From Broke to Financially Woke Interview Series – Fifty Week Vacation
Today, I am excited to share with you the twelfth 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 Alex who, like most college graduates, spent some time in Broke Phi Broke, due to student loans. What’s so compelling about his story is the speed at which he paid off his outstanding debts.
Let’s see what he did to transform his financial life…
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
Hey – I’m Alex, and I write over at the blog Fifty Week Vacation. Mrs. FWV and I are seeking to be FI so that we can travel the world. We have a pretty crazy story where one day we lived in the USA, pursued a job offer, and then eight weeks later we moved to Asia selling the cars and house along the way. You can read about it and more on my site.
Outside of blogging, we enjoy hiking and running. Lately, we have taken quite an interest in boats and enjoy spending time on them as much as possible. Also, I’m really into craft beer and can talk about it all day and night.
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?
Oh, these were the dark days.
Salaries were low, work hours were very long, and I came out of grad school with $20,000 in debt. The payment was not huge, but it sucked to think that it would be there for 10-15 years. On top of that my car died and I had to get a new one (new to me) but couldn’t afford to put much down on one. Add on another $10-$15k for a total of $30-$35k in debt. Yowza!
Having this debt was an all around a shitty feeling because we were doing “the right things” but felt like we were crawling ahead at a snail’s pace. If one thing went wrong, it just set us back another month or two.
All of this happened at once and just sparked that “we have to get out from under this” mentality. It was “that moment” if you will. It became a huge priority to pay these debts as fast as we could because it was just eating up a lot of cash and I knew that we needed to get the boat moving the other way. 6 months later we had it all paid off from that low point.
In terms of living paycheck to paycheck, I remember it hit me when I decided to buy a new bed around the same time as the above car and student loans. I think a friend of mine had recently purchased some furniture and it probably was a keeping up with the Joneses thing. I’ve never been a fan of buying something cheap, but instead prefer to purchase something that was going to last. So an IKEA bed frame wasn’t going to do it.
I think it was a $600 bed frame. It’s nice, and I still have it in storage somewhere, ironically. But I remember that it put me in this bind with always keeping a balance on my credit card for a few months. Since I was paid bi-weekly, it was that 13th week that saved my ass. The “extra” paycheck that paid it off and cleared me anew.
What are some of your biggest financial mistakes?
Oh, where to start. The bed/car/taking more money for student loans were all up there.
Second, I had a pretty good gig selling stuff online in college, and that money was gone to beer and parties by nightfall. I wish that it had gone into investment accounts for sure. That one still chaps my ass from time to time. It’s a real what do I have to show for it kind of feeling.
Third, not negotiating salaries hard enough from the get-go was a mistake. Having hired a good bit of people and being on the other side of the table today, people will generally pay more. There is always money in the banana stand!
While I felt like I’ve done well, in reality, I have not. There has been some money left on the table and many vacation days.
In terms of silly financial mistakes…
Fast forward years later and we were on the right path. Part of moving around the world and selling much of the stuff you own is that it leaves you with a bit of cash. It opened the door for us to invest in real estate.
We closed on three investment homes in one day from halfway around the world. That was crazy, and we had to get a bunch of things notarized and printed. It was $50 which where we live wasn’t that bad. It turns out it was $50 USD a stamp. Fun fact about mortgage paperwork, there are generally about six notary seals needed, per mortgage. 6x3x$50 = $900.
On the printing side, only us silly folks in the USA use 8.5×11. Everyone else uses A4 which is a little longer and slightly less wide paper. Counties have not accepted paperwork for more minor mistakes, so we had to find the one print shop that had 8.5×11 paper. Another fun fact, mortgage paperwork is about 100 pages give or take, per mortgage. Yeah, it was $1/page. 😀
We also needed US legal paper so they had to cut sheets of A3 to size. That was more expensive and a real cherry on top of it all. It just goes to show that a little more planning ahead can help you avoid silly mistakes.
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 the good ‘ole USA. I felt pretty oblivious to the world looking back now but felt like we did okay. I specifically remember having to save up for my Nintendo 64 when I was young. My brother and I saved for months and months to buy it, and I want to say it was $150? That was a lesson in knowing that things were not free. I had a lot of those.
As far as life, it was pretty standard and uneventful. School, sports, playing outside with friends, driving to Grandma and Grandpas. Repeat.
Teachers never talked about money, so I’ve got nothing to say there. However, my parents always taught me to save from the start. I remember my dad counting out quarters for my allowance on the stairs and telling me I had to save it. I was lucky there.
Fast forward, and I used to make excellent money mowing lawns and walking dogs for people on vacation. So from 8yo or so onwards, I was making $100+ a month easy doing that. Talk about some baseball card and candy money. I was a BALLER when I was 8.
With my new found dog walking and lawn mowing fortune came a change from my parents. I remember having to put $50 each month into some “account” my mom opened up for me at the bank. I didn’t quite understand it at the time, but it turns out it was an investment account.
When I graduated from college, it was worth something like $5,000. That was an incredible start.
I wish they had explained it better to me, although honestly, I’m not sure that I would have cared. I wanted to go outside and play. They certainly did instill a savings mindset which carries through today.
They are much more conservative with their investments than we are, but I think that comes from us being in a better situation financially than they were at the same age. We have that to thank them for because they set us up with having so little student loan debt or debt at all. We are very grateful for that head start.
How important is becoming financially woke to you? What steps have you take to increase your financial knowledge?
I would say being aware of your finances is #1 for me. I spent years devouring everything I could read about personal finance. I wanted to know it all because I knew that I didn’t want to work forever. Having money gives you options, and I’ve always wanted to go to the beat of my own drum.
To increase my knowledge – Books, blogs, friends, you name it, and I read the crap out of it.
Why? I made a lot of great mistakes along the way:
- Yeah I can trade… oh wait, no I can’t and my loss ass on trying to trade Netflix and Nike
- Spend money on crap I didn’t need? Been there, done that
- Adjusted my investment strategy every week? I was the KING there
- The list goes on
That was great to happen early when the stakes were low, so I had to find a better way. That’s when I discovered index funds and other people who were not interested in working for an absurd amount of years.
One thing I would also recommend is to get uncomfortable if you want to increase your financial knowledge. No, don’t go to a bad neighborhood at night. You know what I mean. I hear Toastmasters is fun.
What are some of the key principles you have used to improve your financial life?
- Accept that you are often wrong and don’t know it all. You don’t, and it is liberating when you figure that out. Be okay with being wrong and find smart people to surround yourself with. Be humble and hungry to learn.
- Focus on the big picture. Don’t let the minutiae keep you from starting. Said differently, don’t let perfect get in the way of great or even good. There is a time and place to dial everything in, but you have to get the boat headed in the right direction first. If you have low expense funds, but you are in more debt by the day, your ship is headed the wrong way.
- Keep your expenses in check, but don’t focus on it too much. Focusing on the lack or restrictions of things can be really toxic for people. You have to have fun in life because it is meant to be lived. Set aside what you need to save an spend the rest as you want. It’s your life, so you do you.
- Nothing will help you more along the journey quite like earning more will. Earn more. Period. If you can, don’t make it as W-2 income. Earn it through business, rental property, or investments. They are tax-advantaged. The game is not in your favor as a W-2 employee.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
I read or listen to something finance related every day. Here are recommendations.
Books – The last book I read on finance-ish stuff was Fooled By Randomness. It’s excellent and talks about how your thinking can be flawed.
Also, read The Millionaire Fastlane a few times. That and Cashflow Quadrant were huge lightbulb moments for me when I internalized what they were saying.
For insightful big picture information, look up the folks at Ritholtz Wealth Mgmt. Michael, Ben, and Blair have amazing blogs.
For something fun follow RampCapitalLLC and Hipster_Trader on Twitter.
For great FIRE blogs, I really like ThinkSaveRetire, Afford Anything and Go Curry Cracker. I think they see the big picture and tell their stories well.
Podcasts – Stacking Benjamins all the way. I see Chad Carson just put out a podcast. Knowing what I do of him from around the web, I can only imagine it is great.
Where are you on the path to financial freedom now?
Financial independence is a function of cash flow for us. If we have the cash flow tomorrow, we are good to go. So right now I’d say we are about 20% of the way there.
However, it is a function of how much we earn and invest along with how the markets perform over the coming years. More earnings or higher returns will get us there sooner.
I’ll stick with that we are 20% of the way there for now. Seems about right.
Is there any advice/encouraging words you can give those who are struggling to escape Broke Phi Broke?
There is a line from Ernest Hemingway, that is something to the effect of:
Bill – “How’d you go bankrupt?”
Mike – “Two ways – slowly, and then all of a sudden”
The opposite is true for escaping being broke. Get your boat in the right direction, and things can change quickly. You cannot underestimate what can be done with a few small changes.
Also, disconnect from screens each day – phones, tablets, tv, and computers. Take a moment and live life.
Last, remember to do something different, or you are only going to get where you are already headed. You have to change something if you don’t like where you are at. Challenging yourself to get uncomfortable is a great way to do that.
How can the readers contact you?
I hang out on Twitter a lot @FiftyWeekVacay and the site www.fiftyweekvacation.com
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.
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