From -$110K in Debt to $115K+ in Four Years

Hello, I’m Lawrence, a 36-year old Haitian-American plus Brazilian man, who went from over -$110,000 to $116,000 in net worth in 4 years. Starting off in January 2014 with $5,800 in credit card debt, $105,000 in student loans, additional moving fees of $5,000 pending, and a new job in DC, I was a bit stressed. As of December 2018, I closed out the year with a huge sigh of relief. My net worth peaked at $116,000+.

Table of Contents

“Sometimes you go as far as you can and then you go further.”

I have seen low points back in 2012 in Tallahassee, Florida; working for an annual salary of $21,000. However, the winter of 2014 in the northeast was a bit of a new shock. It just never stopped being cold. Based on TV and Disney movies, I thought winter lasted from December to January. With no heat, it was a complete contrast from the scorching desert heat that we suffered in the Marines. I’m talking about a 130-degree average in the Horn of Africa and Death Valley.

Not Immune to the Struggle

I had to remember how resourceful my grandma had to be, to raise 6 kids. Worked from farmhand to the owner of a café. There wasn’t work that she couldn’t do from selling Krémas (alcoholic Haitian drink) to remedies. She flipped work, as the hood would say. I heard stories of my grandfather (known as L’homme aka the man).

He was para-military/police, a school principal, a powerlifter, a movie theater runner, and an electrician. There was no quit in him. It is humbling to know that people before me, faced adversity. I was not immune to the struggle. The journey to financial happiness wasn’t easy. But looking back at it, it taught me to be a better version of myself. Who I was, was not cut out for the person I needed to become.

High angle view of people communicating at table with their devices

Burning Candles at Both Ends

Most Financial experts who follow the almost monk doctrine of Dave Ramsey would often say “Pay Down all your Debts” as if it was a mantra. Other experts would jump in a say, “Leverage Debt to Buy and Flip homes” in flashy suits. All while most of my friends followed the “YOLO” and “Throw It in the Bag” mantras.

I figured I would do the next best thing and follow my own “Personal” finances. I’m a young black male with no male mentor/father figure and no fallback plans. If I failed, there is no bailout and no reset plan. Translation, “figure your life out”. Against the grain, I would maximize Debt Reduction and Asset building at the same time. I would later dub it as the Net/Max Financial Plan.

Ideally, I’m getting all the benefits at the moment while reducing my budget, and increasing assets when and where I can.

The Debt Timeline and Original Outline? – Beg. 2014

-$105,000 in total student loans (principal, plus interest)

-$5,825 credit cards

-$5,000 in moving fees.

$0 Saving

Total Damage, officially -$111k+ in debt

My Strategy:

1. Redesigning my budget and eating habits (2014).

If you don’t know your numbers, how can you make the adjustment? Far too often, people ignore their net worth. I started using Mint, crafted my very own excel spreadsheet, and graduated to Personal Capital.

2. Matching at work with the 401k and paying off credit cards were the top priorities.

I used a mixture of Debt snowball and Avalanche. While the Avalanche makes more fiscal/math sense, I still took the liberty to pay off smaller cards every once in a while to give a psychological boost. I had to consider how to make the best of my investment since I squandered my 20s on video games, movies, and food.

3. In 2015, I added a Traditional IRA and HSA.

While focusing on Tax planning and debt reduction maximization strategies. *Kicked back most of my tax refund back into the IRAs and HSA to max out for previous years since the deadline extended until April of the following year.

4. Consolidated most of my main student loans into 4 loans.

I was able to pay the smallest one to lay it to rest since I owed maybe $600. I would eventually take care of the next 2 in the following years (2015 and 2017 respectively). However, the biggest chunk remains and is being paid off under the Public Service Loan Forgiveness program (with a payoff timeline of mid-2025, otherwise known as the end of slavery).

5. Downgraded

But upgraded my life in 2015 with a roommate for $550/month from my average of $1,100/month rent. This is great for the DMV where people are paying upward of $1,400/month for rent, not including utilities. To celebrate, I took a trip to Brazil for the 2016 Summer Olympics. At the end of 2016, I was surprisingly able to purchase my first 2/2 condo. Full Disclosure: I had the VA home loan in my back pocket since 2008 (Chess move). And by the beginning of 2018, I purchased my first rental property with my mom so that the family is taken care of in the future. Bringing my grandma’s dream of a solid legacy closer to fruition.

6. Throughout, with a solid performance, my salary grew from $64k to $100k.

Top praises include “team-player”, “get things done”, and “doesn’t bellyache or panic under pressure”. I would never say that I’m a great auditor. In truth, my boss hired me to round out the team. So I double down on my own uniqueness. It’s been a blessing on top of my blessings since.

I guess that’s the shorthand of the journey. When I went home, I had staycations with the family. I volunteered at middle schools, high schools, and colleges teaching financial literacy. I took professional photos for friends often just for food. Tip: not all community transactions require money (learned that growing up in Haiti).

I learned to be a solution-driver over a problem over-analyzer. I write about financial wealth and volunteer every other Friday at my local community college as a Financial coach for the Honors program.

The Wrap Up – End. 2018

-$91,000ish in total student loans (principal, plus interest)

-$6,580 in credit card debt (paid off by March 2019)

$132,218 in investments and savings (post-stock dip, sad emoji)

$81,200 in Home ownership Assets – Liabilities

A Net/Max of $115k+ net worth which is an increase of 205%. Some will argue pay down the debt, others will say leverage debt but in the end, it’s all just personal finance. I did what was best for me which maximizing all of my benefits along the way. Many thought I was sacrificing #YOLOness but in truth, it was the complete opposite. I ended up #OLM – Only Living More.

A Facebook commenter asked, “What would you say was the biggest boost toward financial wealth?”

The Answer:

The biggest boost was letting go of my pride and the perception of the external locus of control playing a larger role in my life. I took accountability and it helped clear the social thought matrix (or simply decluttering). I’ve written about the path as the Net/Max Financial Plan extensively. I’ve posted on LinkedIn daily for a year with daily steps.

I pulled out the excel sheet. And I said “No” to going along with someone else’s plan of the day. And the way I’m set up; I’m as stubborn and resourceful as my grandpa and my grandma. Everything is worth a shot. The rest is all ACTIONABLE. That’s the difference; most people wait for the world to change. Truth is, you have to change and your world changes. IT TAKES TIME!