From Broke Phi Broke to Financially Woke

 

To become a member of Broke Phi Broke, I took foolish actions that prevented me from taking the necessary steps toward growing my wealth and building my legacy.

 

-Peerless Money Mentor

Broke Phi Broke 

Once upon a time, not long ago, I was an active member of Broke Phi Broke.  To become a member of Broke Phi Broke, I took foolish actions that prevented me from taking the necessary steps toward growing my wealth and building my legacy.  Even though I had acquired financial knowledge from reading Black Enterprise magazine religiously (dad was a faithful subscriber!), and reading personal finance books, I still found myself on the vanguard of Broke Phi Broke because I did not apply the knowledge I acquired to my financial life.

I bought a car and other material possessions I could not afford, contributed zero dollars to my retirement fund,  co-signed a car loan for an ex, and became best friends with the credit card companies.  By taking those steps, I was admitted to the not so secret group of Broke Phi Broke with open arms.  Membership  dues were non-existent for this group so it was ridiculously easy to join!  As a matter of fact, this group had no standards or restrictions at all; men and women, regardless of their background, were encouraged to become members.

The Broke Phi Broke chant was the first thing I learned as a new member.  Not only did we have a lack of money, we suffered from a lack of originality, too! We stole our chant from the Kanye West Broke Phi Broke skit.  For those of you who have not seen the skit, the chant went like this, “We ain’t got it. Broke, Broke, Phi Broke! We ain’t got it. Broke, Broke, Phi Broke!”  I grew tired of these daily chants but I put myself in this sad predicament by making terrible decisions financially.  Let us now take a trip down my memory lane of major financial mistakes…

New Car Loan + Cosigning for Ex Mistake

I purchased my 2012 Nissan Altima, breaking Financial’s Samurai’s 1/10th Rule for buying a car, by more than 50 percentage points.  According to Financial Samurai, you should spend no more than 1/10th of your gross annual income on a car.  I disagree with the exact number but agree in principle that you should not buy a car that will put yourself in a financial hole.

My knowledge of personal finance was no match for the high-pressured sales techniques of the car saleswoman.  I kept telling her that I did not need a new car.  Her reply would always be something like this, “Why would you buy used when you have excellent credit!?”  Initially, I  resisted her sales pitch but she was persistent in checking in with me daily to see if I was still interested in purchasing a vehicle.

What you deserve and what you can afford are two separate things

High Pressured Sales Tactics

On Monday, May 21st, 2012 I finally gave into the high pressured sales tactics and purchased a brand new 2012 Nissan Altima.  My foolish reasoning was, “My company promised to give me a promotion soon so I can afford this purchase.”  Of course, I knew that purchasing the car would negate my raise but I still bought the car.  In retrospect, it is funny how I let my emotions get the best of me when dealing with the saleswoman.  My new car excitement lasted a few months and then my happiness turned into buyer’s remorse.

The promotion promised to me by upper management fell through so I had to touch my emergency fund to make payments on my car loan.  My cash flow started to suffer and I was only able to make the minimum payment on my credit card bills.  To make matters worse, during this time I had some unexpected medical bills come up.  This is how I ended going from having a surplus of cash to living paycheck to paycheck.  You would think I would learn my lesson and never buy more car than I could afford again, right? Wrong!  My next idiotic move was to cosign a car loan for an ex.

Foolish Cosign for an Ex

Making the Broke Phi Broke move to cosign meant I would be responsible for paying the loan if she defaulted on the loan.  Luckily, no payments have been made past 30 days so no damage has been done to my credit.  I did get a phone call from a foreigner once saying my car payment was late.  I told him I did not have a car loan with Capital One.  He responded, “Oh, yes, you do, Buddy!  Remember you are the cosigner on the loan for this…”  Although I have made a bunch of dumb moves, my credit score has always been above 700.  However, just because you have a good credit score that does not mean you are good with money!

Credit Card Woes

In the video above, the precocious young man says it seems like the credit card companies are setting you up for failure.  If he could see that the credit card companies are setting you up for failure, why couldn’t I see it?  By only paying the minimum on my credit cards, I was paying a whopping 18% in interest a year to the credit card companies.  In doing this, I paid almost double for the vacations, television, and gifts I charged on my card.  I often worried that high interest debt would keep me trapped in Broke Phi Broke forever.

My credit card debt soon grew to almost $10,000 and it became unmanageable.  I called the credit card companies to see if I could lower my interest rates but all of them told me, “No!”  Being so stressed out, made me oblivious to potential solutions.  But I would soon find a way out of the hole I dug for myself and leave Broke Phi Broke for good!

Brighter Days!

Remember one thing
Through every dark night, there’s a bright day after that
So no matter how hard it get, stick your chest out
Keep your head up, and handle it

-2pac on Me Against the World

Financially Woke

Expulsion

From Broke to Financially Woke Stories from the Financial Independence Community

If you enjoyed reading about my journey from Broke to Financially Woke, you will love reading more stories in my new From Broke to Financially Woke Interview series.

Also, if you want to share your story with me, just shoot me an email.

49

Author: Jerry

Jerry is a Business Insider Contributing Writer who is obsessed with personal finance. He believes you can improve your financial situation by applying principles taught by the financial independence community to your financial life.

If you are having trouble saving, he recommends that you join the SaverLife Savings program where you can get a $60 reward after six months (no income requirement). All you have to do is put a minimum of $20 a month into a savings account. Easy, right?

For a fun read, check out his article 10 Signs You’re a Personal Finance Addict to see if you are a personal finance nerd.

Before you go, check out the new From Broke to Financially Woke Interview Series.

Also, please subscribe below if you found his content valuable and want to continue following him as he documents his own journey from Broke to Financially Woke!

Subscribe to be one of the first people to get updates as I continue to document my journey from broke to financially woke 🙂

Twitter Facebook