It was 2009, the depth of the Great Recession. I was 29 and had hit financial rock bottom. I reached out to my older sister for advice. This is what she said: "If you're willing to live like no one else now, you'll be able to live like no one else tomorrow." Heeding those words changed my life.
It was a spectacular fall from financial grace, one that hurt all the more because my parents had educated me about budgeting, living frugally, and saving. Just a few years before, I felt on top of the world -- with a home of my own, an advanced degree, an 805 FICO score, and $45K in the bank. I loved my job as a teacher and had decided it was time to invest that money in order to earn higher returns.
The problem was, I didn't know the first thing about investing. I should have consulted with my dad, who was CFO of a non-profit organization, or with a reputable investment advisor. Instead, a friend brought me into this "can't miss" deal, which turned out to be a scam. Things went downhill fast and my "friend" disappeared, along with my entire savings.
Shortly thereafter, I lost my job (like so many of my friends) and quickly racked up $35,000 in credit card debt. My home was entering foreclosure as I sheepishly returned to the house I grew up in. This is a sadly familiar tale for millions of Millennials and GenXers.
Fortunately, when you truly scrape bottom, the only place you can go is up. And after licking my wounds for a while, that's where I decided to head. Along the way, I learned sacred truths about starting a financial recovery and thriving on the other side of it. As a former teacher, I realized I could share this practical wisdom with other young adults, especially women and Millennials. Doing so became my life's work.
And today 10,000 women are participating in my Live Richer Challenge, a free online financial program designed to help women achieve seven specific financial goals in 36 days. Goals include creating A New Money Mindset, Budget & Savings Plan, Credit Improvement Strategy, and more. It's not too late to join the Challenge, by the way. It's no small coincidence that the next focus is on tackling debt.
I've also teamed up with personal finance community MoneyTips.com on the free eBook, The Millennial Next Door [Revealed]: How To Be Financially Successful in Your 20s. People unfairly accuse Millennials of being lazy, entitled and narcissistic -- and worse. They forget they came of age during the greatest economic crisis since the Great Depression. But with the right roadmap, Millennials can set a course that could make them the most pioneering, entrepreneurial and financially savvy generation of our time. Based on a survey of 588 Millennials, the eBook highlights the attitudes and behaviors of successful millennials who report they are satisfied with their current lifestyles. Learning their success secrets can benefit us all.
Drawing on my own financial experience -- and learnings from the Live Richer Challenge and Millennial Next Door -- I can offer five keys to recovering from financial crisis:
1. Tell Someone - You can't keep your pain and fear bottled up. So look in the mirror, take a sober analysis of where you are, and share it with someone you trust. The first step in solving any problem is to talk about it. I encourage all women participating in the Live Richer Challenge to find an accountability partner.
2. Create a Written Plan - Write down how much money you have today, what's coming in and what's going out. If you're in crisis, you surely have more going out. Note every dollar you spend so you can make informed decisions going forward. (87% of successful millennials set financial goals and are on track to meet at least some of them. So written plans clearly work.)
3. Stop the Bleeding - Armed with this plan, cut whatever you don't need to survive. Turn off cable and get a roommate, or move back in with your parents. Sell your car if public transportation is an option. Negotiate payment reductions or suspensions with your creditors. Put simply, you must stop the bleeding in every way possible. (Taking on excessive consumer debt and spending frivolously were the two biggest financial missteps reported by millennials in the survey.)
4. Begin to Replenish - Now that you're spending is under control, you can gradually begin to replenish both your finances and confidence. Get free online savings accounts (at banks like Ally.com) and assign one to each savings goal (for example, one for car, travel, purchasing a home, etc.). This makes your money inconvenient -- and inconvenient money doesn't get spent. Over time, you will pay off your debts and start rebuilding your life. (34% of the women participating in the Live Richer Challenge report opening one or more savings accounts as a result of the Challenge.)
5. Learn the Magic of Respecting Money - There's a magic about money that most people overlook. When we respect money -- by treating it with care -- it grows magnetically; almost magically. The penny attracts a nickel, the nickel a quarter, a quarter attracts dollars and so on. The opposite is also true. Disrespecting money by treating it carelessly causes money to flee. Learn to respect money and your life will be financially abundant.
Rebuilding my life after a financial crisis was the hardest thing I've ever done. But it's also one of the most satisfying. Better still, it gave me the knowledge and inspiration to help others move from turmoil to financial freedom in their own lives.
My sister was right after all. Making some sacrifices today will allow me to live the life I want in the future. Join me?