Went from broke to 6 figure income, need help

[brewersgirl74]

Emancipated at 15

I was emancipated at 15 (illegally) the courts just got tired of me I guess. Never checked if I had a job, somewhere to live, etc. My mom moved out of state while I was in juvenile detention. Came back to the state for my court date to agree to this emancipation. Same day it was done..

I walked out of juvenile detention not knowing what to do or where to go...

So the streets raised me and everything to do with them.

I was on ssi, (they called me and told me I was eligible at 17) section 8, foodstamps and anything else you get for free.

Fastforward to 30 I was tired of living the way I was, and wanted more. Went back to school, finally got a job (under the table so I could keep my benefits) unfortunately this was the mindset I was taught.

But thankfully between the job and school, I found a career I loved. So I opened my own business. It started slow. So I started working other jobs (on the table) to help pay bills. I completely walked away from section 8 as I felt it was a crutch. 7 years ago I got off of SSI and went all in to my business.

4 years ago I started making 6 figures a year.

I am still living in the broke person's mentality. Spend it fast because you don't know when it will come again.

I've made the worse financial decisions. Giving, helping others, living above my means, etc.

Although thankfully my company is still growing. I need to change.

Unfortunately I was never taught pretty much anything and had to learn everything myself. And I must admit, I need help.

What type of person could I hire to help me?

 

[metanoiabum]

@brewersgirl74 I don’t know if you need to spend more money on having someone tell you how to spend your money.

What is 6 figures? 100k or 999k?

1. Have 6 months of an emergency fund
2. Max out your retirement

Do you have any debt? A home?

 

[convalesence]

@metanoiabum It's always low 6 figures when they say "6 figures"

 

[nickliberty776]

@convalesence I don’t disagree this is the case mostly , but it is also used if you don’t want to be a douche if it has to come up as it is Vague and implies you are doing ok without leading on too much.

 

[mountainmanmike]

@convalesence what do you say when its high 6 figures? Sometimes I feel like stating the range gives out too much information. Maybe Im just being weirdly paranoid

 

[lonequest]

@convalesence This seems to be a rather arrogant perspective. Maybe I’m looking at it completely wrong, oh well, you’re probably right.

 

[joegar007]

@lonequest Nope. Once I start making more than a quarter mil, I'll be saying quarter mil. Not there yet, so I say six figures...

 

[rjschweikert]

@lonequest People who make 250k+ use fractional millions to describe how much they make.

 

[sk8bdr018]

@lonequest If it was 500k, they would have messaged us sooner.

 

[kay111]

@lonequest As someone who has spent close to 20 years in wealth management, this is absolutely accurate. 99.9% of people who tell you they make 'six figures' have a sub 200k income.

 

[misshendry]

@convalesence Can confirm. I just barely started crossing into 6 figure territory and I love to say I make 6 figures.

 

[possumbarnes]

@convalesence It’s always spoon fed people who make this comment

 

[dearlyloved]

@brewersgirl74 Congrats on breaking away from the shackles of poverty, this is a great story and you have proven that is possible, I am cheering for you. As far as financial, don’t live and die by some ratio, live and die by principles. You learnt to live on nothing, so you know the needs vs wants in life. A suggestion Put the max you can towards a 401k or Roth, this will help lower your tax liabilities. go to www.vanguard.com, it’s has the lowest cost and any advisor can get you going. The money you put away pre-tax (401k/Roth) is now invisible to you, what you have left in hand you decide, perhaps another 20-30% save for a rainy day, 30% for housing/food/utilities/car, the remaining you use some to give back to your community or invest in your business or feed your desires there is nothing wrong in living life, but spend money on those items you can afford to lose. Finally get a decent accountant and they can help you lower your tax obligations and keep more profits from your business. A few years with an accountant will teach you a lot. When you hit mid 40 you will realize you made the smartest financial decision and your life is almost stress free. Goodluck

 

[catfisher]

@brewersgirl74 Try YNAB— “you need a budget”

It’s an amazing tracking software for your daily spending.. it can be tricky to use at first but typically becomes a very helpful tool.

 

[pastorinny]

@brewersgirl74 What a journey! Sounds like you've gone really far on your own. Now, the only person you need to hire is a therapist, if you haven't already. I'm serious. None of what you went through is normal, so your coping mechanisms and go-to strategies for overcoming challenges are absolutely not going to work for maintaining success. You don't need a shovel when you're done digging, you know?

Dial down the risk. No options trading. No gambling. No stock picking. Rich people who dabble in these activities, do it with a fraction of their money.

Get control. Look at your statements for the past 12 months and get a spreadsheet going of all your expenses, necessary vs. discretionary.

Take appropriate action. Cut down the spending that doesn't seem worth it. Sell boondoggles: collections that have become a burden, impractical cars for your desired lifestyle, the vacation home that's become a money pit, etc. Learn how to say no sometimes to others and yourself. Funnel the new cash flow to an emergency fund, then to paying off high interest debt.

Gain knowledge. You're already on your way. I suggest reading The Millionaire Next Door (here is a great summary), which discusses the regular habits of millionaires that contribute to their success. I like the Investment Order from Mr. Money Mustache, and I like the Bogleheads 3-fund investment strategy.

Good luck, OP.

 

[resjudicata]

@brewersgirl74 Piling on to the collective, but recommend automating your savings deposits when you can. It’s hard to immediately spend $ when you don’t see it. Learn to create and stick to a budget.

 

[jlchoa]

@resjudicata It is very easy, eg by using a credit card.

 

[janieve]

@brewersgirl74 You definitely need some help breaking the “poverty mindset”. I think this part is hugely underestimated. If you don’t work on the psychological element you will always feel that the money will slip away. Once you have some savings and break the mindset you will be going from strength to strength. Believe in the flow of money

 

[sanguinecross]

@brewersgirl74 No one is taught anything, unfortunately. And most financial advisors are just going to put you in a box that grows your money in accordance with whatever happens with the stock market. Which is fine, if you care about wealth preservation and intend to "retire" someday, but isn't helpful for those who always intend to get richer. Or those who want good results.

I would take this opportunity to learn about money and do it on your own. As they say, if you want something done right do it yourself. Don't trust your money to some advisor or "guru". You WILL get minimal results that only significantly compound over 20-30 years, and barely outpace inflation...

Read on money, investing, and business. I'll put some of my favorite money books below... Also, take the time to sit down and run hard "speculative" numbers on investments. In the meantime, while gaining knowledge and savings, build your savings somewhere that you have easy access to. If your business is classified for a mega backdoor Roth, that could be worth looking into, but I wouldn't lock money into anything else. (Or you'll also find yourself not needing it, decades away from being able to touch it without penalty!). No CDs or bonds, or anything else where there's a waiting period to touch your money.

If you go frugal and take everything from your business to invest into passive income, you'll very quickly amass enough assets to offset your living expenses. Then you'll be like, "Oh, I guess I don't need money anymore. Now what?", which will allow you to put all of your income towards more investments! (Or goof off, or travel. Been there, done that - now it's back to business.)

While you're building those savings to invest elsewhere, I'd either pop them into an actively managed stock portfolio (Robinhood is popular. As long as you can get it out quickly) or a high-interest savings account, like UFB Direct's program (at 5.25% interest/year). I have a decent amount of money with UFB not because I think this is a good return, but because I want to have fast access to cash, for more active, high-earning investments. I'd rather be able to get my money in 2 business days to shift to an investment that's actually going to make me money (as those opportunities arise) than earn an extra fourth of a percent and be locked down for 6 months to 2 years.

Active investments take knowledge and work, but real estate is pretty easy. If you do it right, you will consistently beat the S&P500. Between ROI on rent, equity on the loan, and appreciation, it's very feasible to explosively improve your net worth and passive income. Also, just as inflation will devalue your savings, inflation will devalue leveraged debt!

I'd also continue to focus on building your business, and put thought into creating an exit (if you haven't already). If you ever want to do something else, it's a lot better to get paid to leave than just say "doors closed!"

Here are a few books that I think are worth reading, assuming you have zero knowledge on money or investing. I've included descriptions in case you want something light, serious, engaging, etc...

(Dave Ramsay's Total Money Makeover is not a bad book for escaping a poverty mindset, but I wouldn't take anything he says to heart. It was my first money book and it's not a bad start, but once you've read other books on money you realize that Ramsay's advice is catered to those who would otherwise do nothing. His advice is essentially "budget, save, do whatever a financial advisor will recommend")
Rich Dad, Poor Dad (general mindset. A fun read. Kiyosaki's definition of assets vs liabilities is super important. Kiyosaki is very well known, but I don't think he has any books worth reading beyond this one. I also don't agree with his beliefs on a lot of specific investments - so maybe don't blindly accept whatever he says!)
The Richest Man In Babylon (general frugality tips. Reads like a bedtime story. Pretty fun, pretty short)
Millionaire Next Door (real data on building wealth. Very rote. You can skip this if you already believe you can build wealth without being born wealthy)
How To Get Rich (by Felix Dennis. Again, a fun one. Kind of story based)
The Millionaire Fast Lane (this one was a game changer for me. Some find MJ's tone to be arrogant. It didn't bother me. Unfortunately, his "sequel" Unscripted is worth reading, unless you're really into believing you've escaped the matrix)
How I Made 2 Million Dollars In the Stock Market (A casual read on a stock technique now known as Darvas boxing. Cool if you're into trading stocks)
Mr. Money Mustache (a frugality blog. I like the older posts - not so much the new ones)
Total Recall (autobiography, Arnold Schwarzenegger. Just a great book altogether!)
How To Buy, Sell, Finance Used Mobile Homes (you don't have to be into mobile homes to enjoy this. The logic applies anywhere to passive income, and can get you thinking about lending, too)

 

[kstorm]

@sanguinecross Wow, I got some books to pop into ChatGPT this weekthanks