BeFrugal

Published June 28, 2010

J.D. Roth is personal finance blogger and author. While digging himself out of debt, he founded Get Rich Slowly, which is ranked as one of the top ten personal finance blogs. His new book Your Money: The Missing Manual offers practical tips for boosting income and cutting costs. Roth has also contributed to Be Thrifty, 10,001 Ways to Live Large on a Small Budget, and I Will Teach You to Be Rich. He spends most of his time writing for his blog Get Rich Slowly, and his newest project Success Daily, where he provides his readers with daily articles about success and self-improvement. Roth currently lives in Portland with his wife.

Interview Transcript

BeFrugal: How did your blog “Get Rich Slowly” come about?

J. D. Roth: Well, Get Rich Slowly started for a couple of reasons. First of all, from the writing aspect, I’ve been blogging, or doing what eventually became blogging, for a number of years, since about 1997. I had actually had a real life blog since 2001, but during that time and ever since college, I graduated from college in 1991, I had been struggling with that. I expensed foolishly; I didn’t know how to manage my money. Around 2004, beginning of 2005, I decided, you know I’ve got to do something about this. I just cannot keep dealing with this debt. We bought a new house in June of 2004, and it was a hundred-year old house that requires a lot of maintenance, and allotted all the projects we expected to pay for coming up, and I thought oh my gosh, there is no way I can do this with $35,000 of debt, there is just no way.

So, I started reading personal finance books, and eventually on my personal site I wrote an article called “Get Rich Slowly”. And, for whatever reason, it got a lot of attention from around the internet. It was very edifying, and it planted this idea in my head. That article went up in April of 2005, and so in April of 2006 I thought ha, I wonder if I could start a personal finance blog. And so I did. My goal was just to write about my own struggle getting out of debt and learning to manage money. And, I thought you know, maybe I can share this with other people, and they might find it worthwhile.

BeFrugal: Yeah, that’s where all the good ones come from. You know, something personal. So, this is a full time business for you now?

Roth: It is, yeah. I quit my day job in March of 2008, so about two years after I started the blog, I was able to quit and work on “Get Rich Slowly” full time.

BeFrugal: Oh wow, okay. That’s great, congrats on that. So, between your blog and family, what is the snapshot of your day?

Roth: Well, that’s something that’s in the state of flex to be honest. It’s good; I’ve been working on it. Let’s say that the past two years since I did go to start this full time, there has been a lot that happened behind the scenes and in front of the scenes, and it’s just, it’s taken a lot of my time. So, at first, well not at first, eventually, I got to the point where I was working sixty hours to eighty hours a week on the blog. And that was basically all I did was work on the blog. And then I wrote a book called Your Money, The Missing Manual. And, I wrote that last fall and winter, published it in March, and that took a lot of time. So, I was basically going crazy. If you were to talk to my wife in January or February, she would have said oh my gosh, I don’t know what to do with J. D., but now it’s June and things are settling.

I’ve got this nice routine where I am working on the site maybe four hours or five hours a day, Monday to Thursday, so it’s about twenty hours. Then I work on it for about eight hours on Sunday, so that’s really twenty-eight hours a week I am spending. And then I’ve got time to spend with my wife; we don’t have kids. And I have time to exercise, which is very important to me because I’ve just been gaining weight like crazy. I gained twenty pounds while writing the book. I was under stress too, that was the worst. It was awful.

BeFrugal: Okay. So, it fluxes, it changes?

Roth: Yeah. So, I feel like I’ve reached a balance, and I want to keep it here. Now, that I see that I actually really enjoy what I’ve done in the past two months, you know about twenty-eight hours a week, I enjoy it again. I wasn’t enjoying it there for a long time.

BeFrugal: That’s great. So, nowadays there seems to be a lot more interest in being frugal, right? Financial independence, financial security, it needs to come from somewhere, and being frugal seems to be one of those places. So, given that, why do you think that more people are taking the extra steps to BeFrugal nowadays?

Roth: Well, I think the obvious answer is that it’s the economy. With the deep recession, it really forced a lot of people to kind of evaluate what they’ve been doing with their incomes or their finances. I know we had a recession in 2001, and 2002, but I don’t think it was nearly as severe as this. And, it’s been a long time, maybe twenty years, almost thirty years since we’ve had a recession this severe. And so, I think people had become complacent, and they just thought that they could continue these get laden lifestyles for an indefinite period of time. And it’s just not true.

I am not convinced still that there is any permanent change that’s going to come with this, although I just found a survey the other day that says oh yeah, people are definitely changing. Well, I am not convinced. I think that some people are changing, but I often hear and see my friends, some of my friends, and they are not changing. They are getting the feedback under them and they are just going back to their old habits.

BeFrugal: Okay. I would agree with that as well. I think people are taking extra steps, but wholesale lifestyle changes, I am not sure yet. Alright, so what do you think is the easiest way for someone to start changing to become more frugal? You know, sort of moving towards a better financial security situation.

Roth: Well, I think one of the first things people have to do is know what their goals are for life and for money. And, they are tied together obviously, but I think in order to make changes or to start to make changes, changes that will last, you’ve got to know why you are making the changes. And, everyone’s reasons are going to be different. Some people may want to make the changes because they want to put their kids through college; others may just want to get out of debts because they are tired of just being under this pressure; some may want to save for a down payment.

And, in my case well, that the goal I am about to share, after I got out of debt and started being frugal, well I want to travel around the world, which is one of the reasons I am learning French. And, in order to do that, I’ve got to set financial goals. I think when you set financial goals that helps you know what direction you are headed in, and then you can start taking steps based on your own priorities, your own set of values, because it’s all well and good to read all sorts of books, blogs, and say oh, I like what they are saying there, I should do that too. Well, if things you are going to buy don’t match up with your own individual priorities, it’s not going to matter much.

So, you’ve got to decide what frugal action or what thrifty action you are going to do based on what’s important to you. Here is a good example. For me, clothes are not important to me. So, I can be very frugal on clothes, I can be thrifty. I go to the third store; I buy cheap clothes. I go to Cosco where I buy my $13 pair of jeans. And, I am able to be thrifty there. But, for somebody who values clothes or to whom clothes are important, that’s not going to work. They are going to want to find other areas where they can cut back. Maybe for somebody else food is an important thing, so they can do what they can to reduce their grocery spending or their eating out.

BeFrugal: That’s great. Do you use any modern technology to find deals to save money or invest better, any sites or anything like that?

Roth: No. I mean that was a pretty simple answer for you. My other answers have been kind of rambling, but you know I write about this stuff and sometimes I test it out, but I just haven’t found anything that fits my needs.

BeFrugal: Okay, that’s fair. Now on buying you had mentioned how, you know clothes aren’t terribly important to you, so you look for something that’s inexpensive and that’s what works for you. Regarding necessity spending, you know clothes, food, vehicles, transportation, whether it’s a bike or a car, in your opinion, what is the main reason most people seem to pay more than they need to on products, whether it be shampoo or gallon of milk, etcetera?

Roth: Well, obviously advertising plays a huge role. Advertising and marketing plays a huge role in influencing our decision. Even people who don’t think they are influenced by advertising and marketing absolutely are. There are all sorts of studies that show that often the people who think they are least influenced are the ones that are most influenced, so advertising and marketing play in a sac.

But, there is also this need to “keep up with the Joneses” as we put it in colloquial terms, where we look at what our friends, our family has, and we want that stuff too. And, I think a lot of times we don’t pause to think okay, I see my friend has a nice car, but why do I need a nice car; I mean does it match my goals?

Here in Portland, we have a very elaborate and good comprehensive public transportation system, plus bicycling is huge. I bike eight and a half miles to the gym every morning, and eight and a half miles back. It’s just an accepted mode of transportation; that’s not the case in other parts of the country I know. But, here going without a car is something that many people can do and do do. And so, if you are in Portland for example, you are feeling pressured, or envy is not the right word, but you look at your friends and your family, you see the nice vehicles they have. You’ve got to understand that that’s not necessarily something that you need to do too. Again it comes back to your own personal set of values.

And, another thing, a real quick tangent on this is that I think a lot of times people get into trouble when they don’t watch their spending on the big items. And, this is something they will meet from “I Will Teach You To Be Rich” and Elizabeth Warren who wrote “All Your Worth”. I’ve got a chapter in Your Money, The Missing Manual that talks exactly about this. But, if you watch your spending on the big stuff, it makes it, it gives you more revamp for small stuff, like shampoo you mentioned and so on.

And so, by the big stuff I mean your house, your car, your insurance, and your travel. If you are able to buy a house that you could actually afford, don’t just go when the real-estate agent or the mortgage broker tells you that you should buy as much house as you can afford. Don’t fall into that. Buy as much house as you need. Try to keep your housing cost low. The lower your housing costs are, the better financial position you are going to be in. Housing is the largest component of most Americans’ budgets. And, if you are buying with a huge mortgage or have this huge rent payment, it’s really going to throw you off. So, you are not able to make your ends meet in the other areas of your life. But if you keep your housing payment low or your other big expenses like your car payment and your furniture low, your travel low, it makes it much easier to take care of the smaller things.

BeFrugal: That’s great. So, we are wrapping up here, and thank you. So, how is Your Money, The Missing Manual doing for you?

Roth: It seems to be doing okay. I don’t really have a frame of reference. My publisher, and my agent, and anyone who has ever published a book that I’ve talked to, they’ve tried to temper my expectations because they say you’ve got to understand that when you see the best seller list and you see that these books are selling hundreds and thousands of copies, that is very, very unusual. Most books do not sell hundreds and thousands of copies. In fact, I was talking to one author recently who said oh yeah, my book just broke the 1,500 copy mark, and his book has been around for twenty years, and I was like oh, yeah.

So, fortunately, my book is selling more than that, but it’s not at the hundreds and thousands of copies range. It just went to a second printing and the publisher seems very pleased with the sales numbers. I haven’t seen any hard sales numbers, so I don’t actually know what it is. But, the reviews have been great. That’s one thing that I have been very pleased with is, you know I spent four months of my life writing Your Money, The Missing Manual, and then a month or two months adding in it, and then another month or two months doing PR, and it’s just like giving birth to a child. And, it’s good to see that although it has some words, it’s getting very positive use almost everywhere I look. I’ve seen two negative reviews out of dozens.

BeFrugal: That’s great. So, last question. What is your favorite tip in the book The Missing Manual?

Roth: My favorite tip in the book. Oh my goodness gracious, that’s a tough question.

BeFrugal: Well, that’s probably too specific; maybe the tip with the most impact.

Roth: I guess it would go to the theme that I start out the first chapter with. I think that too many people try to tie their happiness to how much money they have. They think that in order to be happier they’ve got to have more stuff, and yet research shows that the more materialistic people are, the more things they think they need to have, the less happy they actually are. And so, what is very true is that there is a correlation between how much money a person has and how happy they are.

It is very possible to be happy without money. And especially, in the American society, where most of it is, you know, we are pretty comfortable to be honest. And, even the ones who are poor, or who are moderately poor, I won’t say poor. So those of us who are moderately poor, like my family was when I was growing up, we’ve got quite a bit compared to the rest of the world. And, I think if we can learn to be content with what we have instead of always looking at the things we don’t have, and just learn to enjoy that, I think we can be a lot happier. And money could be a lot less stressful than it is for most people.

****End of Interview****

For more tips about personal finance and getting out of debt, check out J.D.’s blog Get Rich Slowly and his new book Your Money: The Missing Manual.