Episode #16： Conquering Debt with J.D. Roth of Get Rich Slowly
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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.