The Savvy Blogging Summit

That’s a great story. I think the first half of the equation is where most of the focus needs to be. Obviously if your habit is to spend every dollar that comes in, it won’t matter if you make a million dollars. BUT, if you are wise enough to actually live by the equation, then you can focus all of your energy on increasing the earnings.

There is no other way to do that than by adding massive value to an audience somewhere. This leads to nothing but positive growth on all sides. Everyone benefits which is great.

I would love if there were more conferences and gatherings like this for people to network and learn from each other. I think there is massive opportunity for everyone who is driven to build an online business.

Just as so many personal finance blogs focus on frugality, so many of the “make more money” posts focus on entrepreneurship. While entrepreneurs can make a lot of money, it generally requires a certain amount of risk. And while a good financial advisor will always tell his clients to have a balanced portfolio in terms of risk, rarely does a personal finance blog do the same with entrepreneurship.

Sure, it’s not sexy to think about the corporate machine when trying to increase one’s income, but a lot of entrepreneurs have done the heavy lifting already, so why not take advantage of that. There are tons of ways to increase one’s income that don’t require you to start your own business (and the headaches that come with that). Learn new skills and get promoted. Network with the people at your current job and climb the ladder. Take contract work with existing companies. Get a second job.

While blogging and e-publishing seems to get the most amount of attention on personal finance blogs (and why wouldn’t it, since it allows the authors to cross-link as much as they do), don’t ignore the fact that there are lots of opportunities in the brick and mortar world to increase your income.

I think its great to focus a bit on ‘the other half’. When we started paying off our debt it kicked into high gear when I asked for a raise, than went looking for (and got) a better paying job and my husband went back to work full time. It wasn’t all roses though. My better paying job was more stressful, more responsibilities, more time away from things I loved. My husband going back to work full time meant we both had to shuttle the kids around, more $ for a babysitter and the house was always a disaster.
After two years of this cutting back in our budget seemed easy. I now equated cutting back to working less!

This was an awesome, inspiring post!

But sometimes I wonder if people who are in debt or want to increase their income by a large factor should go after more of a guaranteed win than doing something like blogging – which seems slightly speculative? I’ve heard quite a few stories of people who put in huge numbers of hours on a blog with very little financial reward. Yes, they’re trying to build something and they enjoy the process but it’s the rare ones that make much money from it.

Should there be more of a focus on something more lucrative than unskilled work like delivering newspapers? (Although the exercise is probably a good thing.) I agree with Patrick above – just getting a different job in your industry can provide a hefty raise, but people don’t seem inclined to do that.

Thanks so much for joining us this weekend at the Summit. You were the perfect fit for our group. You are so right with the points above, and completely think that boosting income, while also understanding how to implement steps to live a more frugal life is the perfect blend. I’ve known friends making well over $200,000/annually, with a fully funded emergency fund, struggling within a few months of job loss because they had no understanding how to live under their means.
Speaking to the commentors above, my blogging decidedly went from hobby to professional when my husband was unemployed for the last year. Our spirit of entrepreneurship kicked into high gear when there were no other employment options.
Our practical implementation of the frugal lifestyle allowed us to survive a year of unemployment debt free, but our spirit of entrepreneurship is now allowing us to come back up for air and thrive. I love saving where I can (thrifting, second hand clothing), so that we can spend and give on things that really matter to us. That looks differently for each person.

It’s articles like these that keep me coming back to this blog daily.

J.D., it was a pleasure getting to know you at the conference. You are so down-to-earth and your classes offered a wealth of information that anyone, at any stage in their blogging career, can apply.

My husband and I are currently working on Baby Step 2 with Dave Ramsey. We ‘tried’ to pay off our debt before using just frugal methods, but it was always such a strain, and we burned out so quickly.

But this time we’ve added the ‘additional income’ aspect through both my blogging and my graphic/web design business, and it’s been so much more effective. We see the rewards (i.e. rapidly falling credit card balances) are seen so much sooner, which in turn motivates us to keep on keeping on.

We’re on track to be debt-free (except for the house) by the end of next year, and we’re looking forward to being able to call in to Dave’s show and scream that we’re debt free.

In the meantime, you now have a new reader of Get Rich Slowly

The focus is properly on saving because that is where most of us are weakest.

We certainly do need blogs showing us how to achieve career growth. But I do believe that most people’s understanding of that one is a bit more advanced than most people’s understanding of how to manage money.

But let’s do it all!

Rob

I know this was just a minor part of your post, but I found it fascinating that only 3 out of 65 bloggers at the conference were men!

I agree with another poster. While it is a two part process, for many people working to make additional income increases stress, takes away from family time, and can lose money depending on the expenses of working. Of course it also depends on how much wealth you need. in my case my primary focus is on cutting expenses. I dont mean doing without, Im mean finding the ways to do things that Inormally would have done on an almost six figure income on a pension. So of course I still manage to fly. And of course, the money I save is not taxable….unlike the money I make from my quilting business. If I had to choose whether to increase the quilting business or cut the expenses, cutting the expenses would comefirts

We were truly thankful to have J.D. come and give the keynote. His experience from his years of blogging combined with his lessons he shared was a huge motivation and great start to our conference!! Not only that but we thank you (J.D.) for making yourself available during the conference to talk and strategize on how to make blogging a successful business. You have definitely picked up some new readers after this weekend!

Kate, as far as the discussion on gender considerations, I might be a little biased as I happen to fit into one of the three men that were at the conference. My wife and I actually believe strongly that both people in a relationship need to be fully committed toward both frugality and earning the extra income to dig yourself out of debt. We know from first-hand experience that when one person in the relationship is not committed that any strides toward frugality are easily thwarted by the other. Our first recommendation to any couple is to establish a united, noncompromising approach in which both persons understand the goals and agree on how to implement them.

Finally, our recommendations on how to approach bringing in additional income is obviously customizable to anyone. We found that starting small (delivering phone books and newspapers) was a real way to see actual income applied to our debt. In our “weak attempts” early on to pay off our debt, it seemed that trying to “dream big” never materialized.

Each person is different, but for us actually seeing real income and being constructive helped change our mindset. As we went along in our “Deep in Debt to Debt Free Journey” we actually had several forms of income that we utilized to speed the process.

Interesting post, JD. One of the things I like most about GRS is that over time, your blog highlights stories of interest to people at all different stages of the journey.

@Kate, my theory about the abundance of women blogging about frugality is twofold. Many of the tasks which can be done more frugally are housekeeping-related, and in most households that is still the domain of the woman. Also, there are many stay at home moms looking to reduce expenses and earn a little cash on the side. Thus, an available workforce. I’ll be interested in seeing if this balance changes over time as more dads stay home with kids.

JD, you have talked in the past about the importance of making more money, but for some reason, at this conference you’ve really seen the light. I’m not sure why.

And for a lot of people, increasing the first part of the equation is the more important. (Making more money vs. being frugal.)

I can easily increase my income but at the present, I choose not to. I like my time, but I really like how I’ve learned to make dollars stretch.

We took a family excursion to Point Loma, San Diego this weekend, eating at this venerable seafood restaurant. I packed sodas and snacks, along with a healthy salad to share during our meal. It might be a small thing, but in the past that’s just something I would have never done.

And I do buy T-shirts at Goodwill. What I’m learning is that it takes a lot less to live. It’s powerful realizing that I have the control.

For me to make an extra $1000 per week is no big deal. I’m fortunate, all is paid, I now want to learn how to enjoy free time and not let dollars rule my thinking.

I feel so very fortunate to be able to make my car payments from my websites.

It’s all about a balancing act and there’s a fine line between frugality and being cheap!

The reality is that a lot of people who need to “cut costs” have incomes so low that their expenses are already at a minimum. It’s one thing to tell people to stop going out or cut out cable, but a lot of “frugal” people are going to ridiculous measures to save on things like toilet paper and food ( at the expense of their health and well-being). Instead of worrying about saving pennies on essential or trivial items, it would make much more sense to be in a position of not needing to worry about such things.

There is no “sure thing” for cutting costs when there are no costs to cut. I guess homelessness and starvation are options.

There are millions of people who work and make almost no money in addition to not receiving “benefits” many people take for granted. I imagine a lot of debt for these people comes from the attempt to just have some dignity and feel human, rather than really “keeping up with the Joneses” or materialistic desires. Increasing income is necessary just

Based on my own experience, many of these people could benefit from a more entrepreneurial outlook. For many people there simply are no such things as raises, advancement, other jobs. They are pretty much locked into whatever they are doing and wherever they live. The ones who do “advance” typically endup back at low paying entry level jobs when they are inevitably laidoff. I am not talking about Third World countries here but many parts of the U.S. While these people might not have the “right” pedigree/parents/romantic partners/location/mobility/resources to advance much in their “profession” they often have skills and talents that would be appreciated by the market- if they were allowed/encouraged to offer their talents.

Just because J.D. and other bloggers make money from blogging doesn’t mean they are equating entrepreneurship and increasing income with “making money from blogging.” Most entrepreneurs are not making money from blogging. Most INTERNET entrepreneurs/marketers are not making money from blogging. If anything, blogs are vanity projects for most internet marketers, if they have one at all. There are many ways to make a living being self-employed online and offline that have nothing to do with blogging.

Of course there are also ways to increase income by working for someone else. Working for yourself or someone else both have their pros and cons. Working for someone else is far from secure, though. I am surprised people are still as skeptical and fearful of the risk and uncertainty of self-employment considering all the people who lose their jobs and become unemployed for months or years and take huge pay cuts to take jobs with income ceilings well below their previous income. I know plenty of people who made 50-60 grand or more, people in 6 figure households who felt very secure and fulfilled, and then lost their jobs without notice. Then they looked for months, while receiving 30-40% of their previous income in unemployment compensation. If they found a job it paid less than unemployment with no “benefits,” and no hope of ever advancing or recovering their previous salary. I have one friend who is very happy because after being fired 5 years ago he finally found a job that pays 80% what he was making. During that time he’s had several dead end jobs that paid $8-15/Hr and laidoff/fired people without notice. He’s been on and off UE and went to school this whole time.

The last time I was laidoff I just decided I would never get a job again. That was 6 years ago and so far so good. I just can’t spend all my life being bitter over other people controlling my income, having the power to ruin my life on a whim, monopolizing time better spent with the people who actually care about me, and spending all my time chasing something to end up back in the same place. It’s not worth the false sense of security.

Oh, and being FRUGAL has really helped me be an entrepreneur. My friends who “have” to have jobs and kneel and plead for permission to live from faceless entities all “need” worthless stuff. So they need some dubious promise of a certain income to meet all their debt payments and luxuries. They also all “have” to have children, but then they choose not to be parents. No Thanks.

@#16 Maharani Read “The Millionaire Next Door” by T. Stanley. Just doubling your salary will not make you rich, nor will only being thrifty make you rich. A combination of the two is the only to get rich and stay that way. This blog has the perfect amount of both parts of the equation.

(I just wish more PF blogs were like this one and focused less on religion as a reason to be frugal.)

J.D.’s equation is correct, but it’s only part of the story. cash flow is in fact income minus expenses like the article states. However, cash flow does not correlate directly to wealth. You would naively think that wealth is the integral of cash flow with respect to time. It isn’t.

Suppose you earn $50,000. You immediately spend this money on building supplies and build a house with it. Your net cash flow is $0, but you now have a house that’s worth more than what you paid for it. You’ve got a property with a value of, say, $60,000. This is investment. Certainly you needed some cash flow to start the investing process, but cash flow itself is not wealth. Also, you now have the ability to generate $60,000 new dollars in positive cash flow by selling the house you built, in which case you can invest in something new.

The average American household income is about $3,000/month, after taxes. If you spend *all* of that on living expenses, you will never save your $50,000 to build your house. If you manage to cut your living expenses by half, you can now save your $50k in about three years. However, if instead you were able to double your income, you could save your $50k in half that time. If you take this even further and double your income again (to $12k/month) you could save you $50k in only 6 months. However, if instead you cut your living expenses by half a second time (to $750/month) it would still take you 22 months to save $50k.

You quickly hit a point of diminishing returns with cutting expenses, where each additional percent cut from your budget buys you less and less. The opposite is true for increasing your income. There is absolutely no way to save $50k in less than 16 months on $3,000/month. However, if you’re making enough money, there’s no limit to how fast you can do it.

Here’s one more example that’s not so extreme:

Set a goal to save $250,000. Pretend you want to buy a house in cash.
Start off with the same $3,000/month salary.
Start with the same $3,000/month living expenses.

Scenario 1: Your living expenses never change, but each year, you manage to increase your income 7% over the previous year. This seems feasible, it’s not a “get rich quick” scheme, you can probably find some way to improve your performance in whatever business you’re in by about this much.

You save your $250,000 in a bit over 12 years. At the end of the 12 years, you make about $120k/year. This is definitely a good salary, but it’s not ridiculously, infeasibly high.

Scenario 2:
You keep the same salary every year, but cut your expenses by 7%.

You save your $250k in 17 years, which is significantly longer. You’re also living on $920/month at the end of this, which is probably infeasible in real life. You just can’t keep cutting and cutting and cutting to this degree.

Scenario 3:
You combine both 1 and 2, both increasing your income by 7% every year, and cutting expenses the same amount. You’d think this would make a huge difference, right?

You’ll save your $250k in 10 years. This is definitely an improvement over either one of the other scenarios, but it’s not nearly the same sort of improvement you see if you solely increase income instead of solely decreasing spending. It also requires you to live on $1500/month at the end, which is certainly a lot more feasible that $920, but you still may think that’s a bit low.

This whole calculation ignores inflation (meaning, your 7% raise per year is probably more like 10% in absolute terms). It also means that at the end, when I say you’re living on $920/month, that’s $920 dollars at 2010 value, not 2027 value.

This is essentially the same concept that J.D. likes to call ‘the power of compound interest’, except applied in a slightly different way.

One other note on this example: selling your ‘stuff’ makes almost no difference here. Even assuming you had $10k worth of stuff to get rid of at the beginning of this, it only buys you a few extra months in any of these scenarios. This is because a single, one-time influx of $10k is small in a scenario that takes 10-17 years to play out. At the end of these scenarios, you’re saving in the ballpark of $2000-$5000 every month. The extra $10k just isn’t that big of a deal any more. Selling ‘stuff’ can help you reduce debts and stop paying interest to other parties if you can do it all at once, but it really doesn’t help you build long-term savings very well.

I know the site is called “get rich slowly”, but I like to think that is meant to convey an idea of perseverance and the fact that “get rick quick” schemes don’t work. It’s not meant to imply you should go artificially slower than you have to, just because.

In short: ask for a raise every year, even if you don’t always get it. Don’t be afraid to take a job at a competing company if they’ll offer you a better salary (assuming the job is otherwise similar). You don’t need to start your own company to make a few more percent every year. Just be valuable in your industry, show that to your employers, and don’t be afraid to ask for raises.

I hope one day I can attend that blogging conference for my blog!

Personal finance is a combination of frugality, increasing your income, and intelligent investments. Excel at one of these three and you’ll be doing better than most people out there. Excel in all three and you will be rich (however you define that term) before you know it!

Wow, I don’t think I’ve ever seen a blog with as many exclamation marks as The Thrifty Couple. Are they aware of the availability other punctuation?

I absolutely agree with your equation! By combining both living below our means AND increasing our income through my blog we have been able to remain debt-free (and even increase our wealth through investments) even as we have spent the past year starting a new business that isn’t profitable yet.

The freedom to start this business and be able to pour into it financially, 100% debt free and with a young family, has been incredible. So very worth all of the sacrifices we’ve made to live frugally, save aggressively and take entrepreneurial risks.

Thanks, JD, for the incredible wisdom and camaraderie that you brought to the Summit! Your story was powerful, your tips and ideas helpful and practical, and we’re all so glad that you stepped outside of your shell to let us get to know you.

I totally agree that actually getting a web site to make money takes a LONG time. But it takes less if you actually set aside time each day to work on it – which is sometimes hard as a SAHM.

I’ve been working on our ‘side project’ for about a year now and I’m still excited when it brings in like $5 in a month. lol

I found for me it was really had to come up with a subject and constantly write about it – so I started doing reviews with links to purchase the item. The trick is that you have to actually create enough content to attract people and know the tricks of how to get up higher on the search engines.

Lucky for me I’m married to an internet marketing guru who can give me free advice.

@ S

Blogging doesn’t have to take 8 hours a day. And besides that kids can, and do, just play by themselves a lot of the day (yes, even with the TV off). You don’t have to sit within two feet of them all day long and regulate every move they make. If you have a cheap laptop (I have a $250 Acer) you can easily sit within eye/earshot and they are perfectly fine.

I spend probably an hour and a half on my page each day while my daughter pretends to cook in her kitchen or puts puzzles together. I’m certainly not neglecting her and it’s about 8 hours more per day with her than I was spending working + a commute. We had to budget a LOT in order to get to the point of me staying home in the first place, so I think it’s totally appropriate for me to try to earn some extra cash to help with the bills.

Interesting seeing the two sides of the equation. I’m more interested in finding frugal tips at sites like this though. My DH works part time, I work part time seasonal (2-3 mos/yr) and the reason we’re frugal is to spend time doing unpaid volunteer work. We’d just work more to earn more money…

Interesting comment above about religious web sites. I’ve never read one and not actually interested in it although I’m a Bible teacher and part of my frugality comes from my Bible based convictions. I imagine they are preachy–against everyone that’s not living like Jesus literally, without a roof over his head. I find the Bible has a really balanced view of life unlike some fanatics.

@Tyler #35:

The only catch with your summary/recommendations would be if your skills are in a field with no opportunities.

Specifically, I had a coworker do exactly what your advice suggests – he asked for a raise, didn’t get it, and took his skills to the competitor whom offered a better salary (in the same field). Unfortunately, he now has his 60 day layoff notice, and can’t come back to our company, as we will be getting our 60 day layoff notice later this year. Combined with zero job opportunities in our field in this location, it’s New Career or Bust.