Sadly, money conquered her.
It started slowly, of course. Money flowed in. Suddenly, those cute shoes she couldn’t afford in high school were affordable. So she bought them. And pretty soon, every time she went to the mall she found something new to love. Boots. Scarves. Hats. Skirts. All of it made its way into her closet.
But it was mostly about the shoes. Isn’t it always?
Oh, sure, sometimes her paychecks went entirely to shoes, but that’s no problem, right? Right? Hello? Anyway, the women of the mall started to get to know her. They put aside shoes for her. On payday, Tiffany would go to the mall to worship at the altar of shoes.
And then one day a miracle happened. Her first credit card offer came in the mail. Who cared if they were going to charge her a bazillion percent interest? It meant she could buy shoes every day! Every. Single. Day. What’s not to like about that?
After her first credit card, a second one came. And soon, offers from companies crowded her mailbox. Visa! MasterCard! Nordstrom! Tiffany could have it all, with a swipe of a card. Life was awesome. Every credit card offer was accepted. After all, you don’t have credit unless you use it, right?
Sadly, Tiffany abused it.
And yes, it was all about the shoes.
Before she knew it, she was standing at the shoe counter will the cutest pair of boots in her hand and staring into the soulful, yet slightly teary eyes of her favorite shoe salesman who said, “it’s declined.”
Declined? How the heck could that happen? Who was denying her shoes? Oh, wait. Turns out if you exceed credit card limits, you don’t get to buy cute new boots. Who knew?
Sadly, it also turns out that when you’ve spent the equivalent of a sane person’s life savings on shoes, you need a second job to pay off the credit card debt. So Tiffany and her shoes went to work another job for her parents’ construction firm.
Slowly, she paid off the credit card bills. She worked her way from receptionist to inside sales rep. She moved to Florida to take an outside sales job. She came back to California to purchase her parents’ construction company.
So how on earth did a woman whose closet overflowed with shoes and whose credit cards stopped working become the owner of a construction company?
Simple. She learned to budget.
Pay Yourself First
The first lesson Tiffany taught herself was to pay herself first. Instead of buying shoes, Tiffany put money each time into her savings account. Sure the amounts were small. But they grew. And now she saves about half her paycheck each month.
Pay off Debt
All those credit cards got paid off and cut up. If she wants new shoes, she pays in cash. If she can’t afford what she wants, she puts money each month is a small savings account specifically for vacations or large ticket items like cars. Credit is important, but managing it is the real key for Tiffany. One way to manage money better is with the free tools on websites like Personal Capital.
Today, Tiffany no longer wallows in credit card debt, but she does have a mortgage and she has to pay on the business loan she took out to purchase her company. That is the only debt she has now.
Open a 401(k) or IRA
The biggest regret Tiffany has about her financial journey? Waiting until 35 to open an IRA. In fact, this is such a huge regret that the first thing she did upon taking over the company was to establish retirement plans for all employees with a 3% match.
The saddest thing about this? Not one employee has taken her up on the offer and opened an IRA.
When in Doubt, Get Help
Tiffany doesn’t know a thing about investments. As it turns out, shoes don’t hold their value as well as you might think. So, she sought the help of an old friend, who has been managing her investments for her. She routinely keeps 6 months expenses in a savings account and puts the rest of her money in investments for her future.
It took her years, but Tiffany managed to go from drowning in debt hairdresser to business owner with a future. And possibly a really good retirement. And a few new pairs of shoes.
*Tiffany F is her real name. Well, not the F part. I mean it’s real, but it’s not all of it. Anyway, regular readers know her by my affectionate nickname for her, Bridezilla. And yes, she really does have excellent taste in shoes. Sadly, her feet are much bigger than mine. Much bigger. She has ginormous lizard feet, while I have dainty, elegant feet. Obviously.Add me to your rss reader | Become a Fan on Facebook!