J.D. Roth is one of the biggest money influencers of our age. He didn’t start as an investment banker. He didn’t start as a finance major. According to his own recollection, he started out “fat and in debt.”
That all changed when he started the epic blog Get Rich Slowly, where in a sea of finance blogs, he was one of the first to document his own personal financial journey. He got out of debt extremely quickly, built a website worth a hell of a lot of money, sold it and became wealthy enough to never have to work again.
His experience and wisdom have helped countless people, and that didn’t stop when Get Rich Slowly changed hands. Today, he runs Money Boss, where he strives to help the masses get a hold on the behaviors and psychology that negatively impact their finances.
Just back from a 15-month, cross-country RV tour with his girlfriend, J.D. has some wisdom to impart with us today. You might be surprised by some of his insights.
Nerding Out May Not be the Best Thing for Your Finances
Remember in high school when everyone told you to be nice to the geeky kid because they’d probably end up becoming your boss someday?
Well, they might have ended up becoming your boss, but that doesn’t necessarily mean that they’re rocking their personal finances. That’s because the math behind money isn’t really the important part; you really have to focus on the psychology.
”To build wealth, you have to spend less than you earn,” explains J.D. Roth. “That's it. That's like second-grade math, right? There are plenty of smart people with PhDs who can't manage money to save their life. They're not stupid. They get the numbers. But they make poor choices because of emotional and/or psychological issues.”
When J.D. was getting out of debt himself, he tackled some of his nerdiest habits, replacing them with better ones over the course of years. He was sitting on $35,000 in debt, and he knew in order to conquer it, he’d have to cut down the costs of the things he enjoyed like comics and books.
“I learned to avoid problem places — bookstores, comic shops, etc. — and taught myself to find frugal fun,” he relates. “For instance, I used to spend a couple of hundred dollars every month on books. I knew this was a problem, but I didn't have a plan for cutting back.”
“One day, I sat down and thought about how to keep costs down. For one, I could avoid entering bookstores. For another, I could get a library card. Finally, I could ‘shop’ my already vast collection of books. By doing these things, I reduced my book spending to ten percent of what it once was. I saved $190 per month by making a plan to circumvent a bad financial habit!”
Maybe your bad habit isn’t comics and paperbacks. Maybe it’s shoes or in-app purchases. Regardless of your financial Achilles’ heel, you can follow J.D.’s example by asking yourself some probing questions.
“What is your money blueprint like — and why? What habits would you like to replace? Once you've identified self-defeating money habits and thought processes, you can decide how you'd like to change, then form a plan to make those changes a reality.”
Set Up Your Money Blueprint
If you read those questions and thought, “WTF is a money blueprint?” you might be surprised to find out that in order to start drawing one, you don’t actually start with money.
“I believe that each of us needs to develop a personal mission statement,” J.D. poses. “We need to get clear on what gives our life meaning. This sounds new age-y, I know, but I don't mean it in a touchy-feely woo-woo way. It's just that when we know what our ultimate aim is in life, it's so much easier to make smart decisions to support that objective.”
“So, for instance, if your personal mission is to explore the world then you ought to be constructing a much different life than your cousin whose mission is to raise a family. If you want to travel, owning a home isn't important. But if you want to raise a family, buying a house is probably a priority. And so on.”
“Your personal mission statement doesn't just affect your financial decisions (although it absolutely should inform what you do with your money,) but also your fitness, your career, your friends, where you live, and more.”
“Millennials (and everyone else) should start by asking themselves what's most important to them. What is it they want to accomplish in life? And how can they arrange their situation to support this goal?”
This belief in a personal mission statement to help establish financial and life goals was one of the main reasons J.D. Roth started Money Boss to begin with. In fact it’s one of the free tools accessible in his Money Boss Toolbox.
Take Personal Responsibility
Millennials aren’t idiots. Many of us graduated into a rough economy. We know we’re saddled with ridiculous amounts of student debt thanks to the alarming inflationary rates of college tuition and the student loan industry.
But we’re also not quitters. J.D. Roth knows this, and encourages our generation to not give up simply because the media tells us we’re doomed.
“I look at it like this: you're like a boat on the river. Sure, the current is flowing in a specific direction, and yes there are occasional hazards — snags and falls and rocks.” J.D.’s analogy alludes to the perceived state of the economy, though he notes that it has improved drastically in the last eight years. It may even be erroneous to state that it’s ‘bad’ at this current point in time, as we’ve had seven years of expansion since the Great Recession.
“But it's possible to steer your own course on the river so that you avoid the obstacles. If you have a mind to and you're willing to expend the effort, you can even make your way upstream.”
“When the national economy is doing poorly, it's still possible to improve your own lot. (Warren Buffett has made a fortune this way!) But you can't make improvements by complaining. While everyone else is talking about how bad things are, you have to quietly steer your own course. If you do, you'll be successful.”
These aren’t just hollow words. J.D. Roth wasn’t just sitting on a mountain of debt when he started his journey; he was also unhappy with his weight. Like many of us, he thought when his financial fortunes changed he’d be able to tackle the other problems in his life.
“I made excuses for not doing the things I knew I ought to be doing,” recounts J.D. Roth. “Then, through a combination of good fortune and hard work, I got some money — enough money to fix my problems. But you know what? The problems didn't go away. That's because money doesn't magically fix things.”
“If something is broken in your life, it's up to you to make it better regardless your financial resources. Getting a windfall won't make you thin and beautiful. It won't change you into a man or woman of action. If you want to be fit, you have to do the things a fit person does — and those things do not require money. Same with overcoming procrastination. When I suddenly had tons of money but faced the same old problems, it became clear that money had never been the issue. The issue was me.”
Change the way you think and behave, and you can literally change your life. It’s true for our physical health, our overall happiness, and, of course, our money. In a world where we’re urged to shrug personal responsibility for circumstantial complaints, J.D. Roth leaves us with these parting words:
“Be your own boss. Don't wait for somebody else to improve your financial future. Decide to do that yourself. Be willing to give up everything the world says you have to enjoy to be successful. You don't need a new car, don't need a house, don't need a fancy wardrobe. Discover what it is that gives your life purpose, and then pursue it. To hell with everybody else!”