3041: You Are Your Own Worst Enemy by JD Roth of Get Rich Slowly on Financial Advice & Spending Habits

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[00:00:19] Get the best out of yourself with the new Samsung Galaxy Watch Ultra with Galaxy AI. Let's go! This is Optimal Living Daily Episode 3041, You Are Your Own Worst Enemy by JD Roth of Get Rich Slowly.org and I'm Justin Malik.

[00:00:37] This is a show where I usually read to you kind of like an audiobook, but on Sundays I think it's nice to share an extra episode from a different podcast where we read to you. And today's is coming from Diana with Optimal Finance Daily.

[00:00:50] So with that let's get right to the bonus episode and Diana's commentary as we optimize your life. You Are Your Own Worst Enemy by JD Roth of Get Rich Slowly.org My friend Jillian called the other day. She's been having money trouble and was looking for help.

[00:01:12] I'm not really a financial advisor, I told her. I write about money and I try to help people at my website but I'm not qualified to coach you one-on-one. Still she's a friend so I resolve to at least give her some advice.

[00:01:25] I asked her to explain the situation. Tom and I are working all the time but we're always broke. He just wrecked his car but we don't have money to get it repaired. We'll have to use the credit cards again. We don't have any other choice.

[00:01:37] There's never anything left at the end of the month. I need somehow budgeting so that we don't keep having this problem, she said. Well let's see what we can do. I guess the best place to start is with your monthly income and your monthly expenses.

[00:01:51] How much do you and Tom bring home each month? I asked. About $4,000 after taxes. That was about what I expected. How much do you spend? I asked. All of it, she said laughing. I expected that too. How much do you have saved? I asked.

[00:02:08] Do you have any savings at all? No we don't, she said. There's never been anything left over to save. They don't have anything left to save because they're very good at spending money. Jillian and Tom live well. They have a nice custom built home.

[00:02:22] Each of them drives a late model SUV. They have no kids and they enjoy expensive hobbies. I have friends who make half of what Jillian and Tom do but have built a nest egg because they maintain a frugal lifestyle. It should be easy for these two

[00:02:37] to reduce their spending to create a budget surplus. Well let's see if we can find a way to free up some cash. I said, let's list your fixed monthly expenses. Jillian listed their bills one by one. I jotted them down making note of anything that seemed particularly extravagant.

[00:02:54] Okay let's see what we have. I said, you're paying a housekeeper $50 a week. If you were to clean the house yourself you'd save $200 a month. But she began, I think you'd be surprised at how much a difference $200 a month can make.

[00:03:09] I said, I know from experience that even a $50 positive cash flow can make the difference between feeling broke and feeling flush. A $200 difference is huge. Yeah, said Jillian but I don't wanna clean the house. It's too much work. I was puzzled, to me this was a quick

[00:03:28] and obvious way to free up money. If I were in her shoes the housekeeper would be the first thing to go. It would be worth some extra work on my part. I tried a different approach. You each have a cell phone. I said, do you both need one?

[00:03:42] Yes, said Jillian. I don't know what I'd do without one and Tom needs one for work. I need to be able to reach him. Her reasoning seemed thin but I pressed on. Well what about the cable bill? I said, you're paying $60 a month for that.

[00:03:55] That's an easy one. What about cutting back to basic cable? Oh we can't get rid of cable. Jillian said, we watch TV all the time. I was silent. Are you there? She asked, I'm here. I said, I'm just trying to figure out what to do.

[00:04:08] In order for you to turn things around you're going to have to make some sacrifices. Yeah, she said but we can't cut cable. Tom would have a fit. Jillian, I said this is a little frustrating. I thought you wanted to get out of your money situation.

[00:04:23] I do, she said but so far you're just suggesting things for me to get rid of. Isn't there something else we can do? Can't we use a budget to get more money? That's what I'm talking about. I said cutting things like these is making a budget.

[00:04:36] I know it seems terrible to have to give things up but you need to make sacrifices at least in the short term in order to get ahead. You don't have any savings. Any disaster means you're putting money on your credit card. You need to build up some savings.

[00:04:49] You need to pay off your existing debt. In order to do this you need to spend less than you earn. Right now you're spending exactly what you earn and you'll never get ahead that way. I know because for years that's how I operated.

[00:05:02] You're going to have to tighten the belt, Jillian. It's the only way. I paused and then said, you need to decide what's important. It was obvious I wasn't going to be able to help her. I hadn't even explored the big ideas like moving down to a smaller house

[00:05:17] or trading one of their SUVs for a used car. I had started with the medium sized stuff, the obvious chaff. But Jillian wasn't interested in making changes if it meant altering her lifestyle. I changed the subject. We talked about the summer. Jillian asked how our garden was.

[00:05:34] I described the knee-high corn, the ripe raspberries and Chris's monster tomatoes. I'm jealous. I don't have time to garden. I did get a chance to go to the nursery last week though. I was able to pick up five shrubs on sale for about $10 each, she said.

[00:05:49] The shrubs were the final straw. There was nothing I could do to help her because she wasn't ready to be helped. She wasn't ready to listen. She said she wanted to change, but she didn't really. She was looking for a magic pill, something that would make life easier

[00:06:03] without any effort on her part. That's not how it works. Eventually Jillian will reach a place so bad that she'll begin to see the need to take responsibility for improving her situation. But she's just not there yet. Our conversation reminded me of an episode

[00:06:18] of This American Life I heard recently. The show profiled debt guru Dave Ramsey. And at one point, the reporter played a segment in which Dave experienced similar frustration. Tina calls Dave because she's upside down on her car loan. She recently wrecked the car,

[00:06:34] but rather than use the money to repair the vehicle, she spent it. Okay, says Dave, obviously flustered. He continues, I'm afraid what you're looking at is probably a really good part-time job, about six or eight months of 80 hour weeks. 80 hour weeks, says Tina, that's too much work.

[00:06:52] I can't help you Tina, says Dave. And I can't help you Jillian. You just listened to the post titled You Are Your Own Worst Enemy by JD Roth of getrichslowly.org. Okay, so clearly this article was written a while ago as in this day and age,

[00:07:13] I think we'd all agree that it would be difficult to manage without a cell phone. However, low cost providers like Mint and Republic Wireless have made cell phones service so affordable. So I suspect today JD would probably suggest cutting down this cost rather than cutting it out completely.

[00:07:31] This article reminded me of a great quote from Hippocrates who said, before you heal someone, ask him if he's willing to give up the things that made him sick. End quote. I've had many similar conversations to the one described here. And while I used to find it frustrating,

[00:07:48] I now recognize it as simply a case of cognitive dissonance. I'm not sure many people recognize that when they say they aren't willing to change their behaviors, what they're actually saying is that they aren't willing to improve their financial situation. It's like wanting to lose weight

[00:08:05] but being unwilling to exercise or change your diet. This to me is where the deep work of a mindset shift needs to occur. And sometimes conversations like the one described in this article simply happen prematurely. Most of us need to go through some financial pain

[00:08:21] before we build up the desire and willingness to change your behaviors around money. This is a very personal journey. And while there are tons of resources out there to help you once you have the willingness to make changes, how does one actually build up that desire

[00:08:38] to improve finances? The way it happened for me was from reading personal finance blogs and other people's musings about their relationship with money. When I got exposed to content that helped me understand the true value of money and what was possible if I prioritize saving

[00:08:56] and investing, it made behavior change easier. I also began to question my assumptions around how miserable I would be if I spent less. I came to realize that cleaning my own home, cooking my own meals and finding creative ways

[00:09:10] to get my needs met is actually not a hardship at all. It's an incredible opportunity, but it took me a while to come to this understanding and I really had to get there on my own. So if you find yourself in this boat,

[00:09:24] I'd encourage you to be patient with yourself and keep exposing yourself to the content we share here on Optimal Finance Daily. And that should do it for today and I'll see you on the Thursday show tomorrow where your optimal life awaits.