The Simple Dollar book comes as close to a page turning thriller as a personal finance book can get! I read the book in a couple days when I went on a business trip and just enjoyed how Trent integrates his personal life with personal finance teachings. If you’re a personal finance junkie like me, when you finish the book you’ll be wishing for more.
The book is a quick read at just 255 soft cover pages long. Trent’s writing is quite eloquent and captures the reader’s attention immediately. Furthermore, Laura from the FT Press/Wharton School Publishing has promised to provide a three book giveaway! Thanks Laura!
I used this opportunity to get in touch with Trent to pick his brain about blogging, his financial viewpoints, as well as learn more of his story on how he came to be. Hope you guys enjoy, and follow the directions at the end for your chance to win!
Sam: Hi Trent, thanks for agreeing to answer some of my questions. To start, why do you think there’s such a large disconnect between people’s desires and their ability to pay for these desires? In other words, do “C” students deserve “A” lifestyles?
Trent: In a word, marketing. We are inundated by it, and all of it constantly portrays the idea that everyone deserves only the best. Of course, the reality is that most people can’t afford the Escalade, the mansion, and so on. It’s in trying to reach for that unreachable goal that many people fall into bone-crushing debt.
Sam: Everybody knows that education is a core building block for people to make more and do more with their lives. Why do you think people don’t study harder in school to give themselves more choices in life?
Trent: Most students simply don’t have the maturity to properly value their education. They view it as something else just to get through, not something that can build the foundation of their lives. I think that many students are not well-served going to college directly after high school.
Sam: How much money saved is enough for you? Do you look at your finances in a net worth or cash flow way?
Trent: I now look at things in a net worth way, but I think for many people struggling to get ahead, the best way to look at it is a cash flow way because it reveals how debt can really strangle you. For me, “enough money saved” is an amount where my family can survive and even thrive on the interest earned.
Sam: In our current economic environment, are you more a proponent of raising taxes to reduce the budget deficit or reducing spending? Do you worry about the budget deficit and our economy much?
Trent: Reducing spending. We overspend grotesquely in many areas. I have no problem with most local spending or state spending – national spending is the problem. I think, though, that the national debt problem isn’t as bad as many people want to make it out to be. The best way to look at debt is as a percentage of GNP, which reveals we had far more national debt growth during the Reagan years than we’re having today.
Sam: Would you rather make $500,000 a year doing something you don’t love, but don’t hate? Making $500,000 does not preclude you from finding another job that you do love. Or would you rather make $50,000 doing what you love, but never making any more?
Trent: I’d make the $500,000 for one or two years, then walk away.
HIGHLIGHTS & THOUGHTS FROM THE BOOK
Sam: In Chapter 8, entitled “Frugality As A Framework” you touch upon frugality and food. I just went through my credit card statement, and a whopping 50% of it is from eating out. Given food is a passion of mine, is it worth cutting down something that I enjoy so much? Is it worth cutting down spending on anybody’s passion for that matter?
Trent: If food is your passion, why are you not just buying high quality ingredients and preparing meals at home? I don’t think there’s anything wrong with spending money on something a person is passionate about. The problem usually comes about when people are passionate about so many things that they can’t adequately enjoy all of them. Focus your energies on a smaller set of passions and trim the other areas and you’ll almost always be better off.
Sam: In Chapter 14, entitled “Recasting Retirement” you discuss a great concept called the “crossover point” where the income from your savings and investments equals your salary so you have the complete freedom to do whatever you want. Most people can’t achieve this, but they can achieve a partial crossover point where there’s enough to take a job that pays less, but which you enjoy that much more. Talk about how to save money and tell us how many years it took you to reach that partial cross over point, and then full crossover point after graduating college?
Trent: I am currently on pace to reach a partial crossover point in about seven years and a full crossover point about ten years after that. It isn’t easy, but reaching it is so incredibly life-affirming that it’ a worthwhile goal.
Sam: Is being happy as easy as “choosing to be happy” as you write in Chapter 17, “Holding You Back”?
Trent: I think it is. If it’s not, I would be concerned about depression.
Sam: One of your big tenets is to stay out of debt, so you have the flexibility to do whatever you want in life, and take advantage of good opportunities. What do you say to those who have been able to take on a large amount of debt, live the life of their dreams, and not pay them off by declaring bankruptcy?
Trent: Bankruptcy isn’t an easy solution that solves all of your problems. Most bankruptcy arrangements simply put you on a forced payment plan and completely decimates your credit. The only debt that “goes away” in bankruptcy is usually unsecured debt. If the bankruptcy myth were entirely true, there would be no foreclosures.
BLOGGING & WRITING
Sam: You have shown that you can follow your dreams and do well financially in the process. Before you walked away from your 9-5 job, how much do you financially plan out your future income and expenses? Why do you think more people don’t do what they want to do, even part time?
Trent: During the run-up to my career switch, I did a ton of planning. More importantly, though, I invested almost all of my free time during that period to building The Simple Dollar. I think that many people don’t have the self-discipline to invest their spare time into building something like that. They come home from work, worn out from the day, and it’s much easier to kick back and watch a television show than to spend several hours trying to build something else.
Sam: What are the one or two most popular topics and posts on your site and why do you think that is?
Trent: The Reader Mailbags are the most popular things I write. I think it’s because they address the problems of a lot of different people all at once. They give little tastes of a lot of different lives.
Sam: You are one of the most prolific personal bloggers in the community. Tell us whether it’s easier writing a book, or writing 100 blog posts and why?
Trent: The blog posts, only because you have to come up with 100 different topics. The book basically focuses on one thing that I break down into smaller pieces. Obviously, the book blows away any one blog post because of the sheer focus and effort – they’re incomparable. The real challenge for me is coming up with 100 different *good* topics for the bog.
Sam: Is writing a book a profitable endeavor? What metrics do you use to determine whether your book is a success? What constitutes a “best seller” in the publishing world?
Trent: In many ways, I view writing a book as something of an advertisement for my web site. I take many of the ideas I’ve started to flesh out on the site, flesh them out further, and make sure that some of the most key, basic information is found in the book. This way, when someone comes across that book, they’ll read it and perhaps, from there, read the website.
Writing a book is not a highly profitable enterprise unless you’re selling a *lot* of copies. I would estimate that in my case, time spent on a book is less profitable (in a straightforward way) than time spent on blog posts. However, the book may, in the long run, drive additional readers.
Sam: Any plans for another book in the future?
Trent: Yes. I am working on three different ideas, all of which are far less directly connected to personal finance than my first two books have been.
Sam: Any final thoughts for the reader and why they should buy your book?
Trent: The Simple Dollar takes the dry elements of personal finance and inserts a human edge that is hard to find. It’s my story – failures and successes and all – with some lessons and ideas extracted that you can use in your own life.
Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”