Afford Anything - From Debt to Financial Independence, with Get Rich Slowly Founder JD Roth

Episode Date: April 11, 2016

#20: The Money Boss, JD Roth, went from $35k in credit card debt to selling a personal finance blog for an undisclosed amount of money. Today he shares how financial independence affected him - and how having enough money to be financially independent forces us to face our problems. For more information, visit the show notes at https://affordanything.com/episode-20-debt-financial-independence-get-rich-slowly-jd-roth/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

Are you recording already? Yeah. You need to mess up more because all the bloopers are me. Welcome to the Paula and Jay Money Show, a podcast about growing wealth and financial freedom. Your host Paula Pant is a world traveler who built financial freedom through real estate investing. She runs the website, afford anything.com. Host Jay Money is a husband and father of two, striving for financial freedom. He hates real estate but loves to blog for a living over at Budgets Are Sexy.com.

Which one resonates with you? Grab a beer and find out as you listen to the Paula and Jay Money Show. So we have an awesome guest on today's show. His name is J.D. Roth, and he has a really interesting story. He went from being $35,000 in consumer debt to starting and then selling a company for an undisclosed, very large sum of money. It was probably in the millions. We're speculating, but probably. And is getrichslowly.org, by the way.

Yeah. For those people that don't know JD or that's in the personal finance world, a huge, one of the top financial sites, blogs in the world, or at least it used to be. Great, great dude, great, great, great site. And so a lot of what he talks about in this episode is how financial independence has affected him. And we actually, one of my favorite parts of the episode happens towards the end, where he talks about the different kind of levels of financial independence that a person goes through in their lifetime. He's spent a lot of time thinking about this, and that really comes through in his thoughts because his thoughts are cultivated.

You know, like when you talk to somebody who spent a lot of time thinking about wine or about art or about any given topic, they have thoughts that are more cultivated than the average person, they've done that level of put in that level of thought. That is really what J.D. is to money. He's put in a lot of thought about the meaning behind money and how it affects your life. Yeah. It's cool. And he also does a, he gives us an exercise and actually puts Paula and I on the spot, which I wish now we can go back and give a better answer. But he does a cool breakdown of what to do and think about, which is super helpful regardless of what stage you're in, just in life in general. Yeah, he does. He turns the

tables and puts the interview on us. It makes us not as cultured as you. I know, right. So now, with no further ado, this is J.D. Roth. By the way, if you want to find him on the internet after this podcast is over, you can find him at moneyboss.com. Hey, J.D., thanks for coming on the show, man. Hey, no worries, Jay. J.D., I'm really excited to talk to you because you've got a super cool story that I think. our listeners are going to love. Why don't you introduce yourself a little bit? You, and tell the listeners a little bit about early JD, like year 2000, JD. All right, sure. I call myself an accidental personal finance expert. And what I mean by this is I don't have any kind of training in

personal finance. Everything I know about money, I learned through the School of Hard Knocks. I mean, to start at the beginning, you'd have to go back to 1969 when I was born because I'm old. I was born into a family where, you know, my parents, they both did their best with money, but they didn't really know what they were doing. My dad had been raised poor. My mom, for whatever reason, didn't have money skills. And so growing up, I had really bad role models with money. As hard as they tried, my parents didn't, they weren't able to manage successfully. They were never in debt, but they always lived paycheck to paycheck.

And so grew up, went to college, managed to go through college on scholarship, so I didn't have student loans, but I got into a really bad credit card habit. I wanted to keep up with my friends, and I looked around and my friends seemed to have all sorts of money. I don't know whether they did in retrospect, but it seemed like it at the time. I wanted to keep up with them, so I went down to the university center and signed up for credit cards. And by the time I graduated from college, I had a bad credit card habit. During the 1990s, I just found more ways to accumulate consumer debt. and by the end of the 2000s, by 2004, it was where I bottomed out. I had over $35,000 in consumer debt. Wow. I was married at the time. My wife and I had just bought a new house that on paper we could afford, but in reality, it was like the straw that broke the camel's back. I just felt like I was drowning in debt.

Can you talk about what were some of the things that you would spend on with the credit cards? Well, I'm a nerd. Let's be honest here. I'm a nerd. We all knew that about you, J.D. Yeah. I've always loved comic books, so I was buying comic books. Computers bought tons of computer parts.

Going out to dinner, I also loved to eat, which is a dangerous thing in many ways. But mostly is really spent buying books and buying computers or video games. Did you get free t-shirts when you signed up? I remember that the holy reason I got a credit card in college because I got like a free stupid t-shirt. No, I never got a free t-shirt, but I tell the story on my various site about the reason I signed up for the bank account. It was a checking account was because they were giving away a free Frisbee. I'm not joking. It was a major national bank.

It's still a major national bank. And they were giving away a free Frisbee. And so I signed up for that one as opposed to the credit union. There were two tables. I remember this very clearly. There was a local credit union. And in retrospect, that was a very big. very, very expensive Frisbee. I ran the numbers once. But the checking account with the major

bank cost something like $5 a month at first, then $7, then $8. And so over the course of, I don't know what it was, 10, 12 years, I paid hundreds of dollars for that fricking. Oh, my gosh. And I could have had free checking. Yeah, that's right. Before free checking was probably even super popular, I bet. Yeah, well, I think most credit unions have almost all been. That story just so perfectly encapsulates financial education and the need for why that's important. Like that story just perfectly illustrates why it is that we all blog and podcast about the topic that we do. Well, when you're a kid and it's your first day of college, you want the Frisbee. You're like, what's the big deal?

You don't ever think, oh, this is going to cost me $100 or hundreds of dollars over the next 10 years. Exactly. Because nobody ever teaches you about it. I mean, for most of us, you know, most of us don't learn this in high school or college or any time other than on the Internet when we go to seek it out. I had a personal finance class in high school. And this is what I think is the ironic thing. In the high school I went to, I don't know whether it was a statewide thing or just our school district, we were required to take a personal finance class for a semester. What I think is hilarious, and I've told this story too, is I hated that class.

It was the last semester of my senior year of high school. And I didn't want to be in that class. It was the first class of the day. I didn't do the homework. I mean, I had senioritis. And so I got Fs on all the homework. But then I would come into class and I would take the test and I'd always get the top score on every test.

And the teacher was so infuriated. But the bottom line is I had checked the syllabus and the way he had it set up. I didn't have to do the homework. If I just made sure I aced every test, I was going to pass the class. And so I did. I got a D in personal finance in high school. Well, so that's interesting, though, because a lot of people talk about how they need to be more education in school and blah, blah, blah. And I feel like, yes, it's better than none, of course.

But like getting people to actually care, like putting it in terms that actually get you to want to be interested in the money. And you obviously were, I mean, maybe you were just good at passing tests. But like, A, they could have changed it to where you had to take this class in like sophomore or junior or not senior year. That could be like a major factor, obviously, if you're ready to get out of there. But would it have changed if they made it more interesting or cooler or made it more like applicable to your life than here's how to do a checkbook and here's how to balance and here's how to even budget, which sounds boring and no one cares about that? Well, yeah, I think so, actually, Jay. I mean, I have really strong opinions about financial literacy education. It's a pet subject of mine.

And I don't know what your experiences are. but mine, most financial literacy education focuses on mechanics and terms. It's like taking a dry history class. We learn how to write a check. We learn what the Federal Reserve is. Why the hell do I as a high school care what the Federal Reserve is? I don't. It's meaningless.

It shouldn't be in the curriculum. And it probably isn't in most, but it wasn't mine. And yeah, we learned how to budget and stuff. What I think is a better way to focus on this is to approach, financial literacy from a behavioral economics perspective and to focus on psychology. So to get kids to understand the psychological reasons behind spending and the reasons you might want to save. And that really means getting people to identify what's important to them because the older I get and the more I write about money and talk to people about money, the more

I'm convinced that the best thing you can do to help your financial situation is get clear on what it is you want to do with your life and what's important to you. And that's kids always want something, right? Even if it's crazy, like, I want to be a millionaire, I want to be a professional skateboarder, I want to do this. Like, they all want something. And as long as you focus, like, here's how money can help you get what you want,

even if it's ridiculous, like they're going to be attention more. Like, it's just natural. Yeah, I think that's right. So one part of the story that I've left out so far is my father was a serial entrepreneur. He was always starting different businesses. And a couple of them were very successful. After he died, my brothers and I took over one of the businesses, which manufactures corrugated

boxes, and we ran it very successfully. In the meantime, I had started my own computer consulting company in the late 1990s and managed that very successfully. So I saw that I could do business right. It was just my own personal finances that I sucked with. So I was $35,000 in consumer debt, had a $300,000 mortgage. I was making about $45,000 a year, I think. It's right around the average income. Wait, wait, wait. You were making $45,000 a year with a $300,000 mortgage?

Yeah. Wow. Wow. Wow. Wow. Okay. Well, okay. You have to understand that my wife, she also was making about $45,000. So together we had maybe $90,000. I think we got up to about $100,000 a year in income. And I started get rich slowly. And I started treating it like a, you. a business. I thought of myself as JD Incorporated. It didn't happen all at once, but slowly I started getting my debt paid off. I made a debt plan in October 2004, and I said I wanted all paid off by December of 2007. And now I was three years out, 39 months. And sure enough, early December 2007, I managed to

pay off all of my debt. And that was through a combination of being frugal and learning to manage money effectively, but also increasing my income. And setting a good goal, too. That was a hard number that you made. Yeah. I don't want to say I was lucky. I mean, there was an element of luck there, but I worked pretty hard too. I was being very diligent. I was still making mistakes. But my goal, in personal finance, we talk about saving rate, which is basically how much you have left over of your income after you've done all your expenses. In business, you'd call that a profit. And so I was thinking of it as a profit. And so I was just trying to boost my profit as high as it would go. It became something of a game. Again, I'm a nerd. I like video games. And so to me,

I didn't know that I was gamifying personal finance at the time, but that's now the term we would apply to it. I was gamifying what I was doing. I was trying to set high scores every month, essentially, trying to earn as much profit as possible. That's a really good way to look at it. At least for nerds like me, it is. That's cool. Okay, so this is early JD, and you've gotten into debt, you got your frisbee. You're like a badass frisbee. All the girls are like, oh, JD, I want your number. I had that for a long time. It was an awesome frisbee.

You should frame it if you still have it. I don't. It wasn't worth a few hundred dollars. You know, it might be at my ex-wife's house. I just emailed her this. I should email her and ask if she has that. Yeah, and we should do like a frisbee burning like a bonfire party or something. That would be awesome.

Okay, so continue from there and how you randomly went online and started, you know, You were one of the very first personal finance bloggers in the world. Like, is that accurate? Well, I thought I was. I mean, that's part of my story is talking about how I thought I was. You have to understand that there were a bunch of things that led up to me becoming a personal finance blogger. Obviously, it's nothing I could have set out to do. Nobody who graduated from college in 1991 sits down and says, oh, I'm going to be a personal finance blogger because there's no such thing.

But what I had is I was deep in debt. I like to write. I always wanted to be a writer. but I thought I was going to write about poetry or I thought I was going to write poetry or write science fiction or as I like to joke, I thought maybe I'd write science fiction poetry. But none of that was happening. I was taking writing classes at the community college. Well, I still do when I'm back home every now and then. I think it's a great thing for bloggers to do is to take writing classes.

Anyway, bad with money, I'm a writer, and I'm a nerd. I like computers. And all of those things happen to just kind of come together. in the late 1990s, early 2000s, as blogs were being born. So during the 1990s, as I was going online, I was reading, they weren't called blogs back then. They were called web journals. And so I was reading various web journals from people.

And I even tried to do one myself. When blogger came about 1999, 2001, I started a blogger blog. It was just for myself. It was for my friends and family. It wasn't about money. I like to say it was about cats. computers and comic books, because that's what it was about. But people loved it.

People liked the way I've told stories, and that was very edifying. And then after my wife and I bought the house in 2004, and I was feeling so miserable and weighed down by debt, I talked to a couple of people, a couple of friends, my accountant and then a couple other people, and they recommended that I read some books. And so I started reading personal finance books. after doing that for six months

I thought I saw some patterns in these books I thought you know they're all taking a different approach but they're all basically they have the same message and that message is you can't get rich quickly but if you do the right things you can get rich slowly

and so for my own edification more than anything else I tried to set all of this information down in a blog post that I titled Get Rich Slowly and I published that in like May of 2005 or something like that a little bit more time passed

and people started making money from blogs and I decided I wanted to make money from blogs. So my first thought was, oh, I'm going to start a comic book blog. Well, I started one. It turned out I wasn't going to be any good at it. Other people were already doing it, and I didn't really like modern comics, and that's all anybody wanted to read about. So I thought, well, what else can I do?

And then I remembered, oh, yeah, I had this post about getting rich slowly that was very popular last year because a bunch of popular blogs had linked to it. I said to myself, well, why don't I start a blog called Get Rich Slowly? So that's what I did. And at the time, I thought it would be the first personal finance blog on the Internet. I was wrong. There were already, there were dozens. Yeah, how many, though, like in the grand scheme of things, like 10 or 15 max?

No, Harlan Landis would know more than I would. You should ask him. He had a service already running at the time or soon after that called pfblogs.org that, like, aggregated all of these. And my memory is that there were probably 50. So that's really interesting because I've always, I don't mean this to sound like an insult, but I've always assumed that part of your success came from first mover advantage. But what I'm hearing now is that there were 50 blogs, there was already a lot of competition.

What made Get Rich slowly stand out? And I know we haven't gotten to that point in the story yet. But just throwing that kernel out there. That's a great question, Paula. I used to try to analyze it. And eventually I just kind of gave up on it because I thought, what's the point in trying to think this to death. But having said that, I can tell you some of the things that I think worked.

First of all, most financial bloggers back then were completely anonymous. They were afraid to share who they were on the Internet. And I wasn't. I was completely out there. I've always been completely out there about who I am and where I am and what I'm doing. And I share all the good things and all the bad things or as much as I'm able to. So I think that helped. And I wasn't just sharing positive things.

I was sharing the bad things that were happening to me. also I really like to tell stories and so most of the other blogs were very nitty gritty type blogs and there's a place for that but for me I was telling like the actual things that I was doing trying to get out of debt and what was working and what wasn't when I put my Roth IRA money into sharper image stock and sharper image stock crashed to zero

I told that story so I think people appreciated that and then another thing is I really cared about the quality of the writing. And I know, Paula, you can appreciate this as a journalist. For me, I don't want to claim that I'm a great writer, but I feel like I try to be as good as I can. And that means I'm always reading other people that I think are good writers, and I'm taking writing classes. I edit heavily. For every hour I put into an article, I probably edit two or three hours. And another thing is, I had been on the internet for a long time, and I had existing connections in other communities that were completely unrelated to personal finance. And so when I

started Get Rich Slowly, these people in these other communities kind of latched onto it. And some of them were very influential people in the early days of blogs. So, for example, editors, Lifehacker, knew me from other places. And so they saw my material and they liked it. And so they would link to it. And that helped a lot. So May of 2005, you published the article Get Rich Slowly. A year later, April 15, 2006, you start the blog Get Rich Slowly. And on day one, I'm assuming you probably had zero or close to zero readers. Talk about the progression of readership because Get Rich Slowly grew very, very quickly. How did you attract that audience and how long did it take? Look at this. I happen to have my Get Rich Slowly spreadsheet printed out right here. Oh, true nerd style. I want to publish

this spreadsheet of yours. I can't share those numbers. There are. some things I can't share because I eventually sold get rich slowly. Some of this stuff is classified. I'm contractually obligated to not share it. But I can't share some of the growth numbers. I can see that by the end of May 2006, I already had 1,000 subscribers via RSS. And a month later, it was 2000. Wow. I'm looking at these numbers. I'm like, how come MoneyBoss isn't growing this quickly? No, it was by sharing on various sites. And I was very fortunate in that a few of my articles got picked up by Dig, made the front page of Dig, which is dig used to be as popular or more popular than Reddit is today. So it's like making the front page of Reddit. That led to a lot of

people to come find the site. And who knows? I mean, you can't always know how different people are finding your site. But I do know that within about 18 months, it looks like I had 33,000 subscribers, quarter million uniques a month, and over 500,000 page views. So that's very quick growth. That is incredibly quick growth. And you still had many years after that that you were growing it and building it before you even sold it. Well, no, that's actually about halfway through my term ownership. So I owned Get Rich Slowly and rode it Get Rich Slowly for three years, just under three years. And then after I sold it, part of the sale was I wanted to get away. I wanted to walk away immediately. Just go. I took less money for the site than I could have got because I said,

no, I'm done. I'm out of here. And then the ironic thing or the sad thing, depending on how you want to look at it, is that I stuck around for another three years. I just couldn't let go. I ended up basically running the site for six years. Your audience is very happy about that. I mean, I remember reading, I think I've been around for a couple years. I remember reading the article and then when you kind of disclosed that you sold, like it had been a while. Yeah, it had been three years at the point. Yeah, and most people, and this is the thing with blogs, stuff, people get like so riled up when like we have successful those sites and then you sell it because it's like oh you're a sellout oh you're doing it for the

money but it's like and i don't know if it's you or a trant from the simple dollar when he sold when you said like dude this is like i've been writing for like i've sold it three years ago right like you had no idea there was any difference except for the fact you just told us now but like everything was still fine up until you said that and then people get all like riled up exactly that was part of way i couldn't leave is whether it's stupid or not i felt a responsibility for the audience I had built some real relationships and I enjoyed the interactions and the community. And I didn't want to just leave the site. Even though the company that bought the site never really did anything evil, let's say.

I mean, they did things that I wouldn't have done because, for example, I refused to advertise credit cards on the site. But they were happy to advertise credit cards. And that's their judgment call. They bought the site. They can do what they want. I don't know. I stuck around because I just felt this intense loyalty to the community. community and I wanted to make sure the transition went smoothly. And eventually, I mean,

one of the reasons, there were several reasons I sold, but one of them was I was burned out. It's a very stressful job to maintain a blog the way I maintain get rich slowly. And I was just burned out and I wanted to walk away. And then I stuck around for three years. So three years later when I'm, I was just basically fading away instead of burning out. And you know it's better to burn out than to fade away, they say. And, you know, I wasn't doing that. Well, it's interesting too. So I treat like budgets or sexy. Like we've talked like it's like my passion project.

It's like a hobby. But then I'm like, oh crap, I have to deal with the business because like my family needs to like live and eat. Right. So like I'm not as like business and pleasure. And I've had offers to buy. And you and I've talked too. And maybe one day I will.

But that's like this hardest part for me to let go is this like you've built this community and people that read. And it's like, and especially since we're both storytellers. Like we tell stories and we engage. Right. There's a lot of sites that just like here. how to do with money, and they're fine.

Like, as you said, there's a place for that, but there's no community. Like, no one knows who's behind the scenes. And we're right in, it's our face and it's our brand and it's us, you know? It is tough. And you know what's interesting? So jumping ahead a little, I recently started a site called Money Boss. And at Money Boss, I've been much more methodical than I was at Get Rich Slowly. Get Rich slowly, I was kind of making it up as I went along.

I didn't have a set philosophy. now, 10 years later, I have a very set philosophy about how people should handle money and what I think they should do if they want to be successful. And so at MoneyBoss, I've spent the last six months essentially laying the groundwork in the foundation. And so my articles I'm realizing are much less, I don't want to say they're less engaging, although maybe they are. But they're much more matter of fact and they're less about story than what I was doing in the past. And recently, over the past month, I've shared a couple of articles that are more. story oriented because I'm done laying the foundation now and now I can start writing about other things and the feedback I'm getting is great the reader's like ah there's jadies there are the stories

like yeah yeah i had to get the other stuff out of the way first i want to ask you about that set philosophy but we'll get to that later in the show but before we get there can you talk a little bit about when you eventually did sell get rich slowly i guess first let's back up and you know i'd love to know I don't know if you're allowed to disclose this or not, but what was the readership, the subscriber rate, you know, how big was Get Rich slowly at the time that you sold it? And then also, and I'm wrapping a whole bunch of questions up into one, how that affected you personally, because what I think is really interesting about that era of your life is that you transitioned from a very ordinary guy to someone with a very, very interesting story in a very short period of time.

Well, it's a great question, Paula. First of all, I think I can share some broad numbers. I'm not allowed to talk about the financial aspect of anything at all. When I sold Kit Richel Lolle, I was making more in one month than I used to make at the box factory. And earlier, I mentioned how much I was making at the box factory so people can draw some conclusions. Can you say if it made you financially independent? The sale made me financially independent. And if I had continued to own the site, I probably would have been financial independent very quickly also.

And how do you define financial independent? To me, financial independence is the ability with the money that you have saved and invested to support your current lifestyle indefinitely. And for me, indefinitely means basically you have 25 times your annual spending rate saved, which for those who know the 4% safe withdrawal rate, that's essentially the number I'm going with there. And I always say that if you're really risk-averse and you're conservative, then maybe you want to have 30 or 33 times your annual spend saved. On the other hand, if you're aggressive, maybe you can call yourself financially independent at 20 times what you're spending. So basically the sale of Get Rich slowly brought in enough that you never have to work again unless you choose to. Well, as long as I keep my spending. As long as you keep your current lifestyle. Yes. And that's the thing.

Different people can be financially independent at different levels. I recently wrote at MoneyBoss comparing Jacob from early retirement extreme who has an annual spend of around $12,000. Pete, or Mr. Money Mustache, as most people know him, who has an annual spend of about $24,000. And then there's me who in a normal year, I spend about $36,000. So each of us is financially independent, but we have different spending rates. So that means different things for each of us. Now I'm trying to multiply 36 times 25 to know at least what your net worth is. Just based on that.

Well, I think it's probably 900,000, although, yeah, I think it'd be 900,000. Oh, thank you. You know that the net worth is above that. Okay. And I want margin for error, so you know, it's a little bit about that. And J.D., just for the sake of the listeners, your home is also paid for in cash, right? So that 36 doesn't include like a mortgage. Correct. Well, yes and no. I mean, technically there's no mortgage, but there's an H-O-A and there's – I end up paying over $1,000 a month to maintain the home, which that rankles me. But that's my own choice. That's my choice. How high is your HOA payment? It's like 535 or something. Oh my gosh. Yeah, mine is 736. Okay, so go back through all these recursive layers.

At the time I sold Get Rich slowly, it looks like there were around 80,000 RSA subscribers. Back then I didn't, I guess I did have email, but I counted them as RSS. And it was getting about 500,000 unique visits a month and had over a million page views per month. That's awesome. Not as big as Mr. Money Mustache, but it was pretty big. Yeah, yeah. All right, so you ramped up the growth of the site. There's people going to it. You're making money monthly. You sell it. You still stick around. But like financially you're good. Like how is your life shifting now? Because you went from being in this debt and being so burdened by it. Now I'm not having to worry about money. And the money part's great, right? Like all that's fine. But like it does things to your brain. You know, good and probably bad. Right. Like it's not all good, I would imagine. Well, in my case, I had a good foundation because I had been writing and reading about money intensively for several years. I was well prepared for the windfall. And so I think if I had

obtained this windfall 10 years before, it would have been bad news. I would have wasted the money. I mean, I would have burned through it. Fancy cars. But because I had this foundation, I was able to make responsible choices. For me, The most shocking thing was, and this is something that I've talked with a bunch of other people about, including Todd Trusseter, the financial mentor, when all of a sudden you have all the money you need to maintain your current lifestyle and you look around and you see that there are these other things wrong in your life, all of a sudden, all the excuses for not fixing what's broken in your world are gone. You realize, oh my gosh, the fact that I'm 50 pounds overweight,

because I was 50 pounds overweight, that's on me. The fact that my relationship with my wife is so shitty, that is on me. The fact that I don't keep up with my friends on and on and on. I was an unhappy guy pretty much. And I realized, oh, if I want this to get better, I have got to fix it myself, just like I fix my money. And the shocking thing is, and again, I've talked with Todd about this and I've talked with a bunch of other people, is you realize even before we had money

it was always our responsibility to fix it. We were just making excuses. Money was an excuse, just like anything else. And so after I had the windfall, after I sold Get Rich solely, I took several years trying to fix what was broken in my life.

And that meant losing the weight and getting fit. That meant trying to figure out what was best for me and my wife. And ultimately, I decided, that for us, that meant going our separate ways. And a lot of people get angry when they hear that, but we've been able to maintain a very positive relationship.

She's now in a happier relationship with a guy, and I'm in a happier relationship with another woman. And so it worked out well for both of us. And I don't want to say that I'm perfect, and I don't want to say that I fixed everything because I still struggle with things. Right now, I'm back on the fitness bandwagon because while I've been on a year-long RV trip,

I gained 20 pounds, and that sucks. But having the money made me realize that the things that are wrong with me, I need to fix, just like I fix my personal finances. That's fascinating. I was not expecting you to say that because most people never fix their finances or they fix it when they're 60 or 70 years old, right? Or they die and nothing. And so for everyone listening, myself included, I'm not financially independent. Like I would imagine if you could go back, there's little things you would have done before the money or like would they have changed anything? Or is there, I mean, there's ways to do it before. You don't have to wait until your money's fixed to then all of a sudden fix stuff. Exactly. I think that's the point I'm trying to make is, In 2011, 2012, it was too late for me to fix what was broken with the marriage. But if I had worked on that earlier, and most of it were problems with me. Let me be up front. Not problems with my wife. Problems with me.

And if I had worked to fix those 10, 20 years before, things would have been different. Or with the fitness. If I had taken responsibility, instead of talking about getting fit, actually got fit and started moving towards that, I would have been fitter much sooner and I would have been much happier about it. Do you think you could have hustled as hard? Like that's what a lot of people, like, you only have nights and weekends. You can work.

You can work on your relationships. And there's always like, how the hell do I grow my blog or my empire or my business and also maintain all this stuff? Because something usually falls, right? Yeah. For me, and that's a valid concern. I mean, we only have a limited amount of time in the day. One thing I like to do is have people get very clear on what their mission statement is,

what is your purpose? And I know that kind of sounds new agey or woo-woo. But if you can get clear on what it is you want out of life, it's so much easier to make decisions to support that mission or that end goal, not just financial decisions, but all sorts of other decisions. Is that part of your money boss mantra? Like is that, you know, okay, okay. That's the very first thing I want people to do. I want them to answer the question, what's your why? And so I walk them through how to craft a personal mission statement. I actually have a like variety of exercises at my disposal. But I've got two or three that I really, really like.

And so I use those all the time, including on the blog. Yeah. Let's hear those. So you have this new site right now, Money Boss. Let's hear the two or three exercises that you walk people through, the Money Boss philosophy. The number one thing I do to get people clear on what they want out of life is I have them complete an exercise. I originally thought this was a exercise from a life planner called George Kinder.

But it turns out he based his exercise on the work of Alan LeKine, who was this time management guru in the 1970s. He's got this tiny little book. I don't remember the name of it right now. But in that book, he has people take some uninterrupted time and work through some goals. So I'm going to read this directly from the site so I don't mess it up. Basically, you need about an hour of time. You need a pen. You need paper.

You need a stopwatch. And you're going to answer a series of questions. So the first question that you write, you write this to the top of a blank page. You write down, what are my lifetime goals? And for five minutes, you write down anything that comes to mind. The point here is you're supposed to imagine you don't have to worry about money. Forget money even exists. Everything's provided for now and in the future.

What do you want to do with the rest of your life? The goal is to not filter yourself. You're trying to just be creative and come up with all the things that are really important to you. And then when you're done, when you're done with that five minutes, you spend another five minutes kind of going over these goals and making any changes or additions that you think might be necessary. And then after that's done, you pick the three things that seem most important to you at that time. So that's the first step.

And the second step to this is figuring out how you want to spend the next few years. So on a new piece of paper you write down, how would I like to spend the next five years? And again, you spend five minutes answering the question. And you're supposed to be honest. You don't list what you think you should do or what you'll do. But what you'd like to do. What is it you actually want to do? And don't judge yourself.

Just be honest. And then when your time's up, you again spend five minutes going through reviewing and editing. And then as before, you pick the three answers that most appeal to you. The third step is to answer the question how you'd live if you knew you'd be dead in six months. So take out another blank page piece of paper, write down, how would I live if I knew I'd be dead in six months? So you've got to imagine your doctor comes to you and says, you'd be dead in six months. got a new disease. It's not going to affect your health at all. In exact six months, you're going to be dead and there's no cure. There's no saving you. So what are you going to do with the time you have left?

That one's a really hard one. That is. It's a good one now. It kind of changes the framework. Each of these questions changes the framework of how you're thinking about things. So what are you going to do with the time you have left? What would you regret not having done with your life? Again, be serious and be honest. What is it that you most are missing out on. And so you take five minutes to do that. Then you take five minutes to go back through and consider your responses, and then you indicate the three things

that matter most to you. And on a fourth piece, there's five steps in case people are worried this is going to go on for a 20th. You're going to die tomorrow. This is number four. Well, you know, that's actually, I think George Kinder,

that's one of his questions, is he does that. I'm basing mine on Alan the Kine's original, so I'm going with the six months thing. That's something that can really shock people is to say, oh, you're going to die in 24 hours. What did you miss out on? So at the top of the fourth piece of paper,

write down my most important goals. And below that, copy over the goals you marked is most important from the three previous questions. So you should have nine different things there. Or maybe there's some overlap. So you combine them into one. And then the final step requires a bit of creativity, but on a fifth piece of paper,

you write, my mission. And looking through your list of resources, your most important goals, the things you regret not having done, you try to figure out, does one stand out from the others? Are there common threads that somehow connect the goals? And using this as a starting point, you draft a mission statement. And I know that sounds nebulous, and it kind of is, but if you go online, you can find examples of how to create a personal mission statement statement. Or if you go to Moneyboss.com, the mission statement things, it's a big thing for me, so it's easy to find there. But ultimately,

the goal is to get each person to get really clear on what their purpose is in life. And even if you don't want to become financially independent, I think this is such an important exercise because it helps you become very clear on the choices you're making. For example, if travel is important to you, I know travel is important to Paula, then it's easy to say when you're faced with the decision, say your car dies and you have to figure out what you're going to do with it. If travel is important to you, you're probably not going to be. going to go out and buy a $60,000 BMW because travel is important to you. You don't want to spend

the money on the car. You'll instead maybe go out and buy a $5,000 beater. Getting clear on your mission helps you make better decisions with not only your money, but everything else in your life. Yeah, career, kids, marriage, friends. It's funny. Yeah, the number one thing to get everyone's money in life situated has nothing to do with money. I mean, unless like what money is one of the things that you list on there, which people do, right? Like people want lots of money, right, which is fine. I think money's often a side effect. You know, what I often say is I don't actually write about money.

I'm not trying to help people get rich. I'm trying to help people be happy. That is my actual. Oh, nice. I'm trying to help boost happiness in the world. Yeah. I like that, dude. And you see money as a side effect of having that clarity and having increased happiness?

I did say side effect. I don't know if that's, it's a tool. I guess it's not the end goal, if that makes sense. It's a tool you can use to achieve your end goal, but it's not really the end goal in and of itself. Or it shouldn't be because it's not going to make you happy. Right. Yeah.

Well, it's funny. When I started the blog eight years ago, my mission, right, was to become a millionaire. And I was like, I'm at this millionaire club. And I was, you know, and I was young, partying. Like, I don't know, I wasn't cocky, but I was just like into money, right? Which a lot of people are. And then over the years, I'm like, all right, even if I had a million now, Like there's times where like I'm a workaholic.

I work 70, 80 hours. Like that doesn't make me happy. Or my blog did good. Or like I stopped, you know, paying attention to my friends. Well, great. I have money, but now I don't have my friends, right? Then over the, especially when I got kids, that really was like, dude, slow down, figure out what makes you happy.

And there's a point where I like had, I know, 10 or 11 blogs I own. I sold everything to focus on just what was important. And I cut my income by like half. And I was happier. You know, doing the same, I didn't do like the whole write it down on the piece of paper, although now I'm going to do that because that sounds interesting. But it's true. Like what you want, like money helps stuff.

Like I'm happier financially than I was years ago. Like I could have very well burnt out and, you know, God forbid you've done something stupid to myself or just hate my life. So what do you think your purpose is now? So I'm actually in one of those stages where I'm trying to figure out what the point of it. all is. And you and I've talked to like, hey, like I have like, you know, we have a podcast and I have some blogs. I suck at creating goals. The only goal I ever had was to like blog full time. And when I got that, I never, that was five years ago. I never set one for myself. And so every day, I literally ask myself, what's the point? What's the point? And I like

helping people. I like having fun. But I don't say, oh, I'm going to grow budgets to be like the best blog or I'm going to do this. I don't, because I don't know. So what I've been doing is just writing down, like, what do I want? Like, I don't want to be a workaholic. Like, this week, it was no more working on weekends, which is really hard for me to do. But I figured if I can just work on little bits and pieces and get the lifestyle part, maybe I'll figure out, like, hey, you only have X number of hours to work. Better pay attention to what you're working on. It sounds like you're making good progress towards figuring out what it is you want. And to be honest, you and I sound remarkably similar. This was the boat I was in, say, six years ago,

seven years ago. It's kind of ironic because growing up, I was always a slacker. I didn't want to do anything. I did whatever I could to avoid work. But once I found something I liked to do and was good at, I was working 78 hours a week. Paul, what's your goal? What's your purpose and mission? Right now, it's to grow afford anything. And that's my one singular objective. Why? I like it. I like growing the community. I like, you know, I used to be a freelancer. I thought that was the coolest thing ever because I didn't quote unquote work for a boss. You know, I was self-employed. But I was serving a handful of clients and using my talents and efforts to promote their projects. Afford anything is completely mine. I have complete creative control,

the messaging, the mission, the purpose, the community, all of it is something that I've created. And that is just incredibly powerful. And it's a fantastic site. I think, you know that I always cite, afford anything is one of my favorite money blogs and an example of how you can have quality writing and quality content and really make an awesome site. Thank you. You know, what's difficult when I hear you talk about these exercises is that, you know, when you talk about the first exercise, what's your lifetime goal or what's your five-year goal? I'm incredibly clear on that because the goals that I've set for myself are things that can be achieved in the span of between five years to a lifetime.

But when the question becomes six months to live, there's no particular goal that I have that could reasonably be achieved within a six-month time frame. Paula, if you had six months left to do, what would you do with the time you have left? Not necessarily a goal, but what would you do? What would you want to do? Would you work on afford anything? Would you travel with Will? That's a tough one, Jady.

I don't know. I like the interview is like turned around on us. I know, right? This is not fair. I want to go back and edit my answer. Yeah, I mean, like, anything that I think about, I can't have six-pack abs in the next six months. And even if I could, I'd be dead.

So I wouldn't get to enjoy it. That's an interesting thing. You know, one of the reasons that I'm struggling with my fitness right now is as Kim and I are traveling around the United States in our RV, we are drinking a lot of beer and a lot of wine. So because I don't think I'm going to be dead in six months and because I think I'm going to have a long life and I want to have a long life, I need to stop drinking as much beer and as much wine and do some exercise. But if I knew I'd be dead in six months, through it. I'd drink lots of beer and wine. Exactly. Exactly. And that's why that exercise is

so difficult. If I was going to be dead in six months, I wouldn't be contributing to a a 401k. Yeah. Well, see, the nice thing, Paul is you spend a lot of time, like you're really good at having a life, like you've centered your blog, your lifestyle, everything around like your ideal lifestyle, like right? Like you're going to France and you're traveling all over the place. Right?

So I feel like for you, you're already doing a lot of this stuff. That's why it makes it harder. Whereas like a normal person, like, oh, I want to do this and this and this because they haven't done any of it yet. You know, so it could be a good problem that you're having, you know, like because you're soaking up life. you know, really well right now, which is, which is great. Oh, well, thank you.

That's my answer for you anyways. It's the Paula Pan fan club. Oh, man. This is awesome. I feel like, I don't know, I feel like we can talk for hours and obviously we won't bore our listeners too much. So we know the reason is the why. That's important.

Are there other like tips and nothing like too crazy? Like, are they like little hacks or little things that you think, you know, people don't see whether like bloggers aren't talking about it or is there any like I don't know like any cool tips that that you could put out there that maybe no one knows about it maybe there's not right maybe it's all the same because it's money right which hasn't changed in thousands of years well every once in a while there's a new tip that comes along you know one of my pet peas when I talk to journalists is they always want new tips that nobody else is given I'm like really you want me to just in the event some new way to be frugal sorry I hate to break it to

It's all the same thing. Even professional financial finance journalists who've been doing this a long time, I've talked to dozens over the years, and they all say the same thing. We tell the same 16 stories over and over in different ways. It's not new. But I think to answer your question, Jay, it's not necessarily a tip so much as reframing things. What I'm trying to do with Money Boss, and what I think is effective for a lot of people, is to get people to reframe how they approach money. because it worked for me to imagine I was running a business called JD Inc., and to manage my personal finances like I was managing a business.

And I think that everyone understands that in order to survive, a business has to make a profit. If a business doesn't make a profit, it's going to go under, right? And for some reason, we haven't made the leap to understand that the same exact principle applies to personal finance. only we call it savings rate in personal finance. And so what I want people to do is manage your personal finances like they're managing a business. That means cutting overhead, which is your cost.

It means boosting your revenue, which is your income, and trying to create as big a gap as possible, so you get as much profit as possible. And Paula and I have talked, we'd like to eventually someday in the future create a course together called Save Half. The idea is to just get people to save half their income. and I know that can sound like almost impossible for a lot of people. But the truth is it's not actually that impossible, and there are many, many, many people who do it

even without huge salaries. It requires getting clear on what's important to you. It might require changing your lifestyle some and deferring some of the things that you want to have for the future. And it might even require downsizing your lifestyle. But I think that managing your personal financial life, it's if you were managing a business, can help you achieve your objectives.

whatever they are. Boom. That was a hell of a way to answer my question like all the other journalists. That's what we were looking for. How do you ask for that out of people? That's what we want to figure out. Yeah, it's funny talking to journalists. I mean, we're not going to go down that path.

I like talking to journalists and I don't want to scare them off. I do get information. And we've talked about MoneyBosses. Is there anything other projects or like where? people find you online? How do we get to get more JD Roth if we want to? My current personal finance project is moneyboss.com. That's where I'm writing. When I had get rich slowly, my goal there was to post around 10 times a week. Money boss isn't like that at all. Money boss is four or five times a month. I'm trying to do longer articles. Actually, this is on

Paula's advice, trying to do much longer, more in-depth content. And I'm trying to stay more focused on what I call advanced personal finance. In reality, I'm going to write about what I want to write about, and that's how it goes. So not all the content is advanced. But my goal is to help people reach an advanced stage of personal finance. If people are curious about the cross-country RV trip, they can go to farawayplaces.com. I know maybe two or three people will go there, but that's where I'm documenting where we're visiting all the different states, and it's a lot of fun.

Cool, man. And I will just say that Money Boss, there are some incredible articles on there. I remember, J.D., you wrote one about kind of the different stages of financial independence. And it was a new framework for financial independence that I've never read before. So I'll just give a big shout out to your blog. You're creating really high-quality articles and you're framing concepts in ways that, as the journalists like, in ways that are new. or you're taking maybe the same base concept, but you've clearly read a lot and thought a lot about topics in the financial arena.

And on MoneyBoss, you do a very good job of synthesizing all of those ideas into unique frameworks. Thank you, Paula. I appreciate that. I'm trying. And the article that you're talking about is the six stages of financial freedom, which is actually seven stages because I'm not good with math, apparently. We should probably sign off, but before we do, at the risk of making this interview go long, can you quickly walk us through that?

Because that just might be a perfect way to, you know, you yourself have achieved financial independence. Let's hear it from the man who became financially independent virtually overnight with Get Rich Slowly, you know. Sure. What I'm trying to describe when I talk about the different stages of financial freedom is when we use the term financial independence, Most people have a very specific meaning in mind. And that's the definition that we talked about earlier in this show, where you have enough money to support your current lifestyle for the rest of your life. And there are different flavors of that. Different people have different ways of describing what that means.

But I actually think that there are different stages of financial independence, different stages of financial freedom. And at the zeroth stage, which is this, this is where I said, I don't have the math right. The zero-est stage is like the bonus stage. It's the stage where you're not financially independent at all. You're completely dependent on somebody else. And that's how we all start. As children. Yeah, exactly.

We're dependent on our parents. We're dependent on others. And so we're born that way. And how long it takes to break free from that stage, it's going to vary from person to person. For example, my ex-wife, and she got out of that zero-th stage very quickly. It took me a little bit longer because I was in debt. If you're in debt, you're still in the dependent stage because you're reliant on somebody else. to fund your lifestyle. You're relying on the credit card companies to fund your lifestyle.

You're in that stage if your parents still support you, for example. So the first stage of financial independence is what I call solvency. And that's where you have the ability to meet your financial commitment. You no longer rely on anybody else for financial support. Stage two would be stability. I should point out that in stage one, solvency, you still have debt. You're just not incurring new debt. That's the key there. Stage two, you've repaid your consumer debt, you've established some emergency savings, you've basically established stability. Stage three, I call agency. This is where you have the ability to work and live the way you want. You have enough money saved. You've eliminated all your debt so that you could quit your

job at a moment's notice without hesitation and go do something else without like feeling, oh my God, the world's going to come to an end. You're not trapped at your job. When you talk about debt here, does this include mortgage debt? No, I'm not including mortgage debt because it's a special case. So I lump those first three stages, solvency, stability, and agency together under what I call the survival stages. The final three stages are what I call the thriving stages. And I borrowed these terms from Donna Friedman, who talks about surviving and thriving. So stage four is what I call security. You reach financial security when your investment income can cover your basic needs. I'm not talking about luxuries or anything like that, but the amount you have saved and invests,

would be able to fund some sort of meager existence for the rest of your life. As an example, I always used to joke to my ex-wife that I would be happy to go live just in a trailer house. That's to me a meager existence. That's how I grew up. I grew up in a trailer house. If I had enough money to support the lifestyle I had when I was a kid, I would be secure. Stage five is independence. And this is where most people talk about financial independence is.

And this is the ultimate goal for most people is you have enough investment, income, and savings to sufficiently fund your current standard of living for the rest of your life. And the final stage, stage six, is what I call abundance. In this stage, you have, in the words of Joe Dominguez and Vicky Robin from your money or your life, you have enough and then some. Basically, you have more than enough. Your lifestyle could be funded indefinitely and you've got a very lavish lifestyle. An example, in my mind, somebody who lives in stage six is Jim,

Wang from wallet hacks. He's allowed me to share how much he spends each year. And he spends over $100,000 a year. And he can afford to do that because he's got so much saved. So that's an example of being in the sixth stage, which is abundance. I want to hang out there. Yeah, I want to hang out there too. But you know what? I'm perfectly happy in independence. And this is an important point because when we set our sides, it's good to have goals further down the road, but when we get down on ourselves for not being in those places, that's when we get unhappy. So I want to keep myself happy by just saying, oh, you know what, I have enough. Why am I worried about getting more? Right. And that was my thought when I read that

as well. Well, I'm in stage five, but how can I get to stage six? You know, I have enough, but how can I have more than enough? It's because that would be fun, right? And make no mistake, I would love to reach stage six, but I don't want to get overly focused on reaching stage six. I want to be happy with where I am, stage five. Yeah. That's an excellent framework. I've never read that anywhere before. So thank you for writing that. And I'll say too, like I, since I go through hundreds every week, me and Kate over at Rockstar Finance, like I see a ton of articles on money, you know, and I love the community, but again, going back to your point, like 95% of it is pretty much the same. And then you get the ones that stick out, right?

For Money Boss, right? And Gerewood Solie, I like to, like I picked an article here and there, But for whatever you're doing at Money Boss, there's times where I see like three articles published in a row that I'm like, damn, like I want to run all of these right now. And I have to space it out so I don't look like we're in cahoots. So I think that's good. And I hate reading long things. I get bored, right?

Like I know like Paula writes these long ones and you do two now. And both of you are the exceptions, right? But I'm usually like ADD kicks in or people write these long ones and it's not interesting, right? Like, which is horrible. Right. And so with Rockstar, like, what's important is, interesting, like different, something that's going to stop me and probably get me to take action.

Like, those are my criteria. And for your blog, the only reason I bring this site up is that your blog most times meet that, which I think is good. Like you've figured out a way to get information across in a fun way, but also that gets you to take action, right? And I'm literally going to do your five page thing and see it pops out of it, right? Now you've got my brain working, right? And, you know, we always need to be thinking about this stuff. So yeah, dude, man, you're doing good.

And I congratulate you for everything you've come from down. You know, as Drake said, you started from the bottom. Now you're here, you know. Well, he's got to, like, get hip hop involved. Oh, that's hilarious. Thanks. I appreciate it. I think my challenge going forward is just going to be to mix up some of this actionable stuff

with the stories that the readers are asking me for. And I think that's where I'm headed right now is to getting the stories mixed in with the actionable advice. So there's a good balance. I like it. Thank you so much for spending this time with us, J.D. Yeah, thanks for having me, guys. Go get that Frisbee.

Yeah. Thanks. Thanks. I appreciate it. Awesome. Well, thank you, Paula. This has been fun, as always. Thank you, Jay.

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