From Broke Phi Broke to Financially Woke – Money Smart Guides
Today, I am excited to share with you the latest interview in the From Broke to Financially Woke series! The purpose of this series it to give hope to those struggling to escape from the not so secret group Broke Phi Broke. A group whose chant is, “We ain’t got it. Broke, Broke, Phi Broke! We ain’t got it. Broke, Broke, Phi Broke!”
To help me accomplish this goal, I have invited the best and brightest of the financial independence community here to share their stories. As you read their interviews, pay close attention to the mistakes they made. Take mental note of the success principles they used to turn things around.
When trying to apply these principles to your own life, realize that success in life is rarely linear. You will encounter some struggles. But stay persistent. Keep moving forward.
Our special guest today is Jon Dulin from Money Smart Guides. Although Jon Dulin was somewhat woke; he enjoyed teaching his fiends about personal finances, he still found himself being $10,000 in debt.
How did he go about turning things around? I’ll let him share his story…
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
My name is Jon Dulin, I am 40 years old and I live outside Philadelphia, PA with my wife and 2 daughters.
My website is MoneySmartGuides.com where I help people on their journey to pay off debt and build wealth so they can achieve their dreams.
I enjoy being active, so exercising, mountain biking, golfing, and hiking are all interests of mine.
As my daughters are growing, I enjoy taking them places and experiencing life through their eyes. It really makes you appreciate what you have.
For example, my 1 year old just started crawling. As she moves, she giggles with delight as she isn’t “stuck” in one place anymore. It makes me think how I take walking for granted.
Tell us about a time where you were a member of Broke Phi Broke. How did living paycheck to paycheck make you feel as a person? At your lowest point, how much debt did you have?
After college I got myself into credit card debt. I couldn’t find a job and got depressed. Buying things made me feel good but as the good feelings wore off faster and faster, I started buying more and more.
I had my aha moment when I was in debt over $10,000. Not only did I feel like a failure for having so much debt, I also felt like a fraud.
This is because I loved the subject of personal finance and all my friends would ask me what they should be doing with their money.
I was telling them all the right things while I was living a lie and doing the exact opposite.
Getting professional help for my depression helped a lot towards getting me back to neutral.
From there, I started to look at the positive things in my life and talked to my best friend about my situation.
He became my accountability partner that I would celebrate paying off my debt with and share my struggles along the way.
Knowing I had people I could vent to and who would encourage me helped me greatly.
It wasn’t easy though. Telling him about my debt and depression was hard. But the payoff was priceless.
What are some of your biggest financial mistakes?
I have made a handful of financial mistakes over the years.
My first one was getting caught up in the hype of the investing tech bubble in the late 1990s.
My grandfather gifted his grandkids $2,000 each. I bought a computer for college with it and then invested the rest into a tech mutual fund. I picked this particular one because it returned 60% the prior year.
My timing was bad as just after I invested, the bubble burst and I lost 60% of my money.
After college I made my next financial mistake. I got into credit card debt. I graduated in 2001 just before the economy went into recession.
I had high expectations of landing a great paying job and moving up the corporate ladder. When this didn’t materialize, I got depressed and started spending money I didn’t have.
Spending the money allowed me to live the fantasy that I was earning a nice paycheck.
Eventually I had my aha moment and admitted to myself that I was depressed. I got professional help and started to work on paying off my debt.
It took me a little over a year to pay off over $10,000 worth of credit card debt.
My next financial mistake was buying my first house. I bought into the idea that buying is better than renting since I would be building equity each month.
The problem was I didn’t have a large salary so the only houses I could afford were in areas I didn’t want to live.
I allowed my realtor to talk me into looking at some home “just a little more expensive” and found one I liked.
Looking back, this was inevitable. After looking at run down row homes, seeing a decent looking condo is like looking at pure gold!
This was back during the housing bubble, so even though I couldn’t afford the house, I was still approved for it.
To afford the monthly payment, I had to get a friend to move in with me. Even then, I was stuck eating peanut butter and jelly sandwiches for a while until I earned some raises from work to get more comfortable.
In the end, I sold the house for $25,000 less than what I paid for it.
Another financial mistake was my dumbest by far. I owned a sports car and I enjoyed mountain biking. I couldn’t fit my bike in my car.
The logical solution would be to buy a bike rack, but I didn’t want to risk scratching my car.
So I bought a used car to transport my mountain bike. Instead of spending $250 on a bike rack, I spent $5,000 on a car. Add in the annual maintenance, insurance and gas expenses, and this was a whopper of a dumb idea!
Describe your upbringing. Where did you grow up? What did your parents or teachers teach you about money?
I grew up in rural Pennsylvania in a small town. We were middle class, where my Dad worked a factory job and my Mom stayed home to raise my sisters and me. She eventually went back to work after I started middle school.
Growing up, money was never an issue, but that doesn’t mean we didn’t get everything we wanted. My parents were very frugal and put off buying themselves things in order for my sisters and me to have what we needed.
I remember going to JC Penney for school clothes in August and not being able to get all the clothes I wanted, but getting the clothes I needed.
We did chores to learn about the importance of work and earned a small allowance from it.
If there was something we wanted to buy, we had to save up to buy it. I remember wanting a Nintendo when it first came out and I had to buy it myself.
Saving $100 seemed impossible to me and then spending that amount of money made me question my decision. In all there were lessons learned throughout the experience.
My parents also instilled the importance of saving in us. I can remember going to the bank on Friday nights and depositing $0.50 into my savings account.
I think the greatest joy my parents have for us is that while neither of them went to college, all 3 of their kids not only graduated from college but also earned graduate degrees as well.
How important is becoming financially woke to you? What steps have you taken to increase your financial knowledge?
It is very important to me. Once I started working, I quickly realized that to get to where I wanted to go, which was early retirement, chances were I wasn’t going to get there on my salary alone.
I needed to figure out other ways to earn an income. This led me to starting my own website.
For a few years, I worked full time and managed my website on the side. When it came time to budget my money, I lived off of my full time income and saved and invested everything I earned from my website.
This allowed me to easily save 70% of my income, putting me in a better position to retire early.
But even before I started earning more money, I knew I had to pay off my debt. There was no way I could retire early, let alone build wealth, if I was paying someone else every month.
I took the mindset that the hours I worked at my job weren’t for me, but for my credit card companies because the money I was earning was going to them to pay off my debt.
This motivated me to get rid of my debt as quickly as possible so I could start working and earning an income for me.
What are some of the key principles you have used to improve your financial life?
There are 2 key principles I have used, paying myself first and looking long term.
When it comes to saving money, I realized that if I don’t save right away, I will never save anything. There are always things to spend money on and if I don’t make it a point to save, it will never happen.
The easiest way to do this is to set up an automated transfer to a savings account. I have this set to run the 1st of every month and it forces me to save money.
I also set this up with my investments too. I automatically invest a small amount of money that happens on the 15th of the month.
By automating my savings, I never have to remember to do it, and my savings grows.
When it comes to looking long term, I invest but I don’t follow the market. I know that the market will swing up and down on any given day. Some days it might even get scary. But I don’t focus on that.
I focus on the long term, like 20 years from now when I will need the money I am investing.
When you look at the history of the stock market, you will see that over time, the general trend is up and that there are more years where the market grew than when it fell.
I trust this will continue into the foreseeable future and don’t get caught up in the day to day happenings.
This was tough during the Great Recession when my investments lost close to 50% of their value. But I knew the market would eventually come back.
So I stayed invested and continued to invest during this time. By 2012 I had all my money back and I have since tripled what I had before the crash.
This was only possible because I stayed calm and kept investing for the long term.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
I used to consume a lot more when I was working on improving my financial life. I would read plenty of books and blogs, but now I don’t consume that much.
I really enjoyed reading the books The Millionaire Next Door and Your Money or Your Life.
I also enjoyed reading Free Money Finance.
Today I mostly focus on Bogleheads.org forums and I read Kiplinger’s magazine.
I am still interested in personal finance, but I have a family now so that takes up most of my time. I do make it a point though to stay current on events, like tax law changes, etc. so I can understand how it will affect our finances.
Where are you on the path to financial freedom now?
We are still in the midst of it. Our goal is to retire by 55, so we have 15 years to go. It will be exciting to see how things turn out as our daughters will be growing up, so there will be added expenses there, in addition to whatever else life throws at us.
Overall we are on track based on where we are and as long as there aren’t any major surprises, we should comfortably reach our goal.
Is there any advice/encouraging words you can give those who are struggling to escape Broke Phi Broke?
I would encourage people to remember that success is never a straight line. No matter what you are doing, whether is it getting out of debt, saving for retirement, moving up the corporate ladder or even building a relationship, there are ups and downs along the way.
The key is to not get frustrated and give up. You have to keep focused on the goal and push through the difficult times.
This is when having a good friend comes in handy. You can rant and moan about how bad things are and then move on.
Next, remember your goals are possible. You just have to put in the work. When I was living in my house and could barely afford the payments even with a roommate, there were times I thought my dreams of early retirement were over.
But they weren’t. I kept believing that I could make my dream a reality and took things one day at a time.
Fast forward to today and we are well on our way to financial freedom.
Also remember that you have to take action. If you do nothing, your life today will be your life in 5, 10, and 20 years from now.
So take the first step and keep moving forward every day.
The last piece of advice is to know where your money is going. When I was younger, I didn’t do this and didn’t think twice about spending $5 or $10 on something.
But these small purchases added up and resulted in me saving a lot less then I could have.
To fix this, I started a budget. Tracking my spending helped me to see where my money was going and plug some areas of wasted spending.
I encourage you to start budgeting. Don’t make the mistake of looking at one and thinking it restricts your spending. It only does this if this is how you set it up.
I have plenty of fun everyday and still save money for the future.
Finally, don’t think you need to pay for budgeting software or use an app. You can easily create your own spreadsheet and update it. As an added bonus, there are tons of free budget templates out there that you can use and customize to your needs.
How can the readers contact you?
The best way to contact me is to email me. You can find my contact information on my website. I am also on social media, but I am much more responsive to emails.
Read more interviews in the From Broke to Financially Woke Series.
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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.
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