Mr. Refined (MR): I read your story of the bike as an 11 year old. With a father as a CFO, did you major in Finance in college?
Tiffany Aliche (The Budgetnista): I was undecided. I didn’t know what to choose. I thought about social work. However, my dad advised against it. He suggested a major that would allow me to do many things. So I picked Business with a concentration in Marketing, because Marketing seemed fun.
MR: So how did you end up as the Budgetnista without a finance background?
Budgetnista: I participated in Inroads, a program that provided talented students of color paid internships in corporate America. The money was good and I excelled, but I hated the corporate environment. It was dry and I have a lively personality. It was not a good fit. The company I interned with the summer before my senior year offered me a job upon graduation with a nice salary. An executive assistant, an older African American woman, pulled me aside. She said, “You would be a fool to take this job. The people here are unhappy.”
MR: She was bold. Not many people, especially young people would understand the value and wisdom in her words. Yet, you took her words to heart.
Budgetnista: My senior year in college, I started teaching at a child care center. I turned down the corporate job and started teaching. I loved teaching and was good at it. Because I didn’t have a teacher certificate I taught preschoolers. Even after I got my Masters in Education, I continued to teach preschool in one of the worst sections of Newark. I taught my preschoolers finance and money management. One time, a parent asked me for money. I told her I would not give her money, but I would teach her how to budget and manage her money. I would meet her during nap time. Soon word got out and more parents and even school staff would come to my class during nap time to learn about budgeting.
MR: This was a truly organic process.
Budgetnista: I had no idea from one parent it would blossom to that. It started to get recognition and people from the Board of Education and community groups came to observe. Most would say, “You’re so great. Why are you here in preschool?” I thought it was ironic that when schools desperately needed good teachers that I was being encouraged by the education system to leave. I considered being a principal, but it reminded me too much of corporate America.
MR: So when did you stop teaching and became full-time Budgetnista?
Budgetnista: Not by design. I worked for a non-profit school. After 2008, there was a decline in funding and corporate donations due to the economic downturn. In the fall of 2009, three days before school was supposed to start, I received a call that the school lost funding and would not open. There was no warning. I felt sorry for the students. We were the only school in the neighborhood. Even though the neighborhood was bad, the community respected the school and when we took the kids out for a walk, the bad element stopped while we had the kids. The school was a safe haven. It was a devastating loss for the kids and community.
MR: So the economy forced you into a career change?
Budgetnista: Yes, but also the landscape of teaching had changed. After 7-10 years as a teacher, you get good at it and hit your stride. I was a great teacher. I didn’t like the new emphasis placed on test prep over teaching. I was not allowed to be a teacher. So, in addition to the economic downturn, my frustration with the changes from teaching to test prep were the impetus for the birth of the Budgetnista.
MR: What did you do with only 3 days’ notice that you were no longer employed?
Budgetnista: Fortunately, I saved a lot so that I wasn’t pressured to get another job. I bounced around for two years volunteering at different organizations. I begin to look at their programs and started writing evaluations and curriculum for them. For one, I wrote a curriculum to teach high school students personal finance as part of an after school program. The program was so successful that the organization ended up getting funding for the program to bring personal finance classes to residents in the inner city projects of Newark. That is where my teaching experience came handy. When I started teaching preschool in Newark, even though I was a person of color, my background was different. However, teaching personal finance to my students’ parents during nap time prepared me. So when this opportunity presented itself, I already had a rapport within the community. I was comfortable in the community and acclimated to the community. Most already knew me as the preschool teacher. It was at this point that my sister started to call me the Budgetnista.
MR: How did you go from volunteering with nonprofits to getting paid?
Budgetnista: It is difficult to get people who are used to getting something for free to pay. However, that is the power of the Internet and social media. My compromise (quid pro quo) was since you can’t pay then allow me to publicize the event and programming on the Internet. I used Facebook, Twitter, and Instagram to publicize events. I did an unpaid gig for American Express lunch time series with the same quid pro quo arrangement. Soon people started recognizing the brand and companies started calling asking to fly me to Detroit, LA, and Texas.
MR: Your entire experience was organic growth. What would you advise new entrepreneurs?
Budgetnista: First, get grounded in the community you plan to serve. Second, use social media. If you do a good job, people will find you and hire you for your services. My first year, I solicited a lot for business. But after 2011, people have found me via Instagram and Twitter. Now, 80% of my clients are paying clients. I dedicate 20% of my time to volunteer. However, I carefully pick those organizations.
MR: Many people don’t like the term “budget.” They think it means being broke or poor. What tips do you have for college graduates getting their first job or anyone interested in managing their personal finances?
Budgetnista: Everyone has a budget. Major companies have budgets. The purpose of a budget is freedom to afford the lifestyle you want. Bad financial choices hinder freedom.
Tip 1: Know Your Take Home Income
Don’t wait until you receive your first check. Your salary is not your take home. Before you start your job, go to Paycheck City and use their salary or hourly calculator to know exactly how much you will take home weekly or bi-weekly after taxes are taken out.
Tip 2: Prepare Your Budget
Once you know your take home pay, then plan your budget. Set aside 10-20% of your total income for retirement (401k/IRA). Ask your job if they match your retirement contributions. Calculate expenses (rent/cell/student loans/entertainment). Set up a checking and savings account. Have a savings goal (car/house/vacation). The savings amount should automatically be deposited and not touched until the goal is reached. If possible, stay at home to save money to purchase a car or apartment. You want to live off of half of your check to have freedom to save. When I started teaching, I made $12/hour. Because I stayed at home my expenses were only $500/month. I decided to save $900/month ($450/each paycheck) to have $10k to buy a car.
Tip 3: Don’t Buy a Brand New Car
Because I stayed at home, after ten months, I had $10,800 in savings. I went to my father and told him I wanted to buy a car. He was shocked to learn how much I saved. He told me not to buy a new car because it depreciates as soon as you drive it off the lot, not to mention insurance premiums for a new car. For example, if you buy a watch for $2k and later decide you don’t want it, you can return it and get the full value you paid. That is not true for a new car. My dad suggested getting a car 1-2 years old at auction that had low mileage. At auction, I bought a one year old 1999 Nissan Altima for $5k cash and only paid $60/month for insurance. If I had bought the car new, it would have cost at least $15k and $200/month in insurance premiums. Instead, I still had $5k in my savings. Making good financial choices in the beginning gives you the freedom of options.
Tip 4: Get a Roommate
By the time I finally bought my car, I was making $39k as a teacher. I wanted to move from my parents, but I didn’t want to pay a lot for rent because I knew I wanted to own a home (my next savings goal). I found a nice apartment with a good landlord. The rent was $1100. With my sister as a roommate, we each paid $550/month. My monthly living expenses were now $900, but I was still living off of half my income. After 2 1/2 years, I saved $40k and was ready to buy my first home – a condo.
Tip 5: Tax Refunds & Unexpected Money
I refer to any money outside of your regular earned income as unexpected money. I suggest setting aside 10-20% for fun and enjoyment to treat yourself. Then split the remainder equally towards: (1) savings account; (2) pay down debt; and (3) investments.
MR: So you just saved money, no fun?
Budgetnista: In hindsight, I would’ve taken advantage of my summers off and used a small portion of my savings to travel.
Budgetnista, thank you for your inspiring story and helpful tips to get our readers on the path to financial freedom.
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