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The first time I tried to refinance my home I was not approved. I’d owned my house for two years, but I did not qualify because my debt to equity ratio was not at least 80/20.
Three years later I tried again and here’s what happened.
The process started just like before. My lender kept sending me letters in the mail suggesting I refinance to take advantage of lower interest rates and lower monthly payments.
At the time the real estate market was hot. It was a great time to sell or refinance. I looked up the estimated value of my home and not only had it increased, but the homes around me were selling at high prices too.
My husband and I talked it over and I decided to contact our lender and see what they were offering. Honestly, I thought it was another gimmick to pull my credit just to say no. But this time was different. This time I did qualify to refinance.
As soon as they ran my credit I started to get phone calls from other lenders. Competitive lenders tried to convince me to fill out an application to see if they could beat my lender’s rates.
Since the goal was to pay less for my mortgage each month I felt I had nothing to lose by shopping around. So, I researched banks’ refinance rates and contacted mortgage lenders too. I spent almost two hours on the phone with one company just to find out they could not do my loan because of their company’s lending limits for my state.
I was starting to get frustrated. Didn’t the company representative know I wouldn’t be able to work with his company before running my credit?
After a few more days of research and several phone calls with potential lenders, I decided to stick with my current lender for my refinance.
But I wish I knew about Refily when I started my home refinance process. Now my husband and I are in the process of refinancing a rental property. This time the experience has gone much smoother. We used Refily to get us started and I have saved tons of time in the process. Refily is a comparison search engine that allows you to compare multiple lenders with just submitting one form and makes the search the second time a lot easier.
I’ll share more about my experience using Refily in a second, but this article will outline reasons why you may want to refinance your home and things to keep in mind while you go through the refinance process.
What It Means to Refinance Your Home
Simply put, refinancing is when you get a new loan to pay off your original loan. You might do this to save money or to take advantage of better terms. You can refinance a home, car, or even student loans.
When it comes to refinancing a home loan, you may refinance your home to lower your interest rate or to change your mortgage from a 30-year mortgage to a 15-year mortgage.
3 Reasons to Refinance Your Home or Rentals
Everyone assumes when you buy your forever home you’ll make monthly payments to the same lender until it’s paid off. In reality, you might have your loan sold a few times during ownership or you may decide to refinance at some point during the repayment phase.
Legally there is no limit to how many times you can refinance your home. However, it’s not recommended you refinance unless it makes financial sense for you. Here are some reasons to consider refinancing your home or rental property.
Eliminate Private Mortgage Insurance (PMI)
Depending on your housing market, down payments for a new home can be pretty hefty. Some mortgage lenders want you to pay 20 percent of the home value as a down payment.
A large down payment gives a lender assurance that you have skin in the game. You want this house as much as they want to give it to you and you’re willing to prove it with more money down. However, not everyone can afford to put 20 percent down. Lenders will still give you a loan, but they may require you to pay for mortgage insurance too.
Private mortgage insurance (PMI) is a mortgage insurance a lender may require if your down payment is less than 20 percent of your home’s value. Although you pay PMI, its purpose is to protect the lender. PMI does not protect you from foreclosure and if you default on your loan, the lender–not you–get paid.
The cost of PMI varies, but it will always be in addition to any taxes, homeowners insurance, or other fees paid. So, you’ll definitely have a higher monthly mortgage payment with PMI than with a loan without PMI. That’s why some homeowners will refinance as soon as their home value rises giving them an 80/20 debt to equity ratio.
Eliminating a couple of hundred dollars from your mortgage could put more cash in your pocket for other things.
Reduce Your Interest Rate
There are very few people who can purchase a home with cash. I’ve done it once in my life and afterward regretted using my money when I could have gotten a loan and kept my cash.
Nevertheless, when you get a home loan the goal is to get approved for the lowest interest rate.
Your interest rate is based on several factors such as your credit score, down payment, loan term, loan type, and your home’s location, price, and loan amount.
Your financial situation could change from when you first purchase a home and a few years into ownership. If your income, cash flow, and credit score have increased since you bought your home, it might be a great time to refinance and see if you can pay off your home faster or pay less interest. You could refinance to lower your interest rate, which also lowers your monthly payment. A lower interest rate also reduces the amount you pay for your home in the long run.
For example, imagine if your home loan was for $250,000 and you were offered a 3% interest rate or a 5% interest rate. Here is what you’d pay for a 30-year mortgage. The 2% drop in your interest rate saves you over $100,000 over the course of your loan!
The real cost of buying a $250,000 home with a 30-year mortgage
| Interest Rate | Monthly Payment | Interest Paid | Total Amount Paid |
| 3% Interest Rate | $1,054 | $129,444 | $379,444 |
| 5% Interest Rate | $1,342 | $233,139 | $483,139 |
Change Your Loan Term
Also, you could refinance to own your home faster. For example, you could refinance to change your home loan from a 30-year mortgage to a 15-year mortgage. You’d have to discuss the numbers with your lender but in some cases, you can pay a few more hundred dollars a month, but own in less time. Shaving five, ten, or 15 or more years off your mortgage will definitely save you money.
For example, imagine if your home cost $275,000 and you were offered a 3% interest rate. Let’s say you put a down payment of $25,000 so your loan was for $250,000. Here is what you’d pay for a 15 or 30-year mortgage.
The real cost of buying a $250,000 home with a 3% interest rate
| Loan Term | Monthly Payment | Interest Paid | Total Amount Paid |
| 15 Year Mortgage | $1,726 | $60,762 | $310,762 |
| 30 Year Mortgage | $1,054 | $129,444 | $379,444 |
As you can see paying your loan off in 15 years will cost you an extra $700 a month but it saves you almost $70,000. What would you do with that kind of money?
If you have the extra cash flow and you plan to remain in your home, it might be worth it for you to change from a 30-year mortgage to a 15-year mortgage. As you can see in the chart above, a shorter mortgage can save you thousands of dollars in interest.
Another benefit to a shorter loan term is that you own your home faster. For example, if you want to pay off your house before retirement, but you purchase your home later, a 15-year mortgage can get your house paid off before you retire. In retirement, the fewer bills you have the better.
You can also increase your loan term from a 15-year mortgage to a 30-year mortgage if you want to pay a lower monthly payment. The extra cash flow can help you save and invest more each month.
Access Your Home Equity
Equity is the difference in the amount of money you owe on your mortgage and what your home is currently worth. If home values in your area are much higher than when you purchased, it might be a good time to put the cash in your home to good use.
If you owe $250,000 on your mortgage and your home is appraised for $350,000, you have $100,000 in equity. But here’s the catch. In order to access the equity in your home, you must refinance, sell your residence, or get a home equity line of credit (HELOC).
If you’re not ready to move, refinancing is a great way to pull cash out. You can use the cash to make repairs or upgrades to your home, purchase another asset like a rental property or pay for whatever you like.
When you decide to do a cash-out refinance you will repay back the equity you turned into cash on a monthly basis. In this scenario, when you refinance your home loan would be for $350,000, the new value of your home, instead of the $250,000 you originally paid. But look on the bright side you have $100,000 on hand for your needs. When interest rates are very low, you might be able to invest that money and make more than the low interest rate you are paying. Make sure to speak with a financial professional to understand the full terms and conditions and the risks involved.
Reasons Not to Refinance Right Now
Refinancing your home can be financially beneficial. But it’s not free. So, before you do it consider these other costs and hurdles involved.
You Pay Closing Costs (Again)
You’ll pay closing costs anytime you buy or refinance a home loan. Closing costs are fees paid when you ask for a mortgage. They can be as much as three to six percent of your loan amount.
When you buy a home the closing costs are normally paid by the buyer. On the other hand, when you refinance a home the closing costs are all your responsibility once again. However, most lenders will give you the option to roll the closing costs into the new loan.
Therefore, you may not physically pay to refinance your home, but you will pay for it over time. When you refinance and roll the closing costs into the loan, you end up paying interest on the closing cost too. So, that could add up to more money paid in the long run.
Your Credit Score Is Checked
It’s definitely true the better your credit the more lenders want to give you access to more credit. Before you refinance make sure your credit score and debt to income ratio are acceptable for your lenders. You’ll also need to provide the same documents (think pay stubs, proof of cash reserves) you did qualify for the original loan.
If your credit score has significantly dropped or you are in between jobs, it’s not a good time to refinance your loan.
Your Employment Will Be Verified
In the event you need a lower mortgage payment due to financial hardship it’s better to contact your lender and see if your loan can be restructured. If you’ve missed payments, ask if your outstanding payments can be added to the end of the loan.
It’s always better to communicate with your lender than to hide from them. Trust me you don’t want to end up foreclosing when you could have asked for help first.
As you look to refinance, understand your employment situation and how it will impact your loan. If you have gone from a W-2 job to self-employed, making less money than before, or are in between jobs, you may face challenges getting your refinance completed.
Time Required to Shop Rates and Apply
Remember the beginning of my story, my biggest gripe about my first refinance experience was the time it took to shop mortgage rates. Refily can help you shorten the time used to research estimated rates and connect you to potential lenders.
However, the time required to apply and close depends on your lenders’ processing time, staff, and other loans in the queue. The process can take as long as 30 to 45 days or longer. A year ago when I started the process to refinance my home it took six months to complete the process. Crazy I know, but it was at the height of the booming housing market.
The good news is Refily shares an estimated time to close on their site as well. So, you can pick a lender based on the estimated interest rate and loan processing time.
What Is Refily
Refily is a refinance lender comparison marketplace tool. I used it to see what estimated interest rates could be available for my rental property. It took five minutes to use and I didn’t have to give up my social security number or run my credit to get results.
I only had to answer a few questions like where is your home located? What is the current value? What is the remaining balance on the loan? What’s the interest rate? And how much longer did I plan to own it?
I entered my contact info and boom I had a list of potential lenders. On the list, Rocket Mortgage was the best fit given interest rates, but I was able to compare them to others.
Then, about five minutes after I entered my information, Rocket Mortgage called me to chat.
The process couldn’t have been easier and the rate offered was lower than my lender’s initial offer.
Although my husband and I are still going through the refinance process for our second property, by starting our lender comparison process with Refily we shaved hours off the research phase. Plus, Refily connected me to a lender that was not on my radar. If you’re looking to refinance your home consider using Refily to compare estimated lender’s rates too.
Because I strongly believe you should never pay more for something than you have to, I am always considering how to lower my debt and monthly payments. When I refinanced my home our monthly savings went up to $700. I got a lower interest rate, paid off my home equity line of credit, and lowered my monthly mortgage payment.
As my husband and I go through the process of refinancing our rental property, we estimate saving at least $300 a month. Since it’s a rental that means more cash flow for us. In addition, we don’t have to start over with a 30-year mortgage. We can get a mortgage for 20 or 25 years (the amount of time we have left on the loan) and still save money.
Look at your finances and your home value and see if now is a good time for you to refinance. If you’re not sure, contact a mortgage professional, ask questions, and always compare mortgage interest rates.
Refily NMLS# 167283
Acquania Escarne is the creator of The Purpose of Money, a community of women building generational wealth for their families one dollar at a time. As an entrepreneur, real estate investor, and licensed insurance agent, Acquania has always been passionate about financial literacy. On her website, Acquania blogs about ways to help you improve your money habits, create wealth, and invest in real estate. Follow Acquania on social media for daily tips.
Investing means using your money to earn more money. Those designer shoes you buy before your job interview are not an investment. In order for something to count as an investment, you must use capital of some type to purchase an asset that in turn has the ability to earn interest. The shoes may give you confidence and swag to help you secure the job, but the shoes themselves won’t earn you a dime (unless you’re able to somehow sell them for a profit).
There is a debate in the personal finance world about the best time to start investing. The best answer is: when you’re comfortable with it and it’s the best time for you. However, the answer that I give my clients is that if you have any debt on which you’re paying more than 7% interest, using your cash to invest instead of paying off that debt is hustling backwards. Yes, it’s true that the stock market has been performing at a higher rate than 7% lately, but that’s not always the case.
I also recommend that my clients have at least one month of expenses saved into an emergency fund before they start investing at all. This is because regardless of the investment options you try, you should plan to have your money invested for at least one year (otherwise, what you’re doing is called trading and that’s a topic for a different article). If during that time period some sort of financial emergency arises and all of your cash is tied up in investments, you’ll likely be stuck using high-interest debt to pay for that emergency and then you’ll be back to hustling backwards. When it comes to your personal finances, it’s important to operate from a position of power. Having significant high interest debt and little to no cash savings is not a place of power.
While ideally every asset you buy will earn interest or generate income, that is almost never guaranteed. There are myriad ways to invest your money and we are discovering new ways every day. However, the following six investment options are a good place to start your research as you grow your knowledge in this area.
Retirement Accounts
If you work for a company that offers a retirement account, this is where you should start your investment journey. A company-sponsored retirement account is usually referred to as a 401(k), 403(b), 457(b), or some other number-letter combination. You’re able to make tax-deferred contributions into this account – that means you won’t pay taxes until you use the money and you will have less money today that you have to pay taxes on. Once the money is in your account, you’re able to invest in different stocks, bonds, and index funds that contain a mix of both. In some retirement accounts, you’re able to invest in other types of assets as well.
Retirement accounts have a bad reputation as being “too conservative,” but they can actually be a great avenue to build wealth. Not only are you saving money on taxes, but you also have the benefit of automatic monthly savings to help keep you on track towards your wealth building goals. If you’re lucky, your employer may either contribute to this account on your behalf or match at least part of every dollar you contribute. In either of these situations, that means your employer is literally adding free money to an investment account for you.
While I do recommend that everyone take advantage of a retirement account if they’re able to, there are some drawbacks. The most obvious one is that because these accounts are meant to help you build your funds for retirement, there is a penalty if you use the funds before you reach a certain age. At the time of publishing, in order to avoid paying a 10% penalty, you have to leave the funds untouched until you reach age 59.5. That means that it’s important to only invest funds that you can ideally allow to continue growing for several decades. The second potential drawback is that some retirement accounts limit the funds or asset classes that you’re allowed to invest in. That said, if you’re new to investing, you’re likely better off sticking with more traditional index funds or time date funds anyway.
If you’re in the privileged position to earn enough money to meet retirement account contributions or income limits, you are likely not reading this article. However, that is something else to keep in mind. Some people actually have to limit how much money they invest in their retirement accounts because they will hit a maximum threshold.
The final drawback to a company-sponsored retirement fund is that you may be paying an administration fee that is higher than you would pay if you were investing on your own. While the tax savings you earn from this type of account would likely offset any higher fees, it’s important to understand how much you may be paying for this type of investing.
Index Funds / Personal Brokerage Accounts
In order to grow your wealth in the short and midterm, you should be investing outside of your retirement accounts. As I mentioned above, you will have to pay a penalty if you use your retirement funds before you turn 59.5 (in most cases). Therefore, as you save for things like a down payment on your first house, new cars, business capital, or family planning expenses, you will want to use personal brokerage accounts to grow your savings more quickly than you could in a savings account.
A brokerage account is the thing that most people think about when they think of investing. This is an account that you would open with a company like Fidelity, Vanguard, Betterment or Wealthfront. Once you open a brokerage account, you are able to fund the account with money from your regular bank account and then choose individual stocks and bonds, or stock and bond ETFs or Index Funds.
As the header to this topic suggests, I recommend that my clients invest in index funds as they allow my clients to be invested in a highly diversified set of stocks and bonds at a very low cost. They get to take advantage of the changes happening in the stock market without having to spend their time researching companies and making manual changes to their stock portfolios. While it is possible to make smart trades on individual companies for short-term gains, we have yet to see the person who is able to “beat” the market over the long-term. If your goal is to grow your wealth over the long-term (3-30 years), then I highly recommend using index funds to do so.
Passive Business Income
Investing in a business can be a great way to create passive(ish) consistent income over time. Ideally, you would then use at least some of this income to continue consistently investing in one of the other options that I mention in this article. The great thing about investing in a business of your own is that you have more control over the outcome. Investing in the stock market has been consistently positive over time, but you don’t have direct control over the outcome.
If you use your money to create a product or service to sell, you can directly impact the outcome through strong business practices. Additionally, through the power of the Internet, it has become easier than ever to start a viable business with almost no money down. Even if you’re still in the high-interest debt, very small emergency fund phase of your journey, this can be a good place to start investing.
Real Estate
Investing in real estate is not for the faint of heart. That said, everyone needs somewhere to live and they’re not making any more land, so real estate can be a powerful asset to own. When my clients ask me about investing in real estate, I make sure that they’re already taking advantage of their retirement accounts, that they have strong savings in place, and that they have paid off all high-interest debt. I then ask them if they’ve ever considered “house hacking.”
If I had it to do all over again, I would “house hack” my first home purchase by purchasing a 2-4 unit building, living in one unit and renting out the others. This is an excellent way to learn about real estate investing because the purchase process is very similar to purchasing a conventional single-family home. It also allows you to have a place to live while paying for part, if not all, of your mortgage with the rental income you’re earning from the other units.
There are several different ways to invest in real estate and each one can have a completely different impact on your wealth. Some techniques like wholesaling can allow you to earn short-term income while not needing to use so much of your own cash up front. Then, there is house flipping, which may require extensive amounts of cash, but offers the potential for much larger returns. Finally, you may be more interested in continuous long-term earnings and therefore choose to be a landlord to long-term renters. Real estate can be an amazing way to grow your wealth, but I don’t recommend that it be your first way.
Cryptocurrency / NFTs
The newest kids on the block, cryptocurrency and NFTs (non-fungible tokens), are the ultimate in volatility. As these assets continue to become established, it’s hard to know what their value will be at any moment – or if they will even still have value in 20 years! To learn more about what cryptocurrency actually is, I highly recommend reading this definitive article. That said, know that cryptocurrency and NFTs are digital items that exist in the blockchain. That means that they’re built on technology that imbues them with a fingerprint and makes them assets that are meant to be impossible to counterfeit.
There is reason to believe that these types of assets will become more ubiquitous over time, but in the meantime I wouldn’t rely on any specific type of cryptocurrency or individual NFT for long-term wealth. Because of the current volatility of these assets, I recommend that my clients have no more than 5% of their portfolio invested in them. However, if you have already established consistent investments in your retirement and shorter-term investment accounts, have emergency savings and little high interest debt, it doesn’t hurt to have a small percentage of your portfolio invested here.
Art and Other Collectibles
On the other side of the spectrum, art, wine and other tangible collectibles are the oldest types of investments available. While there is certainly value in these types of assets, just like cryptocurrency and NFTs, the value is dependent on the collective consciousness of society to determine the value of any particular item at any particular time. Your Nike Mag Back to the Futures may be worth $40,000 today, but that value could plummet to $0 depending on the fashion of the day. While the Mona Lisa will likely retain its value for centuries to come, not all assets are so lucky.
Also, unlike cryptocurrency and NFTs, because these items exist in the real world instead of on the blockchain, it is possible to counterfeit or destroy them. With specific expertise in certain realms, it may be possible to create short-term income with these types of assets, but I wouldn’t recommend relying on them for long-term wealth. And, just like with crypto, because these types of assets can have volatile value, I only recommend that my clients have a maximum of 5% of their portfolio in something like this.
Ideally, as you build your wealth, you will have a portfolio of different types of assets and asset accounts. Extremely wealthy people safeguard their wealth in tax-advantaged accounts, with insurance and by having diversified assets. You will likely have to start with one type of account and use your growing assets to expand out to other types of accounts over time.
However, when it comes to investing in any of the asset classes I mention above, it’s important to understand exactly what you’re building your wealth for and to have a clear idea of your timeline. Understanding how much money you’re trying to generate and when you’ll need it will make it much easier to understand what type of investment plan you should set up. In order to achieve any goal, it’s important to understand your “why” and that goes for building wealth as well. Ultimately, money is just a tool to be used to help you build your best possible life. If you can clarify what that life should look like, the rest of your decisions become that much easier.
Bevin Morgan is a Financial Trainer at The Financial Gym who has paid off over $200K in debt to become debt free. She is a real estate investor and self-proclaimed personal finance nerd. She specializes in helping Black female entrepreneurs and creators gain confidence in their financial futures with a touch of woo woo. She is on a personal mission to help bridge the racial wealth gap in this country. Black families hold less than 10% the average wealth of white families. Instilling financial confidence in Black women is one small step she’s taking to help change that.
Find her at www.bevinmorgan.me or on Instagram, @bevinmorgan.
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The following interview with Wangene Hall of Global Village Foods was conducted over email and edited for flow and clarity.
Wangene Hall is a multifaceted, multi-talented, brilliant young woman who has found purpose in supporting her parents with their family business Global Village Foods. In this interview, she talks about how Global Village Foods started, what it means to work with family, and the hopes she has for the future for both herself and the company.
Asha Atkins of Wealth Noir (WN): Thanks for spending time with us and allowing us to learn about Global Village Foods and about the work you and your family are doing. Can you share with our readers where the idea for Global Village Foods came from and what type of foods you sell?
Wangene Hall of Global Village Foods: The idea for Global Village Foods came from our ethos and mission: making African-inspired and global flavors that everyone could enjoy. We started the business as Global Village Cuisine in 2015, which encapsulated our desire to bring African heritage and old world cooking techniques into convenient dining options like frozen dinners and to-go snacks. We rebranded in early 2021 so we could better reflect our mission of making food that everyone can enjoy. The word “cuisine” was a helpful starting point, but we got feedback from our customers that it felt a little bit too fancy and not as accessible as we wanted it to be. The word “food” is simple. You eat it everyday and it’s a part of your daily routine. The rebrand to “Global Village Foods” allowed us to convey our mission of making allergy-friendly African food for everyone.
We sell many different products. You can find our line of frozen meals in Whole Foods across New England. These are branded meals with the new packaging we released at the beginning of 2021. You can also find our samosas in co-ops and delis across New England. If you’ve had samosas from an independent co-op in the Northeast, chances are, you’ve had our product. These samosas are often sold in bulk without our branding, but you can also find samosas in single-serve containers that do have our branding. We’ve been doing a lot of exciting work in product innovation, so we’ll also be releasing lots of new offerings in 2022. Be sure to sign-up for our email to be notified when new products are released!
WN: I want to explore the Global Village Foods ethos, this notion that food is for everyone to enjoy. What does sharing food from the Diaspora mean to you and your family?
Wangene Hall of Global Village Foods: Sharing food from the African Diaspora means that we’re bringing authentic recipes that reflect our own cultural history and the rich diversity of flavors, spices and ingredients found across Africa. We focus on a few key regions: we have Kenyan dishes represented with our Swahili Curry Chicken and our Samosa lines; we have Ethiopian dishes; we have Moroccan dishes; and we even have an allergy-friendly version of a traditional West African stew. What this means to us is that we’re making flavors that an American audience may not know about and we’re making them delicious, allergy friendly and easy to enjoy.
Sharing food from the African Diaspora also means being creative and inspired; knowing that authentic recipes from Kenya can be just as powerful as bringing in Southern soul recipes. We see ourselves as part of the conversation around African Diaspora and cooking traditions that Stephen Satterfield started with “High on the Hog.” We can be true to the spirit of these places while reimagining them. Both are authentic as our co-founders, Damaris and Mel Hall, come from Kenya and Memphis, Tennessee, respectively. Recipes, cooking and community allow us a space to imagine what Black community can look like across both African and African- American experiences.
WN: I love that you mentioned Stephen Satterfield. I was introduced to him this year when I watched High on the Hog on Netflix. It is such an incredible series and should be seen by all. I agree that understanding and celebrating those connections through our food is paramount to building community within the Diaspora. I want to talk a little bit about entrepreneurship, as this is a family business. Many entrepreneurs acknowledge that entrepreneurship can be challenging, but your father views entrepreneurship, particularly for Black people, as a means of economic development and liberation. Can you expound on that?
Wangene Hall of Global Village Foods: My father, Mel, from Memphis, Tennessee, is the ultimate entrepreneur. He sees a vision of how the world could be, and from nothing, he’s able to bring new ideas to life. For him, building a business started deep. His own grandfather, and my great-grandfather, started the first Black-owned plumbing company in Memphis. Despite all the hardships endured during the Jim Crow era, he was able to feed his family and inspire lessons on Black entrepreneurship that my father, Mel, teaches to this day. When you’re building a business, you’re building a legacy, too.
WN: Amen to that beautiful notion of building a legacy! I argue that many of our readers have the same goal. They don’t just want financial freedom for themselves, they want it for their families. So, it’s been well over a year since COVID-19 changed the global community. How did the pandemic affect your business last year and what are three things that you did to help sustain it.
Wangene Hall of Global Village Foods: Our business, like many others, got hit really hard by the pandemic. The biggest challenge for us was the loss of foot traffic, because we were primarily a brick and mortar business. Without anyone going into stores to buy the product, our revenue dropped significantly. Very quickly, we had to learn about the e-commerce space, build a website and let our amazing customers know where to find us. That revenue allowed us to survive through the worst of it. Thankfully, in Vermont, we have an incredible program called Vermont Everyone Eats that started in the fall of 2020. Under the program, local Vermont restaurants were paid by state funding to produce meals for the local community that would be distributed to those who were food insecure. One of the requirements of the program was that you had to use 10% local produce, which was easy for us to do as a company that prioritized local sourcing prior to the pandemic. The program has had a major impact as it’s allowed us to continue growing and, most importantly, have a really meaningful impact on our local community by alleviating food insecurity for families around Vermont.
Outside of e-commerce and Everyone Eats, we’ve also worked really hard to pivot our foodservice business (bulk foods that can be served in deli sections of grocery stores, college dining halls or work cafeterias). That business is now catered to single serve, individual portions that allow for anyone looking for a quick lunch or dinner option to enjoy our offerings.
WN: It is incredible that you had access to those resources during this time and that it helped you guys pivot. You all had to be creative and nimble, which is important as business owners. When you think about the next 5-10 years for the business, what growth opportunities do you envision for GVF?
Wangene Hall of Global Village Foods: Over the next 5-10 years, we envision a few exciting things at Global Village Foods. We intend to be a leader in food service, to continue expanding into the grocery store aisle and we expect to keep rolling out new and exciting products. We want to be a family-oriented company that employees are proud to be a part of and we want to continue to be a voice for Black entrepreneurship and community in Vermont.
WN: As a brand that believes in community, how does GVF authentically engage with the community beyond providing this incredible food service?
Wangene Hall of Global Village Foods: Beyond incredible food service, we’re actively engaged in the community by supporting organizations like the Vermont Releaf Collective, a network for BIPOC folks advancing racial equity in Land, Environment, Agriculture, Farming and Foodways. In 2022, we’ll also be unveiling ways that customers can engage with us at our new facility in Quechee, VT.
WN: That’s exciting and I’m sure you’re looking forward to 2022 with all the new stuff you have on the horizon. I want to talk more about this family dynamic and how you all fit within GVF. Your mother is a culinary artist, your father is an entrepreneur. Where does Wangene fit in this business, what are your main responsibilities?
Wangene Hall of Global Village Foods: This one’s easy! At Global Village Foods, I do everything from marketing, to executing strategic initiatives and building the ecosystem around what we do. Basically, over the past few years, I’ve learned to be scrappy and find resources to grow the business according to what it needs right now. That ranges from everything from financing projects to marketing and sales. My own goals are going back for my MBA so I can learn the management skills to be a strong operator and strategic advisor to diverse business owners in the CPG (consumer packaged goods) space. As part of MLT (Management Leadership for Tomorrow) and the Forté Foundation, I’ve already taken strides towards that goal. Long-term, I look forward to coming back to my family business to help us continue to grow.
WN: Can you share with our readers your path to joining the family business and the ways in which you plan to elevate it?
Wangene Hall of Global Village Foods: It was an exciting surprise! I worked in corporate America for five years before joining the family business, and I initially had the goal of being the CMO of a Fortune 500 company. When Covid hit, I realized that I could make a bigger impact and own my outcomes if I joined the family business. In this process, I helped navigate our transition from brick and mortar to e-commerce and omnichannel. I’ve been actively involved in helping us scale growth, and I plan to continue to elevate the business by sharing our story and getting us in front of the customers who have a real need for our products. My focus in business school is learning the skills to help us grow in both foodservice and retail, which I believe will require strategy, operations and finance skills. For me, that’s a huge reason behind why I want to pursue my MBA. No matter what happens next, I’m grateful and deeply honored to continue building on my family’s legacy of Black entrepreneurship.
WN: It has been a pleasure learning about GVF and all that you’re doing in the foodservice space. For our readers who may be interested in trying your delicious meals, where can we find them, in which stores, and where online?
Wangene Hall of Global Village Foods: You can always find us online at globalvillagefoods.com. We’re currently in Whole Foods and natural food co-ops across New England. We’ve got lots of exciting plans to expand in 2022, which means that online ordering is currently unavailable. But that said, you should follow us on Instagram or Facebook to keep up with our latest happenings. We’ll have more exciting news to announce soon about where to find us next!
Thank you again Wangene for sharing the story of Global Village Foods with the Wealth Noir Community. Thanks to you and your parents for sharing food from the African Diaspora in New England and beyond. We’re thrilled for the success you’ve obtained thus far even in the midst of challenges and for what the future holds!
I’m a Caribbean – American writer and Army brat who calls New York home. After graduating from the University of Maryland with an English Literature degree, I worked as a counselor and educator for inner-city youth in D.C. and New York. My experience with young BIPOC’s helped me be a better listener, more empathetic, and attentive, and strengthened my storytelling abilities.
Currently, I work in media and advertising for an ad tech company and am a freelance copywriter and creator/host of the Truthis podcast. I love film, television, and am a Toni Morrison stan. My ultimate goal is to tell honest stories of marginalized people.
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Wed, 24 Nov 2021 03:00:00 -0800 Asha Atkins
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Entrepreneurship
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Helping Black and Brown Creators Monetize Their Content: An Interview with TipSnaps
Helping Black and Brown Creators Monetize Their Content: An Interview with TipSnaps
The following interview with TipSnaps was conducted over email and edited for flow and clarity.
Wealth Noir had the opportunity to talk with Lyonel Douge and Dr. Vic Boddie about their company TipSnaps. These men have one goal in mind—help their people make money from their content creations. Black and Brown people are constantly creating trends, styles, lingo etc. Essentially, they define the culture but are often ignored and rarely ever credited for it. Many of you may be familiar with the story of Jimmy Fallon having to right a wrong and bring on the TikTok dancers responsible for all the viral dance moves we see, after he gave a white TikTok performer a platform to showcase moves that were created by young Black creatives. Examples like this are why both men are passionate about supporting Black and Brown creatives and making sure that they not only get the credit they deserve but the money, too!
Asha Atkins of Wealth Noir (WN): This is a very special interview for me for many reasons, mainly because we’ve known each other forever. Please share with the Wealth Noir community who you both are and your professional backgrounds.
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: Thanks, Asha! You all are doing amazing work at Wealth Noir and we’re very excited to discuss TipSnaps with you. Background I’m Lyonel Dougé, CEO/Founder of TipSnaps. I’m a Computer Engineer by training and I’ve worked at several Fortune 500 companies, such as Johnson & Johnson, Sony, ESPN and Viacom. Dr. Vic Boddie joined us as Co-Founder/COO in 2020, and he brings a wealth of knowledge and experiences from a leadership and policy standpoint, working for years in a major government agency. So we both have a lot of previous experience that positions us well to build tech and lead dynamic and successful products and teams.
Asha Atkins of Wealth Noir (WN): I love that you both made the conscious choice to combine your skill sets to make this company thrive. Ok, so let’s talk about TipSnaps. What is TipSnaps, what inspired you to create it, and how did it move from being an idea to an actual product?
Lyonel Douge, CEO of TipSnaps: TipSnaps started back in 2016. I was working full time at Johnson & Johnson at the time building sites like johnsonsbaby.com or neutrogena.com. During lunch and bathroom breaks, I did what most people do — scrolled through Instagram. It was then I noticed something incredible: everyday people like hair and beauty experts, bartenders, fitness trainers, grew from zero to 100k followers on Instagram in 6-12 months time thanks to how deeply fans loved and supported their favorite creators. Sometime in 2016, it hit me. “People are going to pay for social media very soon”. Back in 2016, I KNEW that social media HAD to move in this direction. Premium content / exclusive content. ANYONE with creativity and an audience will and SHOULD be able to monetize their content and fanbase. Anywhere in the world. I realized how huge of an opportunity this was. I realized I could personally build a solid v1 of a platform myself. So I decided to dedicate nights and weekends to it.
Trouble securing capital was an understatement. I was screaming this at the top of my lungs to investors in 2018 that I bootstrapped to 100k users and $600k revenue. I got in front of First Round and Quake Capital and a few others in 2018, they were intrigued by the traction. But after my pitch, I was told “Influencer marketing is dead.” Also, generally, I don’t think they believed I accomplished what I was saying. I honestly think a few investors thought I was lying. Coming from a Blue collar background, first person in all extended family with an engineering degree working for big companies. I didn’t have a network of people who could help me figure out how to raise capital with silicon valley investors. I had no one to do a “friends and family” round. I was the person in my family people looked to for money, not the other way around. Even at JNJ, most folks are locked into their career path, not entrepreneurship. So this was a completely NEW endeavor. Luckily, there are way more resources online now than ever before. So, I read and read and read until I felt confident enough.
I understood software and what communities NEEDED. This is how we grew so fast. However, it’s undeniable that in today’s world, you can be first to market but to truly scale, you need capital and access to industry insiders. In whatever sector. It’s very rare for an outsider to just make huge disruptive waves without access to capital or connections, both of which I tried hard to secure. But my skin tone didn’t help me. People were intrigued by the numbers but “never convinced.”
I built TipSnaps nights and weekends while holding my full time job at Johnson & Johnson as Product Manager. We launched in March of 2017. I built the platform myself, I put a lot of effort into ensuring payment processing and KYC (know your customer), age verification, and compliance features were readily in place. For user acquisition, I literally started DM’ing people on Instagram who had a lot of followers. (LOL) Telling them, “Hey you could charge your fans for content. Create a page and just add the link in your bio.” Convincing one creator at a time. By April 2017, I had convinced one big creator with 1M followers to join TipSnaps. Once she started promoting her TipSnaps page, this led to a rapid network effect. It went viral in certain communities of content creators, specifically bartenders and fitness trainers. TipSnaps grew so rapidly bootstrapped because I recognized a gap/need for the internet that people were looking for but didn’t know they needed. This seemed obvious to me, but, looking back, I realize this hockey stick growth is specifically what VCs and investors want to invest in. However, they don’t typically trust a black man to execute it.
Asha Atkins of Wealth Noir (WN): How has being a black founder and the son of immigrants helped fuel your passion for entrepreneurship?
Lyonel Douge, CEO of TipSnaps: My family immigrated from Haiti in the 60s/70s. My parents moved to California in the 80s and they bought a home in the only place they could afford, San Bernardino, California (by some rankings the 3rd most dangerous city in the entire country). I’m not proud of this, I say this to illustrate I was raised around people who generally saw success to mean graduating high school and not ending up dead or in jail. My dad worked as a mechanic but also opened his own used car sales business. It was never financially successful due to the grind of opening a small business, but also many of the same roadblocks I’m going through now with TipSnaps, just at a different level. He raised us on a salary of $25-30k/year and refused welfare but we never felt poor.
My parents, as many immigrant parents, instilled the value of education and hard work. I went the path of many like me, first generation Americans. I studied hard, got good grades / SAT scores and got an academic scholarship to the University of Pittsburgh. Moving from California to Pittsburgh was an experience all its own, but it opened my mind and prepared me for the next steps. After graduating from Pitt with a degree in Computer Engineering, I did the natural next step, got a job. I worked for a couple smaller media companies, which ultimately led to a move to NYC in 2008, and felt like I hit the pinnacle when I landed a job with Sony Music at 23 as a software engineer. The same went on for several years, working for other Fortune 500 companies such as Viacom, ESPN, the NFL, and, most recently, Johnson & Johnson. What I realized along the way was that I had innovative ideas and concepts that I pitched to leadership but was never taken seriously. I couldn’t really actually accomplish anything innovative due to the bureaucratic nature of the huge organizations. I’ve always been treated as the token black guy who seems smart enough to be there but not smart enough to lead and be let into the inner sanctum.
There’s a quote from Shervin Pishevar (founder of Virgin Hyperloop and tech investor), “When you are denied access, build your own institution.” These types of messages have always resonated with me. So I’ve built this passion for entrepreneurship over many years due to seeing innovation happen around me but never being part of it. Having the conviction and ability to execute myself.
Asha Atkins of Wealth Noir (WN): I know a few talented people who are interested in creating content with the hopes of monetizing their creations. How do you explain to a potential user why TipSnaps is the right platform for them? What separates you from the competition?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: At TipSnaps, we firmly believe that everyone is a Creator and therefore, everyone should have the ability to monetize any content. More importantly, there are so many talented individuals currently using platforms like YouTube, IG, Facebook, and TikTok to share their creative content but making no money; even the ones with massive followings and watch hours are only getting sprinkled the crumbs of the Ad-revenue that’s being generated from their great content. What we’ve seen at TipSnaps is that when a Creator uses their IG, TikTok, and other platforms as tools to drive their fan bases to their TipSnaps accounts, they typically can successfully make money. For example, if a Creator has a following of 100K on Instagram, and they leverage that following well, at bare minimum 1% of that following will subscribe to that creator’s TipSnaps page at $10 per month, that creator has the potential to make $10K per month. We’ve seen it happen, and so we’re excited for this opportunity that creators have to make money, and even more so excited for Black and Brown creators because they drive so much content on social media, but aren’t currently being compensated at all for that. This needs to change, they need to be making money right now and TipSnaps is the home for those creators!
Asha Atkins of Wealth Noir (WN): You two make an excellent point. Black and Brown creators are creating incredible content and yet are not getting the big sponsorship deals like their white counterparts. We are the culture drivers and yet are constantly left behind. I want to talk more about the logistics behind building an app. I’m sure many of our readers are or have considered building a platform or an app, but this is no easy feat. What are some things that you did to help you get TipSnaps to the place it is now?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: Well to start off, and this isn’t being braggadocios, we are experts. We have computer science / software engineering backgrounds and also have worked for several fortune 500 companies building websites and software for over a decade, companies like Sony Music, Viacom and Johnson & Johnson. You can absolutely build an app without having to do the same level of schooling and experience, however Tipsnaps really is more than an app. It’s a tech ecosystem combining social media, fintech (automated payouts and fraud management), compliance AI and moderation.
We took our experience working in big tech and applied it to TipSnaps. We worked really hard to ensure the platform was scalable globally. Based on all of the functionalities, integration, and AI capabilities, the average company would need to invest $3-$5M just to build an equivalent platform. We worked tirelessly for over four years to get to where we are today.
What I would say to entrepreneurs and young people with ambition in tech is to take some high level software engineering courses. Codeacadamy and Coursera offer a lot of great free resources.
Asha Atkins of Wealth Noir (WN): As Black men in this tech and data driven industry, what are some of the challenges or obstacles you faced, such as getting angel investors and venture capitalists to literally and figuratively buy into TipSnaps?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: There are definitely many obstacles for Black Founders in tech from a funding perspective, that’s well documented. But what we’ve discovered that’s even more troubling is that the systemic issues of inequities in funding for Black Founders is much deeper and pervasive than we could’ve imagined. We typically have to show much more robust data and metrics to support our products / thesis than our white counterparts. Often with no product and no platform at all, our white counterparts get better funding terms than we do. We also typically do not have the same (or as impactful) institutional networks that our counterparts do, thus it’s even more of a struggle to not only get meetings with investors, but it’s even more difficult to convince them that we’re actually capable of growing a phenomenal business. There is just much less benefit of the doubt, and we have little margin for error. Definitely tough sledding for Black investors, but compared to what our ancestors went through, it’s a drop in the bucket and a challenge we’re willing to face head on.
Asha Atkins of Wealth Noir (WN): While your initial clients are Black and Brown creators, you make it very clear that TipSnaps is a home where Everyone is a creator. Can you explain why that is? What do you mean you say ‘Everyone’ and why is that your tagline?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: We feel that by explicitly saying we want to be the home for Black and Brown creators, it means that we’re making it clear that we’re a platform that’s striving to make the creator economy more inclusive and diverse. What we see now is other platforms acting like they’re supportive of all creators but their internal algorithms tell a different story. They don’t highlight creators of color, shut out creativity, and they will not highlight creators that don’t fit the ‘description’ of what they want their platform to represent. We DO NOT do this at TipSnaps. We want to create a safe and equitable space for all creators that are creating amazing content and driving culture, regardless of your race, socioeconomic status, sexual orientation, etc. We want you to feel welcomed and that you have a home. It’s very important to us, and we work very hard to build our brand and platform that looks like the diversity of our world and gives ANY and everyone the opportunity to make money and change their lives.
Asha Atkins of Wealth Noir (WN): Thank you for sharing that and for being so intentional about your inclusivity. How do you stay ahead of the competition and also stay up to date with the latest in this creator economy industry?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: As we stated above, as Black founders we can’t afford to get behind. We can’t afford to miss a beat. Therefore, we’re always in innovation mode, even as we’re driving users to our platform and educating them on the best methods to make money. But the one valuable position that we have over our competitors in this space is the fact that we know the community. Silicon valley led start-ups in the creator economy have a very ‘sophisticated’ and theoretical view of this economy. However, they’re not at the ground level like us, talking to creators in the streets, across multiple niches – engaging them directly to understand their needs and what will make their lives better. This is what we do better than anyone else, connect with the people. This is easy for us because we are them, we’re from the same communities and as Black Founders we speak their language. We wouldn’t have 440K registered users, and paid out over $2.2M to creators, if our message around equity and entrepreneurship wasn’t resonating with Creators in our community.
Asha Atkins of Wealth Noir (WN): Beyond creating a home for creators, what do you hope TipSnaps will do for Black and Brown creators?
Lyonel Douge, CEO and Dr. Vic Boddie, COO of TipSnaps: Make them some money, plain and simple! Black and Brown people are literally the primary drivers of all social media. From a cultural standpoint, we drive so much creativity and produce massive amounts of content and up to this point, Facebook, YouTube, IG and TikTok are making ALL of the money from this. And what’s even more upsetting is the fact that none of these platforms are owned by Black and Brown people, nor are we represented on any of their boards of directors. So all of the wealth that’s generated from OUR creativity is going right back to folks who don’t look like us or care about us. And our argument is that if they did care, they would make an effort to change this dynamic but they’re not. They’d prefer to throw us crumbs in the hopes of pacifying our voices, keeping us quiet so we’ll forget that we’re being exploited. But that time is over. Platforms like TipSnaps are here to support these creators. The time of them exploiting our creativity has come to an end, and TipSnaps will lead heavily in this space!
Thank you both again for spending time with us and sharing your immense passion to help shape and change the culture for Black and Brown creators. You both have taken such an incredible product and are working to change the game for Black and Brown creators, which is inspiring and commendable. If you’re a content creator and want to join the creator revolution then check out TipSnaps at tipsnaps.com! And don’t forget to follow them on Twitter and Instagram @tipsnaps.
I’m a Caribbean – American writer and Army brat who calls New York home. After graduating from the University of Maryland with an English Literature degree, I worked as a counselor and educator for inner-city youth in D.C. and New York. My experience with young BIPOC’s helped me be a better listener, more empathetic, and attentive, and strengthened my storytelling abilities.
Currently, I work in media and advertising for an ad tech company and am a freelance copywriter and creator/host of the Truthis podcast. I love film, television, and am a Toni Morrison stan. My ultimate goal is to tell honest stories of marginalized people.
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Wed, 27 Oct 2021 03:00:00 -0700 Asha Atkins
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Helping Black and Brown Creators Monetize Their Content: An Interview with TipSnaps
Entrepreneurship
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The Journey
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Through my Financial Coaching practice with The Financial Gym, I’ve been able to work with hundreds of people from all different backgrounds. I have in-depth conversations with clients to learn their financial histories and future goals while creating comprehensive financial plans to help them achieve those goals. Through this work, I have started to notice a pattern. While all of my clients deal with the stress of paying off debt, updating their spending habits, and learning how best to save, I’ve noticed my Black clients have a particular sense of urgency. At some point with almost all of my Black clients, I end up having a conversation along the lines of, “Yeah, but what do I invest in to get this money faster?” or “Well, we don’t even be livin’ that long anyway, so why am I saving so much for the long-term?”
I don’t blame my clients for thinking this way. Considering that Black people hold about 10% the wealth as our white counterparts, it makes sense that we would feel like we’re playing financial catch up. And, when the fact is our life expectancy is nearly six years shorter than white people— it only makes sense to want to make hay while the sun shines. That said, there are proven steps to building wealth within our economic system. However, these methods are not flashy and typically don’t lead to getting fast money. But they’re simple and easy to implement, which means anyone can do them. If you’re someone who is serious about improving your personal finances then commit to following these eight steps. I promise you can’t go wrong.
1. Take a step back to figure out what you need from life.
Every successful life strategy starts with understanding your “why”. When it comes to your finances, that can mean many different things. Maybe that means being able to live on your own in a big city, having the financial stability to start a business, or being able to give your kids the opportunities you never had.
Whatever it is that you need to make money for, it’s something beyond “not living paycheck to paycheck” and “having financial peace of mind.” Those two phrases are the results of getting your finances together, but they don’t speak to the underlying reason for your money. It’s crucial to understand what’s truly important in your life and to know that what you discover may have nothing to do with what your friends, family or society says is important.
I have a client who realized she was trying to force her life to work in an expensive city. She was pushing her business to make as much money as possible while having no time for the luxury and leisure she craved. After finally taking a much-needed vacation, she realized she could conduct her business as a digital nomad. She sold her expensive possessions and now lives an emotionally richer but less expensive life. By getting clear on what is truly important for you, it will become easier to see the myriad of options that are available.
2. Identify your spending triggers.
Now that you know WHY you need money, it’s time to be brave and see where your money actually goes. Look at the last 90 days of your checking and credit card statements to identify patterns.
- Look for the category where you spend the most money.
- Identify the business or services you repeatedly spend money on.
- Identify the expenses that are overpriced.
- Identify where you spend on services that you don’t realize you’ve been spending money on.
Determine what is driving your behavior to spend. Is it convenience, status, loneliness, boredom, something else? In my case, I noticed that I had spent money at Kroger over 20 times in ONE MONTH! In my defense, there is a Kroger literally a block from my house and we all have to eat right!? Admittedly, I was being lazy. I wasn’t planning my meals and creating a shopping list ahead of time. I had gotten into a pattern of making one-off trips that were leading me to overspend on groceries big time. Fun fact: food is one of the biggest spending categories.
Once I figured out my spending trigger, I was able to create a strategy for cutting back on the expenses. In my case, it meant challenging myself to plan for one full week of meals, shopping only on Sunday, and getting creative with ingredients if I forgot to pick something up that week. Regardless of your spending trigger, you can find a more efficient way to spend in that category. Maybe it’s planning ahead like me. Maybe it’s disconnecting your credit card from the source (this is especially effective for places like Amazon). It could mean cancelling a service altogether or even avoiding a specific route to work or walking down a particular street.
3. Expand your income options.
Unfortunately, it’s not enough to have one source of income these days. At any point, one or more of our income streams can dissolve completely, but that won’t stop the bills from coming. For extra security, it’s important to develop additional streams of income. This can mean anything from taking on a second, part-time job to investing in dividend stocks (only after you’ve completed items 4, 5 and 6 on this list).
These days, starting an online business is one of the most reliable ways to create passive income and can also come with tax benefits and additional opportunities to invest for your retirement in a tax-advantaged way. Just be sure to keep your business and personal finances separate so you don’t end up accidentally spending your grocery money on business expenses. Also, get realistic about how much you can earn in the business compared to how much you’re spending to keep it afloat so you don’t end up with an expensive hobby.
4. Automate your savings.
By addressing your top one or two spending triggers, you will create the surplus you need to start saving consistently without throwing off your budget or getting into trouble with over drafting. In fact, getting this step right is the heart of building wealth. What it all comes down to is creating a cash surplus by either spending less or earning more and then saving / investing the difference.
To get started, determine an amount of money you feel comfortable automatically saving each paycheck. Even if it’s just $20, going through the trouble of creating this habit will make a HUGE difference. Next, open a high-yield savings account and have money direct-deposited from your paycheck or auto-drafted out of your checking account each pay period. You want this process to feel out-of-sight and out-of-mind so you will never miss the money.
5. Prioritize your emergency fund.
You may be tempted to start investing any extra money you come up with, but if you don’t have anything saved for emergencies, you’re frankly not ready for that step. Your emergency fund is the foundation of your financial health and future wealth. Starting to invest before you’ve saved anything is like trying to run a 100-meter dash before you’ve stretched. You might start off fast, but if you pull a muscle right before you cross the finish line, you’re still going to lose the race.
I recommend that most of my clients have at least six months of expenses saved, but I recommend nine months for those who are self-employed. This usually equates to tens of thousands of dollars, which might feel like an extravagant amount of money to have sitting in a savings account that only earns .5 – 1% interest. I get it. But here’s the thing; life is extremely unpredictable. You never know when you might have to replace your car, suddenly fly to take care of a family member, or search for a new job because a global pandemic made yours unviable. As our world becomes more and more unpredictable, it becomes more crucial to have predictable funds to fall back on.
6. Stop paying money to spend money.
The other most crucial step before starting your investment journey is paying down high-interest debt. If you are paying more than 7% interest for any debt while actively investing in the stock market, you are hustling backwards. Over the long-term, the stock market has created a return of about 7% for the last 200+ years, so getting rid of debt where you’re paying interest higher than that is better than beating the stock market.
First, figure out your credit card or loan that has the highest interest rate and start paying as much extra toward it that you can consistently afford. Even $10 above the minimum payment will help you start saving instantly. Be sure to automate this process to make it as easy as possible. Once you’ve paid the first card or loan, roll over the full extra payment to the next highest interest card or loan. Keep doing this until all of your high-interest debt is paid off. Credit can be a powerful wealth building tool, but only if you’re using it in a way where you’re not making hefty extra payments.
7. Think about “future you.”
After you’ve paid off your high-interest debt and saved at least one month’s worth of expenses, it’s time to start thinking about your future. Because you likely won’t be earning income at some point in your later years, you will need to have a lot saved to be sure you can pay your bills. Unfortunately, the current working generation can’t rely on social security being abundant or even available, so it’s imperative that you start saving as soon as possible.
The sooner you start saving, the less you need to put aside each month to reach your retirement goal. To find out how much you need to save each month, calculate your current total expenses for the month. Multiply that by 300 – the F.I.R.E. multiplier (4% withdrawal rate times 12 months). Enter this number into a retirement calculator that assumes you will be investing in an account that will earn you about 7% interest on average. Start automatically and consistently investing that amount of money into a highly diversified, low cost fund.
Here are the steps I recommend for building your retirement savings:
- Invest in your company’s 401(k) up to your employer match (if you have one).
- Invest the maximum $6,000 per year into a Roth IRA.
- Invest the maximum $3,600 allowed into an HSA (if you have one).
- Start a business that allows you to invest in a self-employed retirement plan.
- Invest in a taxable investment account if you still need to save more toward your retirement.
8. Do all of the other things next.
Once you have established these pillars of financial health:
- Automated your savings.
- Built your emergency fund.
- Decreased your high-interest debt.
- Automated your retirement savings.
You are ready to do all of the other things. We tend to want to rush to the big money millions without putting our financial foundation in place first, but that’s a mistake. Take the time to build a strong financial foundation so you can continue to build the rest of your wealth as large and elaborately as you like.
Once you have established yourself financially, you’ll be in a place to more quickly and efficiently do things like: buy a home, invest in unique assets and business opportunities, start higher risk businesses that require more up front capital, and save for future generations.
For most millionaires, building wealth is a slow and boring process. The reason that we mostly hear wealth building stories about genius entrepreneurs and amazing stock market picks is because those are great stories. There is frankly nothing exciting about opening a high-yield savings account and consistently saving into a tax-advantaged retirement fund. However, that doesn’t change the fact that these are great ways to manage your money.
Yes, it is absolutely possible to earn high returns on speculative investments like cryptocurrency and forex and anything else you’ve seen pitched on Instagram. However, the operative word here is speculative. None of these investments come with a guarantee and if you don’t have the money to lose, these are not investments you’re ready to take on.
While the world is changing quickly, when it comes to building wealth it’s the tried and true path that I see working most often. Good luck on your journey!
Bevin Morgan is a Financial Trainer at The Financial Gym who has paid off over $200K in debt to become debt free. She is a real estate investor and self-proclaimed personal finance nerd. She specializes in helping Black female entrepreneurs and creators gain confidence in their financial futures with a touch of woo woo. She is on a personal mission to help bridge the racial wealth gap in this country. Black families hold less than 10% the average wealth of white families. Instilling financial confidence in Black women is one small step she’s taking to help change that.
Find her at www.bevinmorgan.me or on Instagram, @bevinmorgan.
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