“You were right!” by Alecia St. Germain

“You Were Right!”

Just a little over 10 years ago my mom heard the words I can only imagine every parent hopes to hear, “You were right!” For years Mom had been trying to instill the values and concepts from Robert Kiyosaki’s Rich Dad Poor Dad. Even though I had been involved in real estate years prior to that insightful moment, it took the school of hard knocks to help me understand and a parent strong enough to let me suffer a little for me to embrace these lessons. I now meet parents on a regular basis who express to me how much they wish to get their children into the real estate business and show them a path to financial literacy. I thought I might take this opportunity to share some tips that I now realize Mom used to provide me with the foundation to pave my own path.

So as I mentioned it took a little non-traditional “schooling” to get me on track. I didn’t want to do real estate, mostly, because I wanted to find my own way in the world. So I went off to get a 4-year-degree in the medical field. Once I graduated and got a job I had so much more money coming in than I was used to in my E-quadrant mind. What happens when you have the wrong mindset and you suddenly have more money? You guessed it…more problems. You see what happens when you have a job and start making more money, credit companies start extending more credit. Being 22 years old and not financially literate, despite Mom’s best efforts, resulted in a slew of debt spent on doodads. It took me less than two years to see that I was in the rat race and on the verge of financial ruin. Just a few bumps in the road and there I was shamefully back on Mom’s doorstep with boxes of my stuff. Fortunately, I had already started the process to change my mind set. I told her how I thought she was right and that I wanted to learn more about real estate so I could live the way I wanted.

That’s not the lesson though…the real one was what Mom did after I moved back home. The first thing we tackled was my bad debt, over $60,000 to be honest. She explained the difference between good debt and bad debt and showed me a plan to pay it off. I was quickly able to knock down some of it, by selling off some of the doodads, mind you at a loss, but at least lowering the debt by almost a third. That’s the problem with doodads, they hold a lot less value once you buy them. Then we made a list of all my outstanding debt and put it in order from highest interest rate to lowest interest rate. I was to make all my minimum payments and on my debt that was at the highest interest rate I was to pay all my extra income. Then after that one was paid off, all my money went to the next highest until that one was paid off.

For example, if you had $200.00 a month to pay back your debts and 3 credit cards: one at 11.9% interest with a minimum payment of $50.00, one at 9.9% with a minimum payment of $30.00, and one at 7.9% with a minimum payment of $70. You would pay $100.00 to the credit card with 11.9% interest until it was paid off and the minimums on the other two. Then once that was paid off, you would take the $100.00 add it to your minimum payment of $30.00 on your 9.9% credit card and pay $130.00 to that credit card until that debt was gone. Finally, you’d end up making the full $200.00 payment to just that last credit card at 7.9%. This helped me created a predictable budget plan that started me off slowly paying off the debt. Mind you your credit cards need to go on lock down. This only works if you stop acquiring bad debt.

Now this sounds grand but what happened next was the really important part. I made one set of payments and had $38.00 in the bank. With no disposable income and no credit cards available to me, I felt broke. With tears streaming down my face, I cried about how penniless I was to Mom. She looked at me and asked if all my bills where paid. “Yes,” I replied. She asked if I had a paycheck coming in before the next time bills were due. “Yes,” I sobbed. “Good. You have a roof over your head and food in your belly. So you will be fine.” This was all she said and after a big hug we moved forward.

Years later after I was out of that bad debt, we talked about how valuable that conversation was. She expressed her heartbreak seeing me that way and how she could have easily paid off my bad debt for me and even contemplated doing so. However, she did what I imagine was the hard part of parenting and let me suffer, knowing of course, I was safely in her home if anything got too dangerous, like having a safety net only she could see. I watch parents give and give to their children. I have young adult tenants whose parents pay for their living expense while they lounge around and continue to live mediocre lives. I realize these parents are doing the best they know how to try to help their children, but it makes me grateful for the strength Mom showed. Paying off my bills would have been selfish on her part. “What!?!” Yes, I said it, selfish. It would have made her feel better, to not have to see me upset, but I would have learned nothing and the cycle probably would have kept repeating itself. I have come to realize parenting is about doing what sometimes hurts you to help your child.

So I share this with all of you as parents, do what you must to make your children financial literate, even if they judge you and hate you. I imagine this is a tough spot to be in and it would make me second guess myself. So know I support you. If at that moment your kids don’t understand, think of me as your kids in the future. I thank you and I believe in what you are doing. It’s probably not going to always be enough just to teach the concepts. Some kids don’t get it until they go to work at an E-quadrant job and feel that pain after making mistakes. Don’t give up on us…use it to your advantage to make a difference in the course of our lives. I can promise you, I wouldn’t be where I am today without my mom. So carry on…and keep waiting for those three sweet words…YOU WERE RIGHT!