Breaking the Cycle of Poverty
Episode 266
Episode Guide
Episode Summary:
Episode Timestamps
Episode Show Notes: Yanelli, aka Miss Be Helpful
Podcast Title: ChooseFI
Episode Summary: Yanelli shares her inspiring journey from struggling with credit card debt to advocating for financial literacy. Growing up in a low-income household without financial education, she accrued over $21,000 in debt while attending Brown University. Yanelli emphasizes the importance of breaking the cycle of poverty through financial literacy and has dedicated her life to teaching others about money management.
Key Takeaways:
- Understanding Financial Literacy: Yanelli's experience highlights the critical need for financial education, particularly in low-income communities. She believes everyone should know the basics of money management.
- Breaking Generational Cycles: Acknowledging the cycle of poverty is crucial for breaking it. Yanelli transitioned from accruing debt to aggressively paying it off to create a different future for herself and her family.
- Impact of Peer Pressure: College culture often encourages overspending, which can lead to significant debt. Understanding this pressure can help students make more informed financial decisions.
- Grit and Preparation: Success often requires determination and preparation, especially for low-income students entering elite educational institutions.
- Support for Financial Education: Yanelli advocates for teaching financial literacy in schools to equip the next generation with essential skills for adulthood.
Timestamps:
- Introduction of Yanelli
- Facing Credit Card Debt
- Cultural Challenges in Financial Literacy
- Breaking the Cycle of Poverty
- The Role of Financial Education
Quotes:
- "You have the power to choose between falling into debt or smashing it aggressively."
- "Recognizing the generational cycle of poverty is the first step in breaking it."
- "Investing is crucial for building the future my family never had."
Actionable Takeaways:
- Engage in discussions about finances early on to prepare for real-world challenges.
- Investigate financial literacy programs available in schools and support their implementation.
- Understand the importance of breaking generational cycles by being proactive with personal finance.
Related Resources:
- The Millionaire Next Door - A book that emphasizes the habits and mindsets of self-made millionaires.
Discussion Questions:
- How can we better prepare students for financial responsibilities in college?
- What are the impacts of generational poverty on education?
- In what ways can individuals begin to break their cycle of credit card debt?
Podcast Links:
- For more insightful episodes and resources, visit ChooseFI.com/start.
Conclusion:
Yanelli’s story serves as a motivating force for individuals seeking to transform their financial futures and emphasizes the vital role of financial literacy in achieving personal and community advancement.
Breaking Free from Credit Card Debt: A Journey to Financial Literacy
In today's fast-paced world, financial literacy is more important than ever, especially for those coming from low-income backgrounds. If you're looking to escape the cycle of debt and achieve financial independence, you're in the right place. In this article, we'll explore key insights and actionable advice drawn from the story of Yanelli, known as Miss Be Helpful, who transformed her life after overcoming significant credit card debt.
Understanding the Role of Cash Flow
Many young people face a harsh reality when they enter college, especially if they come from low-income households. For Yanelli, attending Brown University on a scholarship didn't shield her from the financial pressures of academic life. Despite her educational accolades, the lack of financial education left her in a vulnerable position.
Key Takeaway: Budget Wisely
Understand your cash flow. Track your income and expenses meticulously to prevent overspending. Creating a budget allows you to allocate funds for necessities while avoiding the temptation to rely on credit cards for every unplanned expense.
The Power of Financial Education
Yanelli's experience revealed a significant gap in financial education. She recognized the need to break the cycle of poverty by arming herself with knowledge. This realization ignited a passion for education, prompting her to advocate for financial literacy in schools.
Action Item: Advocate for Financial Education
Support financial literacy programs in schools. Engage in discussions about implementing financial education as a requirement for all students, ensuring they graduate with crucial money management skills.
Breaking Generational Cycles of Poverty
Realizing the impact of generational poverty was a turning point for Yanelli. She chose to view her financial struggles as an opportunity to change the narrative for herself and future generations. This mindset shift was integral to her journey toward financial independence.
Reflect on Your Journey
Ask yourself: What patterns have you inherited regarding money? Acknowledge these patterns and actively work to change them. Your financial future is not pre-determined.
Transitioning from Debt to Wealth
After acknowledging her situation, Yanelli committed to smashing her debt aggressively. This involved setting new financial goals, such as maximizing her retirement accounts, which her father never had the opportunity to invest in.
Action Item: Prioritize Saving and Investing
- Maximize Retirement Accounts: Invest in tax-efficient options like a Roth IRA or 403B. Aim to contribute the maximum amount each year.
- Establish an Emergency Fund: Save at least three to six months' worth of expenses in a high-yield savings account to prepare for unforeseen circumstances.
- Invest Early: The sooner you start investing, the more you take advantage of compound interest—every dollar counts towards your future wealth.
Cultivating Grit and Resilience
Yanelli emphasized the critical role of grit in overcoming obstacles. She found that success in a rigorous academic environment required determination and resilience, particularly for those from underprivileged backgrounds.
Assess Your Grit
Evaluate how much effort you're willing to invest in your financial education and growth. Surround yourself with supportive peers and mentors who encourage your journey toward financial independence.
Leveraging Resources for Financial Literacy
Throughout her journey, Yanelli sought knowledge through books, podcasts, and online resources. Titles like "The Millionaire Next Door" resonated with her, highlighting the habits of individuals who built wealth from modest beginnings.
Recommended Resources:
- Books on Personal Finance: Explore literature focused on wealth-building strategies and personal finance management.
- Podcasts and Online Courses: Immerse yourself in financial education through podcasts and free online courses that teach money management skills.
Becoming an Agent of Change
The desire to facilitate systemic change in financial education motivated Yanelli to advocate for financial literacy programs across the U.S. She now focuses on training teachers so that every student has the opportunity to learn essential finance skills.
Action Plan: Get Involved
- Join or Start Local Initiatives: Participate in community programs aimed at increasing financial literacy.
- Become a Mentor: Offer guidance to individuals facing similar challenges. Sharing your knowledge can empower others on their financial journeys.
Conclusion: The Path to Financial Independence
Yanelli's story is a powerful reminder that financial independence is attainable, even in the face of significant challenges. Your financial situation does not define your future. By prioritizing education, adopting a proactive mindset, and breaking the cycle of poverty, anyone can shift their trajectory towards a secure financial future.
Engage in conversations about money management, seek resources to educate yourself and others, and don’t underestimate the power of community support. As you embark on your journey toward financial independence, remember that every step you take is a step towards breaking free from debt and achieving your dreams.
Yanely Espinal
- Website: Miss Be Helpful
- YouTube: Miss Be Helpful
- Instagram: missbehelpful
What You'll Get Out Of Today's Show
- Yanely grew up in a low-income household in Brooklyn and then attended Brown University. But by the time she graduated, she had accumulated a bunch of credit card debt that she was hiding from her family.
- She tried to figure out dealing with her debt on her own by reading books, listening to podcasts, and watching YouTube videos. After paying it off, she thought it was ridiculous she had never learned it in school and started her own YouTube channel to share her story. That eventually led to her landing the perfect job and a solid career path.
- Growing up, there wasn't a lot of money in Yanely's household, so there weren't many conversations about money either. When there was talk about money, it was always negative and caused tension.
- One thing that her father did teach her was to never have a loan or owe debt to a friend or family member and that she needed to always pay them back. Interestingly, that sense of obligation did not transfer over to institutional borrowing which she believes is a common mindset in neighborhoods like the one where she grew up.
- When Yanely was accepted to Brown University, she had no idea how expensive it was going to be. Although she received a full scholarship, she discovered she still needed to purchase things such as textbooks, a laptop, and other supplies. Because her father taught her not to borrow money from anyone, she wanted to figure it out on her own and applied for her first credit card.
- She attributes her attempt to be resourceful using credit cards to a lack of financial literacy. She thought she was doing the right thing and on the right path at the time.
- Her payment history was good since always made the minimum payment and never missed a payment on her credit cards, but her credit utilization was high as she was always close to maxing out her card limits.
- With each credit card application, banks continued to give her credit cards with higher and higher credit card limits. Trying to keep up with the rich kid's lifestyles of her classmates ended up getting her $15,000 in debt.
- Moving from a neighborhood filled with Caribbean immigrants to an elite university was a culture shock. Yanely felt like she didn't fit in because she didn't talk or act like her fellow students. Not understanding expressions and phrases others used made her feel dumb.
- Going from a top-performing student in high school to feeling like she was in the wrong pack may be part of the reason why it's physiologically difficult for low-income who attend prestigious universities.
- Yanely says the biggest thing a low-income student can do is expose themselves to the rigorous language and vocabulary that is going to be expected of you. Students are often not prepared for how much harder they will need to work, it ends up being a shock, and they go home.
- Approximately 2/3 of her credit card debt came from spending on just trying to keep up with her fellow students. Although there was no overt peer pressure, it was unspoken.
- Straight A's and scholarships are not enough. Students like Yanely need to have both academic and social grit to survive in an environment that is not in their comfort zone.
- Reading The Millionaire Nextdoor to help her figure out how to pay off the debt, she noticed the descriptions of poverty and generational poverty were describing the life she was living. She decided she was going to be the one to shift the trajectory of her family in terms of wealth.
- Yanely had a choice to make between continuing the pursuit to fit in and look good while racking up debt, or the alternate route of smashing her debt aggressively and begin to build wealth, breaking the cycle of poverty.
- The interviews of people who didn't come from wealth surprised her, opened her eyes, and completely shifted her mindset. She realized she was going to need to completely wipe her mental slate clean and start with new and fresh beliefs about money and how it works.
- Thomas J. Stanley and William D. Danko, authors of The Millionaire Nextdoor devised a formula for determining if you are as wealthy as you should be. That formula is: Your Age multiplied by Your Annual Income (from all sources except inheritance) divided by 10 = Your Expected Net Worth
- Growing up in a neighborhood where spending to reflect success and social status was prevalent, Yanely understands the pressure and had never imagined there was a different route.
- Her beliefs were shaken to the core listening to self-made millionaires answer questions and discuss the strategic money decisions they made with a clear goal in mind. It opened her mind and made Yanely want to explore more.
- Despite FI not even being in her purview a handful of years ago, Yanely just hit Coast FI after beginning to maximize everything she was doing with her investments and prioritizing tax-efficient investments before even paying her rent.
- Yanely paid herself first. After learning more about 403bs, she determined her priority should be a Roth IRA. She then invested as much as she could to qualify for the company 401k match. Whatever money was left after the investments, was used to pay for living expenses like rent and food, and has cut down on her fun money budget.
- Being obsessed and hungry for knowledge helped Yanely pick up personal finance lessons so quickly and go from being in credit card debt to maximizing her investments. Her goal was to learn everything she could and begin producing a result in 90 days.
- She feels that there is an injustice that these things were never taught in her community, her family, or even at her Ivy League school.
- Previously, she would have asked an expert or others for advice and take it. she no longer believes that is a good strategy for solving her problems. She thinks you need to question the experts' motivations and do your own research. This is especially true with investing.
- Her goal with Coast FI was to invest enough that she'd be a millionaire by the age of 65 even if she had never invested another dollar again. that meant she needed to hit $250,000.
- Initially, Yanely's goal was to be an agent of change for herself. Now she wants to be an agent of change for others through her YouTube channel where she could share her story.
- As a teacher, she realized that teachers were also never taught about personal finance in school. Teachers teach students about all kinds of topics, but not about money. Financial literacy is lacking and being passed down from generation to generation.
- An organization reached out to her to come on their podcast where they talk with teachers about money and personal finance to help give them the knowledge and skills to teach it in the classroom. She is now on staff doing educational outreach.
- She says her impact through coaching or her YouTube Channel is limited, but seating change in the education system and reforming the way students are learning in school is the kind of change she is after.