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How a 20-Something's $400,000 Turnaround Helps Her Teach Young People of Color About Money

PhenomenalMAG Staff  |  Mogul Mindset

Fundamental wealth disparities exist. There are many challenges to overcoming it, and Black people must overcome barriers and deal with the ramifications of this gap every day.

Finding a job with benefits and learning to invest can be tough. On top of that, Black students are more likely to accumulate student loan debt, adding to the problem. Our community faces multiple hurdles to developing wealth — but it can be done!

Erika Moore Taylor started working at 15. She knew she needed to save, but not how to build wealth. Taylor's goals were simple: graduate college, obtain a "good" job, and work until she could retire. She thought a higher salary would be enough to make her rich.

Fortunately, Taylor got into college. Her parents thought she was solely responsible for her education. She ended up going to graduate school with $65,000 in student debt already.

Taylor realized she would be forced to make college debt payments, have a small earning potential, and labor for more than 30 years before retiring. So, she studied money management and took steps to produce wealth, like getting a second job and automating her savings.

Seven years ago, Taylor began with $65,000 in debt. Now, she's worth more than $350,000.

Taylor credits her turnaround to gaining financial awareness. She runs courses and awards scholarships through her business, Moore Wealth, to teach students of color how to manage their personal finances better.

All Black people should be incredibly wealthy, according to Taylor. Her are tactics to change her lot after being inspired by others.

Observe How You Spend Your Money

Taylor's limited resources meant she couldn't splurge on all her wishes and whims. When she decided to become wealthy, she became aware of her purchases versus what she really wanted. By carefully considering her spending, she could better align her finances with her values.

Reduce Your Housing Costs

Dr. Lakisha L. Simmons, a FIRE coach and author of "The Unlikely AchieveHer," served as Taylor's source of encouragement for making very careful financial decisions regarding her housing expenses. Dr. Simmons heard about FIRE after her divorce. She felt it was time to cut all of her spending since she just had one paycheck and two kids.

Dr. Simmons moved from a five-bedroom, four-bathroom house that cost $2,410 per month to a $1,400 two-bedroom apartment. This move allowed her to retire at 41 with $900,000 in 4 years.

Average monthly housing costs are high. Taylor downsized her apartment and used the savings to complete the next few tips.

Reduce and prevent debt

Taylor and her spouse both carried student loan debt. They realized they could easily remain trapped in the red for years unless they took charge of their future. So, they devised a plan to steadily pay off debt and remove it as swiftly as possible.

Now, she also questions whether something is worth accruing debt before taking it on. What would the interest cost, and is it worth it? She finds out after calculating, and the answer is often no.

Maximize Personal Investment

Young Taylor thought working and trading time for money was the greatest option. However, she soon learned that some people have their money growing for them even when they're not working — through investment. This revelation drove her to learn more and get started investing herself.

Taylor has made use of every investing tool at her disposal, including a Roth IRA and an HSA. Many accounts that consumers can access are a maze of various laws and regulations due to access restrictions and financial language.

To help clear this hurdle, Taylor learned by first asking about retirement accounts at each job. Which options could she access, how much could she contribute, and how could each account be invested? Her questions helped her invest her money wisely.

Automate Saving and Investing

Taylor didn't want to spend a lot of time each week analyzing her student loan repayment plan once she had a plan in place. She set up recurring deposits to develop an emergency fund, regular student loan payments using Mint, and automated her retirement contributions.

She made her path to financial freedom — and ultimately, wealth, by automating 90% of her financial decisions and choosing an investment distribution to match her donations.

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