J.D. Roth, one of the most respected writers in the personal finance world, was kind enough to join me for an episode of the Mad Fientist Financial Independence Podcast!
In less than ten years, J.D. went from having $35,000 of consumer debt to becoming a self-made millionaire.
He has also just released an excellent new guide that teaches you how to become the Chief Financial Officer of your life – Be Your Own CFO: The Unconventional Guide to Mastering Your Money
On today’s show, J.D. shares what he’s learned over the past decade of writing about money and personal finance and describes how you too can find personal and financial freedom.
- How I Found Freedom in an Unfree World by Harry Browne
- Mastery: The Keys to Success and Long-Term Fulfillment by George Leonard
- Chautauqua in Ecuador
- Chris Guillebeau’s Unconventional Guides
- Be Your Own CFO: The Unconventional Guide to Mastering Your Money
I’m extremely excited to introduce my guest today. Not only is he a writer for some big time publications such as Entrepreneur Magazine and Time.com, he’s actually the creator of the first blog I ever read, a blog that Money Magazine named ‘the web’s most inspiring personal finance blog’.
Now, I can’t remember exactly what year it was I stumbled upon GetRichSlowly.org, but it’s definitely the first blog I subscribed to. And up until that point, I really didn’t get what blogs were all about really. I know that may be surprising since I’m a professional software developer, but I actually got into computer science through math. It was because I was good at math and I liked math. So I was never really an Internet geek. I didn’t spend 20 hours a day on the computer or anything like that. So, I didn’t get blogs.
It wasn’t until I stumbled upon Get Rich Slowly that I was like, “Oh, this is pretty cool. This is just some guy that’s not a professional, but he’s writing amazing content about money and personal finance.” I just fell in love with it. I just consumed the content religiously.
That’s why I’m so excited that I’m going to get to speak to the creator of Get Rich Slowly, JD Roth today.
JD is now writing most of his content over at JDRoth.com, which is his personal site. It’s titled More Than Money. So yeah, he does still talk quite a bit about money and personal finance. But he threw us a bunch of other good stuff in there as well.
For example, he just started a series this year that he’s talking about personal and financial freedom every Monday during the year. Those articles had just been incredible.
He’s also got some really exciting projects in the works that I’m excited to talk to him about. It’s just going to be really cool to tap into some of his experience. He’s been writing about money for almost the past decade. Some of the best stuff on the web for personal finances is because of him.
So without further delay, hey, JD, thank you very much for being here. I really appreciate it.
J.D. Roth: Hey, Brandon. Thanks for having me. Glad to be here.
Mad Fientist: Yeah! No, I really appreciate you taking the time out. As I’ve said in the intro, Get Rich Slowly was the first blog I ever read in my life. I really didn’t even know what a blog was before. I stumbled across Get Rich Slowly and I was like, “Oh, man! Yeah, this is exactly what I want to do. I want to get rich slowly.” I was like, “Oh, some guy named JD is writing this. I guess that’s what a blog is.” So yeah, I very appreciate it you taking the time.
J.D. Roth: Yeah, thanks so much.
Mad Fientist: I have to say though, it was probably the most difficult interview I’ve had to prepared for. There’s a couple of reasons for that. One, your body of work is so big. You founded Get Rich Slowly back in 2006, I believe. And I think at one point, you’re writing 12 articles per week and you’ve just been prolific ever since. So it was very hard to pinpoint actual specific topics to talk about.
And then second reason is the way you’re writing, it feels like I already know you. I’m sure you get that from a lot of your readers.
J.D. Roth: I do, actually, yeah.
Mad Fientist: It’s a testament to your writing. But yeah, I feel like I know you. It was like trying to plan what I’m going to talk about to a friend when I’m going out to lunch. You don’t really do that too often.
J.D. Roth: We did this chat about whatever.
Mad Fientist: Yeah, that’s the plan. That’s what I figured. So I was like, “I’m just going to treat it like we’re sitting down to lunch, having a beer or something.” We can just chat about money and see what you’ve learned over the past eight years of really thinking about and writing about money so much. I hope that sounds good to you.
J.D. Roth: Yeah, that sounds great.
Mad Fientist: Excellent! So yeah, if you wouldn’t mind just giving a little bit of background about yourself from people that may not know you from GetRichSlowly.org or your new site, JDRoth.com.
J.D. Roth: Sure! Well, I was born and raised out here near Portland, Oregon. That’s where I live now. I grew up in a relatively poor family. My father was a serial entrepreneur. He’s always starting businesses. Some of those succeeded, some of them didn’t. But when he did have money, when he did have a successful business, he didn’t save any money. He just spent it. He squandered it.
I recognize early on that if I wanted to go to school, I was going to have to fund my own way through college. So the way I decided to do that, I was a smart enough kid, so I thought, “Oh! Well, I’ll try to do scholarships.” I was fortunate that I managed to get scholarships to college.”
So I could’ve, in theory, graduated from college with no debt. And I did graduate without any student loans. But I graduated with the start of a credit card habit because while I was in college, I started to try and keep up with the Joneses or the roommate, anyhow.
And to do that, because I didn’t have any money, I had to start signing up for credit cards. And back in the late ‘80s, you don’t sell credit cards. What do you do? Getting students to sign up on campus.
Mad Fientist: Yeah, free Frisbees and all that sort of stuff.
J.D. Roth: Yeah, that’s exactly right. I was a sucker and fell for it. So, I developed this debt problem that built during the 1990s until in 2004, my now ex-wife (at the time, we were married), we’re buying a new home. On paper, I could afford it, but it was like the straw that broke the camel’s back I guess. It was just too much debt. Everything involved with it made it so that I just felt overwhelmed.
It was just over $35,000 in consumer debt at the time and it was just getting worse and worse. And so, some friends finally thought I was ready to listen to reason and they loaned me some books. I read the books and implemented what I learned. I started writing about what I learned.
And from there, I got out of debt, built wealth and starting GetRichSlowly.org where I shared my successes and failures along the way.
Mad Fientist: And that all came from just a single post on your personal blog, right? You just wrote a post called Get Rich Slowly about what you’re starting to read and things like that? Is that right?
J.D. Roth: Yeah, that’s right. There are a lot of things – nobody sets out to say, “Oh, I’m going to be a blogger.” Maybe they do nowadays. But in 2006, you didn’t do that. So there are a lot of things that led up to me founding Get Rich Slowly.
Part of that was I’ve been programming computers and working with computers since I was in fourth grader. I was a writer. I always wanted to be a writer. I thought I would write science fiction or poetry, but I ended up writing about personal finance.
And so I had been blogging since before blog was even a word. I kept what we called ‘online journals’ or ‘web journals’. I like to say I wrote about “cats, computers and comic books” because those were the things I liked.
But I was learning about personal financial too. I wrote this article called Get Rich Slowly that was really just an attempt to summarize everything that I had been reading. I have read maybe a dozen personal finance book at this point. They all seem to have this theme that you can’t get rich quickly, but you can get rich slowly.
So that article was just a way for me to summarize what I learned. It ended up being very successful. For whatever reason, a lot of people liked that article and it prompted me to start a blog based on that.
Mad Fientist: So that’s, I believe, April 2006. Is that when you actually found GetRichSlowly.org?
J.D. Roth: Yeah, I’d say it’s April 15th, 2006, but I had a few posts that were up a little bit before that, but April 15th, 2006. So, when is that? That’s almost exactly eight years ago.
Mad Fientist: Wow! Yeah. So you started writing a lot there about personal finance and a lot of it was your personal journey.
J.D. Roth: Absolutely!
Mad Fientist: And it quickly took off and you started making money off the site. Is that right?
J.D. Roth: Yeah! And actually, just the other day, I found my old spreadsheets. I’m one of these people who just track things obsessively. When I’m trying to lose weight, I track that obsessively. I track my spending obsessively. So naturally, I track my blog income.
Yeah, Get Rich Slowly itself, the blog, it grew relatively quickly. There were a few reasons for it I think. One was I wrote fairly often. Second, this was a time when a lot of people were anonymous. They were writing about personal finance on the web anonymously if they were doing blogs. I wasn’t anonymous in any way. I was very public about who I was and what I was doing and how I was failing and what I was doing right.
My philosophy, Brandon, is that I feel like a lot of people when they write online (whether it’s about personal finance or other things), they’re afraid to be completely open and honest. I don’t know, there’s this impression that people are going to get stalkers following them or whatever.
What I found is by telling my story and being completely open and honest, it helped to build connections with readers. So when I speak at blogging conferences and stuff, I stress the importance of telling a story. I feel like it’s a great way for people to connect.
Mad Fientist: Yeah, absolutely. That’s definitely something I’m striving to get better at. And in the end, that’s exactly why I felt like I would be talking to an old friend today because yeah, I just feel like I connect with you on such a personal level.
So by 2007, based on stuff you had written on your blog, you were making a pretty good income. So I’m assuming by then, you had made a pretty big dent on your consumer debt or…?
J.D. Roth: Well, I started tackling the consumer debt in October of 2004. I’ve actually uncovered – it’s not on WordPress, a processing document. But it’s basically a plan that I wrote out. I wrote it on October 2004 and I said, “By December of 2007, I want to be debt-free.” I had this plan.
And things didn’t go exactly to plan, but I actually did end up in December of 2007 paying off the last of my debt, my consumer debt. So that one went according to schedule, anyhow, that part.
And the blog growth, the income from the blog, it grew very slowly at first. I was showing my girlfriend the numbers the other day. I think the first month, March of 2006, was something like $40. The next month was $80 or so on. By July 2007, I was making a thousand dollars a month. No, it had been more than that. I would’ve had been getting really close to my income that I was making from my day job, which was about $4000 a month. So that’s within a year or 15 months, I was making this much from the blog as I was making from my day job, which made it so that I can quit.
Mad Fientist: Wow! And when did you actually quit?
J.D. Roth: I quit in March of 2008. I started trying to get out of debt, October 2004. I started to get rich slowly in April 2006. I paid off the last of my debt December of 2007. I quit my day job March of 2008.
Mad Fientist: Oh, okay. So how was your attitude towards money changing? As someone who was previously in debt, the increase in income, did that change how you’re spending? Did you increase your spending to match a lot of that income? Or by then, did you have a pretty good handle over it?
J.D. Roth: So a large part of the problem that I had when I was younger is my parents how haven’t had a lot of money had never taught me how to have a healthy relationship with money I guess. I talk about ‘money blueprints’ sometimes. These are the blueprints we’d get from our family and our friends (but especially from our parents) about how we interact with money and how we think about money.
I also think about how smart money management has nothing to do with math. It’s all about the mental side of things.
My problem wasn’t the math because again, the math is easy. I had been one of the top students in the nation at business math. I competed in a business math events for future business leaders of America. I competed at a national level.
I understood the math, but that didn’t stop me from making dumb decisions because I didn’t have any mastery of the emotional side. But in the process of paying off my debt, I started reducing my expenses. My income increased the same time, obviously. I was getting a better control on the emotional side of money.
But the thing of it is, even though I got a better control of it then and have continued to build control, I still don’t have a complete mastery of it to this day. Here we are in 2014 and I still am having issues with personal finance. I think everybody does, but it’s just interesting to me that even knowing everything that I know and having read so much about it and written so much about it, there are still times that I find myself buying things just because I want them that’s kind of illogical.
Mad Fientist: Yeah, I know. I’m the same. I still struggle with things like I’ll have this chunk of money that I’m ready to invest and then I’m like, “Well, I’ll just wait until the market goes down a bit first” and that never works out. Over the long run, it doesn’t work out and I know it. But still, yeah, that’s why automation and things like that are good things for a person like me. But yeah, it’s amazing. You can talk about it and write about it so much, but it’s still your brains that’s sabotaging things at the end of the day.
J.D. Roth: And I think you’ve hit on a very important thing. A project that I’m currently working on (I think we’re going to talk about this) is I just wrote a guide to how to be the CFO of your own life, be your own CFO. The whole premise of that is if more people were to manage their personal finances as if they were managing a business’ finances, they will be more successful with their money.
Part of that is learning to automate good behavior. It’s kind of a way to take your brain out of the equation – not your brain, but your emotions and your bad habits. If you can automate the right things like investing or paying off debt or whatever it is, find ways to automate the good behavior, so that you’re not thwarting yourself. I think that’s very important.
Mad Fientist: Absolutely! Yeah, and definitely, we’ll be talking more about that as the show continues.
So to get back, you pay off your debt at the end of 2007, Get Rich Slowly is really taking off. And then by March 2009, you have sold the site and obviously received quite a sizeable windfall from that. But you can’t tell anybody. You’ve got to wait something like three years or something?
J.D. Roth: There was no one defined time in the contract. I was just under obligation that I could not discuss – there was a non-disclosure built into the contract. I still can’t talk much about it. But I can say that throughout 2008, I’ve received a lot of interest, a number of people that emailed me and asked whether Get Rich Slowly was for sale.
I thought that was just ludicrous. I thought that was just a joke. Why would anybody buy a blog?
But then towards the end of 2008, I decided, “Oh, maybe I should actually pay more attention to this. It’s wrong to just dismiss it out of hand. I should at least see what people have to say.”
And there were some other things going on in the background. I was beginning to realize that I wasn’t quite happy with where I was in life, with who I was, with my marriage and some other things. And then in January 2009, my bestfriend committed suicide. This had a profound impact on me. It made me realize that – I don’t know, I was forgoing today chasing some unknown tomorrow. I realized I needed a little bit more balance.
I had been working like mad at Get Rich Slowly, just hours and hours and hours, tons of time, like 80+ hours a week. It wasn’t good for me. It wasn’t good for the marriage. It wasn’t good for anything.
So all of these led me to say, “Okay, I’m going to entertain offers.” So the first offer came in at the beginning of 2009 to buy Get Rich Slowly. I asked the guy, “Okay, how much are you willing to offer?” He said, “$5000!” I laughed him off because at that time, every once in a while, I would have a $5000 a day believe it or not. I was having amazing income there.
But the second offer, I said, “Alright! Well, what are you offering?” They said, “Well, we don’t know. We have to see your financials.” That took me back because I was like, “Whoa! Do I really want to show what’s going on behind-the-scenes?”
So I talked to my lawyer and my accountant and they said, “No, no, no. This is standard procedure. Show them the stuff.”
So, they spend a couple of weeks looking at the figures. And meanwhile, I talked with my wife. We’ve talked what would it take for us to sell. We came out with a number. We would sell the blog if we were offered this much money.
The offer came back about 50% higher than that. I was like, “Whoa!” We thought we had set some sort of unreasonable, crazy target. And here, they came back with 50% more than that. I kind of felt like I was out of my league, so I found some investment bankers and they helped shop around to a second potential buyer and the second potential buyer offered even more money.
So anyway, yes, the ultimate result was I did sell the blog and received a large windfall. It was completely unexpected. I had never set out to do that. I feel very grateful for it to this day. It’s an amazing thing.
Mad Fientist: Absolutely! So was that challenging? When your received the windfall, was it hard to make the right decisions or did you allocate a little bit to yourself, to feel that urge to maybe spend some more since you have received some money?
J.D. Roth: Well, I allocated some. I bought some new furniture and we took a trip. That was what we had decided to do. But the rest of the money, no. Because it was just this completely unexpected thing, it wasn’t hard to set it aside and to follow my own advice and put it in index funds. And actually, a lot of it went into municipal bonds at the time because my wife was really, really nervous about the stock market.
This was, again, March of 2009. That was right at the bottom of the market. Even though I wanted to pour it all into index funds – I actually wanted to put it all in GE I think it was. I can’t actually remember what stock I was so hung up on at the time. There was one stock that it was down below ten and I just wanted to buy, buy, buy.
But I put it into index funds and municipal bonds.
See, you had mentioned earlier the NDA and not being able to talk about it. That was really, really hard for me…
Mad Fientist: …after being so open for so many years on the blog.
J.D. Roth: Yes! Absolutely! The whole foundation of my blog was talking about what I was experience and where I was coming from. And to not be able to talk about this just killed me.
So I had asked from time to time, “Can I write about it yet? Can I write about it yet? Can I write about it yet?” Eventually, about three years later, they said, “Yeah, go ahead. You can write about it.” So, I got to tell the story finally.
Mad Fientist: Yeah, I remember. I remember that day. I got the email on the old RSS reader.
J.D. Roth: That was Get Rich Slowly.
Mad Fientist: So yeah, it definitely sounds like it was good that you had that mental shift well before the windfall and everything.
J.D. Roth: Oh, yeah. Yeah, yeah. Because you read so much about how lottery winners and professional athletes, they get this huge windfalls and they spend money like crazy. So it doesn’t matter that they’ve had this huge influx of money because they’re spending to match their new income and it just screws them up.
Now, on the other hand, there also a couple of competing things going on. First of all, I don’t believe there’s any virtue in dying with a huge fortune. I don’t have children. I’m one of those who wants to die broke. I want to die having spent my last dollar. But obviously, we don’t know when we’re going to die, so it’s hard to figure out when that’s going to be.
In my family, we have a history of health problems. Many of the men die young of cancer. And so, there’s a part of me that’s like, “Oh, yeah! I should spend it while I can.”
So the balance I’ve taken is, “No, I’m going to live a decent, comfortable life – not extravagant, but I’m not going to deprive myself either. I’m going to live within my means.”
And if I do find out I have a terminal illness, well then, I’m pulling out all the stocks.
Mad Fientist: This leads nicely into the next thing I was hoping to talk to you about. You’ve started a new series on your personal site, JDRoth.com about personal and financial freedom.
A lot of that is in pursuing happiness and overcoming fear and things like that. And yet, a lot of it is based on how you feel about money or how you obtain happiness from simpler things and things like that.
So I was hoping to just get your brief rundown of what you have planned for this whole year long personal and financial freedom series on the blog.
Mad Fientist: Sure! You bet. So, after I sold Get Rich Slowly, in 2009, I hung around and I basically acted as editor and main writer for another three years because I just couldn’t tear myself away. I wasn’t contractually obligated to do that. In fact, I had negotiated the ability to just walk away at any time. I had given up a lot of money, so that I could do that because the company that bought it wanted me to stick around for three years. They would’ve paid me to do it. And then, I didn’t do it.
Anyway, JDRoth.com now (the blog that I’m running), I call it ‘More Than Money’ because while I do write a little bit about personal finance, I actually write about other topics in addition to that. And you’re right. What I’ve been focusing on for 2014 is personal and financial freedom.
This is an outgrowth of a presentation that I made in Ecuador last September. Mr. Money Mustache, JL Collins, Sheryl Reed and I, the four of us got together and we held a retreat or a chautauqua, as we called it, in Ecuador and we had about 25 people (I think it was 23 maybe) who came down to talk about financial freedom and happiness and all the different things involved with that.
I didn’t prepare my presentation in advance. I’ve been reading a lot of things on the subject, on freedom and happiness just for my own edification. When we got down there, I listened to Sheryl make her presentation and I listened to Jim Collins make his, I listened to Mr. Money Mustache make his. After all of that, I sat down and I said, “Alright! Based on what they said and based on what I’ve been reading, here’s what I want to talk about.”
So in just one afternoon, I drafted this presentation. I made it the next day and it went over very well. People were, I guess, intrigued by it.
And so I sat down and I said, “Okay, I’m going to write a book based on this or an ebook based on this.” It ended up that the ebook kind of fizzled out, but I had all these material that I produced about a topic that I felt passionately about. And, so what I’ve been doing is sharing that at JDRoth.com during 2014.
So just now, we’ve just neared the end of the section on fear, about overcoming fear. How do you handle fear in your life? We’re going to start the section on what happiness is and how you move from being afraid and live in a life where you make decisions based on fear and instead, make decisions based on happiness and your own well-being.
Mad Fientist: Excellent! No, it’s been a great series so far. I’m really looking forward to the last section in particular because I’m actually in the process of writing a master’s thesis and it’s a lot on happiness and consumption and how they relate, some of the decision-making and things like that that go on.
J.D. Roth: And so, do you find that there is a relationship between consumption and happiness whether it’s a negative one or a positive correlation?
Mad Fientist: It’s positive up to a point. All the data suggests that once you hit a certain income level, then there’s a diminishing returns. It really doesn’t make you happier. And a lot of it is because happiness, it relates to how you’re spending relates to other people around you.
So it’s not an absolute level of consumption that makes you happy. It’s a relative level of consumption. As you start increasing your consumption, then you start hanging out with people that are consuming even more and it just never – hedonic treadmill and all that sort of stuff.
So yeah, it’s been really interesting. I’m excited to read your series on it as well. It’ll be perfect timing actually.
J.D. Roth: And you know what? I’m not sure that I have anything in there. I’m trying to remember about the relationship about consumption and happiness. I’m sure I must have something.
I know that when I wrote this, I was thinking a lot about Mihaly Csikszentmihalyi’s concept of flow and experiencing happiness or fulfillment through the things you do and the choices you make and your daily activities I guess.
So it goes very much to the idea that you see all over the place that it’s actually experiences that have a greater impact on our happiness. Rather than the things we have, it’s the things we do.
Mad Fientist: Absolutely! Yeah, just based on a lot of the data I’ve been looking at. Happiness in America hasn’t increased at all since the 1950s, but productivity has increased by four times. So, we could theoretically work a quarter of what they worked back in the fifties and be able to have all the goods and services that they enjoyed and have just as happy of a lifestyle as they did back then.
There was a lot of talk about extrinsic things like buying things for status, that that doesn’t make you happy. It’s the intrinsic things that really matter and building relationships.
But the problem with humans is that we’re really bad at predicting what will make us happy.
J.D. Roth: Exactly right. That’s a Daniel Gilbert stuff.
Mad Fientist: Yeah, exactly. When we’re presented with an increase in salary, we think, “Oh, that will make me happy,” but it doesn’t make us happy enough to deal with the longer hours and the higher stress and more time away from family and things like that.
J.D. Roth: Right!
Mad Fientist: It’s definitely not connected. Especially in America where everyone’s standard of living is already incredibly wealthy compared to the rest of the world, we’ve already exceeded that minimum level where money will make us happy. Now, it’s just all not going to improve us anymore.
J.D. Roth: Right. That’s exactly right.
Mad Fientist: You’ve already mentioned this during your series. This is a book that actually, our mutual friend, Jim Collins from JLCollinsNH.com have recommended to me. It’s Harry Browns’ How I Found Freedom in an Unfree World. This is a book that I haven’t read until about two years ago or a year and a half ago when Jim recommended it to me. It just blew me away.
I’d just like to get your take on it because I know it’s an important book to you as well.
J.D. Roth: Yeah, absolutely. I think it was a book that was very revolutionary when it came about. It’s a book, first of all, that was written in the early 1970s by a man named Harry Brown. He’s best known for being the libertarian candidate for president in I think ’96 and 2000.
Well, I consider myself a small libertarian in that I subscribe to some libertarian ideas although I, by no means, subscribe to the party type stuff, the libertarian party type stuff.
The book stuff, while it eventually gist the libertarian politics, most of it is about just personal freedom and how you achieve personal freedom. Reading what Harry Brown wrote about it was just kind of revolutionary to me because I was raised – I don’t know, I wanted to please people all the time. I always felt like I had to have their permission to do things. I think a lot of us feel like that.
We’re raised in families. We need our parent’s permission to do things to go hang out with friends or to do anything. Then we go to school and we need permission to do things. And then we go to work, we need permission from our bosses to do things.
What we don’t realize when we get out on our own is for the most part, we don’t actually need permission. We don’t need permission to choose to live differently I guess. If you want to pursue early retirement even though nobody else is interested in, you don’t need anybody’s permission to do that. That’s your choice and you can do it.
So Harry Brown was writing about how you can choose to do whatever you want to essentially as long as you’re not infringing on the rights of others. You can do what you want.
It seems pretty obvious. Well, actually, some people will really disagree with that. But for those who follow this path of trying to pursue personal freedom, it seems pretty obvious. But it’s not obvious when you’re just starting out. Even for me, at age 40, it wasn’t obvious. It didn’t feel obvious that I was free to do whatever I wanted.
Mad Fientist: I completely agree. I think actually through Get Rich Slowly, probably about five years ago, four or five years ago, I stumbled upon EarlyRetirementExtreme.com. That just completely changed my whole plan financially. Before, I was never a big spender. I’d save a lot and then take a bit of time off and then work some more and take a bit of time off. And then, when I realized, “Hey, I could actually just work really hard for five years and then take off for good,” that changed my mind. That just changed my life completely.
And then, How I Found Freedom in an Unfree World sort of did the same thing for my non-financial life if you know what I mean. It just completely opened my eyes like, “Yeah, I’m following all these rules, but most of these rules are dumb. They may not apply to me.” There’s a sense of just following things blindly. It made me question everything.
Yeah, it’s the book I recommend more than any other book. I think many people come to me to ask, “What finance book would you recommend?”, I always stir them towards that just because it’s more important I think – because the math is easy, as you’ve said before.
J.D. Roth: I agree with you 100%. It is more important. It sounds funny to people when they come to me and they want recommendations for personal finance books and I recommend that. I’ll also recommend a book called Mastery by George Leonard…
Mad Fientist: Ooh, I haven’t read that one.
J.D. Roth: …which is about how you achieve mastery in any subject. He’s writing specifically about martial arts, I think, is the examples that he uses most of the time. He talks about how it’s not a linear thing. It’s just this gradual process of getting a little bit better and then getting a little worse and then getting a little better and then getting a little worse. It actually is a great personal finance book because it helps you realize, “Oh, I’m not going to be perfect. I’m going to make mistakes along the way.”
So recommending these non-finance books as good personal finance books I think kind of startles some people.
And another thing I wanted to say, Brandon is when you read a book like How I Found Freedom in an Unfree World or Your Money or Your Life or Dave Ramsey’s Total Money Makeover, there are always going to be parts that you disagree with. And one thing that really frustrates me when people read these books and they decide they don’t agree with certain aspects that the author is writing about is they will just discard everything from the book.
So they might read Total Money Makeover and decide, “Oh, Dave Ramsey is Christian and I’m not Christian, so I can’t agree with what he’s writing about in getting out of debt.” Now, I think that’s just bogus. You can’t throw the baby out with the bathwater. You’ve got to be able to read a book intelligently and go through and say, “Oh, these are some interesting ideas. I don’t agree with everything that the author is writing about, but these things are particularly applicable to me and I can put them to use in my life.”
And so it makes it so that I’m able to read all sorts of different kinds of books and get great nuggets out of them even if I disagree with even a majority of the material.
Mad Fientist: Absolutely! I completely agree. And just to go back, Mastery by George who, I’m sorry?
J.D. Roth: I think it was George Leonard. Hold on a sec! I know I have it on my shelf someplace. Yeah, George Leonard. It’s Mastery: The Keys to Success and Long-term Fulfillment.
Mad Fientist: Excellent! Yeah, I’ll put a link to that in the show notes for everybody. That’ll be something I’ll be checking out as well because I haven’t read that one, so that’s cool. Yeah!
So like I said, you’ve been at this since 2006 and you’re one of the go-to guys for anything finance related on the Internet. So what are the most important things you’ve learned along that journey? If you had to just narrow it down to what’s most important over that journey, what would you say?
J.D. Roth: Well, there are a few things. First of all, it’s very important to take agency. And by that, take responsibility for your situation, for your future, for your destination, where you’re going. Don’t wait for somebody else to solve your problems for you.
What I like to say your situation may not be your fault, but it’s your responsibility to get out of it and to change it if you don’t like what you’re in.
I find that a lot of my friends (and even myself in the past) make excuses for where they are and what they’re doing. They say, “Well, it’s not my fault that I’m here. But I’m stuck, blah-blah-blah.” I just reached a point where I realized, “No! The past doesn’t matter. What matters is the future.” It doesn’t matter how you got here or why you’re here, what matters is what you’re going to do with the hand that you’ve been dealt. I think that’s a very important thing for people to understand.
I think one of the biggest changes in my way of thinking (a most important change) is actually, I’ve heard in the past year in this retreat that we’ve talked about going to Ecuador where I got to spend a lot of time with JL Collins NH and Mr. Money Mustache to talk to people who have achieved financial independence and to hear what Mr. Money Mustache’s philosophy is actually about in all that.
I guess what I’m trying to say is we hear a lot of times from financial advisers that you should save 10% of your income or 20% of your income. That’s great. That’s fantastic! I’m not going to argue that you’re doing a bad thing by saving that much. But when you save only 10% or only 20%, you’re basically locking yourself into a lifetime of work. It’s going to take you 40 or 45 years to accumulate enough money to be able to retire.
However, if you increase the amount that you’re saving, so that you’re saving 50% of your income or 70% of your income, amazing things happen. All of a sudden, you can retire in 15 years or 20 years or 10 years. The more you save, the quicker retirement can come.
And when you actually look at this – and I think Mr. Money Mustache calls it the ‘shockingly simple math of early retirement’, it is! It’s an amazing thing and it’s revolutionary when you actually sit down and look at the numbers and think about it.
If people would understand that if they took just a decade to live meagerly, it’s not a life sentence, what it does is it sets them up to be able to do a lot of different things while they’re still young, while they’re 35 or 40 years old that they wouldn’t be able to do otherwise.
When you’re locked into a career for 40 or 45 years, you basically limit the choice that you have. But when you’re able to achieve some sort of financial freedom, financial independence, all of a sudden, the world is your oyster. The whole thing opens up and you can do whatever you want in that a lot of what you’re going to want to do will be stuff that produces income.
But you can’t get to that point unless you make the smart choices early on I guess.
Mad Fientist: Absolutely! And as I found personally, you mentioned a somewhat meager existence during those ten years. But as I’ve cut back as much as possible to increase my savings to 70+, I find that I’m happier. It’s actually not a sacrifice. It may feel like it at first, but after a while, “Ah, I don’t miss that. It added nothing to my life anyway. I’m happier because I’m focusing on other things that actually do.”
J.D. Roth: Yeah. And see, that’s the secret. You got to get people to buy into it by making them realize that it’s not going to be a life sentence. But then, once they actually start practicing the stuff, I think they realize, “Oh! Well, this isn’t so bad after. So even if it were a life sentence, it wouldn’t be so bad.
Mad Fientist: You mentioned the Chautauqua and you’re actually doing another one this fall, is that correct?
J.D. Roth: Oh, that’s right. Yeah, absolutely! So this fall, we’re actually doing two. There are going to be two halves. Mr. Money Mustache and JLCollinsNH are doing one, along with Jesse Mecham from You Need a Budget. I will be joining David Cain from Raptitude.com for the second week. Sheryl Reed will be at both weeks. She’s the actual hostess down there.
Mad Fientist: Excellent! And are there still spots opened?
J.D. Roth: The first session with Mr. Money Mustache and JLCollinsNH, that is sold out. And so of this recording, there are still spots available for the second week with me and David Cain from Raptitude.
Mad Fientist: And let’s get back to this Be Your Own CFO for the gufy that you’re producing. So would you talk more about that please?
J.D. Roth: Oh, yeah, absolutely. I’m friends with a fellow named Chris Guillebeau who writes a blog called The Art of Non-Conformity. He produces a conference in Portland called World Domination Summit. He’s also producing one called Pioneer Nation. He also produces a series of ebooks – oh, I’m not supposed to call it an ebook. It’s a series of guides that he calls the ‘unconventional guides’. So it’s the Unconventional Guide to Travel, The Unconventional Guide to Earning Money with Your Art, things like that. And so he asked me if I would write an Unconventional Guide to Money.
And so, I spent a long time thinking about what kind of approach would I take to writing about money. What is an unconventional way people can look at money to better manage it in their lives?
And what I came up with is one of the things that helped me turn my life around was to begin managing my personal finances as if I were managing a business’ finance. So I hit upon this idea. It’s not original to me. There are other people who have written about it before, about being the CFO of your own life.
And so I spent several months writing this guide. Almost all of it is from scratch about how to be your own CFO. It’s a hundred page guide. It’s full of a lot of great information. I talk some about the importance of saving as much as you can, for example and cutting back on the big things. I talk about going for big wins, cutting back on housing, cutting back on transportation, increasing your income. These are the things that you can do that will have the biggest impact on your budget.
So this guide to being the CFO of your own life is going to be part of a course that we’re putting together called Get Rich Slowly. The course, it’s got 18 interviews with people like Mr. Money Mustache and Liz Weston and Ramit Sethi and Jean Chatzky and just a lot of other people in the personal finance world. There will also be a weekly email with specific things people can do to improve their lives and a whole bunch of other stuff.
I’m really excited about it. It comes out April 22nd.
Mad Fientist: Excellent! So yeah, I usually end each interview with if you just had one piece of advice for someone who’s hoping to achieve early financial independence, what do you that would be?
J.D. Roth: I know! I go back to the two things I mentioned earlier. To achieve early financial independence, you’ve got to save as much as possible. That means cutting your expenses and boosting your income. Doing both of those things, you can achieve the maximum savings rate or as I call it, the ‘guide to being the CFO of your own life’. You want to be as profitable as possible. You want as much profit as possible.
So that’s the mechanical thing, the habit that you’ve got to develop. But you’ve also got to develop the emotional, the mental side of that and that is taking responsibility for this and not caring what other people think. This is unconventional choice and people can be very judgmental about it. They can tell you it’s not possible, they can tell you why it’s not a smart move. But believe me, all the people that I’ve talked to that have achieved financial independence early, they love it! They love the freedom that it gives them to do what they want, when they want and they’re doing amazing things and good things for the world.
So develop the habit of saving as much as possible. And also, bolster that mentally by realizing that what other people doesn’t matter. Follow your own goals and your own plan.
Mad Fientist: Perfect, JD. Thank you so much for taking the time to talk with me. It’s been a huge pleasure. I really appreciate it.
J.D. Roth: Yeah! Thanks, Brandon.
Mad Fientist: Alright! Take care, bye.
J.D. Roth: Bye.
Mad Fientist: I hope you enjoyed my conversation with JD as much as I did. It was really cool to be able to talk to the guy that created the first blog I ever read, especially now that I’m a blogger myself, which is something I never really expected. So it was great to tap into some of the knowledge that he’s accumulated over the last ten years of writing about personal finance.
He was actually kind enough to send me an advanced copy of the Be Your Own CFO guide. I have to say, it was excellent! I read through the entire thing all under 200 pages even though I was meant to be finishing up my thesis. I just couldn’t stop reading it. It’s such a great way to look at personal finance.
If more people treated their lives like a business and took on that role of chief financial officer, I think many more people would be achieving their financial goals much sooner in life.
The guide itself was packed full of excellent financial advice, which I’ve expected because like I said, I’ve been a long time reader of JD’s work. I knew that all of the advice was going to be great, but to have it packaged in such a unique and exciting way was really good. I couldn’t recommend it enough.
And JD was actually kind enough to give me my own link so that if you buy the guide through my life, I’ll get a few bucks, which doesn’t really seem fair because I didn’t really do anything to help him out with the guide, but it’s much appreciated anyway.
If you’re interested, head over to MadFientist.com/GRS. GRS stands for Get Rich Slowly. Get Rich Slowly is actually the name of the entire course. The Be Your Own CFO guide is a part of that course.
The rest of the course contains – there are some audio interviews with some past Mad Fientist podcast guests actually, Mr. Money Mustache and Paula Pant from AffordAnything.com. And also, some names from mainstream media like Jean Chatzky from the Today Show.
So that is also included in some of the packages. And also, in addition to the guides, the Get Rich Slowly course actually comes with 52 weekly emails that get sent out I think on Mondays to help keep you on track and help you take these bite-sized chunks of the content that’s in the guide and actually take action on it, which I think is an excellent idea. A lot of times, you read things and it has lots of really good advice in it, but you don’t act on the advice because life gets in the way. So the idea of getting 52 reminders and prompts is definitely a good thing if you’re wanting to actually make a meaningful change in your financial life.
So if you’re interested in a new outlook on how to manage your finances or if you know somebody that’s maybe just getting started, that just has no clue what to do, then I definitely recommend it. Head on over to MadFientist.com/GRS. You can read all about the different packages that are available there.
So yeah, I really appreciate JD taking the time. It was an honor being able to speak with him. I hope you guys enjoyed it as much as I did. Alright! See you next time. Thanks!
JLCollinsNH - The Importance of F-You Money
In this episode of the Financial Independence Podcast, I interview Jim Collins from JLCollinsNH.com to discuss the importance of F-You Money!