How Did You Get Into $1m In Debt - Expert Edition Episode 51
In today's episode, I want to share my story with you. Imagine having $1 million of debt. Sounds scary, right? Well, that was me! But guess what? I managed to pay it all off in less than three years. I bet you're wondering how someone can have so much debt. It's simple: a house, education, and life can add up quickly. But I learned some cool tricks to become financially free, and I want to help you do the same. I didn't just work harder or cut out all fun; I made smart choices. And you know what? If I can do it, so can you. I'm here to tell you all about my journey, the ups and downs, and how I managed to come out on top.
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TRANSCRIPT:
Naseema: name is Naseema McElroy, and in November of 2017, I paid off 955, 533. 84 in
debt, and it took me less than three years. So I know you guys are like how the hell does somebody have a million dollars in debt? Cause I'm really from Oakland now, okay? Add up a house in the Bay Area, two master's degrees, your typical inflation and shit really starts to add up.
So you're like, what is all this debt? It's here. This is the debt. I'm going to talk more about it in depth, but, what I want you to take away is, today you're gonna hear a lot of tips and tricks about being financially independent and all those things, but for me, paying down all this debt was really about one thing.
And I'm going to break down my numbers, how I did it, what my debt was. But what I want you guys to take away is that you don't got to do all the things. Sometimes it's just that one thing that stands in between you and the financial goals you want to accomplish. There's this personal finance mantra that says, you should have the same spouse, house and car, and if you do that, you're a true optimizer because you eliminate extraneous expenses and you can really build wealth.
That's hella cute, but that ain't my story, okay? I got two baby daddies, an ex husband, I've moved four times in the last three years. Two of those times buying houses. I've owned seven houses over my lifetime. And some way, somehow, in the words of the late great Maya Angelou, still I rise. I've been able, I've been able to do alright with my money.
What y'all know about the Gap? What y'all know about the Gap, okay? Not the iconic American store. But the gap between what you earn and what you spend, and then that gap, if you grow that gap by increasing your income or increasing your expenditures. So people always ask me, girl, did you just make more money and just put that money towards your debt?
Not really. I didn't do that. And they say did you cut your expenses? Did you like live off of beans and rice? And I'm like, No. As much as I love a good bowl of beans and rice, or rice and peas, if you're from the islands Laughter I'm not about that life, okay? Laughter like, how did you do it?
People say, how did you do it? How I did it was intentionality. And I'm gonna break that down into dollars and cents. First I'm going to tell you a little bit about myself. I am a registered nurse. I have a master's in healthcare administration. Where are my nurses at? Where are my nurses at though?
Hey! I have a master's in healthcare administration. I have a master's in nursing. I'm a family nurse practitioner, but for the last 12 years, I've worked as a labor and delivery nurse. I have two beautiful daughters, a two year old and a seven year old. I have a podcast where I teach nurses about financial independence and I love teaching people that look like me about money. I also have the audacity or sass. to build a bank, and I'm building a bank specifically for nurses. Alright, so let me take you back, way back, back in the time when my hair was a little shorter and my boobs was a little bigger, okay? My daughter had just turned one and I was a year into owning this five bedroom, five and a half bath house that I bought for just the two of us.
I was Instagram popping y'all listen, I had the brand new house, the luxury car, the six figure income. The truth was though I was hella broke and I knew I made too much money to be broke, but I just did not know how to fix it. And I was like, shit, let me listen to these financial, personal finance podcasts.
I was listening to hella NPR podcasts. So I was like, let me turn this listening into listening to personal finance podcasts. And so I started hearing these people sharing their stories about how they paid off massive amount of debt, a massive amount of debt in short periods of time. And then at the end of sharing their stories, they'll be like, We're debt free!
And I was like, oh, that sounds really cute. And so they were doing their Dave Ramsey debt free screens on the Dave Ramsey show. And I was like, let me see what this old white man is talking about. So I started to put the baby steps into motion and, I started implementing Dave Ramsey's plan.
Ain't this about a, it's not about a bitch. It's about a budget, the other because word. Okay, what I realized was that I did not know where my money was going. I realized that I had to intentionally tell my money where to go every month. So I used Dave Ramsey's EveryDollar app to start zero based budgeting, and I started giving every single one of my dollars in take home pay an assignment.
And I didn't just set my budget. I continuously checked in on my budget every time I got a paycheck. My bill make sure that my money was going to work for me. Okay? Your money is like your kids, okay? You can tell them to do something. But you really gotta check up on them and make sure they really doing it right.
Initially, you gotta micromanage the shit. Okay?
I prioritized my debt payoff and I was like, okay, I want to be debt free by my 36th birthday. That would be really, really nice. And so I set a minimum I wanted to pay towards my debt and I adjusted my variable expenses around that. On top of that, I use the debt snowball in order to prioritize what debt I was going to pay first.
Using the debt snowball, you take the, you list your debts from smallest to largest amount. And you pay minimum payments on everything except for that smallest amount, which you throw every single dollar towards. Okay. And so that was the method that I use to get out of debt now. Now, I know it's taboo to talk about money, not in this room though, especially because last year at economy, Jackie told y'all to throw that shit out the window.
So we going to throw that shit out the window and I'm going to get real real with y'all because that's the only way I know how to be. And I'm going to share my numbers. Y'all ready? All right. All right, so this is my monthly take home pay on average for those years that I was paying off my debt. I don't know if some of y'all is damn, that's a lot of money, but okay, I'm a nurse.
I'm a registered nurse. I had two jobs, which is not uncommon for a nurse, had a part time benefited job as well as a per diem job working about 48 hours a week, which is six days a week. Making about 230, 000 a year. And I'll share this twofold. Number one, to show you that I didn't increase that gap by increasing my income.
And then the main reason is because a lot of people think when I make more money, I just need to make more money and things will get better. It don't work like that, boo. Okay. All right. So here are some more numbers. There's a lot of numbers on this slide, but I'm gonna break this down. So this is the total amount I paid off in 2015.
So I list out every debt that I paid off by month and the percentage numbers, the percentages are how much of my take home pay went towards paying off my debt. But where it says not applicable is when I had some windfalls, which we'll talk about. So I started by selling this condo that I had in LA that was raggedy.
And so I used that, and this was before I knew about intentionality. And I used that to pay off this 403B loan that I had taken out to put a down payment on my house because what else do you use to put a down payment on your house? And then I paid off some of my student loans, but at that point I didn't really feel like my student loans were debt.
And then I paid off a commuter car that I had. The next month in May is when I discovered Dave Ramsey and I started following his baby steps. So I took. All the rest of the proceeds from that house sale that I had in my savings, took my savings down to just 1, 000 and put the rest towards my student loan debt.
In June, that commuter car I had just paid off got totals because somebody T boned me on my drive into work. And so instead of buying another car, I just used the the payoff for that to put towards my loans. In August, I got married. Yay! That was real cute. Not really, because two weeks
He was cute, but it wasn't cute. Not really, because two weeks into my marriage, there, it started to be a cycle of physical and mental abuse. But I was doing a debt snowball and his debts were a lot smaller than mine. So when we were married, we combined our income and we started working on his debt. So I paid very little towards my debts during that time.
In January of 2016, because of the abuse in the marriage, a parole violation that my husband had landed him in jail. We were still married. So I continued to chip away at our debt. And in February, all his debt was paid off, and so I could focus on my student loans. Another thing that happened in 2016, being a good Dave Ramsey follower, I stopped contributing to my retirement account.
My pre tax retirement account. Because I was paying off debt. That's what you're supposed to do. And in April, I didn't pay too much towards my debt because I had to pay for my husband's lawyer fees so he can get out of jail by my daughter's second birthday, only to go back to jail in May for violating another woman.
In July. I decided that I was going to file for divorce. Now,
Thank you. This was just a month shy of being married for a year. And, I've just glazed over the things that went, happened in my marriage. And you're probably all like, why, bitch, why did it take you so long to get a divorce? You guys, it's really a hard decision and you should Google why women don't leave and you'll see some deep shit.
So I'm sharing this because I continued on this journey in spite of, okay. A lot of people think when they hear this grand number that my life must have been so dandy during this time. And it was hell, but I prevailed because that intentionality,
because that intentionality was more than just dollars and cents. It bled over into the rest of my life. And I knew that I had to not only do better for me, I had to do better for my daughter that was looking. out for me, and I had to do better for people who are looking at me and people that I can inspire.
Alright.
After filing for a divorce, I pretty much just kept on trucking along, paying down my student loan debt. In April of 2017, because I made the wise decision To not invest in my pre tax retirement accounts, and I had to file. Mary filing separately, I left, I lost all my tax incentives. So the IRS was like, boom, guess how much you owe me?
30, 000. So I don't play with the IRS, so I went to my credit union, I had them cut me a check, I sent them a check, and that was done, but now I accumulated another debt because I had to pay this loan off from the bank. And then in May, I finally got divorced, yay. But, even being married less than a year, because I was a breadwinner, I had to pay my abusive husband a 15, 000 divorce settlement, which broke down to 1, 500 a month.
So needless to say, between paying off the IRS loan and the divorce settlement, I was barely making that much hedge on my student loan, so I was paying the minimum. And then, in November, wanting a fresh start with a new partner, I sold my McMansion and was completely debt free.
I announced this to my community. In December of 2017, and this is a community that I had built in 2016, initially I started, started sharing my, my story of of paying off debt, showing how much I paid off every month, and I was just doing this for my friends to inspire them. But then people started picking up on it and I started getting featured on podcasts and on publications throughout the world And it's what led me to be here in front of you.
So that started the financially intentional Brand her platform like what I did there intentionality All right, so let's look over this debt again So I paid off my husband's braces, his collections, divorce settlement, the 403b loan that I took out to pay for the McMansion, the commuter car. His, his Mitsubishi, the IRS debt, the condo that I sold in L.
A., my student loans, and my house. I wanted to just show you my debt payoff minus the house so you can see that without the house I still paid off a good chunk of money. And again, I share these numbers to share with you that I did all of this in spite of all the reasons why I could have gave up. and stopped.
That intentionality, that one thing showed me what was possible for me. And so I kept on going. All right, I do have to acknowledge, of course, just like anyone else, I did have some windfalls along the way. But before the intentionality, I didn't know where to put it, just like that last tax refund you got.
Yes, you boo. It just disappears if you don't have a place to put it. All right. And just recently, I realized that I didn't even do it right. Okay. Maybe paying off my student loans so fast wasn't the best way to go. Travis Hornsby spoke at the last economy and he sat me down and he said, Nasima, you made an 80, 000 mistake.
You should have stayed in your public service loan forgiveness program, maxed out your pre tax retirement. And if you would have done that, you would have had an extra 80, 000 along this way. And I probably wouldn't even have to pay that fucking 30, 000 IRS bill either. So this 80, 000 mistake was more like a 130, 000 mistake.
And I say just to say, I can do it. I can fuck it all up along the way. And I was still able to pay off a million dollars in debt. So can you. It may also surprise you that I didn't discover the FIRE community until after I paid off my debt. And I was like, Oh, what's next? And then I discovered the FIRE community.
Jamila Sufran had became my friend, my homegirl along the way of paying off my debt. She introduced me to the Choose FI podcast. And then I got introduced to this whole world of people that now became my circle of influence. Just like Diana said, like this room should be. They showed me what was possible for me.
What you mean I ain't got to work the rest of my life? What? That sounds real real good so it just opened up all the options that I had and I Just don't know where I would be right now without this community here's how it started, short hair, bigger boobs, I got another baby along the way. But you guys, in 2007, there was a study that showed that black women, at their peak, in their highest earning years, average net worth was 5, okay?
Now, you can look at this picture and hear my story and see how a well educated, highly compensated Person can fall into that category Okay, like I said, I made a lot of mistakes along the way. My journey was not easy But through this journey, I have paid off debt. I have invested I still have debt, whoo, um, but a lot of my assets now are in my retirement accounts in my house.
My kids are set. They each have 100, 000, they each have enough in their 529s that they'll have 100, 000 each when they go to college. They have their own brokerage accounts, which they compete in to see who's earning the highest returns. And if you don't think a two year old can be competitive. Let me tell you, baby, she is.
Don't play with her money, okay? And guess what? She is winning. Okay? So here is my lessons along the way. Personal finance is personal. Paula Pant will come up here and tell you that zero based budgets are hella stupid. Take what you need and leave the rest. Okay? Dave Ramsey is cool and all, but he didn't fit what I needed.
Okay. Fuck the latte factor. Okay. I like Tesla's. I like Pelotons. Okay. Do you boo, but just know what that's going to cost you. Okay. During my journey. Like I said, I don't do the beans and rice. It was super important for me to take my daughter to Disneyland every other month. That's what brought me joy.
And that's what made this journey attainable for me. Okay. Some of the things that you have to learn is that. Cutting out lattes is cool, but what you should really be decreasing is your two biggest expenses, which is your housing and your transportation costs. So I use house hacking in Turo to decrease my costs along those lines.
Don't be like me. And pick a man that's real cute, but real fucked up. Cause he'll fuck up your money. So picking the wrong partner can be hella expensive. I mean like, picking the right partner is great and you can exponentially meet your goal. There is a lot to say about that same house, spouse, car thing.
There is a lot of merit in that. So choose wisely. And don't let that stop you from paying off. From investing capital gains is capital gains, compound interest is a beautiful, beautiful thing. So invest as much as you can, as early as you can. It's a marathon mindset.
It may take you more than three years. Believe me, when I was on this journey, I didn't even think it was, I thought it was going to be forever. It, I, it wasn't until I was finished that I looked back and seen that it took me only three years. And then, remember to share your story. Representation matters.
Personal finance has traditionally been really homogenous and, we need more people out here that can crib walk onto the stage and pop they collars and throw up the West. We need that. We need that representation. So if that's you, share your story. All right. So my fire number is probably closer to a couple million, but honestly, I'll probably never.
R E a retire early because I love what I do. I love being a nurse and I have so much more potential to explore in nursing. Who the fuck thought a nurse can start a bank?
Nursing, I can make as much money. I can write my own check and stack hell of money, or I can work very little and travel for the rest of the year. There's so many options. I don't really see myself retiring. There are endless ways to optimize your finances. You don't even have to get it right.
Sometimes it's just that one thing that you need to do that will set you on your path. My question to you is, what's your one thing? Thanks y'all. Thanks y
Hey there I’m Naseema
My dream is for everyone to know that financial independence is attainable with a little intentionality. Learn how I can help you finally break the cycle of living paycheck to paycheck.
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