I eventually quit and subsisted on contract work, a lot of crappy food, and at least one eviction notice. My boyfriend at the time ended up moving in with me to my small 1BR apartment in the East Bay and paying the electric bill to avoid my utilities being shut off.

My landlord reduced my rent (when was the last time you heard of that happening in the Bay Area?) because so many people were leaving that they wanted someone to sign a 6-month lease. Please sign it, they begged. I negotiated. I got even lower rent.

After my 2001 horror story, I resolved I would never be caught unaware by a downturn again.

Throughout 2005-2007, I became obsessed with financial news as the market became irrational. By 2008, I was prepared. I correctly predicted the real estate downturn on this blog. I sold my hosting company on September 7, 2007, within a couple weeks of the peak of the market.

And then I took 4 years off without having to worry about money, while the rest of the economy tanked and everyone struggled. I built this blog, eventually reaching over a million unique visitors a year. I learned marketing inside and out.

This is not a “brag.” This is me telling you why I’m sounding the horn now. I understand it seems ludicrous to worry about this, especially if you’re young and didn’t have to live through 2001 and 2008. Those were incredibly rough years.

Now I am battening down the hatches again.

If I’m wrong, I come out of this with no debt, some savings, and a decent business (no plans to sell our business this time.) If I’m right, I can subsist on contract work again for a few years, this time eating slightly better food.

From Cockroach to Billionaire

I urge you to do the same. Cut unnecessary expenses, pay off the cars you have, make sure your business is profitable, trim unnecessary expenses there, and do not take on new debt at this time!

Take on additional paying work if it pays decently and won’t kill you health-wise. Use that extra money and put it away as cash. Do not invest it unless that investment pays cash-on-cash returns (aka dividends) and you have read the financial statements and believe the business will be OK in a downturn.

Be a cockroach, right now, while everyone else is still getting wasted at the party. Warren Buffet famously said, “Be fearful when others are greedy and greedy when others are fearful.” Now is most certainly the time to rein in.

As an added bonus, stacking cash now will enable you to take advantage of market opportunities when others go bankrupt later. I am already making some plans in this area (involving commercial real estate, if you’re curious.) But now is not the time to invest. Now is the time to stack cash so you can invest later.

Billionaires often get created during downturns. In a few years, it may be your time to shine.

What if you didn’t need more money to live the life you want? What if you could live on less, spend less time on your business, and still be happy?

This is the founding principle behind “lifestyle design”–a term that has become popular since Tim Ferriss released his book Four Hour Work Week. The idea behind a “lifestyle business” is to grow a business that sustains your daily lifestyle while allowing you the time freedom you need to pursue what interests you.

Here’s what my optimal “lifestyle design plan” looks like: (more…)

Review: Ramit Sethi’s I Will Teach You To Be Rich
Boot Camp. Have you ever felt like your money was in control of you, instead of the other way around? Do you desperately wish your life wasn’t controlled by credit card payments and bills–and you just need a little help to get turned around?

I’m excited to help my friend Ramit Sethi in his quest to help you take back control of your financial future.

This video explains everything, but the story is also below for you…

My Story

In 2007, I nearly bankrupted my business because I didn’t keep track of my finances. I didn’t hire an accountant or financial planner because I “couldn’t afford it”. Little did I know that my business had far more money going out than coming in.

I always thought the numbers would work themselves out. I was smart; I read a ton of business books every month, and my business was growing like gangbusters. What was there to worry about?

It took our landlord locking us out of the building and me having to lay off most of my 6-person staff for me to hit bottom and realize what a terrible mistake I had made. (more…)

I’m incredibly angry about what has happened in our country in the past several years. At the height of the housing bubble, we had trained economists telling us that houses would never drop in value, and in 2004, with interest rates at near-historic lows, our Federal Reserve chairman, Alan Greenspan, told us that we would probably be better off with adjustable-rate mortgages. Those same mortgages were the ones that blew up in many folks’ faces a few years later, when the “adjustable” rates adjusted to 10% or more.

I think you have every right to be mad as well. (more…)

How do you envision your future retirement?

Some shocking statistics recently caught my eye. The median IRA balance is just $55,000, and the median 401(k) balance is just $15,000. Baby boomers are working longer, since most do not have enough saved to retire comfortably. And, given the statistics, it’s likely you are in the same boat.

Why is it that so few of us save enough for retirement? Why are we so woefully underprepared? (more…)