From Broke Phi Broke to Financially Woke – The Mastermind Within
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 my blogger friend Erik from the Mastermind Within. During his second year of college, he became a short-term member of Broke Phi Broke. With only $40 in his bank account, he wasn’t able to go out with his classmates.
Fast forward to today, and he is a money making machine. He is a six-figure earner with several side hustles.
How did he transform into a person who is killing it financially? I’ll let him share his secrets with you…
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
I’ve been blogging for the past 3 years, and talk about self improvement, personal finance and how to live with intention to progress towards your dream life.
Outside of personal finance and doing things online, I love being active. During the summer, I play basketball, ultimate frisbee, and golf, and recently, I joined a rock climbing gym.
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?
During the spring semester of my second year of college, I was down to my last $40. Luckily, I had already paid for the spring tuition, my meal plan, and spring rent, but with only $40 in my bank account, and no job at the time, I couldn’t go out for the remaining month and a half of school.
Having to say no to going to dinner or other events wasn’t the best feeling, and while I did have a job lined up for the next summer, I could only wait until I was paid to get more money in my account.
It felt horrible spending nights in when I could have been out with friends. I swore to myself I’d never be broke again, and since then, I’ve always had at least $500 in my bank account.
I was definitely lucky to be able to move back in with my parents during the summer to save money, but this change in mindset has allowed me to support myself after moving out for the next semester.
What are some of your biggest financial mistakes?
I’ve had three big financial mistakes: buying a couple hundred dollars worth of virtual bucks on a Facebook game, joining a multi-level marketing company for a few months, and starting and stopping a subscription box company.
During my first year of college, I was stressed. At the time, I was playing this game with other friends. I wanted to progress faster, so I bought some of the premium features. A few months later, a lot of us stopped playing – and I had nothing to show for those expenses.
These purchases didn’t even lead to happiness – the features were purchased because I was anxious and stressed. A little more self control would have been great to apply in this situation.
Fast forward a few years, I was approached on one of the streets of campus by a young couple and they asked if I wanted to chat about a business opportunity. At this point, I was interested in business, but didn’t realize it was a MLM until it was too late. Fortunately, this was only a $200 loss, but it was a mistake.
Finally, the subscription box company I launched and then failed to grow was a big financial loss.
Spending 2 years of my life and ~$20,000, this basically was an MBA but without the credentials.
Describe your upbringing. Where did you grow up? What did your parents or teachers teach you about money?
I grew up in Minnesota, and my parents and grandparents both taught me about money.
My grandparents in particular have had a huge influence on my habits towards money.
When I would go to visit for a week during the summer, my grandma would give me $12 in quarters.
She would say, “Alright Erik, you get $12 for the week. You can spend this $12 on whatever you want, but you only get the $12 and no more.”
This taught me the concept of budgeting (indirectly) and also taught me to value the things I buy with my money.
If I waste money on something I don’t want or need, then it’s not guaranteed I’ll have more money later for the things I actually want!
Over time, I realized that I don’t need a lot, and actually would end up saving the $12!
This has carried over to adulthood, and I’m quite cheap/frugal still.
How important is becoming financially woke to you? What steps have you taken to increase your financial knowledge?
Becoming financially woke is very important to me. Since having that money of pain during college, I’ve looked to learn a little more about making more money and investing each month.
For me, I don’t need a lot to be happy and I’ve never really been a huge spender.
Focusing on debt paydown and saving habits come naturally to me. To really improve my financial situation, I’ve looked to become more valuable through learning new skills and techniques to build wealth and make more money.
Increasing my financial knowledge has come from:
- talking to people who are successful with their finances and investments
- reading numerous books on personal finance, entrepreneurship and self improvement
- Reading different personal finance blogs and listening to different finance podcasts
Also, I believe taking action is very important, and sometimes experience can be the best teacher.
For example, I bought a house to house hack just before my 23rd birthday and told myself, “This is a very risky decision, but if it works out, it will be worth the risk. If it doesn’t work out, I will have learned about home ownership, financing a house, and becoming a landlord.”
With this mindset towards action and learning, I’ve been able to improve my financial knowledge.
[Editor’s note: If you are looking for a great book to read that includes several house hacking strategies, pick up a copy of Chad’s Carson’s Retire Early with Real Estate book from Amazon or your local library.]
What are some of the key principles you have used to improve your financial life?
One of my favorite books is The Slight Edge. The Slight Edge is essentially compound interest, or in other words, focusing on the little things and making small improvements daily and weekly to influence massive change in the long term.
The same thing can be applied in personal finance: by making the right financial decisions on a daily basis, you can meet your medium and long term goals.
For me, this means not making any impulsive decisions when shopping, and thinking about what I value before swiping my credit card.
Also, this helps me keep a focus to the future and trust the process of saving and investing in assets which typically have performed well over time.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
I consume a lot of personal finance and general finance information on a weekly basis. I’ve also read a lot of the popular personal finance, entrepreneurship and investing books, and love listening to inspiring personal finance podcasts.
For me, when I started learning all of this personal finance stuff in 2013, I loved Financial Samurai’s blog.
Then I started reading Gen Y Finance Guy in 2015, and over time, I’ve found many other amazing blogs and podcasts (but these are the two which influenced me the most).
For books, I love The Millionaire Fastlane, The Slight Edge, The Millionaire Real Estate Investor, and The Richest Man in Babylon.
Where are you on the path to financial freedom now?
Honestly, I want to quit my job every day to go full into web development, blogging and freelancing, but I’ve yet to make that jump. I don’t make any profits from my blog though, and until I do this, I probably won’t make the jump.
That being said, this past summer, I sold my house and was able to cash out multiple years of expenses. With the proceeds, I’ve invested the majority into different assets, and have about 6 months of expenses in cash if I do want to quit at some point.
In terms of how far I’m along my path to financial freedom, I’ve been working for 5 years and have saved about 50% of my income each year.
I’m sitting right around the $250k net worth mark, and am hoping that some of my investments and side projects take off in the next few years to give me more flexibility around my work.
I don’t think I’ll ever stop working, but I do want flexibility around what I can do, and also want to be able to help those close to me if they are in need.
Is there any advice/encouraging words you can give those who are struggling to escape Broke Phi Broke?
You have to make the decision for yourself to get out of Broke Phi Broke.
You have an incredibly powerful brain and have a ton of potential.
By making the decision to improve, you consciously and subconsciously spark original thought into designing the life you want in the future.
Depending on your current situation, the process to getting out of Broke Phi Broke might be long.
However, it starts with a decision to become better, a plan to create your dream life, and the action and execution to achieve your goals.
Take action today and your future self will thank you!
How can the readers contact you?
Thanks for letting me participate in this interview series!
Read more interviews in the From Broke to Financially Woke Series.
Please share this From Broke to Financially Woke interview on social media with the hashtag #escapebrokephibroke
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!