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This story originally appeared on Business Insider
In 2005, Mignon Francois and her family moved to Nashville, Tennessee, with the promise of a job for her then-husband. But when the job fell through, he ended up going to work as a foreman and the family was left with limited income.
Everyday expenses like food and transportation became a struggle. Even electricity wasn’t always an option. During the day, Francois would live in the dark so that when her kids came home, they’d have enough power in the generator.
“I’d find myself often walking to the Kroger on the corner near my house to buy water to fill up the tub so that my babies could take a bath. And by babies, I mean all the way from 3 years old up to high school graduates,” Francois told Insider.
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Though neighbors didn’t know the extent of her family’s struggle, what they did know was that Francois had a talent for baking cupcakes. One afternoon in 2007, when she was sitting in the dark, a neighbor knocked on her door asking her for an order of 600 cupcakes at $1 each. Since she didn’t have the money to purchase ingredients for all 600, they agreed that she’d bake 60 first.
“When I closed the door, I had a real come-to-Jesus moment with God and said like, ‘Seriously? You offer me this opportunity when I don’t have any money? I literally have $5 to feed us,'” Francois said.
She decided to put on her shoes and walk over to the store to buy the required ingredients with the last few dollars she had. That evening, she got paid for the first batch of the order, turning $5 into $60. She then put that $5 back into the dinner budget and kept on baking. In late 2008, the mom of seven officially founded her company.
Today, her business, The Cupcake Collection, a bakery for cupcakes, birthday cakes, and wedding cakes, thrives with nearly $1 million in sales each year. But Francois’s journey wasn’t easy. It took years of smart money habits and rigorous budgeting to slowly scale her operation from baking in her kitchen to running a nationwide cupcake empire.
She used envelopes to divide her money
Since her family wasn’t living on a set salary, Francois never knew how much money they’d have from month to month. And so, between the risk of fees and overdraft charges, she couldn’t afford to have a bank account. As a Black woman, she also didn’t feel she had access to the same opportunities when it came to relationships with bankers.
“I think a lot of times in my community, we often have been used to rejection from banks,” Francois said. “Having my money in a bank account at that time, if I had messed up even a dollar, it would have caused me to get a bank overdraft, which would of cost me $30, and then that’s just a vicious cycle of snowballing in a negative way.”
So she implemented her own system and began dividing her money into envelopes based on necessary expenses. She used Dave Ramsey’s advice, in which you pay your four walls first, shelter, utilities, transportation, and food, before moving to tackle other expenses.
When she made sales from her cupcakes, she divided her profits and taxes into envelopes as well. She would take 20% and set it aside for taxes. Any money spent on supplies was always put back in an envelope to purchase the next set of supplies.
She was intentional about every dollar
Francois didn’t have access to a credit card. Everything she needed to purchase would have to be in cash. This compelled her to be intentional and have a plan for every dollar in advance so she wouldn’t get caught in a situation where she couldn’t purchase something she needed. Even small items she wanted, like spoons, bowls, or a mixer, would have a dedicated envelope.
She followed Ramsey’s 7 Baby Steps strategy and set an emergency fund savings goal of $1,000. Once she reached it, she aimed to save three months’ living expenses and then six.
“That envelope system changed my life because when I looked up, there was a lot of money in there,” Francois said.
She created smart budgeting habits with her kids by making it fun
Francois and her children worked together to create habits that allowed them to stick to a budget. For example, if they were able to stay below their budget for dinner for the week, then they would allocate a little more money toward their fun money.
If Francois could purchase certain items in bulk, such as fish, they’d eat that for the week and joke that they were “fishetarians.” If the week consisted of veggies, then they’d say they were vegetarians that week. For additional sides and snacks, they’d tackle their pantry and use what they already had to create meals.
Her children would also keep a meter to track their time in the shower. She’d make jokes with the kids to remind them to keep the lights off.
“We created this phrase where we’d say, the room isn’t afraid of the dark, why isn’t your light out in your room if you’re not in there,” Francois said.
Any leftover change from a dollar would be put into a pickle jar. If a total purchase was $1.01, then 99 cents would go into the jar. Every time it filled up, it meant they could go out to dinner or take a trip.
Saving money and remaining within budget became like winning a game. The more they were able to save up, the more they could put aside for fun stuff.
She paid off her debts using the snowball method
Francois had student loans and medical bill debts that had pilled up. As revenue began to come in, money that was left after the main bills were paid would be set aside to pay off debt.
She used the debt snowball method to get out from under it, making the minimum payments on each while aggressively tackling the smallest debts first. If extra money came in, she’d increase the amount paid towards the debt.
When it came to her medical bills, she’d write letters requesting forgiveness. She’d get offered settlements and she took them. Some settlements brought her total amount down by up to 80%.
Moving forward, she didn’t want to owe anyone money, so she would pay her employees on a weekly basis. This helped her stay on track with her budget and expenses.
Today, Francois helps others achieve their own entrepreneurship goals by serving as a board member and mentoring at Pathways Women’s Business Centerand Nashville Entrepreneur Center.
She also works with Corner to Corner, a grassroots organization that helps people find their path to business ownership, and her company funds scholarships at Tennessee State University and works with various local community organizations focused on education and food insecurity.