Friday, April 28, 2017

Success Through Effort or Advice?

One big criticism that people have made about personal finance writers is that somehow their comments are invalid because they made much of their income writing about personal finance instead of “doing something.” I thought I’d address that today, starting with my own background on the topic.

First of all, I spent many years of my life working at a “typical job” that I would assume would qualify as “doing something.” I worked in a research environment for about a decade, most of it full time. Most of my work involved collecting and organizing data sets and helping to distribute that data in useful ways. I wrote software tools and worked with others to manage data sets so that researchers who needed specialized views on those data sets or needed to extract particular slivers of data could do so easily. Sometimes, I did actual small data mining projects for researchers. We’re talking about sets of data that were measured in the hundreds of gigabytes and later in the terabytes, so this wasn’t a small data set. I would call all of this a “real job.”

Later on in that career, I had a very secure job. I would have been in the field for a very long time, had I chosen to be. I had a great resume and a job with essentially endless funding and very good security. I had worked very hard to earn that position; it was through bolstering that resume and building a lot of good connections within that community that I was able to earn such a position. I walked the walk when it comes to the career articles I write about.

At the same time, I was unhappy with the state of my finances. I was working hard to recover from a ton of student loan debt and consumer debt, and I was working incredibly hard to turn my financial ship around. I’ve always enjoyed writing and at least trying to help others, so I simply started writing about that journey in a few places which eventually grew together and became The Simple Dollar. (I adopted an intentionally earnest tone right off the bat because I was more interested in being helpful than being witty – and I still am.)

My father always had “side gigs” growing up and it’s something he embedded in me, so The Simple Dollar started as a side gig. I treated it like a part-time job, devoting blocks of time to it most days. I enjoyed the writing, of course, but I also enjoyed tinkering with the site, figuring out how to make money from it, reading what other people were writing about, and so on.

For the first year or two of the site, it made almost no money. The income was measured in pennies, not dollars, yet I could see the potential in what I was doing. I could see the income steadily growing as more and more readers came to the site and as I built up more and more content for people to find via Google, and I could definitely see a point where I could earn enough money to survive on.

During that time, Sarah and I had a second child and it became clear that having one parent stay at home was probably going to be a huge money saver. I was also feeling very frustrated with some aspects of my job (while still loving other parts). Thus, with the income of The Simple Dollar steadily growing and the possibility of growing it faster by devoting more time to it and the money we’d save by me staying home and the huge reduction in my personal frustration, we made the decision that I would make The Simple Dollar my primary employment and walk away from my job.

That’s basically been the story for the last several years. The only thing that’s really changed is that I eventually entered into agreements with others to support various aspects of the site because I was getting overwhelmed with managing the site’s backend, negotiating with advertisers, dealing with requests, and so many other things. I tried to handle it myself for a very long time, then I began to hire virtual assistants to take care of specific parts of it, and eventually I just threw up my hands and came to an agreement with another company that enabled me to focus on the aspects that I enjoyed the most while they took care of everything else.

During all of that, I made six figures in exactly one year (possibly coming close one other year) – and during that year, I was absolutely miserable while working 90-100 hours a week, something that was just completely unsustainable. My writing suffered badly and my family suffered, too; I almost burned myself out entirely in terms of writing for the site.

So, yes, right now, I make a decent living writing about personal finance, but not one that I’m getting rich from. I make roughly a typical American income these days. I could be making more if I wanted to devote more time to marketing and other things, but instead I put value on things like being there when my kids get off the bus each day after school and blocking off devoted time to spend with my family each day.

At the same time, I’m very confident that I could still be working at my old research job if I had stayed there and the story would be roughly the same. The “child” of that project I worked on 10 years ago is still in existence, with some continuity in staffing (many people I worked with back then are still involved with the “child” project). I’d be making a little more income if I were still there, I think, but I would be traveling a lot and have a lot less time flexibility, and those benefits are worth the somewhat smaller income for me.

Another part of the reason that I chose to make the career switch that I made was the sense that I was directly helping far more people with The Simple Dollar than I was helping in my other position. While I could definitely see some real-world connections in the work of my previous career, I felt that much of the benefit of what I was doing was being filtered through corporate R&D departments and turned into products with negligible real-world benefit. I felt that the work I invested in answering a single reader mailbag question was more meaningful in terms of making the world a better place than an entire typical day of work at my previous job (even if the previous job was perhaps more intellectually demanding).

So, no, I haven’t “made my fortune” from writing about personal finance. Our family’s path to financial independence has been built on a long series of strong financial decisions, mostly oriented around our choice to consistently spend less than we earn. We have spent substantially less than we earn each year for the last 10 years, with our savings rate ranging from 20% to 50% in each of those years (with a higher savings rate coming after we paid off our house in full). We could do even better, as Sarah and I both see areas for potential improvement all the time. All of that would be true regardless of whether I’m writing about personal finance for a living or working in my old research job.

I’ve had experience making a typical career into a successful one. I’ve had experience building a side gig and turning it into a small business that provided my full-time employment. I’ve had experience facing a mountain of debt and cutting it down to size. I have experience living a modern life with a savings rate that’s substantially higher than zero. And I write about those things in a way that’s hopefully useful to other people trying to figure out how to do those things themselves, not much different than a successful gardener making a YouTube video about her tomato growing secrets. That’s my story.

That’s not to say that there aren’t personal finance marketers out there who have only made a living by marketing personal finance content that they basically scraped from other sites. Unquestionably, there are people like that out there. It’s just not what I have ever done and not really something I’m interested in. I’ve written somewhere in the realm of nine million words in the last 10 years and I’ve given away almost all of it on various sites, mostly The Simple Dollar, and I’ve made money from that solely through ad support and linking to Amazon or to financial institutions. I’ve written a couple of books, too – The Simple Dollar and 365 Ways to Live Cheap. That pretty much sums it all up.

I’ll end on this note: Part of the reason I often use such a personal tone on The Simple Dollar – and why sometimes the advice doesn’t apply perfectly to everyone – is because I am intentionally writing about my own experiences (or those of very close friends) as much as possible. I feel very uncomfortable writing about things I have not personally done or that I haven’t witnessed people I’m close to doing in a very up close and personal way. I often use myself as an example of a principle, both positively and negatively, because I know from my own experience whether something works or doesn’t work, at least in my personal situation. I’m mostly interested in sharing what I know actually can work, and that mostly means things that have worked for me. I know that those things can be done or if there are potholes in those things because I’ve seen them or done them or fallen into those potholes myself.

Of course, by extension, that means I run parts of my life almost like some kind of a personal finance lab. I am much more open to trying frugal strategies or side gigs or other things simply because I write for The Simple Dollar. I’m always trying different things to see how they actually work so I can write about them in some meaningful fashion. If there’s anything I do that’s not what a “normal” person would do, it’s this; I’m constantly trying out new things, most of which other people won’t try. I make stuff like homemade laundry detergent and then I revisit the recipe later – the vast majority of you will never do it, but a few of you will, and many more of you will appreciate knowing that you can save money by doing so and might use the strategy in a financial pinch.

In the end, I’m just writing about the things that work for me and how they work for me and how ideas make sense to me, and if you find value in that, I’m glad and I hope you’ll stick around.

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