What entrepreneur Lola Plaku’s money lessons taught her about credit scores and money advice

Written by Pauleanna Reid

Marketing guru Lola Plaku learned a lot of valuable money management lessons the hard way, but she has also used them to turn things around financially for herself and her business. Being a world traveler and executive in the music industry for a number of years can quickly deplete one’s bank account and can also be detrimental on your credit score, if one isn’t careful. However, it’s not all doom and gloom. There is always a way out. We sit down with Plaku to learn about how she has managed to stay debt free over the years, how she continues to maintain a respectable credit score and why her most trusted money management advice comes from her family.

Tell us about your company.

I own Plaku Media Group, an artist development and branding agency.

Where did you go to school and what did you study?

I went to school at Wilfred Laurier in Waterloo, studying Sociology.

And, did you graduate school with student loans?

I did have a student loan, yeah. Paid it off, thank goodness!

Are you comfortable saying how much in student loans you graduated with?

I would love to tell you, but I honestly don’t remember. I think it was just over $10,000. I had a scholarship the first year. My parents helped me out with paying my school fees, and with rent after the first year, so I didn’t have too much in loans.

And how did you handle the student loans? You said you paid it off. Tell me a little bit about how long it took you to pay it off and what strategies you had in place?

It took me a long time to pay it off because after I graduated I spent all my money on traveling and racking up more debt instead of paying off what I already owed. Interest kept adding up, and minimum payments really just pay off the interest, but very little towards the principal amount. I was working three jobs while I was in university, and once I graduated, everything went towards travel.

Social media wasn’t as prevalent then (2007) as it is now and I didn’t have a way of networking with people I needed to meet for my business, or to foster relationships in the music industry. Everybody was in the U.S., so I had to spend all the money I made on travelling and none of it went to paying off my debts. My credit card debt kept increasing, and my student loans were just there. But I wasn’t paying them off. My mom is amazing and strong, and even though she didn’t want to support my creative ambitions, she also didn’t want to see me suffer or be up to my neck in debt or bad credit so she helped me out. I can’t lie. My mom helped me make payments until my late 20s, or at least stay on schedule for payments until I paid all my debt off a few years back.

How old were you when got your first credit card?

Twenty-one, maybe twenty-two. That’s when your credit is shiny and new, and people give you credit cards so easily, and then you hit thirty and you’re faced with a poor credit score. I was twenty-one and didn’t know any better, so I opened so many credit cards. I had like credit cards I didn’t even need, like Macy’s credit cards, you know?

Tell us about the hardest time for you financially. What did you do to get through it?

Man, my whole early 20’s were my dark period. [laughs]. I just kept spending and didn’t know how to get out of it. Canadian phone plans don’t cover roaming in the US so every time I went there my bill was anywhere between $700 – $1700. So then I would have to make minimum payments to my loans, but also my credit cards, and also my phone bills, which by the next cycle would be double because I would have been so late with my payments the month before. And I did that just because I wanted to spend my money on something I felt I absolutely needed to do, like fly to Atlanta for BET Awards, or LA, or New York for fashion week or a conference or an interview or something. My parents didn’t really understand what I did and up until a few years ago, to be honest with you, and with myself, I didn’t even understand what I did at that time. I just kept trying things that made me happy, no titles attached.

That was the hard part, to wanted to do a lot of things like everybody else but I wasn’t able to financially afford to do them. But I didn’t really care at that time. I’ve been very thankful that I had no children depending on me and my parents were able to take care of themselves. So I’ve been free from financial obligation. I didn’t have a car, I don’t drive. I didn’t have insurance, or things of that nature. So if I had money in my pocket or my bank account, I was out the door. This didn’t prepare me to save money, so then when I finally moved to NYC for work, I had to figure out how to make it last.

In what year?

2013. So I was twenty-eight and at that point, it wasn’t just about making money. It was making sure I had enough money for the next 6-12 months because payments were due, the business had expenses, and people I needed to work with needed to get paid. The travel I wanted to do and the dinners and lunches and brunches and parties had to wait, because now I had responsibilities.

Responsibility and obligation comes at some people a lot faster than others, and in many cases, that’s what prepares you for real life. For me, student loans weren’t breathing down my neck; I was making enough payments that I wasn’t in a chokehold. So it wasn’t like I had all these obligations at a young age forcing me to learn how to save. All I had was my phone bill. That’s it. That’s all that I was responsible to pay. I lived at home with my parents, and would only travel once I saved up enough money. And then when I started my business, it would be marketing and advertising assets, and consultants, things like that. Even now, that is what I feel like is the most challenging thing to do for business owners. To be able to manage their money properly.

Do you have a philosophy about money today?

It’s an Albanian saying my parents always said to me. “Stretch your feet as much as your blanket.” It sounds weird in English. Basically don’t spend more than you can afford to.

Do you monitor your credit score?

No, I don’t owe a lot of money, I don’t have bad credit. I pay my bills on time now. Everything is automated so I’m not late on anything. I still don’t have a car so no payments there *laughs*. I just finally bought property so I will have mortgage payments now.

And who introduced you to investing?

My brother. He does real estate development and financing solutions.

Why did you feel like that would be an advantage for you?

To own property? Because, I have paid over $100K in rent in the few years I have been at my apartment and that’s money I’m never going to get back. I would prefer to have invested that $100K towards something I own so that if and when I wanted to move out of there, I could sell and get back some of the money I spent. I know you pay taxes and maintenance and stuff, but that property is still yours. If a mortgage takes you 20 years to pay off, after 20 years you can leave that property to your kids or grandkids or whatever and they’ll always have a roof over their head. You can pay rent for 20 years, and if something happens or you’re down on your luck, your “home” is gone.

I think it’s a mentality that my parents passed on to me. My parents always believed in owning property and not renting. We came to Canada as immigrants in ’98 and lived in a family’s basement for a few years. My dad went from being a university professor of 15 years in Albania to washing dishes in a restaurant in Canada. And my mom worked in a factory making $20K a year when we first got here. Somehow, with all the expenses and 2 kids in high school about to go to university, somehow my parents managed to save enough to buy our first house. It was damaged and it was old but my dad fixed it up by himself and we moved in. Then we sold that one and got another house that was nicer…and then my parents started their own business and my brother started his business and they were able to develop more properties.

When was your money ‘I made it’ moment?

When I was able to get the condo.

Okay. So tell me, how did you track your spending, how did you save money for your down payment?

You save your money. You don’t buy frivolous things. If you buy 5 pairs of expensive shoes a year ($5K) and let’s say 2 expensive purses ($5K) and if you spend about $300 a week on lunches and dinners and partying ($15K) that’s about $20K per year you are spending on things that you don’t absolutely need. If you’re able to save those expenses, in a few years you will have enough to buy a nice place. Actually you might even be able to afford a $200K property in Los Angeles in just a year or two. How crazy is that?

So, you and I have talked previously about you taking social media breaks. Because you feel people are so caught up in the hype. You said you own really nice things but you don’t feel the pressure to flash them, like your Rolex etc. What advice do you have for millennials reading this piece on choosing to invest vs purchasing material things?

It’s such a simple, yet complex answer.

Frivolous things are okay to buy as long as you can afford them. And when I say afford I mean that you should have enough money to buy the frivolous thing after you have calculated your rent/mortgage, food/groceries, monthly payments, personal expenses, tax return, etc.

I think nice things, materialistic things, can be a reflection of your status in life. You know what I mean? People buy Rolexes and red bottoms, and Gucci purses, because they want others to see that “they got it.” But what use is a Gucci purse if you can’t afford to pay your rent tomorrow, or for food the day after, or your children’s education the year after that?

If you want that brand name purse, or to rent that expensive car, or buy the nice shoes, you should make sure your expenses are covered for at least the next 6-18 months so that you aren’t broke because you blew it all on a nice Rolex.

Or you can examine all your expenses, see where your biggest spends are, cut that in half, and soon enough you’ll be able to buy your own home. That’s more than the instant gratification of something as frivolous as a $500 bottle in the club.

What about retirement?

Retirement? Oh my God. I just started thinking about retirement this year.

Okay, so are you saving for retirement? When did you start and what does the plan look like?

My career has been my focus and at times I felt like I would be an old cat lady and be consumed by my work until a very late age. I never thought of when I would retire, or how, or where. And then this year everything changed for me. I saw life outside of work for a change. I started thinking about where I wanted to spend my life, what I wanted it to look like, with who, how and where I would raise children. Where would they study? When and where I would retire, and how much money I would need. And so I started saving. This year. I started making plans of the life I wanted to have post “music industry”. I want to make sure that I give myself the right tools do that.

And, last but not least, do you have a money coach and an accountant or anyone advising you?

I have an accountant but my brother and my parents are the people whose guidance I seek constantly.

Pauleanna Reid is the Co-Founder of New Girl on the Block, a mentorship platform for millennials. Follow her journey and continue the conversation on Twitter.