In my group of friends, on the outside, it certainly seemed like I was the smartest when it came to money. I had an affinity for numbers and when I started my career I worked in finance. But when it comes to my habits, for a long time my choices didn’t prepare me for financial success.
I was an extreme spender, even going back to high school, when I spent the $800 I had saved all summer working two jobs in one shopping trip. With college and trade school, even though there were scholarship choices, I picked the programs at my “dream schools” that were the most expensive, and started to accumulate debts.
In the midst of it all, for years I still saw the lines of available credit on my credit cards as additional resources for my expenses.
My early investments also left something to be desired. I put $3,000 of borrowed money into penny stocks for a hot business. I eventually lost the value of that investment and still had to repay the loan afterwards. There was also a poorly documented foray into real estate investing that ended in me paying too much for a duplex and then having to deal with late rents and damages. materials from tenants that I had not properly checked.
Finally, at 32, I woke up and realized that with $260,000 in debt and negative net worth, things had to change. It took time and a major mindset shift, but today I am a millionaire.
I’ve made more mistakes with money than I can count, but I’ve learned that no matter what kind of setbacks you have in your past, you still have the power to create real wealth in your life. coming.
Here’s how I bounced back from my early and costly money mistakes.
I sat and looked at the numbers I was hiding from
Before I could make these major changes, it turns out I had to make another money mistake. After I finished my MBA and traveled the country, I sat down and listed my debts and assets. That’s when I discovered that I had a negative net worth of $99,000.
Seeing those black-and-white numbers was a good start, but then, rather than put my head down and figure out the best way to effectively reduce my debt, I took a shortcut that, in hindsight, was a big mistake.
I closed my former employer 401(k) that was worth about $28,000 and threw it on my student loan debt. It made a small dent, but withdraw the money before retirement led to me being penalized and taxed. It was 2011, when the economy was still recovering from the recession, and if I had left it alone to grow, that $28,000 would be worth much more today.
If I could go back I would handle it differently, it was this experience that finally revealed to me that I needed an entirely new approach to money. And it has served me well ever since.
I let go of money beliefs that didn’t serve me
We are all conditioned by beliefs about money from people who raised us and personal experiences, and many of us don’t even realize it. When I finally realized that my beliefs were holding me back, I had the chance to do something different.
I had internalized some misconceptions about money like “investing in the stock market is gambling” and “debt is normal and everyone has it”.
In my teens and twenties, I believed having more made me cooler or more important. I also believed that going to the best and most prestigious school guaranteed a great job, a belief that the realities of the recession quickly proved wrong.
I also thought that buying things made me happy. I was trapped by these mindsets for so long, but when I started to question them, I had the ability to step out of myself and reflect.
I took small steps to regain control of my finances
This mental reset was the beacon of hope I needed to finally take responsibility and regain control.
For a long time, my debt seemed so overwhelming that avoiding it seemed like the only realistic way to manage it. I thought I had no hope of paying it back, so instead of creating a real plan, I just assumed my salary would keep going up. But you can’t earn unsustainable expenses.
The first real breakthrough for me came when I was lucky enough to get a job offer in an area where the cost of living is lower. And while closing that 401(k) isn’t something I would recommend to anyone else, it kickstarted a healthier debt repayment plan.
With my budget, I finally saw that the pain created by my debt outweighed any short-lived pleasure I got from a shopping spree. The stress was even beginning to affect my health, leaving me with migraines and insomnia. Once I realized that I couldn’t separate my money worries from the rest of my life, my priorities changed.
I started making more intentional choices. I reduced my interest on the remaining loans, sold that loss-making rental property, and reduced my daily expenses. In 2011, I also started putting 10% of my income into my retirement accounts each month. Over time, this has helped me establish a positive net worth.
I also started looking forward to paying off the debt each payday. I spent less and less to pay more and more. Once I paid off all my debts in 2016, I made investing an even bigger priority and, from 2021, I became a millionaire.
I took shame out of the equation and found people who inspire me
For so many years, I avoided my money. I was ashamed of it. I let fear take over me. But hiding from your money doesn’t change anything. I would have been stuck, drowning in debt if I hadn’t acted.
Instead of the abbreviated version I did the first time around, once I started actively paying down debt and budgeting, I promised myself to be as transparent as possible with my finances.
I regularly checked in with myself and I wrote down all my assets and my debts to understand exactly where I was and to go further. I added the interest rates for each debt account and calculated the total annual interest I was paying.
I started tracking all my expenses. It wasn’t until I could see everything that I was able to change my spending habits and behaviors. I also built a community of people around me who were more intentional with their money, especially a good friend of mine who has always lived on less than she earns.
She’s become something of an unofficial financial mentor, and spending time with her and understanding how she thinks has motivated me to keep making positive changes and believing in myself even more.
Cori Arnold is the author of “Aspirations Journal Using Beanstalk Goals”, “Make Flipping Real Estate Your Part-Time Hustle”, “You’re Approved”, and “Career Advice for Graduates”. She is the founder of Cornball Productions, which offers gratitude journals and checkbooks, available on Amazon. Her blog, Will You Be Rich or Poor, focuses on mindset and money and she runs a YouTube channel called Cori Arnold: negative net worth for millionaire. She also has a growing Twitter following @moneymindcori.
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