I recently shared my super painful debt story on Chain of Wealth Podcast. This interview inspired me to create this series. Rise From Rock Bottom tells every story from my failure years - and how I overcame it.
In 2015, I was under a mountain of debt. I had about $15K in credit card debt and a $25K car loan on a Mercedes Benz. If that wasn't bad enough, I also had a luxury apartment that easily cost $1500/month.
I was 25 and a single mom. #TheStruggle
Determined to maintain my credit score, I worked 3 jobs to put food on the table, pay my car note, my high-AF rent and continue making the minimum payments on my various credit cards.
I was under water, overworked, exhausted, and out of options.
If I stopped to take a breath at any moment, I would fall behind on paying bills, my rent would not get paid, there would be no food on the table. I was the epitome of paycheck to paycheck.
Flash forward to today.
By the end of 2016, I landed a job for one of the top Marketing Analytics firms in the world, making triple what I was making with three jobs. My company that lets you work from where ever you want, have unlimited vacation, a robust retirement plan and values me as an individual.
Most importantly, I am happy.
How did I make this transition in one year?
I made the hardest decision of my life: I stopped paying my bills... ALL OF THEM.
I called all of my credit cards and informed them I would no longer by paying. I turned my phone off (yes, completely off). I did a voluntary repossession on my Mercedes Benz and bought a crappy car in cash.
Lowering my bills meant I didn't need more money.
With over $2500 in rent, car payments and credit card minimums every month, I was obligated to work enough hours to cover my bills - EVERY SINGLE MONTH. That means before I could put money into my savings account, buy food or invest in my future I had to make $2500 that would immediately go out the door to pay for my earlier mistakes.
I only made $2000-$2200 each month as a receptionist, waitress and low-paid freelancer at the time. That meant that every month I was also spending MORE MONEY ON CREDIT CARDS.
Deciding to stop paying my bills and move out of my apartment (and into my moms basement) meant that I would no longer need $2500 each month. Without working any harder, I would now have $2200 each month TO INVEST IN MYSELF.
What did I do instead?
I made the decision to get masters a degree in a high demand, high value and growing field: Data Science.
I woke up every morning at 3am and rolled out of bed so I could wake up by the shock (and slight pain) of hitting the floor. (I was training myself for a war I intended to win.) I started studying for the GRE.
Within a few months, I had scored well, applied to school and got into the state school near my parent's house.
Remember the crappy car I bought with I did a voluntary repossession on my fancy benz? I sold it to pay for as much of my school fees as possible and minimize the amount of loans I had to take out.
Because I no longer needed the money, I was able to quit my receptionist and waitress jobs to go to school full time. I even fired all of my freelance clients and only kept the highest paying client.
After my nine month master's program, I walked across the stage just one year after starting this journey with an offer in hand - for triple what I was being paid before.
My life changed completely.
At this new job, I made $65K per year. That meant I finally would be able to pay off my debts and also have time for myself, my family and there would be money left over to save and invest in myself.
I also learned the most important lesson of my life: Spend less than you make. (Crazy how long it took to learn that lesson, right?)
I sacrificed my credit score to improve my life.
I am not advocating for scamming your way out of paying for your financial obligations. I am a firm believer that you SHOULD pay your debts. However, that is a choice you CAN make.
Without the bills, I didn't need three jobs.
Without the jobs, I didn't have to feel stressed every month about creating more income, working harder. I didn't have to burn myself out.
I could think clearly about who I was and what I really wanted out of life. With a clear mind, I put myself in a position to change my life permanently.
I made the conscious decision to take 10 steps back to (finally) propel myself forward. From where I'm standing, I made the right choice.
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ABOUT THE AUTHOR
Cyrene is a fun and accomplished workshop facilitator, learning and development guru and Human Resources professional. Being at the helm of Thrive Lounge has been a long-time dream. Through vision board workshops she plans to accomplish two-way learning. Sharing her vast years of knowledge to motivate and encourage others; while simultaneously getting the reward of great energy, ideas and questions to ponder back from each group. A super win-win. Please join our Thrive Lounge community so you too can benefit!
How To Survive (And Fully Recover From) Your Bad Credit History
I recently shared my full debt story on Chain of Wealth Podcast. This interview inspired me to create this series. Rise From Rock Bottom tells every story from my failure years - and how I overcame it.
Two days after I got my first job offer, the recruiter told me that the company would not be able to hire me. I had too much debt and my credit was so bad that many of their clients would not allow me to work on their accounts.
I knew when I decided to quit my three jobs and stop paying my debts to go back to school I would have some set backs, but I didn't think that this - my big break that I worked so hard for - would be taken from me in the process.... all because I had bad credit.
I had character references lined up to attest that it was extreme circumstances (not immaturity or lack of responsibility) that sent my finances spiraling out of control.
That way not the first time I had to sacrifice something I wanted because of bad credit. In fact, in one year of bad credit, I has the displeasure of experiencing every single one of these.
You can't buy a car.
Well, you COULD, but it would have to be in cash to make any financial sense (and if you're here, reading this, I'm sure you have a fair amount of financial literacy). With interest rates up to 24.99% for people with bad credit, car purchases don't make sense on any level.
How to survive -
Focus on living and working in big cities. Large cities (like DC, Chicago and New York) have amazing train systems that can allow you to get around without a car while you stash cash away for that car purchase. Trust me, your future self will thank you when your monthly payments don't go directly to paying only the interest on your fancy new car.
Make Uber and Lyft your best friends. Pro Tip: Use UberPOOL! This will save you extra money to put toward that car you're saving for.
Buy an old, crappy car for pennies. If you find yourself in a position where you need a car (like if you happen to land your dream career... in a city with no public transportation) your crappy car will be your best friend. You won't have car payments and you can still get to far away places without the requirement that they be accessible by public transportation.
You can't get a credit card.
When you have bad credit and you reach a position where you're ready to start re-building your credit, you'll find it's nearly impossible for anyone to trust you with their virtual cash. It's not happening... so don't even think about it. You'll get rejected for lines of credit until you show that you can be responsible with other people's money - and that takes time (a lot of time).
How to survive
Do it that hard way. Start paying off your debts, one by one. Slowly but surely your credit score will rise and eventually someone will trust you with a credit card. You may get a card with a $5 credit limit, but we all gotta start somewhere.
Get a pre-paid credit card. If no one is going to trust you, show some initiative and trust yourself with your cash money. Put $300 - $500 towards a line of credit for yourself and start practicing some of those good money habits you know you have. Over time, your credit score will rise.
You can't refinance your credit.
I always thought it's hilarious that credit refinancing will look at your credit to determine whether you're worthy of refinancing.
The people with bad credit are probably the ones that could benefit the most from a lower monthly payment. Unfortunately, you have a history and (in case you don't get it by now) no one trusts you with money.
How to survive
See above. #SorryNotSorry
You Can't Rent A Car
Have you ever tried renting a car without a credit card? After being super frustrated with my debt levels, I turned off - and then cut up - all of my credit cards.
My goal was to pay for everything in cash and if I didn't have the money that simply meant I could not afford whatever I wanted.
That was certainly not a smart decision for when I inevitably needed a rental car. Showing up for a rental car without a credit card is (simply put) a death wish. Some places will demand you show them a pay stub to verify your address. Many places will refuse to rent a car to you at all.
How to Survive
Rent from Dollar or Thrifty rental car. They will allow you to rent a car while placing a $350 hold on your car until you return the car. These are the only two places I've seen that will give you a rental car with very little (to no) hassle.
You can't get a student loan.
When I decided to go back to school, I had to sacrifice a lot to have the time to dedicate to learning a new craft and start applying for full time jobs in my field. I finally knew what I wanted out of life and I wanted to channel the force of Hercules if I needed to.
I successfully got into a program, paid the fee (with the help of my friends).
How To Survive
Ask your family. My dad was able to get a parent loan for me (in his name) so I could get the remaining $5k to complete my education.
Sometimes (if you're really unlucky) you can't get a job.
At the beginning of 2016, I had a target number for the salary I wanted. Months before graduation I was offered a job at that target number.
I was blown away that all of my hard work had finally paid off. When HR rescinded my offer due to poor credit, I felt helpless. The one thing that could help me fix my poor financial situation slipped right from under my fingers... because of my poor financial situation.
How To Survive
Keep this in mind while applying for jobs. I never met anyone that this had happened to so I thought it was an urban myth. Knowing that this is a possibility will help you manage expectations better during the application and interview process. It will also help you cope with losing a job offer.
Be wary of jobs with banks, financial services firms, government, and consulting firms that work with banks. Instead, look for larger firms rather than boutique firms. Even if these firms work with banks, they will likely be able to put you with another team that does not judge you based on your credit.
Stay positive! Cast a wide net and look forward to the journey. If you are offered a job, take the time to talk with HR and let them know your situation BEFORE they check your credit. Trust me, if they offered you a job, they WANT to work with you! They will do anything in their power to close the deal.
Yes, if you have bad credit America hates you! Understand it and get over it! With one foot in front of the other, you will walk right out of this bad credit situation and live to tell the tale.
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Craft your inspiring vision board workshop talk with our FREE High Impact Storytelling Journal Prompts.
Plan, promote & host your first (or next) professional & profitable vision board workshop with our signature course, Sold Out Vision Board Parties.
This post may contain affiliate links. Please read my disclosure for more info.
ABOUT THE AUTHOR
Cyrene is a fun and accomplished workshop facilitator, learning and development guru and Human Resources professional. Being at the helm of Thrive Lounge has been a long-time dream. Through vision board workshops she plans to accomplish two-way learning. Sharing her vast years of knowledge to motivate and encourage others; while simultaneously getting the reward of great energy, ideas and questions to ponder back from each group. A super win-win. Please join our Thrive Lounge community so you too can benefit!
How This 28-year-old Increased Her Net Worth By $20,984 in 13 months
This post may contain affiliate links. Please read my disclosure for more info.
In June of 2016, I got my first real job. That meant that for the first time ever I actually had some money to pay my debts. Before that, my strategy was sticking my head in the sand and pretending that the pile of debt didn't exist. I'll be the first to admit that it wasn't exactly the best strategy.
By that time in my life I had moved into my mother's basement where my daughter and I shared a room that only had an inflatable bed and my computer desk - so I was in no place to care about debt payoff strategies.
Flash forward two years later.
I finally landed a job where I'd have enough money coming in to cover my expenses AND pay off my debts.
Like many Americans, I'm now paying for the mistakes I made earlier on in life.
I decided to start reporting my net worth because I know I am not unique in my story. Many of us in our late twenties are paying for the mistakes of our vulnerable and naive teen selves so there's a ton we can learn from each other.
There are three main reasons I'm sharing my money story:
I want you to know that no matter how messed up your situation is, you can get out of debt.
I want to track my own personal net worth over time.
I want to share my unique story in how I'm getting my life together (and one day I will)
Let's get started, shall we?
What is Net Worth?
I was not born (or raised) with a huge understanding of money and what it's meant for (other than buying stuff) so I didn't really understand what net worth meant in practical terms until about two years ago.
Basically its what you own (your cash, investments, home, etc.) minus what you owe (credit card, student loan debt, etc).
What's Included? What's Not?
Tracking net worth can be a bit tricky because people can include (or not include) whatever they want so no two net worth statements will be the same.
What's included here:
Money That Pays My Bills - This is money that comes in... and then goes right back out. It's used to pay rent, phone bill, Netflix and other miscellaneous debts.
Savings Account - I put a small percentage of each paycheck into a savings account.
Investment Accounts - My 401K through my job and a few robo-advisors.
Debts - The only debt I have left is my student loans.
What's not:
Money that's not doing anything productive for my net worth - I have three additional accounts that I put a small percentage of each paycheck into: travel savings, weekly household/grocery spending, and personal fun money. This is money that is meant to be spent on enjoying life now and plays no part in my future plans - so I choose not to include it in my net worth.
Cars - Some people choose to include the value of their car(s) into their net worth statements. There are two main reasons I don't do this: (1) I don't think your car is an asset in by any means (2) don't own a car because it's a money pit (and these days I'm more inclined to keep my money in my pocket).
Homes/Rental Properties - Unlike cars I believe homes/rental properties can be a great way to contribute to your future financial freedom. While I don't have any now, I hope to start adding this to these income reports by 2021.
How Much Money Do I Make?
Now I know it's totally taboo to talk about how much money I make but screw that. I'm going to be 100% open and honest about my income with you because I believe the more we talk about our money stories, the more other people can learn from it.
I can attribute my total money makeover to one person... Wendy.
Wendy is a super badass (and that is literally the only way to describe her.) I met her through an ex-boyfriend and was immediately in awe of her badassity. She went to an ivy league for school, was making $90K+ at some bank, running marathons, had a booming social life AND somehow she was also the treasurer of the Young Dems Chapter. #BadAss
I had no idea how long it took Wendy to accomplish all that, but I knew one thing. When I grew up, I wanted to be Wendy.
At 25 years old, I was making $20K/year, working 3 jobs as a babysitter, waitress and freelancer. (I was so exhausted on a regular basis that I once fell asleep at a full blown rave in the room reserved for people who can't hold their alcohol.)
On top of that, every dollar that came in went right back out. A lot of my friends were struggling so I simply thought that it was normal. I thought that no one really "made money" until they were older. I figured I'd make money one day in my forties after I gained experience, after I'd paid my dues. I was OK with my life.
Then I learned Wendy and I were the same age.
The second I learned that my world shattered. The story I'd told myself to be comfortable with my struggle was no longer true. My age was not the reason I wasn't making money - instead it was my own limited mindset that was holding me back.
From that moment, my mind opened up to the fact that I, too, could get one of those high paying jobs. I went back to school, got a master's in marketing analytics and landed a job as a marketing analyst.
My total annual income now is $69K.
I love telling people how much I make because I know my story can inspire someone the way Wendy inspired me.
Cash Money
Here's the money that goes into my checking and savings accounts. It fluctuates over time because all the money that goes into my account gets immediately shifted to pay bills and student loans.
My biggest downfall when it comes to my cash money (and why it's impossible for me to keep money in that account) is that I struggle with properly budgeting. Every month, when I inevitably pay too much out (on student loans or elsewhere) I just pull the money out of my savings, dump it into my checking and use it for more bills.
In the future, I plan on moving my emergency savings to a different account to create a barrier between my savings and my checking. However, I don't plan on doing that until after my student loans are paid off. I believe this is the best move for me because the earnings on savings accounts is around .01% (or whatever) while the interest I pay on my student loans is 6% and my credit score is far too low to refinance at a lower rate. That means the most productive place for my money is in paying off these student loans.
Downside (for now) is I don't really have an emergency fund. I'm OK with this because I do have a health savings account and great health insurance to cover me if I have a medical emergency. Also, I do not have a car or own a home so I don't have any physical property to worry about.
Investments
The only investments I have (for now) are the pre-tax retirement account I have through my job and a few robo-advisors investment accounts where I stash some after tax income.
Acorns
Acorns is an investment app that helps you invest tiny amounts of money at a time (so it's perfect for investors on a budget). For every purchase you make, Acorns rounds your purchase amount to the next dollar and invests the change.
My favorite thing about Acorns is if you happen to want to pull your money out of that account for an emergency you totally can! However, it takes about 7 days to get the money back into your account so you're not likely to reach for that money for any immediate need. That's great because it can sit and grow a little at a time.
Betterment
Betterment is another online investment company that helps you invest small amounts of money. I am currently putting $50/month into Betterment and watching what happens over time.
401K
I started to funnel money into my 401K the moment I got my first real job. I was super excited to start putting money towards my retirement. I finally felt like an adult.
I started off putting in 6% of my paycheck (because the company matches at 6%) and I set my account to automatically increase by 3% every year. Right now, I'm up to 12% of my income going into 401K before tax.
Loans
The only debt I'm going to talk about here is my student loans.
Before I started my current job, I had so many debt collectors calling me that I couldn't wait to get rid of them. I had unpaid phone bills, car insurance payments, credit cards that had gone to collections, unpaid medical bills and about $4K that I'm paying back to friends and family that helped keep me afloat when I was at my worst.
I spent the first 6 months at my job paying off all of my small debts and by December 2016 I was ready to start paying off my student loans.
This report starts at the beginning of that journey.
Student Loans
I have a HATE ONLY relationship with my student loans (and I totally have a right to).
Side note: I'm going to hop on my soap box for a second to say what the United States does to students is CRAZY! At the age of 18 when you can't even RENT A CAR you're saddled with tens to hundreds of thousands in student loan debt. If you're a first generation college student like I was then you didn't have anyone to tell you about the important of choosing schools wisely or the impact of student loans on the rest of your life. Instead, you're way too busy celebrating your future success because you think degree=high paying job. #FalseAdvertising
Just for fun, let's take a look at the moment I started to include my student loans into my Net Worth.
You see that GIANT dip right around December 2016?
Yup. That's what student loans will do to you. (Take notes, teens!)
Clearly, I hate my student loans so it shouldn't surprise you one bit that I decided in January 2017 that I'm going to pay off all $42K of my student loan debt in two years.
I've done some pretty interesting things to get there:
I sold my car.
I rented out my second bedroom to my friend's grandfather visiting from Africa.
I (voluntarily) moved out of my apartment to live with my aunt in New Jersey.
I started to look for more opportunities to make money on the site through:
Private workshops and speaking engagements
Book sales
Affiliate marketing (I recently took the Making Sense of Affiliate Marketing course to boost my chops.)
I have paid off $12,913 in student loan debt payments so far.
Going forward, I'm putting a lot more time an energy into creating new products for the blog and performing high at work as well because it's promotion time!!! #WishMeLuck
Any additional income will go towards student loan debt payments.
Net Worth
My total net worth is currently -16,604.93 (reminder: this is including student loan debt).
This is a huge accomplishment I have increased my net worth by $20,984 (about 1/3 of my pretax income) in just 13 months!
The Visuals
My money story is tracked in Personal Capital. That's where I got all of these cool visuals showing where my money is coming in and going out for this post. It's an amazing free website where you can track your net worth, budget and plan for retirement. Sign up for Personal Capital here.
Tracking my net worth is my way of reflecting on my money habits and thinking about different ways to improve them.
What are you doing to improve your net worth?
Want To Start Planning Your Vision Board Party?
Download the FREE vision board party planning checklist.
Craft your inspiring vision board workshop talk with our FREE High Impact Storytelling Journal Prompts.
Plan, promote & host your first (or next) professional & profitable vision board workshop with our signature course, Sold Out Vision Board Parties.
About the author
Cyrene is a fun and accomplished workshop facilitator, learning and development guru and Human Resources professional. Being at the helm of Thrive Lounge has been a long-time dream. Through vision board workshops she plans to accomplish two-way learning. Sharing her vast years of knowledge to motivate and encourage others; while simultaneously getting the reward of great energy, ideas and questions to ponder back from each group. A super win-win. Please join our Thrive Lounge community so you too can benefit!