Pennies to Wealth founder Dannie Vann had a difficult relationship with money. At one point she had racked up $130,912 of shared debt with her ex-husband. It took a major budget overhaul and living in an RV for nine months, but they paid off their debt in three years. Today, Dannie has her own personal finance blog and designs financial courses and training for kids of all ages. She spoke with us about what it takes to pay off a large amount of debt and how to build wealth.
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This interview has been lightly edited for style and clarity.
When did you realize you needed to do something about your debt?
I had just gotten over a long journey of being sick and my ex-mother-in-law suddenly passed away. We only had $200 in our bank account for food and we needed to figure out a way to fly from California to North Carolina for the funeral. My ex-husband was in the military and we got an interest-free loan from the Air Force to fly and rent a car for her funeral. So once we got back and grieved, we thought about what we could do to change our situation. Our credit cards were near their limits and we actually had to do a GoFundMe for her funeral because she didn't have life insurance.
We put everything out on the table and we realized we had an income issue. I was struggling to find a job after being sick and couldn’t increase my income. So we needed to reduce our expenses and living in California, we decided to live in an RV for nine months.
How did you stay motivated to pay off debt?
It was trial and error at the beginning. After moving in the RV, we automatically had over $1,500 in our account because we were only paying about $500 for the little spot we parked at. We treated that as an extra and automatically sent that to debt.
What advice would you give for people facing debt?
I always tell people to just sit down and look at how they got there. Then after reflecting on it, forgive yourself and make a plan. A lot of us just sit there and beat ourselves up, but it’s OK. You can now focus on what you’re going to do about it.
The next thing would be to determine if you have an income issue, a spending problem, or both — you have to be knowledgeable of those things. That will inform how you budget and how you align your spending with your income and needs and determine if you actually do need to get a part-time job or significantly reduce your living expenses. It may not be possible for many to get another source of income, and that’s OK too.
What’s the biggest mistake you see other people make when paying off debt?
I think it's irresponsible to think that the same approach can be used for every single person and circumstance. There's so much one-size-fits-all information out there. And I think a lot of people fail trying to fit their situation in someone else's blueprint. It’s about tailoring things to fit your needs, interests and situation.
Once the debt was paid off, how did you start building up wealth?
I love to keep things simple. I first started by increasing my 401(k) contribution and got the match once we got towards the end of paying off debt. And then I opened a Roth individual retirement account and set up automatic contributions for that because I'm a set-it-and-forget type of girl. This year I set up a taxable brokerage account so I don't have all of my early retirement money tied up in retirement accounts.
What advice do you have for building wealth?
Keep it simple and automate where you can, invest in total market index funds and then don't touch your balance.
What’s the biggest mistake you see others make when building wealth?
Going after get-rich-quick schemes or the hottest stock to invest in now. People who don't even invest are now trying to invest in these complicated things and that's how you ended up losing a ton of money.
What’s your current money goal & how are you working toward it?
My current money goal is just to reach financial independence. I want the option to do what I want with my time. Not necessarily retire early and never work again, but I want the option to do what I love. I am trying to achieve that by living on less than 50% of my income and investing the rest.
Do you have any financial regrets?
I always regret not starting my financial journey sooner, but my circumstances wouldn't have allowed it any sooner than when it actually happened. So I try not to get stuck on that regret and just appreciate every mistake and setback because I know that it was needed for me to get to this place of financial stability. I wouldn't be the person who I am today without the struggle that I faced all these years ago.
What’s the best financial advice you ever received?
Live below your means and invest the rest. I've learned that it's that magical space between like your income and your expenses and the bigger that space is, the faster that you can achieve your goals. I just try my best to focus on that magical space and I do that by living below my means.
What's the worst financial advice you’ve ever received?
My family says that struggle is just the way of life, it's normal. So there's no need to worry about wanting more. I honestly believed this for so long and I see now how it limited my vision. It limited my growth. I didn't ask for more money at work because I didn't think I deserved more. Once I realized that that was a lie, that's how I was able to increase my income — I went from having a $30K income at the beginning of my journey to now over $100K income at the same job.
Image: Nastia Kobzarenko