Meet Diem

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Today, we're going to talk about how I was able to go from bankruptcy to completely financially free in seven years. It just blows my own mind, honestly. I'm like, “Dang girl! How’d you do that?!” So, we're going to talk about how I did that, okay? 

 

It's important to get an idea of what my background looks like, because you might be wondering- how are you so financially savvy now, but you were so dumb then?! Let's talk about it.

 

Immigration to College

I was born in Vietnam in 1986. I literally lived in a hut on dirt floors. No water. No electricity. I immigrated to Minnesota with my mom and my grandparents through a refugee program. Or, at least that’s what I think it was. My grandpa was in the Vietnam War. At the time, we only had one hundred dollars to our family name. 

 

A few years later, my dad and older sister, who I lost contact with through the immigration process, had found my contact information through relatives back in Vietnam. Then, I moved to California to live with them. My parents had already been divorced long ago so that’s why we didn’t immigrate together. I was so happy to go because I felt very unloved by my mom but it was sad to leave my grandparents, who were the light of my life during a dark time.

 

Moving to live with my dad and sister has changed my life. He was poor too but he made me feel wanted. Even though we lived in section 8 housing, he believed in the power of higher education. Unlike my mom, he insisted that I go to college. He would say, “When I die, I want to know that I left you with an education to make something for yourself because I won’t be able to leave you with an inheritance.” 

 

He gave me the opportunity to go to college for free because our family was so poor under his tax bracket and because of that, I was able to get the FAFSA Grant. Coming out of college, I was debt-free and it was probably the best thing that could have happened. However, I still didn't have any financial education. I went to school for business, marketing and human resources. They talk about economics on a big scale, but not personal finance or money management. Really?! I didn’t expect that in America.

 

My First Business

I started my own business in 2015, pretty close after college. It was a house cleaning business, similar to a national chain I had worked for during my college days. I did a pretty good job creating a business plan like I learned in school. Estimating the numbers, creating a budget and detailing my growth strategy, but my lack of experience led me to learn that expenses ended up costing more than I had planned for. In addition to that, I was also having to support my current lifestyle. You know, dining out and groceries and bills. 

 

While my business was starting to grow, I developed this imposter syndrome of being a business owner. When I would go out and network with people, I would say, “Let me pay for that.” It's also part of my culture too, to be really generous. I was doing that way earlier than I should have. I didn't have the resources to be generous yet. So, between the cost of living through starting a new business and the business costing more than I anticipated, 

I accrued $60,000-$70,000 worth of debt on my credit cards over the course of almost four years from the start of the business. 

 

On the bright side, this business was finally starting to make a profit where I was able to draw a small income. However, I did the math and I realized if I were to continue to grow this cleaning business while paying the debt down… it was going to take FOREVER to get even! 

 

Luckily I only had unsecured debt, which means that it was all on my credit cards. I didn't have debt against a car or against a home. Oh, and I actually had to sell my brand new, white Toyota Corolla. Then I bought a hoopty 1994 Toyota Corolla stick shift with over 200K miles on it! The seller lied and the odometer read 100K miles under the actual mileage. I found out later when I went to sell the car. Still white in color though, so it’s practically the same right? 

 

My Bankruptcy 2014

Now, I had to make a choice. 

 

(A) Let my payments go past due, get harassed by collection agencies  and then try to negotiate with the companies to get a lower payoff balance. I did a lot of research around this option. This route would mean taking a huge hit to my credit score with multiple late payments and being highly stressed out during the process.

 

(B) Consolidate my debt so I have one payment. I would apply with a new lender to pay off all my credit cards and then pay just the one new lender. This option didn’t seem all that helpful except to make it more clear on when and who to pay. 

 

(C) File for bankruptcy and start over debt free. This would mean I hired a bankruptcy attorney and pay $2,000-$3,000 to file, and take a hit on my credit (more on this later).

 

While trying to run and grow a business as a woman in her mid 20’s who came from nothing, I needed to make a pivotal decision at this point in my life that would change the trajectory of my path.

 

Ultimately, after a lot of thought, I decided to file for bankruptcy. At this point, I felt confident my business was going to start taking off and this would help me start fresh with all that I had been learning regarding finances. I also had been reading a lot about, not only how to get out of debt, but also how to manage my money afterwards and how to build my wealth through real estate investing. With that in mind, I searched for loan programs that would allow me to buy a home given my credit record once I file for bankruptcy. I discovered the FHA loan which would allow me to purchase a home 2 years from my bankruptcy discharge date. 

 

Armed with that knowledge, I decided to pull the trigger at the end of 2013. BUT, I also decided that I would never have to again, because I'm going to learn a lesson in all of this.  I'm going to make use of this amazing thing that I only know to exist in America: the ability to file for bankruptcy and start over. 

 

I was able to get the Chapter 7 bankruptcy discharge relatively easily, I believe in January 2014. I continued to make on-time payments until I filed, which meant I had zero derogatory marks on my credit based on late payments. I ended up with only one major derogatory mark as a result of the bankruptcy. So it went from maybe the mid 700s range to the super high 600s range. I can’t remember exactly but I remember being I was shocked at how little it impacted my credit score.

 

Based on my research, I knew that it was now time to start rebuilding my credit. Shortly after, I leased a car and got new credit cards. I refused to carry a balance anymore and paid off every card after each monthly billing cycle.

 

Changing My Business Model 2015

As I was coming out of bankruptcy, I had yet another huge hurdle to overcome. Due to a first and only employee injury, my next annual worker’s compensation insurance policy (required for all businesses with employees) would be $123,000 for 2016! My business was projected to earn revenues of around $750,000 for 2016. That’s almost 17% of sales before tax and other expenses. Payroll is about 33% of sales. Then there’s office rents, vehicle maintenance for 8 company cars, supplies inventory, employee turnover costs, other insurances, advertising…and no room left for my measly salary. 

 

This was not mathematically possible. It was defeating coming out of the BK feeling like I had a fresh start. But was it really a fresh start now?

 

Being the resourceful person that I am, I started to research other options. I found that in the state of California we have a business model called a Domestic Referral Agency. Essentially it's a matchmaking service for experienced cleaners and quality clients. The house cleaning agency can help schedule jobs, accept payments from clients and disburse payments to cleaners. What that meant to me was that I get to do what I am good at, which is marketing and sales, and allow the professionals to do what they’re good at, which is cleaning! Win-Win! 

 

This also meant I no longer had to hire w-2 employees and train inexperienced people to do a job they quickly realized they’re not interested in doing. Even hiring experienced cleaners who had worked for other companies would require training based on our company's policies and protocols. 

 

By working alongside experienced cleaners who already had their own private cleaning business and their own supplies, as 1099 contract workers, I didn’t have to carry worker’s compensation insurance because I was not their employer. I was helping them get more work because many of them didn’t do well with marketing and sales. 

 

I was able to do a % split pay with them and they ended up earning an average of $25-$30 per hour! On payroll, employee cleaners were making $15-$17 per hour. This makes sense because now all the expenses I had before as a cleaning business was being carried by the cleaning business (the cleaner) and not me (the referral agency).

 

Clients also paid me less than my cleaning business because I had less overhead. Yet, I was able to take home more income for myself because of this brilliant business model. I was able to eliminate having a physical office and started working from home because all I needed was a laptop and a phone. I sold all the company cars and eliminated gas and maintenance expenses. 

 

This was life changing. 

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Buying My First Home 2016

Two years after the bankruptcy I was able to use the FHA loan to buy my first owner-occupied home in 2016!!! The last two years since the BK, I began to steadily increase the income on my W2. Because my business is set up as an S corporation, I issued myself a W-2 through setting up payroll paychecks that were verifiable by the lender. The best way to ensure a smooth lending underwriting process is to provide w2 income.

 

Even though my credit score was good enough and it had been 2 years since my BK, I still didn’t qualify for the home! You see, the lender used the average income reported on my tax returns between the last 2 years and since my business was just starting to grow, my previous year was about half the income compared to the current year.

 

Luckily, my sister was willing to cosign for me and helped me qualify. Even though she didn’t put any money down and we knew that she would have no responsibility for the home, it was still a HUGE favor and this started my real estate investing career. I had a clear plan that I would either sell the home or refinance her out of it when the time was right, so she felt good about the commitment.

 

I had to buy a home that was an hour away from my hometown. I knew this was temporary and when I saved enough money and earned more income, I could afford to buy a home back in the area where I lived. Plus, my new business model change allowed me to still run my business from anywhere, so I didn’t have to worry about commuting.

 

Buying My 2nd Home 2018

After I bought my first home, I got a roommate who paid me rent. I intentionally chose a home with a 2nd unit in the back, which I rented out too. With practically no mortgage payment, since the rents covered almost all of it, I saved money super fast and then I was able to buy another home in 2018 that was owner-occupied. I moved in and I created 2 rentable spaces in addition to my main living area. These had exterior entries which meant I didn’t have to deal with anyone walking through my home, except my boyfriend who moved in and also paid rent. I even added a 2nd entry gate on my fence to allow renters their own access point. This is a house hacking strategy I have repeated since.

 

And from there, I waited another two years and bought a third home in 2020 where I repeated the process with my, now, fiance.

 

If you know me from social media, you know I've been talking about house hacking and how to convert your units to get major rents and supercharge your savings!

 

Creating an Online Course 2020

As my cleaning agency continued to grow, I realized I had such a stellar automated system in my business. I created an online course for other people to learn how to start their own house cleaning referral agency and make the kind of money that I was making. At this point I was making six figures and working less than 4 hours per week. I put strong systems in place, hired virtual assistants to help me run my business, and used automation softwares to keep my business sustainable and thriving. 

 

I spent a couple thousand dollars and about a week to create the online course to share my knowledge with this niche market. While my actual business has generated over $3.5M in lifetime sales, I’ve since earned well over $100k net profit on the full length course and supplemental downloadables by simply repurposing a set of skills I already had and tools I already developed. 

 

Becoming a Millionaire 2021

In 2021, my, (now) husband decided to start investing in real estate with me. So together we purchased a few more properties, some as vacation homes with only 10% down payment. 

 

Based on the real estate equity within the $3.75M real estate portfolio and the valuation of my businesses… I’m technically a MILLIONAIRE! 

 

What?!

 

Stay calm everyone…I do not have $1M in cash so don’t come with your ski masks on!

 

The new rental income cash flow has replaced my husband’s salary and he was able to retire. I was able to replace myself within my business by having my virtual assistant run the day-to-day operations. I am now semi-retired. To me that means that I don’t have to work. The work that I do is all by choice and I get to spend my time on things I love. And that’s what brings me to creating Lifestyle Leaps, an online resource to help other people achieve financial freedom and early retirement so they have the means to work because they WANT to, not because they HAVE to.

 

I want to help you get to where I am, which is totally within reach. 

 

I look up to and watch people on YouTube who are so stellar-awesome, with huge accomplishments and are multi-millionaires or billionaires. But, that's not MY personal life goal. My personal life goal is just to be financially free, feeling safe and comfortable, resilient in the face of future financial challenges. Not having to do the kind of work that I don't want to do or having a boss above me, being able to travel and live my life with my husband.

 

I mean, this is the life that America affords you and I just think it's insane that I was able to literally go from zero to semi-retired in seven years, which means that wherever you are in your life right now, it's never too late to start. It's never too early to start. You can do it and you can exceed everything that I've accomplished and do way better than me, because I didn't know what the hell I was doing. I hope that resonates with you in some way and I am cheering for you.