How One Woman Went From The Brink Of Bankruptcy To Retirement Ready In Two Years
June 27, 2017Last week I wrote about how a workplace financial wellness benefit is different from your 401(k), and mentioned that one of the goals of my work these days is to change lives. In that spirit, I just have to share an amazing story of one woman I had the privilege to work with who literally turned her life around through her financial wellness benefit.
When I met this woman two years ago, she was contemplating bankruptcy but wondering if there was a possible way to avoid it. Additionally, she wanted to get herself to a place of being able to retire and know that she’d be financially secure for at least twenty years in retirement.
It was a tall order, but I’m not one to shy away from a challenge. After reviewing her finances, I told her that she could avoid bankruptcy and get out of debt completely, but she would have to sacrifice. And by “sacrifice,” I really meant it – it was a tough love kind of conversation. She said she was willing to try it, so here’s what I suggested she give up:
- Her stuff. I told her she needed a “fire sale” of everything but the clothes on her back and then to live on the bare minimum for a few years.
- Her home. She was living in an expensive part of the country, which meant that her monthly mortgage expenses added up to much more than the standard “25%-35% of take home pay” rule of thumb.
- Her community. Selling her house wasn’t enough – even if she moved to a different place, the area she lived in was so expensive that no matter what, she was going to struggle just to cover living expenses, which left little room for paying down debt or saving money.
To my delight, she did it! She took my guidance and sold everything, moved out of state and in with her mother until she paid off all of her consumer debt. And now she’s on track to retire when she wants to. Her sacrifice has given her the financial freedom to live life on her terms.
It’s hard for me to describe the gratification that I felt when I she emailed me her last status report to tell me all of this – it’s the essence of why I do what I do. But the real take away is that sometimes in order to get what we want to, we have to take a step back and give some things up. It wasn’t easy for her, but she decided that her long-term financial security (and owning up to the debt she’d incurred) was far more important to her than any house, outfit or piece of furniture. Sometimes it takes some tough love and real sacrifice, but in the end, it’s worth it.
For more on how she did it, check out these resources:
How I Sold All My Stuff Online
8 Inexpensive Ways To Prepare Your Home For Sale
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