Episode #16： Conquering Debt with J.D. Roth of Get Rich Slowly
Episode Stats
Summary
JD Roth is the author of the personal finance blog Get Rich Slowly, and he has recently paid off $38,000 worth of credit card debt. In this episode, he talks about how he paid it off and why he thinks it's possible to get ahead financially.
Transcript
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Brett McKay here and welcome to another edition of the Art of Manliness podcast.
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Now with this tough economy we're facing right now, many of us feel like we're sinking in
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financial problems. Bills pile up and personal debt weighs us down and sometimes it feels like
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we're never going to get ahead financially. Well our guest today has been in that situation
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but he's shown that it's possible to get ahead. He's recently paid off $38,000 worth of credit card
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debt and has cataloged it on his website. His name is JD Roth and he's the author of the personal
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finance blog Get Rich Slowly. Money Magazine has named JD's site the most inspiring personal
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finance blog on the net and one of the 25 best money website. JD also has a book coming out
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later this year called Your Money, The Missing Manual and you can pre-order it on amazon.com
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right now. And JD lives in Oregon with his wife. JD, welcome to the show.
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Yeah, I appreciate you taking the time to speak with us today. Now JD, a big part of the story
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on your blog is how you accumulated $38,000 worth of credit card debt and then paid it off.
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How did you get to that situation where you had that much debt? Did it happen really fast or did
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it happen little by little? I mean what's the story behind that? Well no, it kind of happened
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solely over time. And first of all, just to clarify, the total or the way I always say it is it was
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over $35,000 in consumer debt is how I phrase it. And so most of that was credit card debt. Like
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many people in debt, I tried to juggle things around. And so sometimes the credit card debt
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took on other forms. But no, it happened slowly and it actually started when I was in college
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back in 88, 1988, 1989, somewhere around there, I got my first credit card and it was actually a
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store credit card. And I wanted to use it to buy a super fancy shaver and bottled cologne.
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And from there, it was all downhill. I didn't have the money to pay for it. And so I took out
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the charge card. I carried that debt for a while. And then I took out all sorts of other credit cards
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when I was in college. And I graduated. I didn't have much of a debt problem coming out of college,
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but I didn't have a job coming out of college either. And so I lived on credit cards. I used those
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to survive while looking for work. And then even when I found a job, it didn't pay very well. So I was
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using the credit cards to accumulate debt. Over the next few years, up until the mid-1990s,
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it developed from using the credit cards as a necessity, or what I felt like was a necessity,
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to using them to pay for toys and gadgets and computer games and books and all this stuff.
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So by the middle of the 1990s, I had over $20,000 in credit card debt.
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Wow. So your story sounds pretty common. A lot of people get credit cards when they're in college.
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Those people at the tables with giving out free t-shirts and you sign up and then you get the
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credit card and then you just go from there. Do you think your problem or doing that, was it a
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lack of education about personal finances or just being young and... It was being young and stupid and
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just kind of being overconfident, thinking that, oh, well, I'll be able to pay this off. Because
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you know, I've always looked at a smart guy. I was never the athletic guy in high school. I was
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one of those geeks, one of the nerds. And I took accounting classes. I was in Future Business
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Leaders of America. I took these classes. I knew this stuff. And it didn't help me knowing this
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stuff in theory. I just felt like I was cheating the system, I guess. I was like, oh, you know,
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I can take out this debt to buy the Sega Genesis because I'll be able to make more money in the
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future. And I did end up making more money in the future, but I also spent more money. So I was
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never catching up. So eventually I kind of wised up that, you know, hey, I'm being stupid with the
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credit cards. And I couldn't exactly figure out how to get rid of the credit card debt. I started
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looking for silver bullets. I wanted to pay it off instantly. I wanted to win the lottery or something.
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And the one thing I ended up doing was in 1998, I took out a home equity loan where you borrow
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against the value of your house. And I used that money from the home equity loan to pay off the
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credit card debt. And so even though the credit card debt kind of magically went away, it was still
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there. It was just now it was in the form of I was borrowing against my house to pay it off.
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Yeah. And then that didn't stop my debt. I had mentioned that I had over $35,000
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worth of consumer debt. And so from 1998 until 2004, during those six years, I found a way to
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come up with another $15,000 in consumer debt. And I didn't have to use credit cards to do it.
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And so what was the catalyst that caused you to turn it around to stop juggling debt around and
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Well, everything just kind of, I started to feel like I was, instead of feeling like I was
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somehow cheating the system or and managing to stay afloat, I started to feel like I was
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drowning. My wife and I, we bought a new house. We sold our old house and bought the house we're in
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now. And it's a hundred year old farmhouse just outside Portland. And it's a beautiful house.
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But when we bought it, it needed a lot of work done, just tons and tons of work. And we knew
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that going into it. And I did all the math on paper and I thought, oh yeah, you don't have
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to afford this. And then we actually moved in as hard as I started to have to pay for the
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repairs. And I was like, oh my goodness gracious, how am I ever going to be able to make this
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work and still have money to enjoy life? And so I just felt overwhelmed. I felt like I was
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drowning. And so a couple of friends gave me, or recommended some personal finance books. I read
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those personal finance books. And that was really the catalyst is reading those books and starting
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Was there a personal finance book in particular that really motivated you and got your butt in gear?
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Yeah, there were two of them. And that's a great way to phrase it too. The first one,
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the one that kind of laid the groundwork for everything was Your Money or Your Life by Joe
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Dominguez and Vicki Robin. And it basically talked about how when you buy all these little
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things, because that's how I accumulated most of my debt was just buying little things here
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and there, buying magazines, spending on new video games, buying new clothes that I didn't
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necessarily need, just doing these little things all the time.
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You're basically trading hours of your time where the book says life, energy, which sounds
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all new agey. But you're trading your time for these things. And that was kind of an eye-opening
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thing, but that didn't kick my butt. What really kicked my butt then was reading Dave Ramsey's book
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called The Total Money Makeover, which is all about getting out of debt. And between those two books,
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yeah, it just, it spurred me to look at what I was doing. It just changed my ways.
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And how long ago was this when you started really getting serious about paying off your debt?
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Oh, let's see, when was it? 2004. I think it was October of 2004. I sat down and I drew up a plan.
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I sat down and I said, okay, this is what I'm going to do. This is how I'm going to pay the debt off.
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And I tried to work on it a little bit over the next six months. And I kept reading new personal
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finance books. And then it was in the spring of 2005, April of 2005, I sat down and it was just
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for my own education. I kind of wrote out all the lessons I'd learned from the various personal
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finance books. And I had a personal blog. And so on this personal blog, I put up an article that I
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called Get Rich Slowly, because I felt like the lessons that I was pulling from these books were
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that, you know, you can't just pay off your debt all at once. You can't get rich quickly. You can't
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do this stuff. But if you're patient and you follow certain principles, you can do it slowly. So I
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called my article Get Rich Slowly. And it was really popular that that article is really popular. It got
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picked up all over the place. And I started trying to live those principles that, you know, it's hard at
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first, because you make mistakes, you read what these books say to do. And you try to implement
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them. But there's so much going on. And you're in debt. And you're trying to do things right, but you
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still spend too much money eating out or whatever. And you make mistakes along the way. And so it took me a
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long time to get everything figured out, I guess.
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Yeah. So I mean, you started off Get Rich Slowly, I guess, with this article, what inspired you to actually
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start a blog dedicated to that? And really, I mean, it's pretty gutsy to open yourself up, you know,
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financially and let people know your financial status. And I mean, what inspired you to do that?
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I can't remember if there's any one single inspiration. Part of it was I was, I started to pay off my debt by
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cutting my expenses and so on. And I decided I needed to boost my income because I decided there were two sides of the
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things. By cutting your expenses, you kind of free up some money to pay off your debt. But I
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thought if I could boost my income, I could have even more. And so I read about people making money
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from websites. And I decided I wanted to start a comic book website, actually. I wanted to start a
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comic book blog because that's one of my passions, one of my hobbies is comic books. And I started that
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and I was making a couple bucks a month. It was no big deal. And then I thought, well, you know,
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people really like that Get Rich Slowly article I wrote. Well, maybe I can start a website based around
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personal finance. So I did that and gave that a try. And that took off a lot more than the
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comic book blog did. I got many, many more readers. Whereas I had maybe 20 comic book blog readers
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after a couple months. I had 2,000 at Get Rich Slowly after a couple of months.
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Wow. We're going to take a quick break for your word from our sponsors. And now back to the show.
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Now, so JD, your site's called Get Rich Slowly, which I think pretty much sums up your philosophy
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towards personal finance. But can you go into a little more detail about how you approach personal
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finance? Sure. For me, I'm all about making small manageable, taking small manageable steps,
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not trying to get everything, not trying to be perfect, not trying to do everything at once.
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And so that means maybe picking one or two areas in your life where you can make improvements and
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focusing on those. One example might be if you're the sort of person who eats out all the time,
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and maybe you don't get a lot of value out of it. Maybe you don't really enjoy eating out,
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but it's just something you do out of habit. That might be one area where you can try to cut back.
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And meanwhile, still indulge yourself in other areas. That's not necessarily giving yourself
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permission to overspend, but it's just saying, I'm going to try to focus on one thing at a time,
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try to cut back on one thing at a time. Let's see, what else do we have here? I think that it's
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important to take a long-term view. I think many people, and I'm one of them,
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we get wrapped up in this idea that, oh, I need to change everything this month or this year.
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And that's really not how it works. You didn't get into debt overnight. I mean,
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people don't get into deep debt just over the matter of one year. It usually takes several years
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if you've got a credit card problem or some kind of spending problem. It's going to take three,
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five, six, seven years to get really, really deep in debt. Well, it's going to take that long to get
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out of debt too. And you've just got to be patient and be willing to make those choices
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for a long period of time, I guess. Yeah, I guess it's kind of like personal
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fitness as well. A lot of people... Oh yeah, absolutely. There's a huge parallel there.
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Yeah, a lot of people take 10 years to put on 100 pounds and they want to lose it in a year,
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but it never happens. So JD, you've become kind of an expert in the area of personal finance. You've
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got this successful blog, you're writing a book. So I'd like to get your take on this. What are the
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biggest personal finance mistakes that you've seen that are unique to men or that you see more
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often in men as opposed to women? Well, I think maybe the biggest one, and this is true in a lot of
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different aspects or areas of life, not just with finances, but men tend to be more overconfident
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about their abilities. We want to believe we're right, that we know what we're doing. And it's
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very difficult to admit mistakes sometimes. And I know when doing research for Your Money,
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The Missing Manual, I came across this study. I think it was published in 2001. And a study found
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that men believe they're better investors than women, but they're actually not. When you compare
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men investors and women investors, men actually earn about 1.5% less per year for annual returns
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than women do. And single men are even worse. It's like 2.5% less than single women. And the reason
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for this is that men tend to be overconfident, that they think that they know more than other
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people. And so they can make these decisions that are going to outsmart everybody else.
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Sorry, propensity towards risk, I guess, bites us in the butt. Interesting. And speaking of men and
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women, what are the biggest problems you've seen that couples experience with money? And what advice
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would you give to avoid those type of problems? Well, I think that there's one fundamental problem
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that occurs with couples, and that's a lack of communication. And it can manifest itself in all
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sorts of different ways. But it all comes down to a lack of communication. And I think that, you know,
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a marriage is a partnership. So I often think of it as it's actually like a partnership between three
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different entities. You've got the husband, you've got the wife, and you've also got the partnership
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itself. And I think it's important to keep all three of those in balance. If for some reason,
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one aspect becomes too dominant, whether it's the husband dominating over the partnership and the
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wife, or even if it's the partnership dominating over the husband and wife, I think that it can
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create problems. And I think by having open communication, it's possible for both partners
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to work together to make sure that, first of all, they're each pursuing their individual goals,
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but they're also pursuing the goals for the marriage, if that makes sense.
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Yeah, definitely. J.D., I want to get your take on this. You know, with this recession that we're
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having right now, frugality, you know, manly thrift and manly frugality or whatever, is back in vogue.
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But do you think this is just a temporary thing? Or, I mean, do you think this recession is actually
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going to fundamentally change the way that Americans particularly view money? Are we just going to go
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back to our spin-thrift ways as soon as things start picking up again?
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You know, that's a great question, and I don't know the answer to that. I know that a lot of
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my own friends seem to be much more interested in thrift over the past couple of years. It's
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become much more popular. Well, just Friday night, me and a bunch of my friends, we went
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out, we went from Poland and went to pizza, you know, it's pretty cheap entertainment. And so it does
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seem to be this return to thrift, but I don't know how long it's going to stay. And I have to say
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that I think that one of the main reasons that there's been a departure from thrift in this
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culture, because, you know, thrift was very popular for hundreds and hundreds of years
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here. I think it's largely because the media influences away from that. The media is driven
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by advertising dollars, and advertisers want people to spend money. And so I think the predominance
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of the media is really what leads people to spending problems. And I don't think it's
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necessarily going to change once the recession's over. I think we'll be back to where we started.
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Yeah, I know. But I guess what you're doing and what we're trying to do on the Art of
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Man is kind of hopefully make those things kind of cool again, I guess.
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Yeah, yeah. Well, see, the thing of it is, just because the general society might be going
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that direction doesn't mean that your readers and listeners can't just take it upon themselves
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to say, you know, I'm going to opt out. I don't have to be part of this consumer culture.
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I don't have to be part of this culture that, I don't know, unmanly is not the right way
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to phrase it. But your listeners and readers can make the choice to behave like our fathers
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and grandfathers did, and to make the choices that lead to a better life, even if the people
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Exactly. So, J.D., last question. What are three things that a man struggling with his
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finance can do today that will, I guess, get him on the path to manning up his personal
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Manning up. Well, for me, I think one of the big ones, I'm huge on setting goals. I think
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it's very important when you're trying to overcome your finances or overcome your debt
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or your poor financial decisions to set goals to decide what your priorities are. And so
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for each of us, it's going to be something different. Maybe your goal is to buy a house
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or maybe you've got a daughter who's going to be married or getting married in a few years
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and you need to save up to contribute to her wedding. Or maybe you've got kids who are going
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to be heading to college in 15 years. Everybody's got different financial priorities. And I think
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without setting financial goals, it's really easy to just lose direction and to spend on
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whatever. If you don't have a financial goal, what does it matter when you go spend $2,000
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on a new computer, even though your old computer does the trick? So I think setting financial
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Another thing to do is take responsibility for your income. I think men today and women,
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everyone needs to take responsibility for their income. And it's so easy to just kind of just
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blow along with the flow of work, I guess, and just wait for raises to come to you. But
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I think that in order to improve your financial situation, it's vital to seek self-improvement,
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take classes, find ways to move up the ladder of work or to find better jobs, and to actually
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ask for a raise. Learn how to negotiate a raise or to negotiate your income when you're being
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hired for a job. I think these are great ways for a man to improve his financial position.
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Yeah, I think a lot of men don't know how to do that, especially in America where it's
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Exactly. Exactly. And you're not always going to be successful when you're trying to negotiate,
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but it's better to try and fail than to not try it at all, I think. And I guess the third
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thing I would say is, vow to live without consumer debt. After having lived with consumer debt for
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almost 15 years, or more than 15 years, I know how much of a psychic drag can be on people.
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And right in a Get Rich story, I have all sorts of people write me emails saying,
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oh man, it's just this burden, I just can't get rid of it. And if you can vow to live without
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consumer debt, by which I basically mean non-mortgage debt, most people are going to have to take
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on a mortgage. I understand that. But going so far as to say, you know, I'm not going to even
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take on a loan for a car. I'm not going to take on a loan for a vehicle. If you can live without
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debt to the furthest extent possible, you're going to be happier and better able to pursue
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Very cool. Well, JD, thank you very much for speaking with us today. It has been a pleasure.
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Our guest today was JD Roth. JD is the creator of the blog Get Rich Slowly. And you can find that
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at getrichslowly.org. And also make sure to check out JD's book. It's coming out later this spring.
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It's called Your Money, The Missing Manual. And you can pre-order it on amazon.com right now.
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That wraps up another edition of the Art of Manliness podcast. For more manly tips and advice,
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make sure to check out the Art of Manliness website at artofmanliness.com. And we want to let
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you know that our book is available again after selling out of its first print run in just three
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months. The Art of Manliness Classic Skills and Manners for the Modern Man is in its second print
00:20:55.240
run. And so you can find the book on amazon.com and other major bookstores. For more information
00:21:00.780
about our book, check out artofmanliness.com slash the book. And until next week, stay manly.