Broke to Financially Woke: Guest Post on Peerless Money Mentor

Do you remember a time when you were broke? Not just a temporary “I can’t afford X today,” but a period where you couldn’t afford anything?

It’s hard for me to remember those days, honestly, but I think it’s good to try and remember what it felt like to sweat every purchase.

When I was in my twenties and we were just starting out I remember playing the gas game. I’d drive up to the pump and put in $20 because there was no way I could spare $60 to fill up the tank of my BMW X5. Ironic, right?

I remember having $10 or less in my checking account in college. That happened a lot. I drove to the ATM, would check my balance, then if I had enough ($10 or more!), I’d go join my friends at Checker’s or wherever else we were eating/drinking that night.

While I’m really glad to be on the other side of that now, I think it’s important to remember the Russian Roulette money days, when we had to decide what bills to pay and what bills had to wait and couldn’t imagine ever getting out from our mountain of consumer debt.

Jerry from Peerless Money Mentor has a series on his blog about people who’ve gone from “digging in the couch cushions to go to McDonalds” to “on the way to FI.” So I reached out to him to see if I could share our story in his series, From Broke to Financially Woke.

Jerry is a millennial from Baton Rouge who graduated with degrees in Business Management and IT. Despite his supposed business acumen, he still made the typical financial mistakes and ended up broke. He wised up, started some side hustles like driving for Uber, and began to make better money decisions. He started his blog to document his journey toward FI and help others make better money decisions.

Jerry’s series details the stories of people like him (and me) who went from major debt to financially literate.

Here’s an excerpt from the post:

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?

My husband (who goes by the moniker Mr. ThreeYear on the blog) and I moved from South America to the US with no debt (no consumer debt–we did have a 15 year mortgage on a Chilean apartment a family member was living in), which is pretty amazing considering he put himself through grad school and I went to an expensive undergrad. We both owe our parents for graduating debt free which is a gift we’d like to give our children as well. 

However, when we moved to Atlanta, we promptly fell into the $40K millionaire trap. We both had entry-level salaries, and were making way more money than we ever had before. As DINKS, we felt rich, so we immediately started to spend, spend, spend. We had a great apartment just miles from both our jobs, but we decided we needed to buy a house. We had two practical, paid-for cars, but we decided we needed newer cars so we took out car loans. And we began going out to eat and charging things on our credit cards, left and right. While we were investing some of our salaries, we were spending way too much, getting into debt, and not saving enough cash.

One of the low points of that time was right after we’d moved into our new house, which we bought at the top of the housing bubble in 2016. I was driving to work, and heard a report on the radio that the average American had $10,000 in credit card debt. I realized that we had MORE than that. I called Mr. ThreeYear from work and told him I thought we needed to pay it off. I remember telling him we’d probably need to cut our discretionary spending back, so he’d “only” get $400 per paycheck in discretionary spending. He pitched a fit! We look back on that memory now and smack our foreheads at how stupid we were. 

Our efforts to pay off our debt didn’t stick, because we weren’t committed and didn’t have a plan. It wasn’t until Mr. ThreeYear was laid off from his job and I picked up a copy of Dave Ramsey’s Total Money Makeover that we got financially woke and really got serious about paying off our debt. 

That was on July 4th, 2008, and when we made the decision to finally get rid of our debt, we owed $38,000 between car loans and credit cards (not counting our mortgage). 

Looking back, living with so much revolving credit card debt made us feel out of control. We realized, after Mr. ThreeYear’s layoff, that we were completely financially dependent on outside forces (i.e., his employer). We didn’t have any self-discipline or self-control around money. We didn’t know how to tell ourselves “no.” Whatever we wanted, we bought. If we didn’t have the money, we thought it was perfectly acceptable to charge it, because we needed it then. We didn’t want to have to wait. 

After we read The Total Money Makeover, we realized that we’d gotten the money rules wrong. We needed to practice delaying gratification. Even though we thought we needed to have the perfectly decorated house, luxury cars, and perfect clothes, that was a myth we’d bought into. 

It took us eighteen months to pay off the $38,000 in consumer debt. I wish I could say we buckled down and changed our ways that day, but the truth is, we made many mistakes, kept eating out, overspent, and overspent our budget many times during those eighteen months. But we still paid off our debt. Small, imperfect steps in the right direction were more important than waiting until we were perfect at budgeting and spending to start. 

To read the complete post, visit Peerless Money Mentor.

Thanks for reading!