Personal Finance Hour: Episode 16 – Trent From The Simple Dollar Joins JD and Jim to Discuss Frugality and Blogging
Recap by: Brian of Building Wealth Together
This week’s episode of the Personal Finance Hour found JD and Jim being joined by fellow Personal Finance Blogger Trent Hamm from The Simple Dollar.
Trent got out of college and didn’t know anything about money management. He was raised with the idea that you live on what you have (i.e. whatever you earn, you spend). Then around April 2006 Trent reached a point where he looked in his mailbox and saw 5 bills that he had to pay. He went online and checked his bank account and saw he had only $2 available. This was the sign that things needed to change. He went to the library and checked out a pile of personal finance books. At that point he decided to blog about what he read and if those lessons worked for him or if they didn’t. Thus, The Simple Dollar was born. When Trent started to his turnaround he had about $100,000 in debt.
When does debt become overwhelming
Jim, JD and Trent began discussing how easy it can be for someone to fall into debt. Trent described that his readers often write and tell him that they finally reached a point with their debt where they became scared; very scared of losing everything they had. JD agreed and stated that when he made his turnaround he had finally reached a point where he knew he had to take action.
Path to frugality
Trent and Jim went on to compare their family lives growing up. It was very different as Trent grew up in a situation that most people in America would consider deep poverty. Jim on the other hand grew up in a frugal environment where money wasn’t spent, but was saved.
Trent firmly believes it was the educational difference between his parents and Jim’s that created the gap in long term planning and foresight (staying out of debt, etc.) For Trent, his family was primarily concerned with how they were going to put food on the table that night instead of worrying about big expenses down the road. JD stated his parents were similar to Trent’s in that they didn’t manage money properly or pass on any knowledge of money management.
There were further similarities between JD and Trent as both did learn some very good examples from their parents regardless of the lack of money management lessons. Trent learned how to fish and how to hunt to provide himself and his family with food. JD learned about economizing and shopping at thrift stores. Those prior experiences have helped each of them to become successfully frugal.
Being Frugal in Business
Baker from Man vs. Debt called in from New Zealand wondering about how each blogger balances frugality with their businesses (considering their blogs represent businesses). This is a good question as each of the bloggers is a good example of how to be frugal in their personal lives but each of them has to spend money on their business to help it grow.
Jim and Trent both focus on business expenses correlating directly to a profit. If they can’t calculate an immediate return on the investment they don’t make the purchase. (Trent’s example in practice is that of his laptop replacement fund. Read about his frugal laptop here.) In a different capacity, JD feels that he needs to scale back some of his business expenses which often manifest themselves by way of business lunches.
JD then gave an example of how his spending in his personal life mirrored that of his business life. JD often buys comic books for his personal life. This behavior carried over into his business as he would purchase several books on personal finance with the intent of reviewing them for Get Rich Slowly. While these books were a legitimate business expense, he found that he was buying more books than he was reading or reviewing, thus wasting money. He has since cut back on his book buying habit drastically.
Jim offered a great tip to JD that several personal finance bloggers may be able to take advantage of for themselves. Jim stated that if he was looking for a specific personal finance book all he needed to do was call the publisher and offer to do a review of the book on his site and he was likely to get a free copy. (This may not work for all PF bloggers but it’s surely worth a try for all of you that have significant audiences and may want to read/review a book on your site).
Getting People Interested in Personal Finance
A question was e-mailed to Jim pre-show by Brian of Building Wealth Together. Jim read Brian’s question to Trent and JD asking how to get the 20somethings interested in personal finance, especially if they lived in an area where keeping up with the joneses is the norm. Each of them agreed that it’s very hard to get people interested in personal finance if they are not actively seeking to better themselves. Going back to what Trent and JD explained earlier, a person needs to get a bit scared first before they seem to want to take action. People have to be ready to hear the message, and if they aren’t all you can do is casually remind them that tools exist out there for their benefit. Jim used an example of a high school student ignoring the sage advice of his/her parents because they are rebelling against the advice of an authoritarian figure.
JD continued by talking about his friend Mike at The Secure Student. Mike is trying to reach kids early and help teach them about personal finance. When trying to develop a product for youths, Mike discovered that there was an aversion for his audience to listen to their elders, so now he is working on creating a product that is presented by student for students, which will hopefully get the message across more effectively.
Matt from DFA’s “Frugality Snowball”
Matt Jabs from Debt Free Adventure called into the show with a question about frugality. He outlined a post he is working on about the “frugality snowball” and how he got started with a frugal lifestyle. Matt started with reducing how much he and his wife spent when going out to eat. Saving money in this area of their lives bled into other areas (saving money at the grocery store, cooking more often, etc.). Matt’s question was what started the frugality snowball for the hosts and their guest.
Trent’s frugality started when he stopped going to book stores and comic book shop in Iowa. This saved him a ton of money. Once he discovered that the behavioral change was a great success, he wanted to try other things.
Matt talked about making his own homemade products and how fun and rewarding frugality can be. JD came back to the Balanced Money Formula by Elizabeth Warren. He stated that it’s a challenge for everyone to find the balance between being frugal and sacrificing their quality of life.
JD shifted the topic slightly to discuss a post by Ramit Sethi and how people act frugal out of guilt. While the hosts and Trent don’t agree that they act frugal out of guilt, Trent did say that he may have been motivated at first by a little bit of guilt, but now he looks at frugality as a fun challenge that he is more than willing to undertake.
Full Time Blogging
The final segment dealt with how Trent, Jim and JD deal with being fulltime bloggers. Trent discussed the aspect of loneliness that comes with being a professional blogger. There is a sense of isolation as he spends most of his time writing and not being around people. JD agrees that there is a lack of social interaction that comes with writing. Even in his new office, JD doesn’t receive much interaction with people.
As a remedy for this problem, Jim had the idea of renting out a time-share office. However, Trent actually tried something like this and it didn’t end up suiting his needs. Once people discovered that he was a blogger, he became the in-house expert for all things social media. He was bombarded with questions and got very little work done.
Jim said he struggles a bit working for himself because he knows that in order to keep the business of his blog afloat, it requires him to be 100% all of the time. He compared it to working a normal job for an employer. You can take a day off, or mail in a day and the business will keep running. But, if you are a blogger, if you aren’t working, your business is at a standstill. Trent tries to relieve the pressure of this situation by knowing that a 60% day is enough to keep his blog running. If he works beyond that he is ahead and is able to mail it in on a day when he isn’t feeling up to doing a full day of work.
Blogging calendar. Jim and Trent both recommend using a calendar to help keep track of your posts. Trent went into the details of his typical work week. He writes 4 posts a day at minimum. That is 20 posts a week. His blog publishes a post at 9am and 3pm daily like clockwork. His output level is 14 posts a week, meaning he has six left over. He stated that usually 2 of the posts he writes during the week are garbage and get thrown away and the other 4 posts get saved for later usage. Similarly Jim tries to get 2 posts done a day and maybe one book review over the weekend.
When trying to explain his incredible output, Trent draws a parallel to Malcolm Gladwell’s theory of 10,000 hours in his book Outliers. Because Trent has been writing for so long he has eclipsed the 10,000 hour mark and is able to draft very quickly.
Unique tips for a small medium blogger. Other than interacting with readers, having great content, and the ability to stick with it the hosts offered their advice to small and medium sized bloggers. Trent said that the best way to make your blog more successful is to get the attention of bloggers that have more traffic than you. Trent noted that if you are e-mailing a professional blogger, he is likely getting a ton of correspondence and doesn’t have time to jump through hoops when reading your e-mail. Its best to put all of the information you want them to read in your e-mail (links, etc.) so you save them time and effort. JD concluded by saying that trying to write a guest post for a larger blogger is a really effective way of getting your name out there.
This week’s show went a little bit long, but luckily you can hear it in full on the podcast. Jim didn’t have the opportunity to plug Trent’s book, so we can do that here in the recap. Trent’s book is 365 Ways to Live Cheap!
Closing out the extra portion of the show, Baker chimed in again to talk to the guys. They offered us a bit of a preview for next week’s show as we are going to be hearing about Baker’s initial move to Australia and how he ended up in New Zealand. We will also be able to hear the planning phase and the entire process that Baker and his family undertook before embarking on their adventure across the globe.