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A nugget of wisdom that Warren Buffett has passed along more than once to Berkshire Hathaway investors is this: "You only find out who is swimming naked when the tide goes out. " What the oracular Omahan seems to have meant by this is that you don't really know or appreciate the risks that companies are taking until they are tested by adverse conditions--a corollary to the saying that everyone looks like a genius in a bull market. Buffett used the line a year ago, for example, in reference to the follies of large financial institutions exposed by falling home prices.

While the tide-going-out phenomenon clearly applies to companies, it is relevant to personal finances as well. In a booming market and a booming economy, we don't have to worry so much about our debt, our obligations and our expenses and our safety net. We don't have to worry so much about where that last penny goes, because there are a lot more pennies and dollars on the way. But when times get tough, we discover out that we are the ones swimming naked: Gosh, I guess I shouldn't have tilted my portfolio so much toward stocks. You know, I'm spending a lot of money each month on my health club membership, and I hardly ever go. And, hmm, is that all the cash I have on hand? I guess I'm living closer to the edge than I thought.

So, with the benefit of 20/20 hindsight, what have you learned about your own bathing suit, or lack thereof? What were the major risks you were taking with your personal finances, and did you even realize it at the time? I'm curious to know what you've discovered as the tide has fallen.