7 Goodbye Broke Principles
Keep more of your income. Your income is your biggest wealth building tool, so practice keeping more of what you earn. It’s not about how much you make, it’s about how much you keep. Contrary to popular belief–if you work, wealth is well within your reach. Like, right in your hand every pay day. So if 50% or more of your money is going out to creditors each month–then you are removing your first step toward building wealth. Investing and entrepreneurship are NOT the first steps to wealth building. The money in your hand, right now, is. If you keep more, then you have cash to invest. Then, you can start a business that is NOT heavily leveraged (cough–ensnared) with debt. And, this principle applies to people on fixed incomes or living in the projects on welfare. Your ability to get off welfare is based on how smart you leverage yourself by using those government dollars to your future’s advantage.
Live at or below your means. Actions to consider taking are downsizing your lifestyle, selling or downsizing your home, getting roommates, stop financing cars, furniture, cell phones, and other depreciating items. Suspend leisure trips/vacations, paying for entertainment and wardrobe shopping. Choose self-grooming over salons and barbershops. There is a lot to unpack about how we have been propagandize to stay living above our means which reduces our monthly income which is–let’s say it together–“our biggest wealth building tool.” I will unpack my thoughts on this in future posts. So yes, these lifestyle changes are uncomfortable. However, the million dollar question is how bad do you want financial freedom?
Take action to eliminate all debt. Again, for the people in the back, your income is your biggest wealth building tool. When you start making lifestyle choices that help you keep more, the sooner you can start paying down debt. As soon as you are able, one effective strategy to eliminate debt fast is to negotiate with your creditors–where possible. This strategy works best when you receive a settlement offer from a creditor or are severely delinquent (i.e., charged-off). Use any new disposable income to position yourself to have enough cash to make them a final settlement offer. Unless you are in a position to make a final settlement offer, don’t contact the creditor to negotiate. Just prioritize paying those debts last. If you get a settlement letter from them, hold it until you have cash to pay it off the day you call. Know that collection agencies are in the business to collect whatever they can on the debt they purchased at a discount as fast as they can. So, contrary to what they say, they have some wiggle room. Use that to your advantage as they want you off their call list. Oh! Be ready to walkaway when they play hardball. For example, I made a hospital creditor a decent cash offer in April to settle. It was a bill I knew was very over priced. They would not budge. They wanted the original balance. I told them to call me back when they are ready to accept my offer. It’s December. And, I’m not pressed. It’s already ruined my credit score, so they can’t use that tactic to threaten me. I share this to illustrate that it’s to their advantage to work with you and make a deal–at these points. It was their stupidity, greed, and loss. Having paid pennies for the debt, they would have still, likely, made a profit if I offered 30% of the original balance. I offered 50%–which I considered a win-win. So, if I were the owner, I would have fired that agent for not negotiating on an almost three year aging balance–when the debtor, voluntarily, called you with cash in hand ready to pay on site. So, don’t let them intimidate you. Clearly, some of them are not the sharpest pencil in the box.
Think like an investor about student loans and avoid them. If you must finance your education, think like an investor. Ask, what is your $50k African-American Studies or (x) degree worth in the labor market place today? What demand is there for people with this degree and how much do they pay? If the going salary for this degree is less than $50K you made a bad financial investment. You are now upside down on your education loan. While this affinity degree may hold other non-monetary value to you, it has little to no value in the labor market to return the money you invested (i.e., breakeven) or provide you a steady return on your investment (i.e., ROI aka profit). The most valuable college degrees in the labor market are STEM and business related.
Tell your money what to do each month with a budget–as Dave Ramsey says. Use the envelope system to ensure you don’t overspend or create overdrafts. If you don’t take care to account for where your money goes each month, then that’s very poor stewardship and you don’t deserve to be wealthy. You will remain a resident of Brokeonia and borrower.
Start saving. I prefer the Dave Ramsey Total Money Make-Over method. Start saving by, first, creating an emergency fund account of at least $1000 and up to 3 to 6 months living expenses. Murphy’s law loves to show up and harass broke people. But like magic as soon as you stop spending every dime you make and start–habitually–putting some away for rainy days, Murphy leaves you alone.
i Start investing. I have a mouthful on this one. First, I recommend educating yourself on legal and sound investment options—like owning a business, owning real estate, stock market, or investing in other businesses directly, (e.g., start-ups, IPOs). But before you do, take ample time to ensure your sources are credible. For, everyone is a coach with a course, today. So you want to make sure you do your due diligence on whoever is offering you an investment opportunity or a financial info-product. I’m actually working on a post featuring my concerns and observations about the online coaching and info-product industry. While there are some reputable business, finance, life, and fitness coaches, finding them is like looking for a needle in a haystack due to the over-saturation of insta-coaches. It’s natural to want to share what you’ve learned with others. You should, if you were successful. However, it’s obvious some folks see the demand for financial freedom growing and are exploiting the fantasy of financial freedom and offering average to below average info-products at premium prices. The info-product business model is so shared and recycled across industries and top influencers, there is not much originality. You can, often, predict what you will get when you buy a course. Lest I digress. So, be careful and educate yourself. Do your due diligence before you apply this principal.
2 Habits That Cultivate A Rich Spirit
Rich in Spirit Principle: Practice giving. Give your way out of debt. People rich in spirit give regularly. You can practice giving by budgeting it. Budget giving because 1)giving is fun. 2) Being stingy, “tight,”or selfish with your money opens you up to reaping constant money problems (James5:1-3). When you give, you get to change the lives of others which, often, brings an immediate return of joy and blessing back to us (Luke6:38). Giving ensures we don’t store up for ourselves empty treasures hereon earth but in Heaven where our good works of giving from a pure heart actually last. (Matthew19:21). Give your way out of debt.
Rich in Spirit Principle: Practice prayer. Pray your way out of debt. The first step to changing your financial situation–especially when your broke, busted, and disgusted with your back is against the wall is to commit your situation and desire to be debt free to prayer. (Mark11:24) In so doing, you will start to receive spiritual downloads in your spirit on the specific action plan you need to implement in order to achieve this goal. You will be directed to people, information, jobs, and unique opportunities that will guide and expedite your journey into kissing your debt goodbye.
I started this blog two years ago in an act of faith–mainly as an accountability tool for myself. At the time, I wasn’t even making enough to do regular monthly pay off reports like all my debt blogging peers. But I said to myself, “until you can work your plan to show progress, feature the stories of OTHERS and do what you can.”
STARTS AND STOPS
So, this blog and my debt free journey are full of starts and stops over the past two years in an attempt to regain momentum in paying off my debt.
Life events like unemployment, underemployment, caregiving for a sick parent, attending to my own health issues (undergoing brain tumor surgery) and losing a loved one due to an unexpected tragedy–have been overwhelming.
I’ve had to pause, often, to catch my breath, process, and adjust to these life-altering events.
Although often discouraged and paralyzed with self-doubt wondering if my vision was too ambitious for me to pull off–I could never bring myself to give up.
FAITH IN ACTION
I didn’t cease to pray even when I wasn’t in a traditional or obvious posture of prayer. In other words, my inner disposition was always in a posture of prayer.
My soul has been holding on for dear life to what felt like a dental floss string of faith while crying out to God for HELP.
AN UNEXPECTED EXPONENTIAL”RETROACTIVE” BLESSING
Well, this month, due to an unexpected and ridiculous move of favor from God towards me (i.e., answered prayers), I was able to resume my debt free repayment plan and knocked out over 10% of my total debt balance in ONE MONTH.
An amount equivalent to a good year’s worth of side hustle earnings. Talk about an exponential “retroactive” blessing.
After I settle two more bills (a medical bill and an AMEX card. I made an offer awaiting acceptance), I’ll be done with consumer and medical debt and all debt repayment can go toward this ancient student loan debt. Lord willing, I will be doing my DEBT FREE scream before or by the end of 2020 at the latest.
That is, Lord willing and His continuing to bless and favor me to EARN exponentially.
INSPIRATION | DONT GIVE UP
So my story should inspire those who find themselves stopping and going on their journey. When you are determined to reach the finish line, you will NOT quit. You resume. You pick up where you left off.
And if your relationship with GOD is affectionate & robust, you just may be setting yourself up to receive a retroactive blessing.
So, why is being debt-free important? For me, it is important because I don’t want to be anyone’s slave–anymore. Owing people makes you, effectually, their slave. Debt-freedom offers an ease of mobility through life that positions you to seize more opportunities. Opportunities that produce more income as well as joy, peace, and charity in your life and in the lives (or causes) of others you care about. And it’s just wise. Spiritually, the Bible advises us to pay our debts, quickly, and owe no man anything except a debt of love.
Disclaimer: Whenever I reference my upbringing or the parenting I experienced in my writing, it is NOT from a self-serving place to shift blame away from me on to others. And, it is NOT me seeking to negate full responsibility for my adult choices. It is simply the result of me quietly and consistently doing the hard work of self-examination so as to fully understand myself. That is, why and how I react to certain life stimuli. It is simply the problem solver in me. Note that I adore my parents. They did the best they could with the awareness they had. I just happen to be a product of a moment of passion in their youth and immaturity. And, being the product of such leaves certain deficits in an offspring. So any narration about my family is simply a sober reflection on the REALITY of my upbringing and the role it played in my adult mindset. But, more importantly, it is referenced to feature how I’m processing the deficits of my past/present so as to make a better present and future. That is better for me and others appointed to my destiny. So, the message I’m conveying in any writing that references my family is, you DO NOT have to live defined by what you lacked in childhood. You don’t have to be a slave to your past, upbringing, or environment. For, what you lacked can actually empower you to have and be more than you ever imagined. But, you must take action and it starts with you in a mirror–thoroughly examining yourself.
Cryptocurrency markets are naturally volatile. But within the past month (January 2018), it has gone through a lot of hemorrhaging in an effort to correct itself.
Bitcoin was riding high above $15K per coin for months--bringing Altcoins like Ripple, Bitcoin Cash, Ethereum and others up along with its rising tide. Then it went cascading down by almost 50% in a matter of days.
To add insult to injury, Cryptocurrency's evil step-child, Bitconnect, was exposed as a fraudster Ponzi scheme.
And that revelation (credible crypto investors suspected this early on and stayed clear of Bitconnect) created further unrest in the market and cast more skepticism on the industry.
But I still believe. I'm still HODL (holding on for dear life).
I'm in it for the long haul. I invested an amount I'm comfortable losing. So, I'm riding this baby until the wheels fall off. Right now, my investments are at the break-even point.
More importantly, though, is the education I've received from actually getting into the market. Learning the value of the Blockchain, brushing up on the history of the U.S. and global currencies and all the lingo is well worth the investment I made into the market.
This small investment amounts, easily, to an education on par with a couple semesters in an economics course at a university--but at a much less, of course.
Although this video presentation was recorded in early January, just before the all the market corrections began, the content featured is still very much relevant and useful whether in a bull or bear market.
I'd like to share it with you as there is ancillary personal finance information that can be applied no matter what investment vehicle you choose (e.g., real estate, stocks, or crypto).
The PowerPoint presentation featured in the video serves as the show notes. It includes all the live links I reference + some updates and corrections to things I mentioned in the video version.
If you would like this presentation for your personal review and research--then download it here.
If you find this presentation insightful, then please comment below and let me know your thoughts or answer your questions.
Also, if you are digging it--share it with anyone you think would appreciate it.
In Part 2…
- Valentine picks up the story of how he met his smart wife
- At minute 10:00 discusses his upbringing in Cameroon. Valentine was raised by parents who were financially conscious and responsible. He tells you why he abandoned those principles, briefly, when he moved to America.
- At minute 10:20 Gives a very wise insight into the difference between being broke and poor.
- At minute 12:42 Gives advice to someone who got out of debt but life’s circumstances caused them to backslide back into debt.
- At minute 19:00 for the techies, he shares some of the tools he uses to produce his blog, video, and podcast.
FB: @Goodbye Broke
In this episode, you will discover…
- Who Valentine Nde (Mr. V) is, how he got into debt, and how long it took him to get out of it.
- 10:21 Mr. V discusses the emotions he felt selling his fancy Audi A8 in order to buy a Hyundai Sonata. You learn about Mr. V’s wife and her huge impact on him selling his car and returning to the sound money management principles his Cameronian parents taught him before he moved to the states to become a student and software engineer.
- You get some insight on how it’s true that men who marry smart women, like Valentine’s wife, live longer and become more financially secure.
- 16:15 You learn about what Mr. V is calling “debt-free shaming.”
In Part 2, Valentine shares how he met his smart wife and other interesting events that color his debt free story.
FB: @Goodbye Broke
On December 21, 2016, I was honored to be a guest on The Money Champ Podcast with Nick Blair.
Nick created “The Money Champ” to help millennials win with money. He had me on to offer a sage perspective.
Nick also wrote a cool book called The Money Champ’s Guide to Getting a College Degree Debt Free. Nick says his goal in writing the book was to educate every parent and student on the potential dangers of irresponsibly taking out student loans. He feels insights from his book can help minimize or, even, eliminate the need for student loans.
My interview with Nick (as well as my recent relaunch series of videos) serves as a cautionary tale for young adults (ages 18-21) on what NOT to do when entering college.
It’s a cautionary tale on what going into the “real world,” (fresh out of high school into college) looks like when you’ve had no guidance on personal finance or the dangers of excessive student loan borrowing.
It’s a cautionary tale of how important it is to find mentors or positive role models, early, to help you identify the career path best suited to your unique strengths and personality.
It’s a candid and vulnerable conservation. If you feel the interview helpful or inspirational, then please hit me back here in the comments or on social media @goodbyebrokegirl with your thoughts. Also, please share it with your social network or those with whom you know it would resonate.
Once Upon A Time…
In 2010, I created an IRS tax liability for myself by claiming exempt which enabled me to get all the coins I earned (income tax-free) for that year (although I still had to pay Medicare & Social Security taxes).
I claimed exempt because I needed all my income that year as I had been out of work from September 2009-January 2010. So, I had to play catch up on some things. I rationalized (like when you pay off a credit card or car loan and tell yourself the backslide is only temporary and you will pay it off quickly) that my current need was greater. I convinced myself that I would save up the last six months of the year and have what I needed by the time taxes would come due.
Recognize and Heal Your Anxiety Because It Is Expensive
Now I’m a creative person–often an idea machine. Looking back, I cram to understand why I was able to be creative in other areas of my life but that creativity didn’t transfer to me thinking of ways to earn extra money so as to eliminate my need to take such a risk.
I’m suspecting that my being prone to anxiety was a huge factor and clouded my judgment. When you live under money stressors (like I have for a lot of my adult life due to ignorance and anxious choices), it puts wear and tear on your mind truncating creativity, energy (e.g., to work extra), and optimism. You just go into a “let me do whatever is most easy to maintain my sanity and survive another day” mode. So, when the 2011 tax year came, I owed about $2500.00 in federal taxes and about a grand in state taxes. I can’t remember the exact figures but I know it was approximate $3,000.00 total.
And guess what? When those tax bills came due, I didn’t have it.
Solution-oriented, I urgently poked around on the internet and learned about an IRS program called Offer In Compromise. So I reached out, put on my old real estate negotiation hat, pitched my hardship, and started the paperwork and verification of my claim.
What is an Offer In Compromise?
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. The grounds upon which one can qualify for an OIC acceptance are stated on the IRS website as follows:
The IRS may accept an OIC based on three grounds:
- First, the IRS can accept a compromise if there’s doubt as to liability. A compromise meets this only when there’s a genuine dispute as to the existence or amount of the correct tax debt under the law.
- Second, the IRS can accept a compromise if there’s doubt that the amount owed is fully collectible. Doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
- Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there’s no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
I was able to qualify for an OIC based on the second ground.
So what are the steps?
- Meet one of the criteria above (e.g. they will verify thoroughly).
- Submit the appropriate forms as instructed on the OIC section of the IRS website.
- Pay the application fee of $186.00. This fee can be waived based upon income. (see the rules). The application must include:
- Form 656, Offer in Compromise
- Completed Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, if applicable
- Completed Form 433-B (OIC), Collection Information Statement for Businesses, if applicable
- $186 application fee, unless you meet Low Income Certification
- Initial offer payment, unless you meet Low Income Certification
- NOTE: The “initial offer” is determined by the completing the applicable worksheet on the forms listed above. Your current income, assets, expenses, juxtaposed to the tax liability determines your “offer.” This part of the process is where #4 (communicating with your IRS OIC agent) is crucial. For this is where you can lobby and negotiate for yourself if that figure is still beyond your means to pay. So, stay in touch.
- Call them. Get someone from the OIC department on the line and let them know you have submitted paperwork and find out if they have received it. This helps to ensure you crossed all your T’s and dotted all your I’s so as to prevent any hold up of the review and approval of your request. Find out the person who will be working your case (I had a direct phone number after I got to a certain milestone in the process).
- Repeat #4 until your final figure is settled. Any monies you send in as part of the initial offer payment is applied to your tax liability.
- And, if you owe the state, check with your state as some states have a companion income hardship repayment program.
It is a very tedious bureaucratic process (after all it is the government) but is worth it.
Because the process is very tedious, there are various companies that offer to do the work for you for a fee. They advertise under claims like, “Tax Debt Relief” “Tax Relief Experts.” I am unable to comment on such services other than to say, I hear some are legit and helpful and some are not and scammy. The purpose of this post is to let you know that you can do it yourself for FREE99 if you are willing to do the work and exercise the patience.
Before hiring someone, you should consider that because it is a tedious process, when you delegate this important task to a third party, you are left to rely on their word about the progression of your case with the IRS. It can present a challenge to be sure of their work ethic or how attentive they will be to follow-up and follow-through on key milestones and deadlines. You already have the built-in lethargy of government bureaucracy to factor in–and you need someone you can trust to be on top of follow-up and any deadlines. You will also have a few hundred dollars in fees to pay these services on top of the OIC $186.00 application fee and your liability.
Hiring a third party may make sense (after extreme vetting of the company and their results) IF you have a huge tax liability or are several years behind.
Give It A Try
Reply in the comment section below or on one of my social channels if you have had an experience filing an OIC with the IRS? Was it successful? Positive or negative? What are you doing to ensure you never have to owe the government taxes again? How do your plan to take action, going forward, so you can save stacks of cash instead of paying it out to the IRS or to other debtors every month? If you found this information helpful, please let me know and share it with anyone you think could use it.