From Debtor To Millionaire: How A Windfall Changed My Life

This is a guest post from J.D. Roth, who founded the blog Get Rich Slowly in 2006 and is the author of Your Money: The Missing Manual. I first met JD four years ago for lunch up in Portland when I was still working. By that time, J.D. was already a mini-celebrity in the personal finance world through his story telling abilities and topical focus of paying down debt and living a more frugal lifestyle. We came from opposite ends of the financial and topical spectrum, but as fate would have it, we’re in pretty similar boats now.

I admire J.D. because he is a “blogging purist” – someone who writes for the love of writing first, community second, and income a distant third. Instead of an interview, I asked J.D. to share his story of how he went from debtor living paycheck-to-paycheck to financially free in just a few short years. His latest project is a year-long course on how to master your money, which explains how to slash costs, properly budget, and boost income so that you can pursue early retirement and other goals. Please enjoy this great post about struggle, loss, change, and love. 

In The Beginning

My parents

I’m a lucky man, and I know it. But for a long time, it sure didn’t seem that way.

When I was a boy, my family was poor. We lived in a single-wide trailer house in rural Oregon. My father was often out of work. When he was unemployed, things were rough. We never went hungry, but sometimes we came close. More than once, we were bailed out by the kindness of other families in our church.

We didn’t always struggle. Sometimes my parents had money, at least for a little while. You see, my father was a serial entrepreneur. He was always starting businesses. Even when he had a job selling boxes or staplers or candy bars, he had something going on the side. Most of his businesses failed, but some succeeded.

In 1977, my father sold one business for $300,000. He was supposed to receive $5000 per month for fifteen years, which seemed like a lot of money at the time. To celebrate, he went out and bought an airplane, a sailboat, and a Kenwood stereo. Life was good — until the buyer went bankrupt. Because he hadn’t saved anything from the few payments, Dad was broke again. And unemployed. We were right back where we’d started.

This “famine or feast” pattern continued throughout my entire childhood. Most of the time, it was famine — not feast.

In the late 1980s, I went away to college. Because I knew my parents couldn’t help me pay for school, I took care of things myself. I was a good student with a lot of extracurricular activities: president of the computer club, national competitor in Future Business Leaders of America, editor of the school literary magazine, and so on. Plus I had terrific scores on the the PSAT and SAT. As a result, I earned a full-ride scholarship. I worked two or three or five jobs to pay for housing and to earn spending money.

During college, I developed a spending habit. In order to keep up with my friends, many of whom seemed to be rich (as I defined it at the time), I used credit cards. I began to carry debt. At first, I only owed a few hundred dollars, but by the time I graduated with a psychology degree, I had a few thousand dollars in credit-card debt.

After college, my debts continued to mount. I bought a new car. When I had money, I spent it. When I didn’t have money, I still spent it. By the middle of 1995, just four years after I’d graduated, I’d accumulated over $20,000 in credit-card debt. It got worse. In 2004, my consumer debt topped $35,000. I felt like I was drowning. (See: How Many Credit Cards Should I Have Until It’s Too Many?)

Interview With Bo Lu, CEO Of FutureAdvisor On Startup Life, Online Wealth Management, And More

Bo Lu, FutureAdvisorsI’m pleased to share an interview I did with Bo Lu, the CEO of FutureAdvisor. FutureAdvisor is an algorithmic money manager with sophisticated tools to help clients manage their money.

I was introduced to Bo through Sam Yount who used to work at Personal Capital as the VP of Marketing and now works at FutureAdvisor in the same capacity. Sam was the one who brought me in to Personal Capital’s Redwood City headquarters to speak to Bill Harris, CEO of Personal Capital and Jim Del Favero, CPO back in the summer of 2013 for an hour and a half. Now I’m fulfilling one of my bucket lists of working at a startup part-time thanks to Sam’s intro.

I invited Bo over to play tennis and chat about business in between games. I’m fascinated by the entrepreneur’s story and I hope you’ll find this interview insightful. Bo shares his thoughts about the future of the online wealth management business, immigrating to America, why he decided to leave his job at Microsoft, the Y Combinator experience, and more. 

How Much Do I Have To Make As An Entrepreneur To Replace My Day Job Income?

Entrepreneur Cash OnlyEntrepreneurship is great due to the high correlation between effort and success. If you want autonomy and believe you have what it takes to create income out of thin air, go for it! There’s nobody to blame for your failures, just like there’s nobody to reward but you for your victories.

Anybody who incessantly complains about their job should just give entrepreneurship a go – they will probably never complain again. A day job is a walk in the park compared to entrepreneurship because of the necessity to wear many different hats e.g. accountant, operations, marketing, sales, producer.

What I’d like to do in this post is provide a rough estimate of how much you have to make as an entrepreneur in order to make equivalent money as a worker bee. Hopefully this post will give you a better idea before taking a leap of faith. After all, you don’t want to quit your job and die alone do you? There’s no honey when you got no money.

How To Deal With A Micromanager Without Killing Yourself First

Your Micro Manager Donkey There’s probably nothing more annoying for an experienced person than to be micromanaged. I’m sure someone who is new to work finds being micromanaged just as annoying, but at least the boss has a good excuse. The novice could really mess things up without proper supervision.

Out of roughly 100 people I spoke to who were interested in leaving their jobs or had already left their jobs when conducting research for my book, roughly 70% of them said the main reason why they wanted to leave or did leave their jobs was because of a difficult boss. The boss was either unfair, unpleasant, uninspiring, or a micromanager.

When a boss micromanages an employee they effectively do three things:

1) Undermines

2) Demotivates

3) Creates self-doubt

In other words, micromanagers are horrendous bosses who will likely lose all of their employees over time.

One reader wrote in,

“Sam, I’m dying here! My firm recently hired this hotshot 30-year old MBA graduate who thinks he knows everything. He used to work in recruiting before getting his degree and this is his first job working for a tech firm. I’m 34 years old and have been working here for five years. Recently, he’s been on my ass about checking all my work, telling me how to do my work, and asking me every time I leave my desk for more than 30 minutes. I can’t even take a dump in peace out of fear he’ll start questioning my whereabouts! I’ve got way more experience than him, yet he gives me no respect. What do you recommend I do?!”

Meet him in the garage after work and deal with the situation like a man by kicking his ass! Was my initial thought. Anybody who shows no respect for their elders should be taught a lesson. But of course, we’re not living during the time of honor. We’re living in the time of “what have you done for me lately”.

I truly empathize with the reader because losing autonomy was one of the main reasons why I left my job. When you’ve got plenty of other means to make a living, working for a micromanager is NOT WORTH IT. But for those of you who have no way out yet, this post will discuss strategies on how to deal with micromanagers so you no longer have to feel miserable coming into work.

Should I Continue Working As A Contractor Or Go Full-time?

Relaxing In HawaiiIt’s been over two months since I started consulting at a financial tech startup and I’ve now got to make a decision to lobby for a permanent spot, stay on as a consultant if they’ll have me, or return to the world of fluffy rabbits and afternoon siestas in the park.

I have learned a TON about marketing and analytics so far, and I plan to learn a ton more for the remaining time left. It really never occurred to me to promote anything with marketing dollars since Financial Samurai has been organically grown since the beginning.

But if you can spend $1 dollar on marketing and get $1.01 in return, you should continue spending until your marginal revenue meets your marginal cost. Figuring out how to maximize one’s marketing dollars is the fun part.

The only thing I have to sell on my site is my book. Based on what I’ve learned, I plan to do some promotional tests and see how things go. The book’s monthly revenue is a tiny portion of my total monthly revenue even though it’s the only thing I sell here. Pretty neat huh? If I focus, perhaps I can grow my book’s revenue to 10-20% of total revenue. We shall see.

I think this post will be insightful for anybody who has ever had to make a decision between money, time, experience, freedom, joy, and responsibility. Let me first share five positives for continuing to work either as a contractor or as a full-time employee. I’ll then share the main negative and wrap the post up with some final thoughts.