You don't writ, if your text is outlined or not? – It should not!
You don't know WHICH pathfinder you are using? Window > Pathfinder?
I would do so:
- Write ”hungry”.
- Write ”I’m” in a seperate object
- Open pathfinder window (Window > Pathfinder)
- Select both text objects
- Hold down Alt-Key (keep holding)
- Click on the button to exclude intersection or the second button)
What happens if you just Type>Create Outline, then Direct Select the h and the I'm and Pathfinder>Minus front?
You may do it all in fewer steps and keep everything editable, as follows:
1) Create and place the words hungry (in red, just insert your intended colour with Fill on top of Stroke at the bottom of the Toolbox) and I'm (in white or black);
No need to Type>Create Outlines, keeping it live Type will let you edit freely;
2) Select both hungry and I'm and in the Transparency flyout tick Make Opacity Mask with Clip and Invert Mask unticked (for white) or unnticked (for black).
If you need to edit text, colour, or whatever, just tick Release Opacity Mask in the Transparency flyout, then edit, then repeat 2).