- "I've made more mistakes with money than I can count, but I've learned that no matter what kind of setbacks you have in your past, you still have the power to create real wealth in your future," writes Cori Arnold.
- "Once I understood that I couldn't separate my money concerns from the rest of my life, my priorities shifted."
- "For so many years, I avoided my money. I felt ashamed of it. I allowed fear to get the best of me. But hiding from your money doesn't change anything. I would have stayed stuck, drowning in debt if I didn't take action."
In my group of friends, from the outside it certainly seemed like I was the smart one when it came to money. I had an affinity for numbers and when I started my career, I worked in finance. But when it came to my habits, for a long time, my choices weren't setting me up for financial success.
I was an extreme spender, even going back to high school, when I spent the $800 I had saved all summer working two jobs in a single shopping spree. With college and business school, even though there were choices with scholarships attached, I chose the programs at my "dream schools" that were the most expensive, and I began to accumulate debt.
Amid all this, for years, I still saw the lines of available credit on my credit cards as additional resources for spending.
My first investments also left something to be desired. I put $3,000 worth of borrowed money into penny stocks for a hyped company. I ultimately lost the value of that investment, and still had to pay back the loan after the fact. There was also an ill-researched foray into real estate investing that ended with me overpaying for a duplex and subsequently dealing with late rent and property damage from tenants that I did not properly background check.
Finally, at 32, I woke up and realized that with $260,000 of debt and a negative net worth, things needed to change. It took some time, and a major mindset shift, but today, I am a millionaire.
I've made more mistakes with money than I can count, but I've learned that no matter what kind of setbacks you have in your past, you still have the power to create real wealth in your future.
Here's how I bounced back from my early and expensive money mistakes.
Before I could make those major changes, it turns out that I had to make one more money mistake. After finishing my MBA and moving back across the country, I sat down and listed out my debts and assets. That is when I discovered I had a negative net worth of $99,000.
Seeing those numbers in black and white was a good start, but then, rather than putting my head down and finding the best way to effectively reduce my debt, I opted for a short cut that, in hindsight, was a big mistake.
I closed my prior employer's 401(k) which was worth around $28,000, and threw it at my student loan debt. It did make a small dent, but taking the money out before retirement led to me getting penalized and taxed. This was in 2011 when the economy was still recovering from the Recession, and had I left it alone to grow, that $28,000 would be worth significantly more today.
If I could go back I would handle it differently, it was this experience that finally unlocked for me that I needed an entirely new approach to money. And it has served me well ever since.
Video by Helen Zhao
We are all conditioned with beliefs about money from the people who raised us and personal experiences, and many of us don't even realize it. When I finally realized my beliefs were holding me back, I had the chance to do something different.
I had internalized some misconceptions about money like "investing in the stock market is gambling" and "debt is normal and everyone has it."
In my teens and twenties, I believed that having more made me cooler, or more important. I also thought that going to the best, most prestigious school guaranteed a great job, a belief the realities of the Recession quickly proved to be false.
I also thought that buying things made me happy. I was trapped by these mindsets for so long, but when I started questioning them, I had the ability to step outside of myself and reflect.
This mental reset was the glimmer of hope I needed to finally take some responsibility and get control back.
For a long time, my debt felt so overwhelming that avoiding it seemed like the only realistic way to deal with it. I thought I had no hope of paying it off, so instead of creating a real plan, I just assumed my salary would continue growing. But you can't out earn unsustainable spending.
The first real break for me came when I was fortunate to get a job offer in a lower cost-of-living area. And while closing that 401(k) is not something I would ever recommend to anyone else, it did jump start a healthier debt payoff plan.
With my budget, I finally saw that the pain created by my debt was exceeding any short-lived pleasure I got from a shopping spree. The stress was even starting to affect my health, leaving me with migraines and insomnia. Once I understood that I couldn't separate my money concerns from the rest of my life, my priorities shifted.
I started making more intentional choices. I reduced my interest on the remaining loans, selling that loss-generating rental property, and getting leaner with my day-to-day expenses. In 2011, I also started putting 10% of my earnings into my retirement accounts each month. Over time, this helped me establish a positive net worth.
I also started looking forward to paying down debt each payday. I spent less and less in order to pay off more and more. Once I paid off all my debt in 2016, I made investing even more of a priority, and as of 2021, I became a millionaire.
Video by Helen Zhao
For so many years, I avoided my money. I felt ashamed of it. I allowed fear to get the best of me. But hiding from your money doesn't change anything. I would have stayed stuck, drowning in debt if I didn't take action.
Instead of the short cut version that I did the first time, once I started actively paying off my debt and budgeting, I made a promise to myself to remain as transparent as possible with my finances.
I regularly checked in with myself and wrote down all of my assets and debts to understand exactly where I was, and to take it a step further. I added the interest rates of each debt account and calculated the total annual interest I was paying.
I started tracking all of my spending. It's only when I could see everything that I could change my spending patterns and behaviors. I also built a community of people around me who were more intentional about their money, particularly a good friend of mine who has always lived on less than what she makes.
She's become something of an unofficial money mentor, and spending time with her and understanding how she thinks has motivated me to continue to make positive changes and to believe in myself even more.
Cori Arnold is the author of "Aspirations Journal Using Beanstalk Goals," "Make Flipping Real Estate Your Part-Time Hustle," "You're Approved," and "Career Advice for Graduates." She is the founder of Cornball Productions, which offers gratitude journals and check registers, available on Amazon. Her blog, Will You Be Rich or Poor, focuses on mindset and money and she runs a YouTube channel called Cori Arnold: Negative Net Worth to Millionaire. She also has a growing Twitter following @moneymindcori.
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