Patrice Washington's Story
As the first in her family to attend college, Patrice Washington, 34, was shocked and disappointed in herself when she realized that, despite working while in school and even putting aside savings, she had accumulated $18,000 in credit card debt. Through hard work and lifestyle adjustments, Patrice paid off her debt in 22 months. She then launched a highly successful real estate and mortgage brokerage, only to lose it all in the Great Recession. Not one to give up, Patrice is now an author, speaker and personal finance coach.
OYO: How did you wind up with $18,000 in credit card debt?
PW: The reality is, no one in my family ever taught me about credit cards — what to do, what not to do, how to manage them. When I got to campus and someone said, ‘Here’s a t-shirt and you can get a credit card,’ it seemed like a win-win scenario. I started with one credit card my freshman year and, by the time I graduated, I had five credit cards … It was not from going on any elaborate trips or buying fancy clothes or anything like that. For whatever reason, I just figured ‘Adults use credit cards.’ You get gas on your credit card; you get groceries on your credit card; you split the dinner at the table with your friends on a credit card. That was just my way of life.
OYO: What was your wake-up call?
PW: It was a Wednesday. I’ll never forget it. I attended a bible study at my church and there was a financial expert who suggested that everyone go home and really get clear about how much debt they had. Had you asked me Wednesday morning how much credit card debt I had, I may have said $10,000. I went home, added it up, and I was dumbfounded. I had no idea it was as bad as it was. I became relentless about getting out of debt. It just sickened me. I was disappointed in myself. I was embarrassed, ashamed. I was the first to graduate from college in my family and I felt like, how could you do this? You’re the one who got all the opportunities and you’re blowing it.
It just sickened me. I was disappointed in myself. I was embarrassed, ashamed. I was the first to graduate from college in my family and I felt like, how could you do this?
OYO: Why do you think debt has so much shame around it, especially when so many young people never receive much financial education?
PW: I think it’s because you just want to believe that you’re smarter than that. You want so badly to believe that when you turn 18, and especially if you get to go to college, that you should just know better. The reality is, if you haven’t been taught, you don’t. [Debt] has no age, no race, no color, no religion attached to it. For a lot of us, it’s not necessarily that we’re spendthrifts or that we’re not responsible people, it’s just one small poor decision after another that can add up and turn into something catastrophic.
OYO: Is there a responsibility on the part of the companies that are preying on young people who don’t know the rules of the financial game?
PW: Absolutely. When I think about it as just an individual, would I lend money to someone who has no job; they don’t own a home; they have no real assets; they have nothing. Would I really give them money and then expect them to pay me back on time, with interest? Probably not. I think these companies should be ashamed of themselves, instead of us being ashamed … Especially when they’re targeting young people because [these companies] know exactly what they’re doing. We think this is what adulthood is. At least I did. Having a credit card made me feel like, ‘Now I’m a grown-up because of what I have in my wallet.’
OYO: You said you were working during college, so what did you do with the money from your job?
PW: I saved quite a bit of money, but also I had to pay for school. I was not on a full scholarship or anything. I did have some parental support, but there were quite a few expenses I had to take care of on my own too, like my apartment, my food, my transportation. I was responsible for all of that. I was good at saving, but I didn’t realize that it didn’t make sense to save in a bank account with .0001 percent interest while having a credit card with 27 percent interest … Ironically, I had good credit, because I did pay on time. It just didn’t dawn on me that I should pay more than the minimum amounts due. I just thought, ‘Oh, I owe you $1,000 and you only want $10? Heck yeah! Perfect, I’ll give you $12.’
I didn’t realize that it didn’t make sense to save in a bank account with .0001 percent interest while having a credit card with 27 percent interest.
OYO: In your work now, you focus a lot on empowering women specifically. Why is that?
PW: Coming out of college I started a real estate, mortgage and escrow brokerage. That was my senior project that I turned into my actual business. I would say 80 percent of my clientele were women in their 30s, 40s and 50s who thought they were ready to buy homes … We would pull their credit reports and they would have no idea that [friends and family members] had defaulted on loans in their name … I heard so many stories about family members taking advantage of them: boyfriends, partners, best friends. They were putting cars in their names and co-signing on loans, giving loans to start businesses. It seemed, as women, that we could be really naïve. It was all in this spirit of, ‘I want to help. I don’t want people to go without’ or ‘I want my cousin to live her dream’ or ‘this is my man and to be a good woman, I’m going to help him.’ These women would tell me stories about money missing from their bank accounts or taken out of their 401(k)s … Now I really want to be a voice for women. We have to learn to say no in order to protect our own financial futures. It doesn’t make us bad people. It’s about self-preservation. I can’t help you when I’m not helping myself.
We have to learn to say no in order to protect our own financial futures. It doesn’t make us bad people. It’s about self-preservation. I can’t help you when I’m not helping myself.
OYO: How does that relate to parents financially supporting children?
PW: I think it’s an individual thing. We have a really big problem in this country with entitlement, and also enablement. It seems a lot of young people are way too enabled. Nobody helped me get out of debt. My parents were like, ‘Yeah, that sucks for you. Sorry you did that.’ There was no Mom and Dad to come save the day. But I’m grateful that I had to make it happen because once you learn on your own what to do, then you can always do it, but if someone is constantly coming in and saving the day, you never force yourself to have the skill set to survive. Nowadays with Boomers who have lost so much money in the Recession — like people who were thinking they could retire, but had to go back to work — you’re not in the position to care for your 30 year old. Give me a break. You’ve got to figure your own retirement out. Again, it’s not selfish to put your own financial goals first, and I think actually when you do, you become a better example for your children.
OYO: What is your philosophy of budgeting?
PW: When I started to do workshops and seminars about basic personal finance management, people’s brows would always furrow when I started talking about budgeting. They’d tense up as if ‘budgeting’ is a bad word. My response was, ‘No, the b-word you want to avoid is bankruptcy; budgeting is OK.’ Budgeting is about discipline. It’s not about depriving you of what you really like to do … I’m not saying as a woman, don’t ever get your hair done, but do you have to get it done every week? Discipline says, how about getting a hairstyle that can be done every three weeks? … You don’t have to deprive yourself of what you like to do, but you have to be realistic about how your expenses fit into your lifestyle.
OYO: So many people seem afraid to look at the numbers because they’re afraid of what they’re going to find.
PW: In 2011 or so, I did an experiment with about 26 people while I was doing financial counseling at a nonprofit. I found that when people tried to track their spending for 30 days, they recorded 30 percent less in expenditures than what we found when we went back to their bank statements. I know that’s not a huge group of people, but it shows that tendency [to underreport]. We don’t want to look bad, because we have that shame and that guilt. By the time you start looking at fixing your finances with a counselor, you’re already feeling ashamed of something. You already have all these stories going on in your head about how you’ve got to get it together and how you’re not good with money. You don’t want to look worse than you already believe you are, so you change it. When you’re looking at getting out debt and what’s a realistic budget, I always say start with what you’ve already done. Look at your bank statements. I think the truth is in the past, not in tracking.
OYO: Why are you so passionate about personal finance?
PW: Not only did I have the experience of accumulating credit card debt when I was younger, but I lost big in the Recession as well. By 25, the company I started had turned into a seven-figure business with 16 employees and a huge office in Manhattan Beach, Calif. When the Recession hit, I also happened to be pregnant at the time and I ended up in the hospital for 10 weeks. I wound up with a $380,000 medical bill between myself—because I was on bed rest and my daughter ended up in [intensive care] for another 21 days. There was just a whole lot of stuff going on. My husband was my partner, but I primarily ran the business. The banks were shutting down left and right. It was a nightmare. We ended up having to shut the business down. I had to lay off my entire staff — people who had been loyal to me since I got out of college. I had to work from home with a newborn baby, which was weird for me as a busy person, go-getter. But we closed up shop, lost major real estate deals, two foreclosures, everything that I had worked for. Again, even though this time I had done the right thing and we were able to live off savings for about 18 months, which I was proud of, but it was still hard to watch those savings go away.
I became really passionate about financial education and helping people, but losing everything and suddenly having a child and a family in the picture was when I really got compassionate.
Through my first financial storm, with my credit card debt, I became really passionate about financial education and helping people, but losing everything and suddenly having a child and a family in the picture was when I really got compassionate. It made me understand on a deeper level when I would hear a mother say that she was struggling between paying a bill or feeding her child. Before that, I had made so much money so young, and I was doing well, it never dawned on me how difficult those decisions are to make.
[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]