In today’s guest post, Kelly Wallace shares how her debt drove her to deep depression, and how she found help and recovered, and is now on her way to retire as planned. This kind of transformation does not happen overnight and requires incredible mental strength. I am so glad that Kelly reached out to me to share her story, in the hopes that it can inspire someone else to do the same. Please keep in mind that all guest posts on SaveMyCents are the contributors’ unique experiences, meant to give you a glimpse on private lives and to inspire positive steps towards personal finances in your lives.
My childhood was as follows: Living on the west side of Oregon, working class, poor with a single low-wage mom. I became estranged from my high-wage earning dad, due to early childhood trauma. Both of my parents were well- educated and my sister and I always had food in our tummies, but there wasn’t a lot of extra spending money or vacations. My dad’s income afforded me the ability to attend private college on the East Coast. With a combination of him paying for some of the tuition, I also received grants from the college, and received student loans.
I took out student loans not really knowing what I had signed up for. I exited college with $16K of student loan debt and no career direction for a few years, due to unresolved issues stemming from the childhood trauma. After getting assistance from therapists and support groups to tackle my underlying issues, a friend of a friend helped me locate a job with a company helping people with disabilities find jobs. I found my vocational calling!
Now in my late twenties, I realized I could get my own state contract doing this job, so I started a consulting business where I’d help people with disabilities to find jobs. I put the expenses for this business on credit cards which quickly added up.
The first 5 years of business were incredibly challenging. I went on food stamps and declared bankruptcy because the stress of not being able to pay my now $18K in credit card debt was crippling. Filing for bankruptcy erased the $18k in credit card debt but I still had the student loans to pay off. I placed my student loans, now ballooning to $20k, in forbearance.
Feeling almost suicidal, I started going to a recovery based financial program and was able to dig myself out by budgeting and tracking earnings both for my business and personal finances. A few years into paying my student loans out of forbearance, I was able to start paying the monthly minimum amounts.
At age 35, with my consulting work growing year after year, I started saving and purchased my first home when housing prices in Portland were low. I only put down 3.5%, but it was a start! I have always had an entrepreneurial spirit, and the idea of purchasing a rental home also appealed to me. I purchased my primary home in an up-and-coming neighborhood which doubled in value after a few short years. I was able to refinance it and pull out cash to purchase a rental property in a nearby suburb. I started to make large payments beyond the monthly minimum, and in 2017, I paid off both properties completely.
I continued to save so that I would have an emergency fund and money towards the costs of any maintenance or unforeseen work that might come up on the rental property. With no retirement fund in place, I decided it was time to start planning for my golden years. Being close to age 40 by this time, I got a referral for a financial advisor from a friend who helped me start a Roth IRA. Additionally, he helped me start purchasing individual, earth-friendly stocks.
Despite the challenges COVID-19 brought, my work has remained steady. This past fall, I sold my starter home to purchase a single-family home with an attached studio apartment. The new home is in an older, established neighborhood and came with an inherited long-term renter. Now, I have two doors and am looking to purchase single-family homes in the Midwest.
During the pandemic, I found inspiration from podcasts and Instagram accounts (like Save My Cents!) which all had content related to retirement and real estate investing. Based on what I heard and read, I made the decision to eat out once a week and decided to go on a two-year clothing and cat toy diet. Prior to the pandemic a lot of my money was being spent on eating out, impulse clothing purchases, and believe it or not, cat toys for my two rescue cats, Starboy and Moonboy (they are featured in the picture in this blog post).
Since I started my retirement planning later in life, and wanted to start saving even more money, I switched to funding Simple Self Employed (SEP) IRA over my Roth IRA. The SEP also allows for a 3% company match. At this rate I hope to retire at 62 with my investments while also being a landlord.
Kelly Wallace is at work on a memoir about her early childhood trauma and can be found on Instagram: Kellythewriter1 and Twitter: @kellythewriter1
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