The Art of Manliness - #69： Be Your Own CFO with J.D. Roth

00:00:00.000 Brett McKay here and welcome to another edition of the Art of Manliness podcast.

00:00:19.300 So we've talked about on the site that an important part of manhood or manliness across

00:00:24.380 cultures, across time, is being autonomous and independent. And for modern Western men,

00:00:31.920 a big part of becoming autonomous and independent and freestanding is getting a hold of our finances,

00:00:37.740 being on top of our finances. But if you're like most men today, you probably don't think much about

00:00:42.640 your money except for checking your checking account balance every now and then. But if you

00:00:47.120 really want to get ahead with financially, you need to treat your personal finances much like a

00:00:53.440 CFO or chief financial officer of a business would. At least that's the argument that personal

00:00:58.960 finance writer J.D. Roth makes in his new ebook, Be Your Own CFO. So J.D. Roth, he's the founder of a

00:01:04.320 popular personal finance website called GetRichSlowly.org. And he just came out with a new

00:01:09.260 ebook called Be Your Own CFO along with an online personal finance course. And in today's podcast,

00:01:15.960 J.D. and I talk about what it means to be CFO of our own personal finances and how it's switching to

00:01:22.180 that sort of mentality can help us immensely with getting ahead financially. Great podcast. It's

00:01:29.780 crammed with just like really useful, practical takeaway tips. So I think you're really gonna enjoy

00:01:34.060 it. So stay tuned. J.D. Roth, welcome to the show. Thanks, Brett. Glad to be here. Let's tell,

00:01:42.320 let's talk about you, you for our listeners who aren't familiar with you or your work.

00:01:46.200 You call yourself the accidental personal finance expert. How did you accidentally become a personal

00:01:53.340 finance expert? Well, the bottom line is I sucked at money for a long time. I grew up in a household

00:02:00.840 where my parents didn't really know how to manage money. They were always broke. When they did have

00:02:05.580 money through a windfall or whatever, they would just spend right through it. So their balances in

00:02:10.060 their checkbooks were always zero. I went to college. I developed poor personal finance habits

00:02:15.320 myself. And by the time I graduated, I had the start of a credit card problem. And I just grew

00:02:21.280 throughout the 1990s until by 2004, I had over $35,000 in consumer debt, which is less than some,

00:02:29.180 but a lot more than others. And trust me, $35,000 in consumer debt, it feels like you're chained,

00:02:36.600 you're enslaved to your creditors. So spurred by some friends, I started reading everything I could

00:02:44.080 about personal finance and then trying to put some of this stuff into practice. And as I did this,

00:02:49.820 I started writing about what I was doing for the web. I started a blog called getrichslowly.org.

00:02:56.080 And I documented the things I was reading about, the things I was trying, what worked, what didn't,

00:03:01.920 the mistakes I made, the successes I had. And for whatever reason, getrichslowly built an audience

00:03:08.860 and rather quickly. So I started the blog on April 15th, 2006. And within a couple of years,

00:03:15.580 I built that audience so that I had 100,000 subscribers and was making a lot of money from

00:03:22.740 the website, which naturally helped me get out of debt quicker than I thought I would.

00:03:26.900 And eventually I was able to quit my day job. It was awesome.

00:03:30.820 Yeah. Well, I was one of your first readers.

00:03:33.040 Yeah, that's how we met. And then you inspired me to start my first blog with a frugal law student.

00:03:39.640 Frugal law student. I remember it was awesome.

00:03:41.800 Those were the days. Yeah. And I think the reason why it grew so quickly is because people resonated

00:03:47.960 with your story. There's a lot of people who were in the same boat. And at the time, there's all

00:03:53.680 these like, yeah, there's all this personal finance books and things like that. But it was always

00:03:57.740 written by experts who probably never had to deal with having $35,000 in consumer debt or overcoming

00:04:05.340 that. And you provided a narrative like, hey, look, this is what I'm doing. It works. I'm an average

00:04:10.760 guy. I was a screw with my money, but now I'm not so much of a screw up anymore. 0.85

00:04:14.820 Right. I think you've hit the nail on the head there, Brett. I think that a lot of personal finance

00:04:22.540 books at least, say, a decade or more ago were written by people who were on Wall Street or they

00:04:29.240 were accountants or certified financial planners, people who had their act together. And yes, the

00:04:33.360 information they were providing was correct, but it didn't take into account a lot of real world

00:04:39.100 stuff. It didn't take into account psychology and emotions and relationships and all these things

00:04:44.520 that make personal finance messy. Because as I think most people realize, smart money management

00:04:51.240 is more about mindset than it is about math. It's about mastering your emotions and mastering

00:04:56.500 psychology and learning how to do things in complex relationships where you're dealing with

00:05:06.020 your friends and your family. And so I think not just me, but a lot of personal finance bloggers

00:05:14.940 that were getting started in the mid-2000s, they were telling their personal stories. And you're

00:05:20.020 right. This resonated with people. And also at the time, behavioral finance, the field of behavioral

00:05:25.280 finance was beginning to take off. And that actually is a field where people write about

00:05:31.120 how people handle money in their real life instead of in ideal ways.

00:05:36.720 Very good. So you started to get rich slowly. And yeah, you were able to quit your day job. This

00:05:43.380 helped you earn a very lucrative income. You're able to pay off your consumer debt. And basically,

00:05:49.360 went from JD, the screw up to JD, like I got my financial act together. And so now you've come

00:05:57.160 out with this new guide called Be Your Own CFO, right?

00:06:01.640 Right.

00:06:02.240 Right. And I think it's interesting because it's such a great idea and a great concept. Because

00:06:08.620 you talk about in the guide or ebook that when you worked at your day job, you took care of your

00:06:15.620 business finances meticulously. You took care of that because you didn't want to get audited by the

00:06:19.880 IRS. But then your personal finances were a wreck. And I think a lot of people are like that. They'll

00:06:25.820 be very meticulous if they own a business with their business finances. But to their personal

00:06:29.700 money, they just don't care. Why do you think people are like that? Why do you think people

00:06:35.220 could be so meticulous when it comes to business but not personal finance?

00:06:38.980 You know, I don't actually know the reason. I think maybe people are forced to be meticulous

00:06:44.720 with their business finances because of the IRS. And because if they aren't meticulous,

00:06:52.260 the business can't survive. I think we all understand that in order to survive, a business

00:06:58.260 has to make a profit. Now, profit is not necessarily the purpose of business. Some people would argue

00:07:03.540 that it is. But I've seen plenty of research that indicates profit is a byproduct of other

00:07:10.760 objectives, of doing other objectives well. And the great example is Apple Computer, which they're

00:07:17.680 very explicit. Steve Jobs was very vocal about the fact that their purpose was not to make a profit.

00:07:23.620 Their purpose was to make great products. And if they were able to do that, then the profit would

00:07:28.000 come. And so profit is kind of like food and water for a business is the way I look at it. We need

00:07:34.600 food and water for our bodies. We don't live to eat. That's not our purpose, right? But we need the

00:07:40.340 food and water in order to survive. And that's the same thing with a business. So I think people grasp

00:07:44.800 that, that a business needs a profit in order to continue being a business. Otherwise, it goes out of

00:07:50.680 business. But what people don't realize is the same idea applies to your personal finances. If you have

00:07:57.080 an objective, if you have a mission, if you have things you want to get done, in order to accomplish

00:08:01.520 those things, you have to have a profit. That's the only way you're going to reach your objective.

00:08:06.760 And most people, for example, have an objective of retiring. And in order to be able to retire,

00:08:13.020 and retirement is the same thing as financial independence. They're essentially the same thing.

00:08:16.780 In order to achieve these goals, you have to have a certain amount of money that can support you

00:08:22.280 for the rest of your life, however long your life will be, or however long you think your life will

00:08:27.340 be. So you've got to earn a profit until you've accumulated enough money to sustain that goal.

00:08:33.460 Interesting. So I mean, how did you come across, I mean, so when did it click for you when you were

00:08:36.300 like, hey, I can do what I do with my business finances to my personal finance? I mean, how did that

00:08:41.900 connection happen for you?

00:08:44.360 Well, it was kind of a gradual thing. I mean, when I finally decided to get out of debt and take control

00:08:48.340 of my personal finances in 2004, it occurred to me that if I used some of these same skills

00:08:54.780 that I had used to make my business successful, then perhaps I wondered, you know, what would

00:09:01.560 happen if I used them in my personal life? And so I began applying them. And the more I applied them,

00:09:06.820 the more successful I was. And at first, I mean, it was a conscious thing. I was making a conscious

00:09:12.240 decision. And it's kind of funny. I don't want to go too much into this because it's a

00:09:17.320 deep rabbit hole. But part of this was based on I had set up a sort of business, we'll put business

00:09:23.300 in quotes in the game World of Warcraft, where I bought and sold. I would buy things cheap at the

00:09:28.520 auction and then resell them at higher prices. And I was basically doing arbitrage. And that too

00:09:35.380 serves as an inspiration, this fake business. I was like, you know, why am I not trying to do some

00:09:39.540 of this stuff in real life? Why am I doing it in a computer game where it doesn't matter at all?

00:09:44.900 Why not try to do some of this stuff in real life? So just over time, the more I put these

00:09:50.380 principles into practice, the better results I had. And so when it came time to write this

00:09:57.220 particular guide, this guide is part of Chris Guillebeau's unconventional guide series. I don't

00:10:02.480 know whether your listeners are familiar with Chris, but he writes a blog called The Art of

00:10:06.460 Nonconformity. And he founded a convention here in Portland, Oregon called the World Domination

00:10:11.920 Summit. He also has a series of online guides called The Unconventional Guides. And they're

00:10:16.920 like The Unconventional Guide to Art and Money for artists who want to make a profit or The

00:10:20.900 Unconventional Guide to Travel Hacking and so on. So he said, JD, why don't you write me

00:10:25.380 a guide, an unconventional guide to money? When he asked me to do that, I kicked him out a lot

00:10:31.260 of different ideas. I had three false starts, as I told you before we started recording.

00:10:34.880 And it was only once I latched onto the idea, I thought, you know, I remember when I was trying

00:10:41.020 to get out of debt and I did that whole business thing. What would happen if I like carried that

00:10:46.060 metaphor even further? And so I started writing the guide as Be Your Own CFO and it just clicked

00:10:54.140 and it made so much sense. I love the way the metaphor worked. And every time I would then bring

00:10:58.820 this metaphor to the people I was talking to about personal finance, my friends and my family

00:11:02.880 who were asking me questions. And when I would explain it to them, it was like this light bulb

00:11:07.720 went on in their head. They're like, oh, I get it. Try to aim for profit. So anyway, that's the

00:11:13.400 long version of how this thing is developed.

00:11:16.820 So, OK, let's get talking about some of the things you talk about in the e-book because it's

00:11:20.120 really good. I mean, it's just very practical, but also relatable at the same time.

00:11:27.540 And so you start off talking about the first thing you need to do is come up with a mission

00:11:31.840 statement, which for a lot of people, they'd be like, well, why is this doing in a personal

00:11:36.540 finance book? Like what is my mission statement have to do with anything? What does that have to

00:11:41.420 do with personal finances? Like having your, I guess you kind of touched on that before with

00:11:44.140 like the Apple example, right?

00:11:45.360 Right. Well, you know, I think that I would venture to say that most people don't really have

00:11:52.980 particular direction in their lives. They're very reactive. And I don't mean this in a, I'm not

00:11:59.960 trying to condemn people for doing this because nobody tells us, oh, you need to have direction.

00:12:04.060 So people just kind of move aimlessly through life, reacting to things and maybe planning a

00:12:09.440 little bit ahead. But as a result, because they don't have a destination in mind, they

00:12:13.400 just kind of wander. On the other hand, the people who do decide that they have a goal,

00:12:18.720 whether that goal is to travel the world, to retire early, to buy a house, to send their

00:12:24.220 children to college, whatever those goals are, they help provide focus and direction

00:12:30.480 to whatever it is you're doing. So if you have a particular goal in the guide, I call

00:12:37.620 it a mission statement. And I talk about how you can develop a mission statement and then

00:12:41.680 sub goals that go along to support it. If you develop this mission, it can keep you focused

00:12:47.500 so that it's much easier to make choices with your money. If your goal, for example, for example,

00:12:54.120 one of my goals is to travel across the United States next year. I want to leave here, leave 0.99

00:12:58.500 Portland, buy a used travel trailer and travel across the United States for six months, interviewing

00:13:04.300 people as I go. That goal keeps me focused. I know that I need to save money to purchase

00:13:10.180 a used travel trailer and to support my travels as I'm no longer writing about money. I'm going

00:13:17.740 to have to live off my savings and I don't want to have to tap my retirement savings.

00:13:20.860 So this goal keeps me focused. And it means when a friend calls me and says, Hey, JD, do

00:13:27.580 you want to go out for dinner tonight? I'm more likely to suggest something like, well,

00:13:31.620 why don't you come over here? I'll grill up some hamburgers. It'll be cheaper. And then

00:13:35.720 we can go for a walk because I know that that's going to save me money, keep me fit. And it's

00:13:42.840 going to be more aligned with what my personal goals are than going out to dinner and sitting

00:13:47.820 around drinking and not doing anything. Yeah. Well, yeah, I know for me, um, a few years

00:13:52.100 ago when my wife and I were like in debt pay down mode, like it was just like pay off our

00:13:55.500 debt. That was our goal. And then like, we just, every decision we made financially, it

00:13:59.040 was just like, what can we do to pay this debt off as fast as we can? And it really helps

00:14:03.360 because like, you know, we were eating like what Dave Ramsey says, like beans and rice,

00:14:07.040 like spaghetti and like nachos, like every day, you know, cause it was cheap, but it paid off.

00:14:12.500 Yeah. And every once in a while you'll realize, or you'll make a decision, uh, and say, you know,

00:14:17.740 right now I do want to go out to dinner with my friend. The example I'm thinking of is right now,

00:14:22.300 uh, my girlfriend and I have both managed to put on a little bit of weight over the past, uh,

00:14:27.200 year or two. And so we're, uh, we're in fitness mode. We're trying to do what we can to eat right.

00:14:34.080 And, and so on. And that means we're consuming a lot less alcohol. And so our default is because we

00:14:40.380 know we want to lose weight. We are not drinking alcohol and we're especially not drinking beer.

00:14:45.100 On the other hand, last night it was beautiful, beautiful sunny day here in Portland. And, uh,

00:14:52.240 we went out to dinner with some friends and we still know that our goal is to lose weight,

00:14:57.180 made this conscious choice. We decided intentionally, we are going to drink. And so, uh, she had a glass of

00:15:03.420 wine and a cocktail and I had a beer and a glass of wine. And so, uh, it's not that you have to deprive

00:15:09.220 yourself, but when you have a mission, it's much easier to make decisions and be conscious about how

00:15:14.560 you're spending money. Yeah. Yeah. That's, it's great stuff. So you have a section I thought was

00:15:19.320 really great about like financial rewards, right? So every business has these different financial

00:15:22.720 reports they produce out on a quarterly and yearly basis. Um, you suggest some financial reports or

00:15:28.740 metrics that you should keep track of in your personal finances. Is there one in particular that

00:15:33.320 you think is like the most important that people need to start thinking about more

00:15:36.820 and they might not be doing it right now? Yeah. I think the most important personal

00:15:42.020 finance metric is what I call profit margin. And most people would know this as saving rate

00:15:48.740 and your saving rate is basically, uh, the percentage of your income that you're setting aside

00:15:53.660 for future use, whether that's in savings accounts or retirement accounts or investment accounts or

00:15:57.920 whatever. And in general, we are told by financial experts that you should set aside a 10% of your

00:16:04.200 income and the, uh, really ambitious financial experts will say 20% of your income. So they're

00:16:09.480 suggesting a 10% saving rate or profit margin or, or as much as 20%. And you know, that's what I

00:16:14.900 recommended for a long time too. In my first book, your money, the missing manual, uh, I'm all over the

00:16:20.080 20% thing, but after talking a lot, uh, in the past year or two with people who have achieved financial

00:16:27.400 independence at a young age, people who've, uh, uh, basically retired early. And by that,

00:16:32.920 I mean at 35 or 40 or 50, uh, especially a fellow named, uh, Pete who writes a blog called

00:16:39.460 mrmoneymustache.com. It's the coolest blog name. Yeah. It's, it's awesome. He's got passionate

00:16:45.420 followers because of his advice. And the advice is, yeah, this 10%, 20% saving rate or profit margin,

00:16:51.940 that's great. But if you follow that advice, you're going to be working at your job for 45 years

00:16:57.240 because that's how long it takes to save enough to retire. On the other hand, if you bump that

00:17:01.800 savings rate up to 30%, uh, you can retire much quicker. That's my ex-wife. She's saved 30% of

00:17:08.560 her income. She's going to retire at age 50. But Pete says, you know, if you bump it up to 50%,

00:17:14.420 you can retire by 40. Or if you're really, really industrious and bump that savings rate or profit

00:17:20.640 margin up to 70%, you can retire in about 10 years. You can, you'll have accumulated enough money

00:17:27.000 money to, uh, live off, uh, at your current spending rate for, uh, the rest of your life.

00:17:33.240 If you keep your spending rate there. Um, and at first I kind of blew that off as like

00:17:38.240 extreme thinking is it, and it wasn't really possible, but looking at the math, no, he is

00:17:43.400 absolutely right. If a young person coming out of college, man or woman says, all right, I'm going to

00:17:50.860 just do this. I'm going to buckle down and save 70% of my income, no matter what in 10 years,

00:17:57.660 they can retire and fund their, uh, spending level. And the amazing thing about that is when you

00:18:04.640 retire, uh, I think a lot of people think of retirement as just lounging around playing golf,

00:18:08.840 that kind of thing. But from what I've seen of the people who do achieve early retirement through

00:18:13.240 this sort of extreme saving, uh, they, they continue to make money. It's like me now I've

00:18:19.280 accumulated enough money. I'm 45 years old. I've accumulated enough money that I could retire if I

00:18:24.400 wanted to, but I continue to do other things like this be your own CFO guide, which is part of the

00:18:29.980 get rich slowly, uh, year long course by the way. And that produces income for me. And it's just kind

00:18:36.520 of a sidelight. I don't need the income, but it's, I'm doing something that I enjoy and I think provides

00:18:42.100 value. And even though I'm retired, I'm continuing to generate income. So bottom line, and I'm very

00:18:48.740 talkative today, aren't I? I love it. The bottom line is the most important metric a person can

00:18:55.760 look at in their personal financial life. I think is what their profit margin is. And if your profit

00:19:00.860 margin is small, say 5%, do what you can to get it up to 10 or 20%. But if it's already at 10 or 20%,

00:19:07.960 see what you can do to bump it to 30 or 50%. So that may mean cutting back on expenses or trying

00:19:14.860 to find ways to make more money. Yes, exactly. So my philosophy is, uh, the best way to do this

00:19:21.320 isn't through like clipping coupons, although there's nothing wrong with clipping coupons

00:19:24.880 or, uh, uh, other things that produce tiny, uh, benefits, but you want to see what you can do

00:19:31.780 to produce, uh, big changes to your financial situation at once. And this is much easier to do

00:19:38.840 if you're just starting out, if you're, if you've just graduated from college, if you can refrain from

00:19:43.880 adopting the adult lifestyle, when you graduate from college, get an adult income, but don't have

00:19:49.660 adult spending levels, uh, you're going to be so much better off. But if you already have an adult

00:19:54.300 lifestyle, there are a few changes you can make that produce big results. Uh, unfortunately people

00:19:59.880 are very, very resistant to these changes because they go against, uh, the way our culture operates,

00:20:05.800 it's what we tend to value. The, the big changes that I try to stress are, uh, number one is housing,

00:20:11.880 cut back on your housing costs. Uh, the typical American household spends a third of its budget

00:20:17.160 on housing. And this is enormous and it's much larger than it used to be in the past. And I feel

00:20:24.360 like people would cut their housing costs back to say 20% or even 15% of their budget. They could save

00:20:30.600 huge, huge amounts of money. Second source that people can cut back is transportation.

00:20:36.460 And most people actually could cut back on transportation today. If they just made the

00:20:40.160 resolution, okay, I'm going to find other ways to get around and drive to my car. And again,

00:20:45.820 transportation is the second largest, uh, piece of most American households budgets.

00:20:50.940 It's if people could find alternate routes or ultimate, alternate means of getting around,

00:20:56.480 like taking the bus or biking, or, uh, I've got a motorcycle, which is much cheaper than driving a

00:21:01.180 car. Um, these things, this cut would, uh, provide a huge impact to the bottom line. And then the,

00:21:08.180 the third big change that people can make is boosting their income. And this could come through

00:21:14.280 negotiating the pay raise, uh, taking a second job, selling things, uh, whatever it is, generating

00:21:21.460 additional income is another great way, uh, to boost your profit margin.

00:21:27.040 Right. So focus on those big wins.

00:21:29.440 Exactly. Right. Big wins. All right. Um, so you have a section about budgets, right? So if you're

00:21:34.200 in run a business, businesses have budgets. So if you're going to be the CO CFO of your life and

00:21:38.400 you'd have a budget too, but the thing is lately you've been, you see a lot of talk in the personal

00:21:43.000 finance sphere that budgets don't work, right? Like sort of like how diets don't work. You know,

00:21:47.940 you need to make lifestyle changes instead of trying to go on a diet. You want a lifestyle

00:21:51.580 change. Um, how do you respond to that, that argument that, yeah, budgets don't work. So

00:21:57.180 just kind of focus on general lifestyle changes in your finances. Well, I think that there is

00:22:04.480 merit to the argument that the lifestyle changes are most important because that's true. However,

00:22:09.140 to say budgets don't work is misguided. Uh, some budgets don't work. And the reason they

00:22:15.420 don't work is they can be very fussy. They get overly complicated. They try to track too much

00:22:19.840 detail. So, uh, I'm a huge advocate of, um, what you might call budget frameworks, which are broader

00:22:27.720 budgets that might have, for example, just three categories. Uh, I've been a long time advocate of

00:22:33.180 a budget framework or a budget, if you prefer called the balanced money formula, which was suggested

00:22:39.140 by Elizabeth Warren and Amelia Tiagi in their book, all your worth. But anyway, the balanced money

00:22:44.520 formula suggests that, uh, you just have three budget categories. Uh, the first category is needs

00:22:51.040 and your goal is to get your spending on needs to be below 50% of your take home pay.

00:22:56.400 So that means, uh, needs include things like your, uh, basic housing, basic clothes, basic food,

00:23:02.620 and so on. You want those to be below 50% of your take home pay. And you also want to save more than

00:23:08.180 20% of your income. Now, again, remember I said earlier that ideally you'd be saving 50% or more of

00:23:14.200 your income, because that's going to get you to your goals much quicker, but this is a good start,

00:23:17.640 20% or more of your income. And then that should leave you roughly 30% to spend on want. And, uh,

00:23:24.200 Warren and Tiagi say that this balanced money formula is a way to provide peace of mind. Um,

00:23:30.760 and you're able to, uh, have everything you want and everything you need while saving for the future.

00:23:36.100 And I think it's, uh, by limiting it to just three categories, it makes it a lot less fussy and it's

00:23:42.000 something that people can follow. And yeah, I agree. So my experience with budgeting has been

00:23:46.400 like, yeah, you start a budget and then you're always just tinkering with it. Like you spend all

00:23:51.960 your energy, like trying to like tinker with it and like set everything out. Like every dollar has to

00:23:56.180 have a place. And then like, it just saps so much mental energy that like, you don't have the willpower

00:24:00.560 to actually follow it anymore. Yeah. For me, a budget is kind of like a roadmap to take you in the

00:24:06.060 direction you want to go. And I don't necessarily need a roadmap that shows me every little twist and

00:24:12.840 turn that that's good. Just going to drive me nuts. Uh, what I want instead is just a, a general

00:24:17.680 map that says, yeah, stay on the freeway until you hit San Diego and then take this exit. I don't

00:24:22.400 need to know about all the other exits or, uh, how many lanes are in the freeway at this point and so

00:24:27.180 on. Um, so yeah, I think a broader budget framework is best for most people. Definitely. Okay. So you

00:24:34.660 kind of hit on this a little bit, you know, a lot of our listeners are in their twenties,

00:24:38.280 maybe early thirties, um, just starting out in life, any specific advice you have for them?

00:24:43.920 Uh, you mentioned like, don't have adult lifestyle, right? Don't, don't, don't pay for that

00:24:48.840 inflated lifestyle, but anything else they can do to like, that'll just have a huge payoff, um,

00:24:53.340 years down the road for them. Uh, well, uh, you know, Brett, I would go back and, uh, point to this,

00:24:59.820 uh, having a mission statement and having goals, because I think that, uh, being clear

00:25:04.540 on what your purpose is and what's important to you, knowing what's important to you can keep you,

00:25:10.120 uh, focused when your friends are doing things that, uh, might not be in your best interest.

00:25:16.580 If I were to pay attention to how my friends spend money, I would buy a lot of cigars and a lot of

00:25:21.780 booze. And I'm not saying that I don't drink and that I don't smoke cigars, but, uh, I let them do

00:25:27.880 whatever the hell they're going to do because they're following their priorities. I pay attention to my

00:25:33.320 priorities. And it took me a long time to get to there. When you're young, it's very easy to be

00:25:39.100 taken with the notion that you need to have the sorts of things that your friends have or that

00:25:44.040 your parents had when you're growing up. But if you can resist the urge, uh, to compare yourself to

00:25:50.140 others, to, uh, uh, be seduced by the notion that you have to have what other people have or, or what the

00:25:56.140 people on TV have, that's even worse. You're going to get so much further ahead than anybody else,

00:26:02.640 any of your other peers, as far as your personal finances are concerned. And the key is becoming

00:26:10.340 clear on what is important to you so that you're able to make these choices wisely.

00:26:14.620 Yeah. I think that's nails that you, I mean, that's awesome because like, I've noticed that

00:26:18.980 there's a lot of, there's a tendency for young people to be like, I just want to keep my options 1.00

00:26:22.420 open. It's like, like coming up with a mission statement, like a purpose, it seems sort of

00:26:26.320 constraining what they don't realize is like that it can change. Like you're not stuck in it for

00:26:30.920 the rest of your life, right? Like you can change this as your life progresses, but you had something

00:26:36.380 like at least one thing you're focusing on that will give you some sort of direction in your life.

00:26:41.420 So you don't go off to someplace you don't want to be. Yeah. And I think it's important to realize

00:26:46.440 that there are opportunity costs associated with everything that we spend and whether it's time or

00:26:51.640 money. Uh, when we choose to do one thing or choose to spend money on one thing, we are basically

00:26:57.940 saying, okay, I'm choosing not to spend it on something else. And so if you go out and you

00:27:03.040 buy a new car for say $25,000, you're choosing not to spend that $25,000 or $30,000 after financing

00:27:10.960 on something else, whether that something else has traveled around the world or a retirement or a new

00:27:18.300 house or whatever. And it may not be a conscious choice. You may not be consciously saying, oh, I would

00:27:24.040 rather have this car than to travel around the world for a year, but it is effectively the decision

00:27:29.620 that you're making. And so you need to realize that these opportunity costs exist and, uh, they

00:27:36.960 really have a huge impact on your future. I was really dumb with money when I was in my twenties, 0.85

00:27:42.220 Brett. I got into huge, huge credit card debt and I made choices that once I got down the road, 0.94

00:27:50.520 10 years later, I was like, what in the world was I thinking? I basically mortgaged my future, uh, for

00:27:56.220 the sake of a few like luxury items, uh, when I was younger. Yeah. Well, that that's, I think that's

00:28:04.640 solid advice. I mean, it's something we try to hit on the site a lot for, uh, young guys is like, have a

00:28:09.940 mission, have a purpose. Yeah. Something. Right. All right. Well, JD, um, last question, um, we'll wrap

00:28:16.580 things up. So tell us a bit about this guy. So it's, it's this, you know, be your own CFO, but

00:28:21.120 it's a part of a course as well. Yeah. So this was kind of fun for me. Um, I'd never done anything

00:28:27.980 like this. I, I thought it was just going to be like a, uh, standard PDF ebook that people could

00:28:33.480 download, but Chris Guillebeau is like, no, no, no, let's make this a part of a bigger project. So

00:28:37.780 we created the be your own CFO guide and it's about 120 pages. It contains all the, it's like the

00:28:43.820 distillation of everything that I've learned reading and writing about personal finance over

00:28:47.920 the past 10 years. And it's got all my, uh, uh, all my latest ideas because I'm constantly evolving.

00:28:55.400 I'm constantly learning new things about personal finance. And so it's got all the latest information

00:28:59.600 that I've been able to, uh, accumulate. And Chris said, well, let's add some more stuff and make it

00:29:05.180 into a course. So we basically have a 52 week email series where every, uh, every week we send out our

00:29:11.040 new email about a personal finance topic. Some of the stuff is about how to handle psychology,

00:29:15.180 how to handle relationships, but it's also some practical stuff too, like, um, how to set up an

00:29:20.620 estate plan, which sounds boring, but everybody needs to do. And, uh, then I also, uh, you do this

00:29:28.000 podcast, but I'm kind of new to this kind of thing. Uh, and I decided it would be fun to interview,

00:29:33.620 uh, some of my friends in the personal finance world, cause I have a lot of contacts. So I interviewed

00:29:38.380 18 different people and, uh, those interviews are available as part of the course. And then there's

00:29:44.960 a whole lot of other stuff, like a guide on how to negotiate your salary, a guide to setting up a

00:29:49.300 Roth IRA, which is a basic retirement account that everybody should have. And it's a, it went from

00:29:55.780 being just an ebook to this large comprehensive course. And I'm really proud of it. I feel like

00:30:01.260 it's the best work I've ever done. That's awesome. Where can people find out more information

00:30:04.640 about it? We set up a website at moneytoolbox.com and people can go there and learn more.

00:30:11.620 Awesome. Well, JD Roth, it's been a great conversation. It's always a pleasure to talk

00:30:15.440 to you. Uh, been a big fan of your work since way back when. So, uh, thanks so much for taking

00:30:19.800 the time to talk to me. Thank you. Our guest today was JD Roth. JD is the founder of getrichslowly.org

00:30:26.380 and he continues to write there today. And he just released his new ebook slash online money

00:30:30.800 course called be your own CFO. And you can find that at moneytoolbox.com. Uh, you can

00:30:37.080 sign up for it there. Well, that wraps up another edition of the art of manliness podcast. For

00:30:43.660 more manly tips and advice, make sure to check out the art of manliness website at

00:30:47.280 art of manliness.com. And also if other days is coming up, check out our store store.artofmanliness.com.

00:30:53.640 We've got some new cool coffee mugs, really manly and hefty and cool looking. I'm really

00:30:59.220 excited. I think they're cool. Let's check them out. Uh, store.artofmanliness.com. And until

00:31:04.340 next time, stay manly.

The Art of Manliness - May 23, 2014

#69： Be Your Own CFO with J.D. Roth

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