Money Coach Shares How She Went From $70k In Debt To A Net Worth Of $200K In 5 Years Even Though She Was Living Paycheck To Paycheck
Her biggest piece of advice? "You still have time! But ya gotta get started."
Julia Zavalishina | Shutterstock When it comes to paying down debt and getting to financial security, it often seems like an impossible task, especially when you're someone who lives paycheck to paycheck. Money expert Chloé Daniels, however, has done it, and she's on a mission to let people know it's possible.
The money coach went from $70k in debt to a net worth of $200k in just five years — and says you can too.
If you wanted to distill Daniels' view of finances, the caption on one of her videos would be a great place to start: When it comes to financial security, "you still have time! But ya gotta get started" — even if you're already in your 40s and long past the time when you "should" have begun the journey.
The money coach says financial success is attainable even if you're living paycheck to paycheck like she used to be.
Daniels acknowledged that many people feel hopeless about their finances for a reason. But she said it all starts with "knowing where your money is going" every month — and getting to the bottom of this is always revealing.
She said that combing through your spending always reveals areas where you can cut back — and even if you're pretty strapped and that excess is minimal, it's something to start with.
"I would have told you at the time that I thought I knew where my money was going," she said of her own experience. She went from thinking her rent and student loans were simply too expensive to realizing she was actually spending tons of money on bars and restaurants each month.
"I have done this with hundreds of people," she said in another video, "we've literally gone through and organized their money and where they spent their money the last 30 days. And every single single time, everyone is shocked."
The money coach laid out a five-step process to evaluate your finances and begin growing your money.
So, what do you actually need to do to start moving forward? Before you ask — no, Daniels doesn't even own real estate, so if you don't either, don't worry. Daniels' method comprises five steps, the first of which is the one above.
1. Track your spending for a month to see where your money is going.
"So many people need to do this, but they don't want to," she said. But we need to do it anyway. Even two weeks of documentation is likely to leave you "pretty surprised," she said.
2. Make a "zero-based budget."
"Zero-based budgeting" is a method based on bringing your account balance to zero at the end of the month — "you're assigning every dollar of your paycheck a job," Daniels explained.
This means treating extra debt payments, investing, or whatever your goals are as if they are bills, just like your utilities, groceries, and everything else. "Most people do the opposite," Daniels explained. "They just spend, and then whatever is leftover, they save, put on debt, or invest." This one switch was "huge" for her own success.
3. Lower your cost of living and raise your income by however much you can.
As far as lowering your cost of living, combing through your spending to find that little bit (or big bit) of money you're needlessly spending each month covers this base. But raising your income too is essential, whether via a better job, raise or promotion, or taking on a couple of "gig economy" or "side hustle" hours each week temporarily until you meet your goal.
And if you get lucky and get a raise, don't think you slag off on lowering your cost of living — studies have repeatedly shown that pretty much any time we get a raise, we make up for it by adjusting our spending upward, which is known as "lifestyle inflation." So stay on top of that!
4. Learn to say 'no.'
Daniels said that when she first started out, "I was a super social person, constantly saying yes to, like, literally everything that my friends invited me to, even if I didn't wanna go." But that added up really, really fast. No one's saying you need to be a recluse — it's just about priorities. Daniels said to ask yourself, "What do I think is reasonable? What is a reasonable amount of going out that I can still enjoy my life but really make some progress on these financial goals?"
5. Get clear on your motivation for changing your finances.
And speaking of priorities, "you have to get really, really, really clear on why you're doing this," she said. "It's not like saving money and saying no to things is always a good time, so you have to know what you're actually working towards."
She said that most people haven't actually thought this through. Their motivator is simply, "I want to pay this bill." But you need more than that. "You gotta have a dream that excites you and keeps you going." That, in the end, is what makes the inherent sacrifices involved worth it.
John Sundholm is a writer, editor, and video personality with 20 years of experience in media and entertainment. He covers culture, mental health, and human interest topics.