From Broke Phi Broke to Financially Woke – Their Money Goals
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 Rho from Their Money Goals. Although her family still has a negative net worth, she and her husband have paid off an incredible $200,000 in debt over past two years!
Did they win the lotto? Come into an inheritance? I’ll let Rho fill you in on the details!
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
Hi there! My name is Rho. I own the site Their Money Goals, where I write about my family’s journey out of debt and provide financial tips to empower millennial professionals to take control of their lives by taking control of their money.
I believe that being financially responsible doesn’t have to mean completely sacrificing your lifestyle, although there will be some sacrifices and trade offs, for sure.
Aside from personal finance, I enjoy spending time with my husband and little ones, reading, listening to music (especially from the 90s and early 2000s–bring on the nostalgia), and trying new restaurants.
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?
I’m still technically a member of Broke Phi Broke, as our net worth is still negative (we ain’t got it!). The difference now, though, is that we’re paying attention and actively taking steps to improve our finances by aggressively paying off our debt.
We never lived paycheck-to-paycheck, but we spent a lot of money and didn’t make any progress financially. When we bought our house, we had to add up all our debt for the mortgage application. We had over $400,000 of debt, most of which was student loans.
The birth of our first son made us think seriously about turning things around and set us on the path we’re on now. When we laid out our debt at that point, we found that the student loans had ballooned because of the interest.
We had about $670,000 total when we started out, including the mortgage, and about $470,000 of that was student loans. It. Sucked. It was really overwhelming.
What are some of your biggest financial mistakes?
I got into a car accident in the summer of 2013. My car was totaled, so the insurance company cut me a check for about $4,000.
Rather than using that money to buy a similar car to the one I had already been driving, I used it as a down payment for a brand new car (while I was still in school, mind you).
When my husband and I started making a plan to get our finances in order in January 2017, I was sick to learn that my car was worth about a third of what I paid for it—plus I still owed $10,000 on my car loan. I learned about depreciation the hard way.
I don’t think buying a brand new car is always bad, but it definitely wasn’t the best idea in my situation, especially since I financed it.
Describe your upbringing. Where did you grow up? What did your parents or teachers teach you about money?
I grew up in a single-parent household. My mom did what she could to make ends meet. We didn’t always get what we wanted, but we always had what we needed.
She did a really good job of hiding the fact that we were poor. I didn’t fully realize it until I became an adult.
My mom didn’t explicitly teach me about money, but I remember her paying off one of her credit cards when I was in high school and the negative comments she made about credit.
Her experience with credit cards made me very hesitant to get one. I didn’t get my first credit card until I was a senior in college. Her experience is also largely why I’ve never carried any credit card debt.
I also remember taking a life skills class in high school, which included a brief lesson on the basics of personal finance. It wasn’t noteworthy, and I don’t even remember what was covered.
Aside from that, I didn’t learn much about money growing up. The foundation of my financial knowledge and my interest in personal finance actually came from a friend who helped me learn to manage my money in college. He was about the same age as me but had a much better understanding of money and was much further along financially.
How important is becoming financially woke to you? What steps have you taken to increase your financial knowledge?
Becoming financially woke is extremely important. I believe the biggest mistake people make with their money is not paying attention.
Part of the lack of attention may be due to feeling intimidated because, in general, we collectively don’t know much about money. With so much information available at our fingertips, though, it’s time to change that.
I’ve been learning about personal finance for over a decade. I read books and blogs and listen to podcasts regularly.
It’s definitely been a process. It started with learning basic money management skills and has grown to putting a plan in motion to reach financial independence. At each stage, I’ve continued to put the new information I learn into practice.
What are some of the key principles you have used to improve your financial life?
First and foremost, we are Christians, and we tithe, even though we’re working to get out of debt. I strongly believe that because we’ve been faithful in our tithing, God has been faithful to us in this journey.
Further, taking a look at our finances and figuring out where we stand was huge. We bring in a six-figure household income, and we’ve always been able to pay all of our bills on time, save, and do fun things like date nights and vacations.
We thought we were doing well with managing our money, so imagine our surprise when we realized our debt totaled $670,000, and we had a negative six-figure net worth. When we decided to pursue financial independence, the first order of business was to clean up our debt.
We’re using the debt snowball method in which you order your debts from smallest balance to largest balance without regard to interest rates and pay them in that order. Using this method, we’ve paid off over $200,000 in the last 2 years.
Another major key is being on the same page as my husband with our plan. Being in agreement about our goal and the road map to get there has made it much easier to accomplish success than if we were at odds.
For anyone who shares finances with a spouse or significant other, remember that you can’t fill a bucket that has a hole in the bottom.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
I consume personal finance information almost daily. There are so many great blogs and podcasts out there that it’s hard to keep up with all the great content.
Two of my favorite finance books are The Total Money Makeover by Dave Ramsey and The Millionaire Next Door by Thomas Stanley. Two of my favorite podcasts are The His and Her Money Show by Talaat and Tai McNeely and Journey to Launch by Jamila Souffrant. One of my favorite blogs is Budgets Are Sexy by J. Money.
Where are you on the path to financial freedom now?
I’d say we’re about halfway down the path to financial freedom.
We’ve already paid off all of my student loans. Once we finish paying my husband’s, the only thing left will be our mortgage, and our mortgage payment is less than 10% of our income.
We plan to keep going to pay off our mortgage and invest to reach financial independence, but I’ll feel free when we only have the mortgage to worry about.
Is there any advice/encouraging words you can give those who are struggling to escape Broke Phi Broke?
Nothing is going to happen overnight, but if you keep putting one foot in front of the other, eventually you’ll be able to look back and see how far you’ve come. Don’t give up. You’ve got this.
How can the readers contact you?
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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