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

BiggerPockets Money

Naseema McElroy shares her extraordinary financial transformation from facing bankruptcy and $1 million in debt to building a $1.3 million net

Key takeaways

• Naseema McElroy successfully paid off nearly $1 million in debt, including student loans and mortgages, in under three years.
• She utilized zero-based budgeting to gain total control over her cash flow while earning a high income as a nurse.

Main topics

• Debt repayment strategies
• Financial resilience through life transitions

Notable quotes

I have never had to start from zero. Even if I had to bounce back for a little while, I can bounce back easier.

Conclusion

The episode serves as a powerful testament to how disciplined financia

Transcript preview

Speaker 3 (0:00) Today's guest is Nasima 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. Speaker 3 (0:22) 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, Speaker 1 (0:33) 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. Nasima 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 BiggerPocketsMoney podcast. Thank Speaker 2 (1:08) you for having me. Speaker 1 (1:09) 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? Speaker 2 (1:19) 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. And 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, or 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. building wealth for myself and my daughters. And, you know, it's been an incredible journey. Speaker 1 (2:16) Let's zoom in on that 2015 start here. How 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 looked like at that, at that point. Speaker 2 (2:27) 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. But I also had $200,000 in student loans where my minimum payments were $1,900 a month. And just like your normal everyday, you know, debt, like I took some money from my 403B to put down money on my house. And so paying that back, you know, normal stuff. Speaker 1 (3:25) Did you say you had a $200,000 income as a labor and delivery nurse? Speaker 2 (3:28) Mm-hmm, yeah. I Speaker 1 (3:29) 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, in the Bay Area specifically. We'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? Speaker 2 (4:02) I did not know initially. I just knew that every month I did not have any savings. I just felt really, really broke. And 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? It 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. And I do want to make a caveat. So $200,000 in the Bay Area as 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. But I just want to preface that so people won't 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. So I Speaker 1 (5:26) imagine that as five days a week and more than 40 hours, because some of those shifts can be longer, right? It's Speaker 2 (5:31) like a little over 40 hours. I'll do like two 12s and that two eights or something like that. So it's like 50 hours maybe. Speaker 1 (5:38) 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? Speaker 2 (5:46) 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 something were to happen to me. I need to know that my daughter would be cool. And so, um, started off and just like, okay. Well, I got two master's degrees. I'm not dumb. 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. And 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. Speaker 3 (6:35) What were some of the changes that you made? Really learning how to budget and Speaker 2 (6:39) paying myself first and understanding finally what that meant. I've heard it my whole life, but what does that mean, an application? Making sure that I had a goal. And initially, my goal was just, you know what? probably behind because I got hella debt. 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 having zero savings, nothing put aside to being at the 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 prioritized my debt and then everything else just fell in line. Speaker 3 (7:24) What were some of the things that you had to give up in order to put that $4 Speaker 2 (7:27) ,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 Speaker 1 (7:57) of Speaker 2 (7:57) people were just like, you just work more and paid off your debt. I did not. I just was really, really intentional about every single dollar that came in. Speaker 1 (8:05) 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? Speaker 2 (8:11) So it was only a couple of months once I finally figured out budgeting. And I started using zero-based budgeting where I was giving 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. Speaker 3 (8:34) 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. 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Application times may vary and rates may vary. You know that feeling you get when checking your finances means logging into five different apps? That's why I use Monarch. Setup takes about 10 minutes, you can link your accounts, and everything you own and owe lands in one clean dashboard. Banking, cards, investments, even keeping track of recurring charges. After that, you can stay on top of your money in just minutes, not hours, per month. Monarch saves you time and actually helps you use it wisely. 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. Can you tell us about what those big moves were? Speaker 2 (11:24) 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. Speaker 1 (11:48) 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 over a three-year period. And we have cleaning up some other messiness that had come along with the divorce. And 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? Speaker 2 (12:16) Yeah, I guess. Speaker 1 (12:18) 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