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Potential needs versus actual needs: Re-writing my financial blueprint

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Last week, I was a guest on the new Fire Below Zero podcast. The interview was fun. (It'll probably be several weeks before the episode airs, though.)

Toward the end of our conversation, the hosts asked a question that my mind keeps returning to: “What's something you spend money on that other people might question?”

At the time, I had two answers:

  • On the business side of things, I spend lavishly on gear. I buy top-of-the-line Apple computers, then pimp them out with as much memory and storage as possible. I recently bought some expensive audio and video equipment to help with the GRS YouTube channel. I pay a lot for this gear, but I don't regret it.
  • In my personal life, I have season tickets to the Portland Timbers, our local pro soccer team. These tickets cost $1050 each this year (and I have two of them), or about $62 per game. The price increases to $1150 each next year (or about $67 per game). This might seem exorbitant to some people — especially when you consider costs for parking, food, etc. — but I'm fine with it. I get a lot of pleasure from these games.

This morning, my mind drifted back to this question again. It occurred to me that it doesn't bother me that I spend on either of these things, and I doubt that it would bother other people either. These are deliberate expenses. They're purchases I make mindfully and that bring me both joy and satisfaction. This is how money should be spent.

If I were to answer the question today (now that I've had a week to think about it), I'd say that my biggest spending problem is buying things that I might want to have in the future — but for which I have no use in the moment.

Let me explain what I mean. [Read more…]

Spare change: Awesome articles from elsewhere

Inconspicuous consumption is the new conspicuous consumption

Only YOU can change your circumstances

Eight questions that YOU should ask prospective employers during a job interview

Home sellers are slashing prices, especially in California [and in Portland, so it seems]

Nine secret weapons that could save your finances (especially if you're young)

Average retirement savings by age (and why you need more)

The cognitive burden of poverty

A scientific way to win an argument (without making enemies)

"Why I stopped setting goals." Thoughts on continuous success vs. achievement-driven success

Don't follow advice of stock analysts; they're right only 51% of the time

Find an archive of all past spare change links on Pinboard.

Spending rate versus saving rate

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For years, I've argued that your saving rate is the most important number in personal finance. “Saving rate” in the world of personal finance is the same as profit in the world of business. We all understand that a company needs to earn a profit in order to grow and thrive, but what most people fail to realize is that people need profit too.

The greater the gap between your earning and spending, the faster you're able to grow your wealth snowball and achieve your goals.

Last week, the always-excellent Michael Kitces published an interesting article that argues spending rates matter more than saving rates. He writes:

Most households struggle to save because there is no money left at the end of the month to save in the first place. Because technically their problem isn’t a savings rate that’s too low; it’s a spending rate that’s too high.

When I began reading Kitces' article, I thought he was picking nits. After all, saving rate and spending rate feel are two sides of the same coin. Turns out, however, Kitces has a good point.

Saving Rate vs. Spending Rate

Your saving rate — and note that it's not “savings rate” — is calculated by dividing your profit (your income less your expenses) by your income.

Saving Rate

Your spending rate is calculated by dividing your spending by your income.

Spending Rate

As you can see from the equations, saving rate and spending rate are simply the inverse of one another. If you have an 80% spending rate, then you have a 20% saving rate. If you have a 5% saving rate, then you have a 95% spending rate.

Because of this, it's easy to dismiss tracking your spending rate as a needless exercise. That number is implicit in your saving rate!

But Kitces argues that shifting the attention from saving to spending makes sense because saving is, essentially, a side effect. The two numbers you actually control in this equation are your earning and spending. Saving is a byproduct. It's not a primary factor but a secondary one. This observation is subtle but it's important. [Read more…]

A visual history of U.S. bull and bear markets since 1926

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Who am I kidding?

I can't go an entire month without publishing anything here at Get Rich Slowly. I need to write. And judging from the feedback regarding my planned sabbatical, you folks want me to write! Tell you what, let's change the premise.

Instead of taking all of September off from publishing, I'll instead vow that for the next four weeks, I won't tackle any major articles. If there's something that I want to share and that thing can be shared in 20-30 minutes, I'll do it. This plan will serve the same objective — freeing my mind to focus on the other tasks that need to get done around here — while also giving me an outlet for my writing (and giving you something to read).

Sound like a plan?

Instead of a “silent September”, we'll have a “subdued September” here at Get Rich Slowly. Now and then, I'll share some quick and interesting money stories.

A History of U.S. Bull and Bear Markets

Here, for instance, is a chart providing a succinct history of the U.S. bull and bear markets since 1926. (Click to open a larger version.)

A history of U.S. bull and bear markets

I love this chart! Produced by First Trust Portfolios (and using market data from Morningstar), it mirrors a similar chart from 2014.

This chart is unique because instead of showing stock market growth as an unconnected line, it deliberately resets each individual bull and bear market to a baseline. Bear markets are shown in red. (Or is that orange?) Bull markets are shown in blue. They're plotted on a logarithmic scale.

A “bull market” here is defined as running “from the lowest close reached after the market has fallen 20% or more, to the next market high. Similarly, a “bear market” runs “from when the index closes at least 20% down from its previous high, through the lowest close after it has fallen 20% or more”. That's a little confusing, I know, but if you look at the chart for a few minutes, it should make sense.

According to First Trust Portfolios:

  • The average bull market period lasted 9.1 years with an average cumulative return of 476%.
  • The average bear market period lasted 1.4 years with an average cumulative loss of -41%.

This chart makes it easy to visualize just how costly it can be to get gun shy after a market crash. If you stop investing — or worse, pull your money out! — you can miss out on huge growth.

The chart also clearly demonstrates that the U.S. stock market has been growing steadily for the past 90+ years with only occasional (relatively minor) speed bumps. If you let your investing policy be dominated by potential drops, you run a real risk of missing out on future gains.

(And honestly? As much as I'm against market timing, I wouldn't condemn anyone who looked at this chart and thought, “Hm. It looks like we're near the end of a bull market. Maybe I should cash out for a couple of years.” I don't plan to do that, but I agree it seems like we're nearing the end of this cycle.)

Wake me up when September ends

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For the next month, this blog will be on sabbatical.

That's not to say that I won't be working on Get Rich Slowly — I'll be working just as much as always — but that I won't publish a new article here until Monday, October 1st.

The sad truth is that this is the only way I can force myself to work on the non-editorial side of my business. Left to my own devices, all I do is read and write about money. That's great! The problem is that when I'm solely focused on content, none of the other stuff that needs to get done actually gets done. It's only when I force myself to take time off that I make progress on the business side of the business.

So, I'm forcing myself to take a month off from publishing.

In the meantime, most things will continue as normal:

  • I'll continue to update the Spare Change section found on the home page so that you money nerds get a constant stream of new articles to read.
  • I'll continue sending the GRS Insider to email subscribers every Friday morning. (But instead of highlighting new articles, I'll highlight the “greatest hits” from certain categories.)
  • I'll continue answering email, experimenting with video, and working on the site redesign.

Basically, nothing will change around here except that I'm going to try to keep myself from publishing a blog post during the month of September.

With the extra time this buys me, I'll:

  • Spend ten days in Orlando to attend this year's Fincon (the conference for financial bloggers and journalists).
  • Work to restore the GRS forums. If we can't restore them, we'll replace them. I know many of you miss that space, and I want to bring it back.
  • Figure out a rough publication plan for the next year.
  • Attack the much-needed “content audit”, getting rid of useless old articles and updating outdated pieces with current information.
  • Implement some advertising that doesn't cross my thin green line.

During this silent September, I'd love it if you could help me out. How? Whenever you find something you think GRS readers should see or read, leave a link in the comments below. Whenever you think of a topic that this blog should cover, let me know in the comments below. Sound good?

I'll see you all again in a month!

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An index to every money book I’ve reviewed during the past twelve years

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I read a lot of money books. As a result, a large section of my large library is devoted to books about personal finance. (And if I hadn't purged hundreds of money books when I sold this site in 2009, I'd have even more books — and no place to put them.)

Last week, a GRS reader named Lindsay dropped a line with an interesting question:

“I'm really enjoying your work back at GRS, the email newsletter, and your most recent FB live video! I'm wondering: Do you have a list of all the money books you've reviewed? I've been poking around to try and find one)?”

As it happens, I've been wanting a list of reviews myself. I know I have a million billion different projects around here, but one that I'd like to pursue is a free nicely-formatted PDF download that compiles every review I've written.

To answer Lindsay's question — and to satisfy my own curiosity — I sifted through the GRS archives yesterday to compile a list of every money book I've reviewed during my 12+ years at this site. In this post, I've linked to those reviews, plus I've included a short summary of each book.

Note: I'm certain that about half of the reviews are missing from the archives. The folks who purchased this site from me “unpublished” hundreds of articles (including many book reviews, apparently) during the time they owned GRS. Those reviews still exist, and I'll eventually find them and list them here, but it's far too cumbersome to find them at the moment.

Paperback Money Books

For each book below, I've included a link to Amazon. I've also assigned each a book a letter grade and, in some cases, a star .

My letter grades might seem harsh. That's because I've tried to really think about these on a sort of curve, where the vast majority of books are average and only a few merit As or Fs. As a result, some important titles get average (or low) grades despite their contribution to the field.

  • If I grade a book an A, I think it's excellent. It offers excellent advice with no real flaws.
  • If I give a book a B, it's a good book with good advice, but something about it holds it back. Maybe it's poorly written or maybe it's off-base on a topic or two.
  • If I give a grade of C, the book is average. That means it gives reasonable money advice in a typical way. There's nothing drastically wrong with the book, and it's worth reading.
  • If I give a D grade, the book is flawed in some major way. It still has some value to it — maybe a core concept that you can't find elsewhere — but I'm hesitant to recommend this to average folks.
  • If I give a book and F, I don't think it has any sort of value. I don't give many Fs because I think nearly every book has some nugget of wisdom in it.

Note that all of my letter grades were assigned today. They're based on who I am and what I know now, not when I wrote the reviews. And they're based on how valuable the book's info will be to a modern reader. (Some money books that were awesome in 1978 haven't aged well because their advice is specific to that era.)

When I've marked a book with a star , that indicates I believe regardless of my grade, the title should be considered part of a core personal-finance library. (I don't have a review of Dave Ramsey's Total Money Makeover here. If I did, it'd get a C or lower because the book's quality is mixed and it has certain drawbacks. But the book would also merit a star because it should be in any serious library of money books.)

Ultimately, though, you shouldn't let the letter grades and stars guide your decision to read a book. Use my reviews instead. They're much more nuanced than an arbitrary grade. The grades are meant as a sort of quick reference.

Finally, I've sorted the titles into roughly reverse-chronological order based on year of publication. I think most readers are interested in recent titles. (Because of my hiatus from money-blogging, there's a gap here between 2010 and 2016.) If, like me, you prefer older money books, you'll find them closer to the end of this list.

That's enough explanation. Here then is a list of (nearly) all of the book reviews from the archives here at Get Rich Slowly! [Read more…]

What early retirement was like in 1957 (according to Life magazine)

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Sometimes I hit the jackpot in my quest to find old material about retirement and early retirement. Last week, for instance, I was reading Early Retirement Dude's history of the financial independence movement when he mentioned a Life magazine photo essay about early retirement from February 1957. Say what?

Within minutes, I was reading the article via Google Books. Within an hour, I had ordered not just that issue of Life but three others with retirement articles. Within days, the magazines were on my doorstep. I'm telling you: We live in the future!

Life magazine article on early retirement

I had intended to scan the entire ten-page photo essay for you, but that proved impossible. My scanner only handles 8-1/2 x 11 paper. (What about legal size?) I took the magazines down to the nearest copy shop, but their scanner can't handle Life magazines either. (They're roughly 11 x 14!) So, I've opted to transcribe the bulk of the text for you, and I've included a few photos from the Google archive of this article.

Note: I hate Life‘s copy editing. I've taken the liberty of formatting things to match my personal sensibility. Long live the Oxford comma! And paragraph breaks. Also, you should be able to click on any of these images to view a larger version.

To many young men, retirement is a goal they cannot hope to reach until they are too used up to enjoy it. To many aging work horses, it is a prospect of boredom bred of too much spare time. Between the two extremes, a few men in their 40s and 50s are pushing into a new frontier of retirement — retreat from punishing jobs to a life where they still work but no longer under high pressure.

Joel Brecheen, now 45, was a building-products salesman making $10,000 a year [equivalent to $91,000 in 2018] but finding himself always out of pocket for time. In 1952, with $13,000 in savings [$119,000 today], he quit, got married, and bought an orange grove near Phoenix.

He remodeled a house, built five rentable apartments, tennis courts, and a swimming pool and settled into the family life he wanted to lead, teaching youngsters how to swim and play tennis and improving his property. He had special qualifications that pulled him past the critical point where many who try retirement give up and return to the beaten track. He was an expert do-it-yourselfer and a qualified athletic instructor.

Still, he found decompression from high-pressure life hard to take. “I'd be plastering one of the apartments,” he says, “and I'd suddenly think that I ought to be on my way somewhere.”

From his property and teaching, Brecheen today nets $8000 per year [$73,000 today].

Life magazine article on early retirement

Holy cats! This dude retired with barely more than a year's salary saved. That's ballsy.

As you read these anecdotes, keep in mind they're from February 1957. A young adult reading this might have been born in 1930 or 1935. They would have reached traditional retirement age in 1995 or 2000, and they'd likely be nearing ninety now (if they're fortunate enough to still be alive).

To put it another way: Warren Buffett was born in 1930. He would have been 26 years old when this issue was published. Odds are good that he read it. Odds are also good that he thought, “Man, I'd like to retire early!”

A romantic retreat to part-time jobs
Arthur and Kathryn Lynch had romantic ideas about retirement: They wanted to get away from it all. They also had advantages — $30,000 [$274,000 today], no children, and technical knowledge picked up on jobs as research chemists.

Four years ago when Arthur Lynch, at 45, was making more money — $15,000 a year [$137,000 today] — than ever before, they left Pittsburgh to settle on St. John in the Virgin Islands. There, $12,000 went into a house [$110,000 today], and Mr. Lynch put his training to use on the island's power equipment.

Both Lynches like manual labor and hire themselves out as handymen. Working part time in a place they love, they net a livable $4000 a year [$36,500 today].

Life magazine article on early retirement

This guy is a little more prepared than the first fellow. He at least has two times his annual salary saved — even if he put a big chunk of that into a house. And what about his wife? If she's a research chemist too, how much does she make? If this article were written today, we'd get stats on both partners in this marriage.

Aside from the subtle sexism, I feel like these stories could have been written today. When I think about the folks I know who are pursuing early retirement, their lives and thoughts and passions look very similar to those profiled in this piece.

I know people who want to retire early so that they can move to some remote country for a “romantic retreat”. I know folks who want to escape high-pressure jobs in order to pursue something more prosaic. Like the Wertzes (in the excerpt below), Bob Clyatt retired early to focus on art.

People want to retire early for a variety of reasons. But our reasons today look an awful lot like the reasons people had in 1957.

Getting free to lead a very busy life
In 1948, Joseph B. Wertz, a 45-year-old Washington designer under contract with the government to lay out airbase plans, had reached a high-pressure level of success where he had no time for hobbies and too little time for his newly-married wife, Jeanne.

So, he gave up his busy life for a life of retirement which has turned out to be every bit as busy. Today, in a made-over stable in New Mexico, he makes pottery and furniture, paints, sculpts, photographs, and does silversmithing.

After deciding to retire, the Wertzes scouted the western U.S. in a trailer, looking for the ideal spot for settling down. Facing the river in Santa Fe, they bought a stable and rebuilt it into a rambling adobe house. They live there comfortably on the $4200 annual income from investments [$38,000 today].

Some of the pottery Mr. Wertz makes is so good museums are interested in showing it. Meanwhile, he has a new interest — glass blowing.

Life magazine article on early retirement

Having discovered this article — and the three other Life magazines with retirement topics — I'm now forced to wonder: How many other old articles are out there about early retirement?

In college, I loved working on research papers. I loved going to the library, digging out the catalogs of various magazines and journals (some of which were on microfilm), then tracking down the back issues. This project feels like it calls for similar legwork. As awesome as the internet is, it's woefully lacking when it comes to pre-1990 material. Like the U.S. as a whole, the web has a strong recency bias.

Do universities still keep huge volumes that index back issues of journals and magazines? I don't know. But I think it would be fun to take a day to go visit a college library to try to do some research on this subject.

Finding time to be a father
Allen Cook was an airline pilot whose overseas flights kept him too long from his family. He muffed two tries at retirement. Once, he moved to Florida but got cold feet when the monthly pay check was cut off abruptly. Another time, he tried dairy farming in California and wearied of the long milking chores.

Such troubles are common to people who try to retire. But Cook kept trying.

In 1954, he sold his farm and livestock and bought a motel in Sarasota, Fla. for use as a business and as a residence. Soon, he was able to sell the motel at a profit, buy a house, and devote himself to a business he liked — a camera shop in which he had invested.

Now 39, he works at the shop full-time during the tourist season but, with a manager to spell him, only half-time the rest of the year. He takes $100 a week [$913 today] out of the till for the family's living expenses and can afford to do what he prizes most: be a full-time father.

Life magazine article on early retirement

I love that the folks at Life had no qualms talking about these men being retired even though they still worked. Nowadays, there's a lot of push-back when somebody says she's retired yet continues to earn money from her labor.

We bloggers jokingly talk about the Internet Retirement Police who roam the web calling out folks who don't meet their definition of retirement. I wonder if there were Magazine Retirement Police in 1957, folks who complained that the subjects of this article weren't actually retired.

I suspect not. From my reading, this is a new complaint in the past twenty years. Previous generations had no qualm with folks claiming to be both retired and working.

Business tied to pleasure, plus the risks
For those who retire young, it is often hard to know which part is vocation and which avocation.

Warren Rice, 51, Old Lyme, Conn. engineer, and Bruff Olin, 42, a Worcester, Mass. radio-station owner, both left high-pressure lives at different times to settle in Sarasota, Fla., later joined in a sign-making business.

“With two of us,” says Olin, “neither knocks his brains out. And we can do business on a beach as well as an office.”

Edward Dobson, 52, quit a lucrative 15-hour-a-day law and real estate business in Washingtonville, N.Y. and moved to Sarasota. He now dabbles in real estate and two palm tree nurseries and lives on $6000 a year [$55,000 today].

The scarcity of people who achieve this state of relaxed living indicates the hazards. Capital is needed to start and a period of hard labor and discouragement must be faced. Favored regions are flooded with others trying to retire. While one member of the family may adjust to the new life, others may not. Many people are stimulated by their work, feel dismally let down when they give it up. And some, in trading money for time, simply change pressures.

But if it works, early retirement can produce the blissful by-product show [in these pages].

As a word of warning, look for more of these “history of retirement” pieces in the future. I've ordered six or seven old books on the subject, and am now keeping my eye out for more magazine articles about the topic too.

How to get rich and stay rich

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How to Get Rich and Stay Rich by Fred J. YoungIn my ongoing quest to build a library of pre-1990 money books, I recently heeded a reader recommendation to buy and read How to Get Rich and Stay Rich by Fred J. Young. Spoiler alert: I liked it! But I almost didn't read it.

You see, everything about this book exudes scamminess. The title is scammy. The cover looks scammy. The amateurish formatting seems scammy. But the book is not scammy. How to Get Rich and Stay Rich is a marvelous prototypical book about early retirement. I enjoyed it.

Fred J. Young, the author, was born and raised in rural Tennessee during the 1910s. His family was poor, as were all of their neighbors. Young decided he wanted to do something more than be a farmer, so he left Tennessee to become a lawyer. After military service, he worked for Harris Bank in Chicago, where he spent three decades advising wealthy clients.

During the 1960s and 1970s, Young supplemented his bank income by giving motivational talks on how to get rich and stay rich, basing his presentations on observations of his clients. In 1979, after he retired from Harris Bank, Young collected much of this material into a book called How to Get Rich and Stay Rich.

How to Get Rich and Stay Rich

“For 27 years, I worked in the Trust Investment Department of the Harris Trust and Savings Ban in Chicago, Ill.,” Young writes at the start of the book. “Most of my time during this period was spent helping rich people 1) stay rich, and 2) get richer.”

He continues:

“During those 27 years of working with rich people, I made a number of observations about getting rich, being rich, and staying rich, and about the difference wealth makes. I am delighted to share those observations with you in this book.”

[Read more…]

Money story: One man’s trash is another man’s treasure

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This guest post from Brian Winch is part of the “money stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all stages of financial maturity.

Today, Brian shares how he got rich slowly by building a simple, profitable business.

Brian from CleanlotsHi, folks! My name is Brian Winch, and I’m delighted to share my story with you.

In 1981, I was earning a modest income at a sporting goods store, but I wanted to make more money. I dreamed of being an entrepreneur, but I was hesitant because I only had a high school education and hardly any start-up cash.

Inspiration hit as I recalled that my father used to moonlight cleaning up litter in a local shopping plaza. I had gone along with him a few times as a kid, and I remembered thinking how easy it was. It was a case of us walking around the property cleaning up litter before the stores opened the next day and getting paid for it.

I decided to see if there was much money to be made from this simple service. Turns out, there was. This is where the idea for Cleanlots was born.

The Secret of My Success

When I started Cleanlots, I only had about $200 to invest. Fortunately, the business didn’t require any extraordinary skills or training. All I needed were a few simple tools and a willingness to work.

Today, my operation bills out over $650,000 per year in parking lot litter removal contracts. (Others who have adopted my system report earning $20,000 to $50,000 per year.)

Looking back, I think there are several factors that have contributed to my success:

  • I Wasn’t Shy. I contacted property management companies and offered to clean their retail, office, and warehouse properties on a daily basis. I was relentless. I discovered that commercial real-estate management companies were my best source for business. A good one could result in a dozen prospective contracts.
  • Hustle. Since cleaning up litter was work I could accomplish before and after my full-time job at the sporting goods store, I was able to grow my business as a side-hustle while still taking home a steady paycheck.
  • Repeat Customers. I chose a business model that required year-round service. Most property managers didn’t want to do the “dirty job” themselves. But I did, and they paid me handsomely for it (on average $30-$50 per hour). Month after month. Year after year.
  • Expansion. There came a time — I remember it fondly! — when I realized I had a viable business on my hands. I was making more income than my full-time job and it was time to quit that sporting goods store job and focus all of my attention on Cleanlots. But I didn’t slow down. I expanded. As I continued to take on more contracts, I was able to recruit others to help me clean up litter.
  • Diversification. A few years into my success, I compiled all of my standard operating procedures into one “clean” document. As that document expanded, I was inspired to take it a step further and publish it as a book. I created a manual to help others do what I've done.

Today, business is better than ever. Do you think people are littering less than they were 35 years ago? Nope! And property managers have a hard time keeping up. That's where I come in. It's a win-win for me and the businesses I work with.

The Millionaire Next Door

The bottom line? I got rich slowly by picking up other people's crap. (Just goes to show that the old saying is true: “One man's trash is another man's treasure.” Haha.)

But I've obtained more than financial wealth. My career has offered me the flexibility to spend quality time with my family, the ability to make a positive environmental impact, and with all that walking I also get some great exercise!

Like many of you, I'm a fan of the best-selling book The Millionaire Next Door by Thomas Stanley and William Danko. The book showed that about two-thirds of America’s millionaires who still work are self-employed. They tend to own simple, blue-collar businesses such as cleaning or other service types. The book's success profiles showed that you don’t need a family pedigree, an advanced education, or a fancy job title to become rich.

These findings match my personal experience.

I've learned what many successful entrepreneurs have found over the years: You should study your community to discover a need that isn’t being met. Then start a business that fills that need. Be creative and open-minded to opportunities.

Often it’s the simplest side hustle ideas that can lead you to success.

The thin green line: Why you should be skeptical of financial blogs

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Why you should be skeptical of financial blogsI've been blogging since before “blog” was even a word. (I wrote my first blog post twenty-one years ago last Thursday!) I've had a financial blog for a dozen years now. In that time, things have changed in a variety of ways. For instance:

  • Blogging has become more business-like and less personal. A decade ago, most blogs — even money blogs — were rooted in the author's individual experience. Nowadays, most big financial blogs have a minimal editorial voice. They're much like money magazines used to be.
  • Audience interaction is limited. In the mid-2000s, it wasn't unusual for blog articles to get dozens (or hundreds) of comments. This site has old articles with over 1000 comments. Nowadays, many blogs have removed reader comments…because they receive so few reader comments. And when blogs do allow comments (as here at GRS), they're scarcer than they used to be.
  • Today, most bloggers want to make money. In fact, that's their primary goal. When I started blogging in 1997, there was no way to make money from it. When I launched this site in 2006, my primary goal was to get out of debt. My secondary goal was to help others get out of debt. Yes, I wanted to make money — but that was only my third aim. It was almost an after-thought. (This was, in part, because it was more difficult to make money blogging in 2006.)

Most of the changes in the world of blogging are neutral. They're neither good nor bad. They just are. But I think the move to a more money-centric approach often does a disservice to readers — to people like you.

How I Became a Blogging Cynic

Twelve years ago, if I read something on a financial blog, I generally accepted it at face value. If somebody recommended a book, I trusted their sincerity. If they wrote about the best bank accounts, I believed they were telling me about the best bank accounts. If they raved about a company or service they liked, I had no reason to doubt them.

Today, I'm much more skeptical. Why? Because most of my friends are bloggers, and I know what they think and say in private.

Now, these folks are not bad people — I love them! — but, like most of us, they'll sometimes put profit ahead of, well, truth. Honesty. Objectivity.

  • Today, for instance, I saw an article from a colleague I respect. He was raving about a financial service. The problem? I'm damn sure he's never used the service himself and the only reason he's recommending it is he gets a commission on it. With his huge audience, he can make big bucks by promoting this company.
  • Or there was the time I overheard another colleague talking with her partner about an advertiser who had just cancelled their affiliate program. (An affiliate program is, essentially, a commission program. You provide a sale or a lead to a company, and you get a kickback.) “If they're not going to offer an affiliate program,” my colleague told her partner, “we're not going to promote them. We need to go back and change articles to feature a company that does offer an affiliate program.”

I wanted to call out my colleague on that last one but I didn't. I bit my tongue. I think her actions were shady, but I realize that not everyone shares the same values. What isn't right for me and my business might be perfectly fine for her. What's perfectly fine for me and my business might seem shady to somebody else.

I'm not willing to criticize other financial bloggers for what they do. I'm not in their shoes. Their business is not my business. They're free to make choices that adhere to their personal ethics. (My hope is that they're at least considering ethics when they make these choices.)

But I have to say: The stuff I hear and see behind the scenes has made me cynical. I've become skeptical of the stuff I read on other money blogs. (Not on all money blogs — I'll recommend some I trust later — but on many of them.) [Read more…]

Case study: Starting with less than zero

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I am not a trained financial expert. I'm not an accountant, I'm not a financial planner, and I'm not a stock broker. What's more, I've made many many money mistakes on my own financial journey. As a result, I've always been reluctant to sit down with people and go over their budgets.

That seems to be changing.

In March, I spent a couple of hours talking with a friend about her financial situation. A few days ago, another friend asked if I'd be willing to meet with him in the near future to puzzle through his budget woes. And yesterday, I took three hours to chat about money with my friends Wally and Jodie.

As always, I've changed names and certain identifying features in the story that follows. Unless I have explicit permission to share details, I do my best to protect people's privacy when I write about their intimate financial lives.

Wally and Jodie have recently begun dating. He's in his early forties (and recently divorced); she's in her late twenties. They both work in food service, and have done so all of their lives.

Their trouble — and the reason they asked me for help — is that they cannot seem to make ends meet. They work hard but never have anything to show for it. In fact, they feel like they're falling further and further behind.

“Can you help us?” Wally and Jodie asked.

“I can try,” I said. “Let's look at your numbers.” [Read more…]