What will be your financial rock bottom?

We got our very own 9/11.  All to ourselves.  That’s the first thing that ran through my mind when the doctor walked in the ultrasound room and just looked at me.  Not a word came out of his mouth.  All I could say was “no, no, no” just like when I watched those towers go down.  This can’t be happening.

And so it was.  The doctor couldn’t say it so I had to ask.  Is he sick?  Yes.  Will he die?  Yes.  When? We don’t know.  How do I tell Manny?  I will.  You just stay here and wait.  So I waited for my husband to be introduced to our new hellish reality.  I used the time to decide how I would tell Alex and Noah that their baby brother would likely not live long enough to learn their names.

But wait, that wasn’t all.  This was 2008.  We were knee-deep in stupidity induced debt of every flavor.  Student loans, family loans, auto loans, 1st mortgage, 2nd mortgage, credit cards, medical bills and now a funeral we simply could not afford.  We planned Isaiah’s funeral during my 7th month of pregnancy.  I remember because while we were waiting for the “funeral planner” there was a pretty hefty earthquake (as if we weren’t shaken up enough already). Picking out your kid’s casket while he’s still alive and kicking inside of you is quite the experience.  But that was nothing compared to the shame I felt.  If rock bottom exists, we had hit it.  Hard.

I didn’t know if there was a way out of the hole we had gotten ourselves into.  But we knew we couldn’t save our son’s life.  We also couldn’t save the little girl we were expecting just a year later, so we worked on fixing the only thing we still had some power over.  We let go of the things we could not control, we placed all our faith in God and we got busy following the only plan that made any sense.  We were getting out of debt.

The house was already in foreclosure so we focused all our energy on paying off everything else we could.  Using the debt snowball, we started to see the power of small wins along the way and finally finding something in our lives we could save.

Fast forward 8 years.  We are completely debt free.  We have not had a credit card in years.  We have paid cash for both our vehicles, our kid’s college savings accounts are done with, our retirement savings are well on their way, we paid cash for our business (which is also debt free), we have emergency funds for both our business and household, we have an estate plan in place, we pay cash for our vacations and we are saving to pay cash for a house (yes, in Los Angeles).  Best of all, I gave birth to a crazy, beautiful, strong little girl in 2010 that is Daddy’s little princess (and mine). 

Nobody owns us anymore.  We own our lives, our jobs, and our freedom.  We take nothing for granted and today, we owe nothing to anyone but God.

I've only just begun

It's been a long time coming.  I've known for years that I wanted to help others through the same type of financial struggles we went through.  I knew that God had not blessed us and taught us what we learned just to benefit ourselves.  When we started to see the light at the end of the tunnel I was anxious to share with anyone and everyone that would listen, how we had done it.

At first, all I could come up with was buying books in bulk so I could give them away whenever someone casually mentioned their stress over money or credit cards they couldn't pay off, or student loans that had been around for decades.  

The second step was deciding to coordinate a Financial Peace University class at our church.  The funny thing is that we hadn't even taken the class ourselves, so it was great to see how this group accountability and support system worked so well to get motivated to make a change.  This class also helped to fill in the gaps and help clarify some details that we hadn't even considered before.

Throughout this process, I realized the importance of reading, listening to podcasts and actively learning more and more about what had become undoubtedly my passion.  I decided to teach a second FPU class and start a class for single moms that would help them like I wish I had been helped many years ago.  

Teaching made me even more curious and I wanted to be better able to answer some of the questions I would get from our students.  We had started RMD by then and our finances continued to improve, so I decided it was time to be trained by the best and I registered for the Master Financial Coach training in Nashville where I would learn from Dave Ramsey's team of coaches how to professionally do what I so badly wanted to do; help others get in the best possible financial shape.

Since completing the training and then a 3 month mentorship program, I have been offered the opportunity to be listed as a local coach on the Dave Ramsey website and now have the designation of Ramsey Solutions Master Financial Coach.  As of May 1st, I will have the opportunity to serve not just our existing clients and anyone looking for help through Dave Ramsey's team.  It's been a long time coming and yet, I have only just begun!

The almighty FICO

I have very strong opinions about the FICO score and what purpose it serves.  If you know anything about me (and you will after this post), you know without a doubt where I stand.  

So, let's look at it objectively then.  A FICO score, as described by Dave Ramsey is an "I love debt" score.  And the sad part is that we are not only teaching, but encouraging our kids to follow the guidelines of a culture that has "lost its mind" in order to raise this score and maximize the opportunity to get further into debt.  

When you've become convinced that telling your kids to get into debt is better than showing them how to live within their means and save for the things they want, something is VERY wrong. Common sense has left the premises.  That's what the FICO score obsession has forced us to do. Loose our minds and encourage our kids to follow along.  

WHAT THE FICO SCORE IS:

The FICO score has become the ultimate measure of financial fitness.  But let's really talk about what this score is based on and what it stands for.  The score is based on 5 things. 1. How well you've payed debt in the past. 2. How much debt you currently have. 3. How long you've been paying on this debt.  4. How much new debt you have and finally 5. What types of debt you have.  

WHAT THE FICO SCORE IS NOT:

The FICO score IS NOT based in any way on your cash position or savings, your income, your net worth, your discipline in living below your means or your investments.  In other words, you could be a millionaire who can write a check for an apartment building but be turned down as a tenant for a 2 bedroom apartment if you've stayed away from debt and have no FICO score. Makes complete sense, right?

BUT I NEED TO BUY A HOUSE!  

The argument always comes up (especially in L.A.) that you MUST have a FICO score to purchase a home because it's impossible to do so without a loan.  The truth is that if you've stayed out of debt and have no FICO score, you can get a loan through something called manual underwriting that actually looks at how well you manage money (not debt).  But most people have NEVER heard of this or considered this as an option and the truth is not every bank does this.  But they do exist and are most definitely an option.

Now I'm not telling you what you should or shouldn't do.  And I know it's hard to be "weird" when everyone around you is not.  I'm just sharing information that I wish I had had access to a long time ago.

In closing, from personal experience, I want to share that a life where FICO no longer rules your world is not a myth and is just so much sweeter.  Not owing anything to anyone, waiting patiently and working your booty off to pay cash for a car, an education or a vacation, living below your means, having an emergency fund and savings for your kids college and your retirement beats the heck out of obsessing over a score that tells the world how well you play kissy face with debt.  And having your kids see that and start their lives that way is truly priceless.

Our second tax season survived!

We made it! This was RMD's second tax season but our first tax season in our new offices.  It feels like we're all grown up! Our move in July 2015 was scary and overwhelming but definitely a great decision. A big THANK YOU to all our clients for making this year's season as successful as it has been.

We feel so blessed to have amazing clients that are not only loyal but have referred us to their friends and family members and there is no greater compliment than that.  Manny has many years experience and truly loves what he does.  When we hear our clients' gratitude and see them come in with a frown at times and leave with a big smile on their face, it makes what we do so worth while. 

Owning your own business has many challenges but the rewards (and not just the monetary ones) far outweigh the costs.  We never take this for granted.  We were very intentional about starting this business debt free to ensure its stability and growth for many decades to come. It hasn't been very long, but we are able to take a few minutes today to reflect on the last 15 months.  

During these short months, we have more than doubled our revenues.  We have cut costs by over 20%.  We have built up retained earnings while keeping our working capital intact.  We have hired 2 new team members and plan to add a full time member later this year.  We started providing financial coaching services, giving the business a new revenue source with unlimited growth potential.  We became a Dave Ramsey Endorsed Local Provider for taxes and became the #1 ranked ELP in California and the U.S.  But above all, we have continued to learn and strive to be the best at what we do. Here's to what made all this possible...YOU!