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I Cleared $35K Worth Of Debt While Making $12 An Hour

Finance

In 2009, I lost everything. My career, relationship and home. It's amazing how quickly unemployment can knock you down and change the entire trajectory of your life. I went from earning and saving good money to waking up on my 30th birthday living on my sister's couch.


My credit card debt ballooned to $35,000 and my 802 credit score plummeted into the 500's because I couldn't pay bills. Fast forward five years later and I've not only dug myself out of that hole, but I built a business on the way up. I'm currently a speaker, bestselling author, and financial educator running an internationally recognized brand, but before building a successful business I hit rock bottom.

Here are some money lessons I learned from the struggle:

Always Save for a Rainy Day El Niño

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There's no way to predict long-term unemployment, but you should always prepare for it with an emergency fund. I lived well below my means to save money before losing my job. Thankfully, I had some savings to live on.

My first "real" job at 21 was as a teacher's assistant. It only paid $12 per hour, so I lived with my parents to stack coins. I found a modest yet affordable rental in New Jersey with a roommate (my sister), that cost just $1100/month, $550 per person including utilities. As my income steadily increased, I kept the same standard of living and a strict bi-weekly budget. I used envelopes filled with cash to divide my pay into categories: bills, savings, entertainment and grooming.

I lived off one paycheck and saved the other.

By 25, I had $40,000 saved in cash.

Live Richer Lesson #1:

Nothing in life is guaranteed, so establishing good saving habits no matter how much you make is invaluable. Downgrade your life, if necessary. This could mean cutting cable, getting a roommate or keeping your gel manicure on for a few extra weeks.

How To Live This Lesson Now:

Begin to set aside a few dollars from each paycheck in a savings account. Don't have the discipline? Start with Digit. This free resource studies your financial moves and automatically transfers money from your bank account to your Digit Account. They will send you daily, fun texts with updates of your balances and transfers. You can choose to save more, pause savings or withdrawal your money via text as well. Your money is FDIC insured and they have a no-overdraft guarantee. Oh, and they do it for free!

Nothing Good Comes Easy

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Before joblessness, my savings game was on point, but my investment game was lacking. I made one crucial mistake that put me in a world of debt and made unemployment overwhelming. At 27, I asked a wealthy friend of mine to teach me how to invest and he pitched me a genius plan. We would buy high-end clothing in New York and ship it to Paris to sell in one of his stores.

My return was supposed to be $1,200 per week for two years. Yup, you read that right. I thought I was going to make $62,400 per year shipping clothes across the pond. I was so excited about making racks on racks that I applied for new credit cards and took out cash advances totaling $20,000.

We sent our first shipment to Paris then I never heard from him or received any money. It devastated me at the time, but I can appreciate the lesson. First, be careful who you trust. Second, if a plan sounds too good to be true, believe it. Last, hard work and passion are what will pay off tenfold, not a get rich quick scheme.

Live Richer Lesson #2:

There's no such thing as easy money. When my "friend" aka The Thief shared his get-rich-quick scheme with me, I should have ran for the hills. Looking back on it, it didn't make sense. Rarely in life do you make a ton of money without knowledge and work.

How To Live This Lesson Now:

If you're interested in investing, you first have to invest in knowledge. Two financial books to help you get started are: The Richest Man in Babylon by George Clason, Stock Market Investing Mini Lessons For Beginners: A starter guide for beginner investors by Mabel Nunez.

Odd Jobs Add Up

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Losing my job and the implications of bad investing had me down and out. At 30, I was directionless and living off the little savings I had left. I didn't know how to start over after losing so much. Back when I was a teacher, staff members took notice of my money management skills and looked to me as a financial resource.

Looking for something to keep me busy, I began volunteering at several nonprofits teaching financial education. I networked like my life depended on it and asked nonprofits to refer me to other organizations for paid opportunities. Since I couldn't find 9 to 5 work, I did a bunch of side hustles to make money. I took on one-on-one financial consultations, babysitting and tutoring.

Sidebar: Don't discount volunteering. I met my first clients for The Budgetnista by volunteering. By combining volunteering and sharing me in action on social media, I was able secure a new client each time I spoke and posted myself speaking online. In the beginning, 80% of my business came from the posts I shared on Facebook. So use your social media network to showcase your skills and increase your income.

Live Richer Lesson #3:

If there's no place for you in the workforce, make your own way. Use your experience and passions to offer a product or service that someone finds valuable. Hustle even if you have a full-time job. Multiple streams of income will lead to financial security.

How To Live This Lesson Now:

  • Use Your Degree. If you have the education, put it to use. You can charge more money for a service when you're an expert in a field. Think about how you can shape your education into an extra source of income.
  • Do What You Do For a Living. You can hit the ground running with your side hustle if you have work experience in the industry. There's no learning curve and you have a resume that proves you know what you're doing.
  • Activate Your Passion. Start charging for things you already do for free. You already have an established clientele who like your work and you can use them to spread the word.
  • Negotiate a Raise. Start to collect all of the amazing value you bring to your job. Put it together in a file. Make sure you monetize your value. Example: The decision you made to do _________ is saving the company $10,000/year.

Take Ownership of Your Situation

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At first, I didn't want to face my credit card debt from the bad investment even when I started making money again. I felt paying any more than the minimum payment was admission of guilt and I didn't want to take full responsibility.

Only after owning the mistake and forgiving myself was I able to start crushing the debt. I transferred my credit card debt to cards that offered introductory 0% interest rates, so the money I paid largely went to principal instead of interest. (Use Magnify Money to help you find the best balance transfer cards.) If I had continued to sit back without taking ownership, interest would have increased my debt exponentially.

Since I've been through the struggle, I understand how disheartening financial missteps can be. You feel destitute, desperate and hopeless, but there is a way out if you face the situation. Open the bills, pick up the phone for collectors and form a plan. Sure, it won't happen overnight, but you have the power to change your situation.

Live Richer Lesson #4:

Have you made financial mistakes in the past? Are you currently making financial mistakes? Will you probably make financial mistakes in the future? Yes?! Well, so did Will Smith, Rihanna, Suze Orman, and me!

Sometimes you are unable to move forward financially, not because you don't make enough money, not because you don't have the resources, and not because your situation is un-repairable. The truth is, you have yet to get over your financial mistakes if you want to move onto greener pastures (pun intended). Financial forgiveness is one of the first keys to becoming financially healthy.

How To Live This Lesson Now:

  1. Admit to Yourself and Take Ownership. Confess; say "I messed up when I __________". Feel free to substitute the word "messed" with your verb of choice.
  2. Identify the What and Why (Be Very Specific). Take a break from beating yourself up for a minute and clearly identify your mistake and why you made it.
  3. Tell Someone You Trust. OK, so this may be a tough for you, but tell a trusted confidant. Doing so will allow you to let go of the shame, begin to forgive yourself, and ultimately work on a solution.
  4. Focus on a Solution. So the truth is out, and it's time that you focus on what IS, verses on what ISN'T.
  5. Plan, Then Work the Plan. Once you've drafted your list of possible solutions, pick one and begin crafting a plan. Not sure how to start or what to do?

Using these four lessons, I now run a successful business, and no longer struggle financially.

Tiffany Aliche, better known as "The Budgetnista", is America's favorite financial educator and she's here to answer your money questions.

Featured image by Getty Images

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When I was ten, my Sunday school teacher put on a brief performance in class that included some of the boys standing in front of the classroom while she stood in front of them holding a heart shaped box of chocolate. One by one, she tells each boy to come and bite a piece of candy and then place the remainder back into the box. After the last boy, she gave the box of now mangled chocolate over to the other Sunday school teacher — who happened to be her real husband — who made a comically puzzled face. She told us that the lesson to be gleaned from this was that if you give your heart away to too many people, once you find “the one,” that your heart would be too damaged. The lesson wasn’t explicitly about sex but the implication was clearly present.

That memory came back to me after a flier went viral last week, advertising an abstinence event titled The Close Your Legs Tour with the specific target demo of teen girls came across my Twitter timeline. The event was met with derision online. Writer, artist, and professor Ashon Crawley said: “We have to refuse shame. it is not yours to hold. legs open or not.” Writer and theologian Candice Marie Benbow said on her Twitter: “Any event where 12-17-year-old girls are being told to ‘keep their legs closed’ is a space where purity culture is being reinforced.”

“Purity culture,” as Benbow referenced, is a culture that teaches primarily girls and women that their value is to be found in their ability to stay chaste and “pure”–as in, non-sexual–for both God and their future husbands.

I grew up in an explicitly evangelical house and church, where I was taught virginity was the best gift a girl can hold on to until she got married. I fortunately never wore a purity ring or had a ceremony where I promised my father I wouldn’t have pre-marital sex. I certainly never even thought of having my hymen examined and the certificate handed over to my father on my wedding day as “proof” that I kept my promise. But the culture was always present. A few years after that chocolate-flavored indoctrination, I was introduced to the fabled car anecdote. “Boys don’t like girls who have been test-driven,” as it goes.

And I believed it for a long time. That to be loved and to be desired by men, it was only right for me to deny myself my own basic human desires, in the hopes of one day meeting a man that would fill all of my fantasies — romantically and sexually. Even if it meant denying my queerness, or even if it meant ignoring how being the only Black and fat girl in a predominantly white Christian space often had me watch all the white girls have their first boyfriends while I didn’t. Something they don’t tell you about purity culture – and that it took me years to learn and unlearn myself – is that there are bodies that are deemed inherently sinful and vulgar. That purity is about the desire to see girls and women shrink themselves, make themselves meek for men.

Purity culture isn’t unlike rape culture which tells young girls in so many ways that their worth can only be found through their bodies. Whether it be through promiscuity or chastity, young girls are instructed on what to do with their bodies before they’ve had time to figure themselves out, separate from a patriarchal lens. That their needs are secondary to that of the men and boys in their lives.

It took me a while —after leaving the church and unlearning the toxic ideals around purity culture rooted in anti-Blackness, fatphobia, heteropatriarchy, and queerphobia — to embrace my body, my sexuality, and my queerness as something that was not only not sinful or dirty, but actually in line with the vision God has over my life. Our bodies don't stop being our temples depending on who we do or who we don’t let in, and our worth isn’t dependent on the width of our legs at any given point.

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