Experiencing financial stress? You need to shift your mindset, and start using your money mistakes to your advantage like these folks did below.
Out of money mistakes the size of Dolly Parton’s…personality can come the most wonderful of things. In fact, it’s the one thing that unites most of the financial greats.
Dave Ramsey, Jean Chatzky, Suze Orman, and lots of personal finance bloggers (myself included!) all delved deep into finances after finding ourselves in pretty embarrassing financial straits.
You see, the dire financial straits are what motivated each of us to learn about money and move onto better versions of ourselves. It’s the proverbial phoenix rising out of the ashes, and none of the best financial gurus are exempt.
Let me show you what I mean.
Dave Ramsey’s Financial Stress: Bankruptcy
Unless you’re intimately familiar with Dave Ramsey, you may be surprised to hear that the man declared bankruptcy early on in his career. Roughly 20 years ago, he and his wife filed for bankruptcy and “lost everything”. At the age of 26, he was a broker with real estate holdings of around $4 million. This portfolio of properties was financed on various short-term loans, all of which came up for renewal at the same time. Lenders called in $1.2 million of his short-term debt (meaning they expected him to pay up because they didn’t think they would get paid otherwise), and he couldn’t. He had way over-leveraged himself, and at the same time, was using part of the debt to pay for things like expensive cars and exotic trips. He and his wife took six years to pay off the $500,000 they owed the IRS and various friends and family members.
Rising Phoenix: Since his clash with bankruptcy, Dave has built up quite a career teaching others to unload their debts as quickly as possible (and then to never go back).His reported net worth is $55 million. All because lenders called in roughly $1.2 million in loans and he couldn’t pay them back.
Jean Chatzky’s Financial Stress: 401(k) Cash Out + $7,000 Credit Card Debt
Several weeks ago I was invited as a media guest to Fidelity’s conference on the subject of empowering women financially. One of the speakers was Jean Chatzky, who was quick to point out all of her financial mistakes early on in her career. On her list included: racking up $7,000 of debt while outliving her salary as a business reporter for Working Woman magazine in expensive New York City, cashing out a $1,500 401(k) when changing jobs (which would be worth $25,000 today), and earning 9% interest on money while paying out interest of 27% to service her debts.
From these experiences, Jean “realized that I needed to understand money so that I could fix what was wrong in my financial life – and by understanding it, and fixing it, I was able to explain what I was doing to anyone who was willing to listen.”
Rising Phoenix: Since these financial mistakes (and while working through them),Jean’s been on Oprah, a financial editor of NBC’s Today show, successfully authored books and has a speaking career. All because she decided to let her financial mistakes define her by making her a better person.
Suze Orman’s Financial Stress: $50,000 Loss + $250,000 Credit Card Debt
Suze was a waitress earning $400/month with very loyal customers. Like, very loyal. Together, they gave her $50,000 in order to open her own restaurant at the age of 30. Unfortunately, she invested the money with a broker at Merrill Lynch and lost it all within three months. Not only that, but she was $250,000 in credit card debt as well. She gets a seemingly bizarre idea of applying for a position at Merrill Lynch with a social worker degree and seven years’ experience as a waitress, and they hire her to satisfy new Affirmative Action regulations. She successfully sued for her $50,000 back, stayed at Lynch for several years learning about money, and then became vice-president of investments at Prudential Bache Securities
Rising Phoenix: Of her financial mistakes and past, Suze says, “Sometimes poverty is the greatest gift you can ever be given. Sometimes loss is the key that leads you to gain.” She has a reported net worth of $35 million, is a successful author, speaker, and has a successful television show. All because she lost $50,000 to a broker and found herself $250,000 in debt on a $400/month income.
Amanda L. Grossman’s Financial Stress: Unemployment Stints + $36,000 in Student Loan Debt
Depending on how long you’ve been following me, you may not know why I started my blog. It was 2008, and I was newly laid off a second time from my second post-college job. Yep, you read that right − exactly two jobs, and two layoffs in less than four years. Instead of wallowing on the couch like I did after my first layoff (albeit while still job searching; I scored my second job within a few months, which is quite necessary for someone who graduated with $36,000 in student loans), I decided to make something great out of the time I was given.
Writing had always been a passion of mine. One I was afraid to claim because of the countless stories of writers never actually making it. And money? Well I just loved the subject and was endlessly fascinated by it since my early teens.
So I went to the library, got out several books about how to write a newspaper column, and spent part of my three months of unemployment writing six columns called Frugal Confessions. After I finished, I sent them into several newspapers across the country. While none of the newspapers accepted it (I did receive a nice letter from one editor telling me I was close, and to keep going), I was introduced to my friend Helen at my next job, who then introduced me to the idea of opening a blog at the Houston Chronicle.
Rising Phoenix: Over the last several years my dedication is beginning to pay off. I was able to quit my day job in early 2013 and pursue Frugal Confessions fulltime. I’ve appeared in Woman’s Day magazine, Business Insider, lifehacker, US News & World Report, abc 13 and Fox 26 news here in Houston. Better yet, I’m able to continue working at something I’m passionate about while raising our son. Now that’s priceless. All because I decided to give this writing thing a try during a stint of unemployment.
Eye-ball popping amounts of debt. Anemic emergency savings − or none at all − to fall back on. Bad jobs. Low pay. Hitting rock bottom. Living on Mom’s couch. You could say that these are reasons why no one should listen to these guys (and myself) ever.
OR, you could see this for what I think it really is: learning from people who have been there, and who have turned their financial mistakes into their greatest financial assets through the School of Hard Knocks.
What are your financial mistakes you are ashamed of, and how are you going to let them define you moving forward?