Naseema Went Bankrupt at 25, Became a Single Mom at 30, and Built $1.3M by 45

0:00Mindy Jensen:Today's guest is Naseema McElroy. In the last 20 years, she has gone through a bankruptcy, a divorce, another breakup, and now has three kids as a single mom, yet still managed to become a millionaire by age 45. We are going to be hearing her actual numbers and how she's built this impressive portfolio.

0:22Mindy Jensen:Hello, hello, hello, and welcome to the BiggerPocketsMoney podcast. My name is Mindy Jensen, and with me as always is my loves a money story with many twists and turns co-host, Scott Trench. Thanks, Mindy. This is definitely an up and down story here. And wow, the resilience and the foundation that Nasima brings are really what saved her financial story here. And it's incredibly impressive and incredibly powerful. We're also going to get into it much later in the episode in detail, but we're going to be talking about how Nasima paid off$1 million in debt. That debt consisted of a mortgage, student loans, car payments, and expenses, all resulting from her divorce.

0:57Nasima is the founder of Financially Intentional. She is a labor and delivery nurse and the author of the book, Smart Money. We are so excited to be joined by you today. Welcome to the BiggerPockets Money podcast. Thank you for having me. Let's get some background here to set the stage. Could you tell us where your journey with money begins and set the stage for helping us kind of figure out the big catalysts in your journey? I mean, I guess my formal money story starts kind of in 2015, being a single mom, kind of owning this McMansion with just me and my baby and like earning a lot of money for a long time, but feeling really, really poor.

1:37and just like, well, what does it take to really feel wealthy and really feeling like, man, like the only people I really see that are wealthy are people who were born into it. People that don't look like me are people that are scammers. Where is my place in this story and trying to navigate that? So yeah, I started on this journey of learning about finances, which I thought was going to be like this PhD level intensive kind of thing to understand my finances. And it set me on a path to creating this brand and building wealth for myself and my daughters. And it's been an incredible journey. Let's zoom in on that 2015 start here.

2:19How did you arrive in this position as a single mom? Help us understand what Mixed Mansion looks like and what your income and expense profile look like at that point. Yeah. So it was a 4 ,000 square foot, five bedrooms, five and a half bath house in Northern California. So the house at that time, you know, we were coming off of kind of like the housing market decline. So it wasn't super expensive by California standards, but probably by every other standard. So it was about a$630 ,000 house. At that time I was making about$200 ,000 a year as a labor and delivery nurse. I remember I had an FHA loan, so I think my mortgage was like$4 ,000 with hella high PMI or MIP that I remember at that time.

3:06But I also had$200 ,000 in student loans where my minimum payments were$1 ,900 a month. And just like your normal everyday debt, I took some money from my 403B to put down money on my house. And so paying that back, normal stuff. Did you say you had a$200 ,000 income as labor and delivery nurse? Yeah. I think that's something that people need to wrap their heads around with the Bay Area, right? Because people think, oh, that job probably is$110 ,000 in many other metros around the country, but everything's more expensive, income and salaries and taxes and all those other things in California broadly and the Bay Area specifically.

3:47We've seen how that plays out in some of the data sets that we've been working with here. Where's that going, right? You have$200 ,000 coming in. How much feels left over at the end of the month, given the$200 ,000 in student loans, the$600 ,000 mortgage with$4 ,000 payment? Where does that go? I did not know initially. I just knew that every month I did not have any savings. I just felt really, really broke. I think where a lot of people are is that we simply do not really sit down and understand the real numbers of what's coming in and going out every month. And so that was like one of my biggest lessons, right?

4:24It was like, I thought I wasn't wealthy because I didn't know how to invest. Cause like this investing had to be like this crazy thing, like on trading places where you're like on the floor of the stock market and you got to know how much pork bellies are and all this kind of stuff. So I thought that's what it was, but it was really me not understanding what was going on with my money and not being in the driver's seat of that. And so like, I could not tell you honestly where my money was going. And it wasn't, like I said, it was on normal things. It was on housing. It was on the cars. It was on, you know, the things I was supposed to have because, you know, I was well off.

5:03And I do want to make a caveat. So$200 ,000 in the Bay Area as a labor and delivery nurse is not abnormal. But at that time I was working two jobs. So I had like a part-time job as well as like a full-time job, which I was working like five days a week still. So, but I just want to preface that so people will be like, oh my God, like, is that how much nurses make? Yes, you can make that much, but it just depends on how much you work. I imagine that is five days a week and more than 40 hours because some of those shifts can be longer, right? It's like a little over 40 hours. I'll do like two 12s and at two eights or something like that.

5:37So it's like 50 hours maybe. And so what was the catalyst here? So that's the, we set the stage, here's the position that we're in. What changes and begins to shape your trajectory going forward? Really, it was just like, I, like most moms are like, if I don't do better for myself, I got to do better for this baby I have. If something were to happen to me, I need to know that my daughter would be cool. And so I started off and just like, okay, well, I got two master's degrees. I'm not dumb. Like I know how to study things. So I'm going to put the same level of intentionality into learning about my finances and learning about as I've used for my other degrees.

6:16And so I have an hour commute to work. Every minute of that is going to be spent listening to podcasts and audio books and reading and doing all of the things to change my circle of influence to now normalize those messages around wealth. Yeah, I just started learning and implementing along the way.

6:35Mindy Jensen:What were some of the changes that you made? really learning how to budget and paying myself first and understanding finally what that meant. I've heard it my whole life, but what does that mean in application? Making sure that I had a goal. Initially, my goal was just, you know what? I'm probably behind because I got hella dead. So let me focus on paying off that debt and setting a number and being like, hey, if I want to be debt-free by this time, this is how much money I need to be putting towards my debt. And like I said, I started at like having zero savings, nothing put aside to being at point where I was consistently putting like$4 ,000 a month towards my debt, just because I flipped that relationship with my money where I prioritize my debt and then everything else just fell in line.

7:24Mindy Jensen:What were some of the things that you had to give up in order to put that$4 ,000 towards your debt every month? Honestly, nothing. It was really just a shift and people think like I worked more or I cut down. I didn't. My lifestyle in itself did not change. I just had to get intentional. And it was also a very challenging time in my life where I couldn't work more. I had gotten married. Then my marriage turned really, really abusive. And I could not work because I had to stay home with my daughter. I couldn't work extra. So a lot of people were just like, you just work more and paid off your debt.

8:00I did not. I just was really, really intentional about every single dollar that came in. How long did it take you to ramp from nothing to that$4 ,000? And how long did it take you to pay off the debt? So it was only a couple of months once I finally figured out budgeting. And I started using zero-based budgeting where I was given every single one of my dollars in assignment. But yeah, once I got really intentional, it took a couple of months to ramp up to getting good with that system. And then after that, in under three years, I was able to pay off nearly a million dollars in debt.

8:34Mindy Jensen:When you're ready to start your business, Northwest Registered Agent helps you do more than just file paperwork. You get all the tools to build a real business identity from day one, a business address, website, phone number, operating agreement, free guides, and more at no extra cost. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They are the largest registered agent and LLC service in the U.S. with over 1 ,500 corporate guides. These are real people who know your local laws and can help you in your business every step of the way.

9:08Mindy Jensen:With Northwest, your business is set up to stand on its own from day one. That means your home address, personal email, and phone number stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com slash money free and start using free resources to build something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com slash moneyfree. If you've been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you'd pay for.

9:44That friction is exactly why so many people who should have coverage don't. Here's what I believe. Most BP money listeners need term life, and the right move is to build a ladder. A few term policies of different lengths stack together so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent or you get closer to hitting your financial independence number. The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100 % online. Same day coverage, no medical exam. You just answer a few health questions online.

10:15Up to$3 million in coverage, some policies as low as$30 a month. So building a two or three layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com slash bpmoney. That is E-T-H-O-S dot com slash bpmoney. Application times may vary and rates may vary. When's the last time you enjoyed checking your finances? Well, Monarch is trying to change that. Open it up and in a couple of minutes, you know exactly where you stand with your spending, your goals, your net worth, your investments, everything all in one place.

10:49And it goes wherever you go. Quick check in on your phone between meetings or check the bigger picture on your laptop on Sunday night. Everything syncs, everything refreshes whenever you want. Use the code pockets at monarch.com to get your first year of Monarch Core half off at just$50. That's 50 % off your first year at monarch.com with the code POCKETS. You just mentioned that you were paying off about$4 ,000 a month towards your debt. It sounds like you made some other really big capital allocation moves, if you will, to knock out a million dollars in debt, in addition to, of course, this$4 ,000 a month that's going towards it.

11:26Can you tell us about what those big moves were? Because the house was connected to a lot of trauma and I was starting kind of fresh. Part of me starting over was when I had that$58 ,000 left, kind of wiping everything out by selling my house, which was, I said, like in the$600 ,000 range at that time. So on top of everything, it was close to a million dollars that I had paid off in just under three years. That's amazing. So the three mechanisms to understand them are selling the house, that brings$600 ,000 into the situation. We have$4 ,000 a month, which is$150 ,000-ish period. And we have cleaning up some other messiness that had come along with the divorce.

12:10And the opportunity to clean that up, however it manifested, resulted in those three things generating a million dollars in proceeds to pay down debt. Is that the right way to frame what we're understanding here? Yeah, I guess. That's amazing. That's an incredible amount of progress. How much did the content you were consuming, that podcast in your ear, the books you were consuming, count here in helping you build towards making at least the$4 ,000 a month in savings, but also that major house and capital reallocation move with paying off the house and using the proceeds to pay off debt? It just normalized, like putting your finances in order.

12:46It normalized the concept that, you know, paying off massive amounts of debt is possible. And then it just changed, like, again, my circle of influence, like what I saw other people doing, it just made it even more attainable to me because that had never been my experience. I've never been around someone who could even feel confident about talking about money, let alone talking about paying off massive amounts of debt or becoming millionaires or any of those kinds of things. And so it just changed the landscape of what was possible in my life.

13:21Mindy Jensen:So this started in like 2015. So about 2018, 2019, you have paid off all this debt. And what would you estimate your net worth to be after you've paid off all the debt? It was actually, I paid it off in November 2017. Oh, okay. Yeah. So it's about two years and like eight months or something like that. I can't remember. At that point, I would say, you know, I still had investments in the background and I did profit a little bit. So I think for the first time I was kind of in the green. No, I do remember what my Netflix because I was starting to track it. It was under$100 ,000, but it was around there.

14:00Yeah. Give us the picture of your life the month after, December 2018, after you've made all these moves. So I sold my house. I moved into like a two-bedroom apartment. I went from like the suburbs of the San Francisco Bay Area back to Oakland in the city in a two-bedroom apartment and stayed there for about a year. I condensed a lot, but it was all good. And what happens to your savings rate, right? Because previously we had$4 ,000 a month and the mortgage payment, it sounds like you're putting another fourth. It didn't even sound like you're accounting that mortgage payment towards the debt reduction that you're putting in at$4 ,000 a month.

14:35Plus you don't have student loans anymore. What happens to the spread between your income and expenses? It immediately shifted. It was like, it's interesting. So I kind of went from like this Dave Ramsey aggressive, like debt payoff camp to more of like the fire, aggressively invest. And so I was gung-ho. I had a 403B, I had a 457, Roth IRA. All those things were maxed immediately. And then I started saving for my daughter's college fund. So just super bumped up my savings rate. Fantastic. So I'm struggling to do that math in my head here. About how much a year are you accumulating at this point almost immediately?

15:15So it's almost like$50 ,000 a year going directly just into investments. That's fantastic. And I assume that you also are able to build out a nice strong cash position as well and just fortification of the financial position in that period? Yep, definitely.

15:30Mindy Jensen:I want to know what your rent went to after you paid off the$4 ,000 a month mortgage payment. Because I have friends who live in the Bay Area and it is not inexpensive. No, it's not. Interesting time, no. It wasn't expensive. I think I went to like$2 ,400 a month. It wasn't bad. There was these deals, like all these deals. You know, when you live in like these bigger apartment complexes, they always have like these rent reduction, kind of like reduced rent for like a year or something like that if you sign a year lease. And so, yeah, it wasn't bad at all. I just remember like my portion because I've gotten into a new relationship by then.

16:06Yeah, I was my portion was like a thousand dollars a month. You said you lived there for a year. What happens next? Let's fast forward to 2019 or 2020. Let's talk about that because then there was a lot of transition. So that move kind of took me to moving four times in five years because my partner had different jobs. So we moved out of state. We moved to Reno for a little while. I was doing a little geo arbitrage where I was living in Reno, but working in the Bay Area. So I went from working five to six days a week to six days a month for a year, then moved back and, you know, then rented here for another year and then bought the house that I'm currently in in 2020.

16:44So between 2017 and 2020, I had moved four times, which is a big blow to your finances. It can be. I want to reframe that a little bit because I think that moving is just a huge pain in the rear. And it's like a big disruption to your life and then the mail and all that stuff. But I moved a similar amount for almost 10 years in a row while house hacking or doing that kind of stuff. And the moves you made were clearly part of a new financial plan, a new way you were thinking about managing your money. It seemed like at first, okay, you're laughing. At first it was, but after that, it was not. Okay, fair enough.

17:22These were all family decisions that weren't based on finances. It was based on, initially it was for a job. And then it was like, listen, we're out here on our own. I need more support. We need to move back home. And then it was like, okay, this is a good time to buy, which I'm happy that I did. But landed me into getting a home with a 2.5 % mortgage, which was great. But it was very expensive. It was not strategic financially. It was just because just life and family and having kids and navigating support and all of those kind of things. In 2017 through 2019, 2020 is what I'm hearing as we move four times.

18:03Are you still able to save during that period and accumulate wealth during this period and keep the investments in the 403B and the other retirement accounts going? I was able to still save. I was able to still max those accounts out, even though I was working significantly less for a year's timeframe. But that's what I prioritized over everything. So, yeah, my net worth was still growing. I was still aggressively investing. But, you know, it still was very costly overall. And then tell us about the home purchase where you live now and with the low interest. What fueled that decision and what did you do there?

18:39It was interesting why we actually moved back here. So we actually moved back to the city where I had originally sold my home. And we were looking in Oakland and Bay, like Oakland real estate is older houses. So it was like you would pay a million dollars for a house to basically tear it down and build it back up. And I had owned five houses by the time I was 25. And so I wasn't new to real estate and I wasn't new to construction and all those kind of things. And I kind of, you know, went through that housing market crash. So I was very leery of big real estate projects. And so where I live now, there's more, it's more of a family environment.

19:18It's more new homes, you know, bigger land. And so, you know, newer construction that has very favorable terms. and it was during COVID. I'm a nurse. They had all these discounts going on. And so I was able to get into a home with a relatively low down payment with a relatively good interest rate, even though I did almost have to sue my mortgage company because they tried to give me, I mean, the initial builder in their mortgage company because they tried to cheat me out of a good rate. But that's a whole nother story for another day. So how much was the home and how much you put down and what was the interest on it?

19:53The home was$630 ,000 again, but it was a little bit smaller. So now my house is about 2 ,500 square foot. I did 10 % down. I ended up getting a 2.85 interest rate. But initially the mortgage company, so when you get a new construction, this is a new construction. So when you get a new construction, the builder has a preferred lender and this is Pulte. I'm going to put them on. It's Pulte Builders, Pulte Mortgage, right? And so with the pristine credit score, with everything that I had going on with all of my assets, they gave me a subprime offer, which was like 8.5%. And I'm like, I'm not new to this.

20:34I'm true to this. You're messing with the wrong person. And so I just went to my friend who's a mortgage broker and she immediately was able to give me that rate. And I got some incentives back from the builder because they give you extra incentives for going through their mortgage, like discounts on upgrades and all those kinds of things. And because they didn't offer me the best rate, I negotiated that they were still going to give me those things regardless, or I was going to back out of the deal because it was truly ridiculous. And it was definitely discriminatory. This is terrible that happened.

21:08There's no reason at all. It should have been a six, 7 % rate at that time. Today, that would be like one bling twice at it, right? But in this case, yeah, that's, that's really absurd. So you got this very low interest rate mortgage on the house. What was the payment when you started after you closed on this thing? I want to say it's like $2 ,300. Okay. So it's about the same or even less than the first place you were renting. I'm sorry. No, no, no. I'm sorry. It was like 3 ,000 with everything, with interest and everything. Yeah. Okay. With taxes, insurance. Yeah. Okay. So 3 ,000 and then things are going well.

21:39The The house is purchased. This was a real pain in the rear and they're treating you terribly in the closing process in here. But we emerge with the end result of a good mortgage rate in this house, right, or a reasonable one. You got the$3 ,000 payment. What happens next in your financial journey from here? You have to think like a lot of the story, it's 2020 and I'm a nurse, right? So that is not all, it's a hard time. Overall, I've done four moves in this amount of time. I didn't buy this house alone, but after a month and a half of being in this house, I became a single parent again and had to do it all on my own.

22:20So my portion of what I had to pay shifted drastically. But, you know, still on this journey. In that time, I wrote a book. It was a lot of stressors. You know that list of all the things that, you know, life events that lead to major stress? I probably had about 10 of those things on that list going on simultaneously. The thing is, is like when people look at like stories like mine and see like, oh, she paid off a million dollars in debt. Then, you know, she became a millionaire seven years later. They think it's like this linear process. It's like a freaking roller coaster and things are going on in the background and life is happening and it's just not all straightforward.

23:02And it's not the math doesn't always math and things don't always line up. But at the end of the day, one lesson that I learned is that that intentionality of getting me out of that debt and building a safety net around me has provided so much security that can never be taken away from me. Mindy and I, or me in particular, I tend to drill down. Where did the money story start? What was next? And you're telling me, gratefully so, you're missing some key details with all this. Could you help us fill in those blanks? Because it seems like there is a lot. How do I unpack that four years of moves? I was like, okay, we moved four times in about a house.

23:40Let's move on to the money story. You're telling me, no, no, there's a lot there that's really critical here. Yeah, there's a lot. Maybe help me reframe and tell us what that story looked like for you so that other people who are going through the same things can relate a little bit and understand the power of the foundational finances that we've gotten to, but what was swirling around above that in your life during this period? The things that has helped me build is, number one, the financial security to leave an abusive relationship, even if I had to pay to get out of it. That's number one. Even after that, I was in a financial position where I was still like the breadwinner in the relationship and then trying to help my partner navigate, you know, his financial issues and helping him build and all of that kind of stuff.