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
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?)