I’ll never forget the night of December 31, 2016.
I was in my pitch-black bedroom. My face was wet with tears, and I was curled up in my bed under the covers. I was alone and I felt hopeless. I was going through a divorce and felt overwhelmed by the divorce process, parenting plans, child custody negotiations and a household full of bills to pay on a single income.
I’m an amateur personal finance geek.
Your tools have helped me become a smarter investor.
Personal Capital Dashboard User, February 2021
Can you relate?
I was wondering how I could possibly deal with the emotional turmoil of the divorce, go to work every day, and be happy in front of the children. And did I mention the stack of bills that needed to be paid?
I knew I had to do something.
Financial Turning Point
When I woke up on January 1, 2017, I sat down and organized all my financial accounts. I wrote down a list of all my expenses and debts. I then looked at my income. What was left over was heartbreaking. Based on my childhood upbringing of barely having just enough, I was embarrassed to be back in that position, even after going to college and getting a “good job.” Further, when I determined how long it would take me to retire at the rate I was going, I was devastated.
I started researching different terms. Financial independence. Financial tools. Retire before 65. I was at a turning point, and I wanted to move forward with my life intentionally.
While searching online, I came across Personal Capital’s net worth dashboard. It was free, so I immediately downloaded the app. I added my savings accounts, checking accounts, credit cards, 401k accounts and other financial liabilities. I was presented with my financial net worth and that moment was so empowering. The numbers weren’t what I was expecting, but for the first time I knew my net worth and was ready to make well-informed decisions.
I had a starting point.
Time to Budget
I used the Personal Capital cash flow analyzer to visualize which expenses were costing me the most each month. It was easy to see that my home was my biggest expense and the easiest to reduce.
I quickly sold the house and didn’t look back. My two sons and I moved into a small apartment, saving over $1,400 a month on our housing expenses. Using my own Budget Bestie spreadsheet, I continued to slash my expenses and was able to increase my savings rate to 50% of my income. I was then able to invest those savings as pre-tax contributions to my workplace retirement accounts (403b and 457b).
Working Toward Financial Independence
After taking control of my finances, I realized that earning more money could help me reach my financial goals much faster. I started several side hustles to create additional income streams. In my opinion, the best side hustles are the ones you are uniquely positioned to run.
For example, I created a workbook, titled The Unlikely AchieveHer®, to help women level up their soft skills so they can elevate their careers and personal life. While I do share my personal story, it is a workbook for women to learn how to overcome obstacles, break through glass ceilings, and reach their highest potential. It’s an action-oriented guide focused on personal, professional, and financial development. I self-published the book and started a speaking business. I had other side hustle businesses as well. I once owned a travel agency and even developed an app for students. Now four years later, I’m financially independent.
I’m on a mission to help women reach financial independence. To do that you will have to do three things:
- Adjust your mindset to a can-do-anything mindset
- Cut expenses (for example I pay only $180 a year for mobile phone service)
- Create your own income streams
These steps will require you to think outside the box and be disciplined, but I know you can do it!
It’s a mindset shift to owning versus consuming. I am not saying to never “treat yourself” or purchase quality clothing. Buying new clothes won’t give me an investment return, but the money invested in the company that makes the clothing just might.
Where I Came From, Where We’ll Go
At this point, you are probably saying, “What about the people who have low income or are below the poverty line?” I’m glad you asked because that was my story growing up.
I say, take ownership of your situation no matter where you are. My mom dropped out of high school, and I was born when she was just 17 years old. I know what it feels like to be on government assistance. I know all too well what it means to be poor. No matter your income level, reset your mindset around money. If you don’t have money, adjust your mindset around going as far as you can with education so that you can earn more money, or start a side hustle to create your own income. Be creative. Be bold!
I’m now a retired tenured professor who wants to empower women to achieve their goals and gain financial freedom, just like I did. I achieved financial independence not because of my salary, but rather because I had been saving 60% of my income for years.
We don’t always know what options are out there to help us cut expenses and invest more. I hope this letter gives you some tips and hope along your journey to financial freedom.
Featured individual is a paid spokesperson and not a client of Personal Capital Advisors Corporation (“PCAC”) and does not make any endorsements or recommendations about securities offerings or investment strategy. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.