From Broke Phi Broke to Financially Woke – Mr. Heartland on FIRE
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 Mr. Heartland on Fire. At his lowest point, he was borrowing money from his boss to fill his gas tank. He was a quintessential member of Broke Phi Broke.
Now, he and his wife are maxing out there 401(k)’s! How did he turn his financial life around? I’ll let him share his incredible journey…
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
Hi, I am Mr. Heartland on FIRE and I blog over at www.heartlandonfire.com. My wife and I are a couple in our 30’s with two kids living in the St. Louis area. Outside of Financial Independence my interests are many. I love everything outdoors, as well as cooking, homebrewing, and all manner of DIY challenges. I like to say my hobby is to collect hobbies.
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?
A couple years out of college I joined the Broke Phi Broke fraternity. My descent into debt was fast and was fueled by a sense of entitlement. After graduating with my engineering degree and securing a full time job, I felt “I deserved” to have a new vehicle, to have a house, to have a big screen TV… the list went on and on. At the same time I started making payments on my student loans. I was “monthly paymenting” myself into negative cash flow.
Around this time I met my future wife and we joined our finances… including additional student loan debt. Together we had around $120,000 in student loans, 2 vehicle payments (probably another $30,000 there), a mortgage, and various consumer debt, including payments for a TV and a mattress. Yuck!
At my lowest point, I had to borrow money from my boss so I could fill my gas tank. Another time, I was asked to take a client out for lunch, but I refused since I knew I didn’t have enough in my account to cover the tab! (I didn’t use credit cards at all back then). Talk about embarrassing! Here I was, a young professional with a promising career and I was worried about making the mortgage payment and utility bills. Not at all what I envisioned when I planned out my life after college!
What are some of your biggest financial mistakes?
There are so many to choose from. I’ll pick three that stand out.
- Buying a full size pickup truck immediately after graduation. I bought a $30k+ F-150 the second I could afford the monthly payment. Not only was the payment a boat anchor dragging my down, but the horrid fuel mileage and higher insurance and maintenance costs made this purchase the gift that kept giving.
- Buying a house too early that cost too much. I thought I “needed” a house right away. Prior to home shopping I met with a lender to get a picture of what home price range I should be looking at. To their credit, they quoted me a low price range… around $70k. I scoffed at this. “I deserved” a better house, so I bought one (at the height of the market in 2008, mind you!) with a price of $127k. Thank goodness my wife decided to move in with me, because the monthly payments were bleeding me dry.
- Missing a year of 401k contributions. For some reason, I believed I wasn’t eligible to contribute to my 401k until I had a year of service. In hindsight, I don’t believe this was true, but I did what I did and lost the company match and the lucrative growth potential of those early contributions.
Describe your upbringing. Where did you grow up? What did your parents or teachers teach you about money?
I grew up in a middle class family in North St. Louis County. My Dad was a machinist and my mom stayed at home initially. We never had a lot of money growing up, partially due to my dad being laid off a couple times by the large aerospace firm he worked at. At the same time, I never really felt deprived of anything. My parents are naturally frugal and found a way to save up enough to send three kids through Catholic grade school and high school. This fact still blows my mind. One major factor that ultimately helped overcome the bad money decisions I mentioned previously, is they set up a custodial mutual fund for me when I was born. I was able to watch this money grow through the years which gave me an appreciation for the power of compounding. I am beyond thankful that when I reached my financial rock bottom I had the presence of mind to not cash those mutual funds in!
How important is becoming financially woke to you? What steps have you take to increase your financial knowledge?
Becoming financially woke is deeply important to me. The benefits from getting my financial house in order have been profound. Namely, my stress has dropped considerably and I feel much for optimistic about the future.
My path to gaining knowledge began by seeking out books. Two books set my financial “re-birth” into motion: Dave Ramsey’s “Total Money Makeover” and Robert Kyosaki’s “Rich Dad/Poor Dad”. Following those books, my brother turned me onto Mr. Money Mustache and JL Collins’ “Simple Path to Wealth. Now, I consume a lot of personal finance blogs and a couple podcasts.
What are some of the key principles you have used to improve your financial life?
- Minimize fees when investing. The market booms and busts, but fees are forever.
- DIY as much as possible. At least initially. The benefits are lower costs, but more importantly is knowledge gained.
- Automate your savings.
- Emphasize “Lazy Savings” by directing raises, bonuses, or “found” money into savings/investments. Since you weren’t counting on this money, you won’t even miss it! This is my favorite way to increase our savings rate and minimize lifestyle inflation.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
I consume personal finance information daily. My favorite sources are:
- Rockstar Finance – this site curates the best of the personal finance blogoshere. If it’s good, it’s probably there.
- Of late, I’ve been binging the ChooseFI podcast. Again, it is one stop shopping for everything personal finance, and their enthusiasm is contagious!
- Twitter – As hectic as my life is with a stressful job and two kids, I have little bandwidth to seek out new content. Twitter has been great since I can quickly scan the content when I get a spare moment.
Where are you on the path to financial freedom now?
We have a FI goal of roughly a couple million. I’d put us at about 18% of where we want to be. We are finally maxing out our 401ks and have a savings rate near to 50%. Our goal is to retire at 55 or earlier and I think we are finally on the path to doing so.
Is there any advice/encouraging words you can give those who are struggling to escape Broke Phi Broke?
No matter where you are financially, it is amazing how fast things can turn around once you start down the path! About a decade ago, I didn’t have $20 in my checking account and massive debt. Now, we have a net worth approaching half a million!
Start by looking at your spending. There may be obvious ways to save immediately. Consider the value of the things you are spending on? Are they really bringing joy into your life? If not, can you eliminate it, or find a lower cost alternative?
Next, I feel it is very important to get an early financial win or two for the FIRE to truly catch. Look at a loan balance you can tackle in a few months, or save $1,000 for an emergency fund. Show yourself you can do it! Once that ball is rolling, it is hard to stop!
How can the readers contact you?
The best ways to reach me are by email firstname.lastname@example.org or through twitter @HeartlandOnFIRE
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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