Wealthy, Successful Bloggers: Don’t Simply Follow Their Frugal Advice

financial-bloggers-adviceI often wonder if I’m brainwashing myself with the stuff I just want to hear.

Lately, I’ve been reading a lot of blogs, books, and other advice about self-employment and starting your own business. I’ve (mostly) convinced myself that working a 9-5 job isn’t the key to happiness and success in my life.

Of course, I haven’t always thought that way. I went to college for six years to study engineering – a field with much fewer prospects for entrepreneurship. Before doing that, I went to business school for one semester. It wasn’t just any business school – it was Babson College, which was (and may still be) the #1 ranked school in the U.S. for entrepreneurship.

I get a lot of the advice with how I live by from various bloggers around the web that have achieved success in their lives. But an interesting point (and one that I first heard from MJ Demarco, author of the Millionaire Fastlane) is that many of these successful bloggers or “gurus” did not achieve most of their wealth by following their own advice.

Now, before you think that I’m calling them hypocrites, I’m certainly not doing that. These people do follow their own advice, but they’ve gone beyond that in many ways to acquire most of their wealth. Here’s the proof:

JD Roth of Get Rich Slowly

JD went public last week with the story of how he sold his blog, Get Rich Slowly, almost three years ago. It’s a great story, and one that you should definitely read. I think it’s awesome that JD was able to do this. While JD doesn’t disclose how much he sold his blog for, the Dough Roller has a great article on financial blogs that have been sold and estimates of what they sold for. It’s almost certain that Get Rich Slowly sold for more than $1 million.

JD points out that he’s put all of his proceeds from his blog sale into a “nest egg” after he paid of his mortgage, and he continues to live off ~$48,000 of other income he generates by mostly writing. But, no matter how you dice it up, JD is almost certainly now a millionaire and is more wealthy than many of his readers via the sale of his blog.

Trent Hamm of The Simple Dollar

Trent is one of the masters of frugality and the author of The Simple Dollar. His advice is sometimes a little too extreme for me, but he’s offered a lot of tips and has undoubtedly helped tons of people. Nonetheless, I admire how Trent has grown the Simple Dollar and his dedication to producing useful content that undoubtedly affects the life of thousands.

But, like Get Rich Slowly, the Simple Dollar was also sold to another company for an undisclosed sum (see the Dough Roller post above), and it was also likely that it was a seven-figure deal. I’m sure Trent will continue to live a frugal lifestyle, but it’s unlikely doing so because of lack of wealth.

Dave Ramsey

Dave Ramsey boils down financial advice to the simplest level possible: pay off your debt, build an emergency fund, and save for retirement with as much intensity as possible. He advocates going all-out to do these things, and he’s very clear and effective with the advice he offers. He’s help tons of people turn their financial lives around.

As a result, he’s build his Total Money Makeover book and course into a financial empire. Dave has syndicated radio show, has appeared on Oprah and even had his own TV show for awhile. He now has several more books and courses that he sells. This site claims that his net worth is $55 million, which I haven’t been able to confirm elsewhere, but I wouldn’t doubt that it’s to far off.

You’ll still hear Dave tell his listeners to fund retirement accounts and sell their stuff to pay off debt even though he almost certainly doesn’t have to worry about any of these issues in his own life now.

Lesson Learned

I know it’s unlikely that any of us will duplicate the success of any of these people using the business models that they have. It’s much, much harder to create and grow a popular personal finance blog these days than it was in 2006 when these guys started. I don’t expect them any of these three people to spend the majority of their time or blog posts encouraging others to attempt to create a carbon copy of their success. But that’s not the point I’m trying to make.

My point is: if you’ve strictly followed these guys’ advice, you’d have a pretty darn good life (and maybe a great one). But you wouldn’t have the amount of wealth they have.

It’s nearly impossible to become a millionaire in your 20s, 30s or 40s by acting like a gazelle to pay of debt, maxing out Roth IRAs, and making your own laundry detergent.

What I’ve learned from this is that we shouldn’t take any advice so literally and accept it as the only way to do something. If you strictly followed tips from these writers, you most likely wouldn’t have a life (and a bank account) similar to theirs.

Instead, it’s helpful to look at how they were successful and consider that when determining which pursuits to take on in life. To put it simply for me, it’s come down to taking their advice and spending like they do, and not just seeking to earn and save like they suggest. If you do, you may “get rich slowly,” but it may be more slowly than you wish.

How do you feel about taking advice from people like this? Does their wealth affect your perception of their advice?

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photo by: velkr0

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Comments

  1. I don’t really follow the advice of others. They aren’t in my shoes, or in my head, so they don’t know what I want or need. That being said, I still read JD’s and Trent’s blogs for inspiration and ideas–not to apply exactly to my life, but as a starting point. I wouldn’t say that I am affected by their wealth or lack of if the case may be. It’s more about the foundation of the message to me.

    • @Eric J. Nisall – DollarVersity Exactly – and I’m not affected by their wealth, either, since I know they haven’t dramatically changed their lifestyles since becoming millionaires. They all have valuable advice, but of course it might not apply to everyone.

  2. Im not sure about the connections used here to illustrate the points in the article. How do we know what exactly they do with the money from the sales? ? To get where they are took time and dedication to the business of their blogs and little to do with frugality. There are many blogs that are just that businesses with staff writers to pump out articles.

    Readers should focus on what fits on with their personal finances and worry less about what the owner of the blog is doing with their money.

    • @Ginger I respectfully disagree with your points. If you read JD’s post, you know almost exactly what he does with the money: he paid off his mortgage and saved most of the rest that he made from the sale.

      I’m not arguing that where they are required time and dedication. Of course it took them tons of work, and I’m not knocking any of them by any means. But it did not take dedication to frugal living to get them where they are despite the fact that each of them personally writes about frugal living on their blogs all the time.

      While I’m not “worried” about what these bloggers do with their money, I think it’s definitely important to know the perspective they are writing from. They all detail their backgrounds extensively on their blogs and in their books.

      I’d much rather read advice from someone that practices what they preach and has experienced the things they write about. If Donald Trump came out with a book on frugality, I’d never read it and it would be a huge flop because everyone knows he’s a billionaire.

      • @Jeffrey Trull Thats my point, it had nothing to do with frugality.

        I said: “To get where they are took time and dedication to the business of their blogs and little to do with frugality.”

        You said: “But it did not take dedication to frugal living to get them where they are despite the fact that each of them personally writes about frugal living on their blogs all the time.”

        I don’t know that it’s important for me to know their perspective. There are several blogs out there that are owned by huge corporations that hire paid staff writers to pump out articles. Is it important for me to know what the writer does with their own money? Not at all.

        That’s why personal finance is personal. What someone else does has little to do with me and what I do with my money. Bloggers can certainly tell readers what they do but really not follow that advice behind closed doors. It’s an attachment to the blog owner that I just don’t have. My 2 cents :-)

        • @Ginger With my original comment, I was simply pointing out that they write many more posts about frugality than they do write posts about starting your own business to earn money. You’re saying that their success had “little to do with frugality” whereas I would say it had a lot to do with frugality – that’s what the preach all the time. Maybe I’m misunderstand your point, but I think we’re more or less on the same page.

          From my perspective, I’m much more interested in blogs where I know something about the author and get some of their personal story, too. I’d my rather read something from JD at Get Rich Slowly than a generic “Top 10 New Tax Tips” found on a site with dozens of authors. Maybe that’s not true for everyone, but I find it to be a better mix of both advice and entertainment when blogs are authored this way.

          Thanks for stopping by to contribute to the conversation!

        • @Jeffrey Trull

          “From my perspective, I’m much more interested in blogs where I know something about the author and get some of their personal story, too.” – A-ha, you’ve figured us out!

  3. This is a great post! Really, I think everyone should watch what the hands are doing, not just listen to the explanation for what is really going on.

    I really think there’s two parts of success for all of the people above. First, they’re all talented. JD and Trent as writers, Dave Ramsey as a salesperson. Secondly, they all had the power of timing behind them. JD and Trent virtually launched the personal finance blog as a business model thing. Dave Ramsey built a business after going broke, leveraging his experience into a story that could be sold to John Q. Public. If JD or Trent hadn’t started early, or Dave Ramsey never bought into an overlevered real estate transaction, there’s no way to know where their different paths might have taken them.

  4. Very good question. I strongly believe that being “frugal” is not going to make you wealthy.

  5. moneycone says:

    What works for others may not necessarily work for you. Listen and evaluate others’ opinions and align it to your temperament. Best chances of succeeding.

  6. These guys got wealthy by running a business. They continue to be rich because they live what they teach.

    It’s more difficult to become wealthy just by saving and frugal spending, you have to have a way to make a better income as well. That usually comes with creating and developing a great business that allows for a larger income stream. They created an income stream that’s not directly related to the time they spend working.

    In the case of Dave Ramsey, I would bet that as much or more of his wealth has come from investing in real estate as from his financial advice. From what I hear, he owns a ton of real estate here in Nashville. Anyway, he got there by practicing what he preaches and not using debt.

    I don’t think achieving wealth invalidates them in any way, in fact, I think it proves their validity even more. I think any of them would tell you it’s all about the frugality. Frugality is only one part of the equation, but it’s the base on which everything else is built.

    • @DrCabler I agree with this. Frugality saves you money but getting wealthy, well you have to find a way to make more money as well. They go hand in hand. The bloggers mentioned found a way to make more money while keeping most of what they have.

    • @DrCabler I got a completely different perspective from this. I may be projecting – I am making some assumptions about Jeffrey’s viewpoint, and including my own bias – but I see it as an efficiency thing. I read it as though Jeffrey’s looking for the outliers in wealth creation.

      In all reality, there really isn’t that much difference between $8 million or $6 million at retirement. However, there is a big difference between $1-2 million at 30-40 years old and $8 million at 60. If you apply the instructions from the authors above, you may very well be in the $8 million category at 60 if you start really young. However, you’ll never be in the $1-2 million club in your 30s, and you certainly won’t ever be in the $50 million club, even at 99 years old.

      If you practice part of what they preach (frugality and basic money management) you’ll do quite well. If you practice what they preach in addition to what the authors actually DO, you have the opportunity for much larger success.

      • @JT_McGee Right, using your money efficiently is what they teach and is the basic building block of becoming more successful. You can’t build lasting wealth without knowing how to use money efficiently.

  7. AverageJoeMoney says:

    I actually like their advice better because they’re now wealthy. Is the goal of frugal to always live with less or is it to become wealthy yourself?

    I know that for some, it’s definitely to always live with less. It’s a financial peace. But for others, they can show those others what they did on the expense side to get there. I agree, that showing people how to do what they did on the entrepreneurial side would be equally as awesome.

  8. I’ve never been particularly frugal so the advice-following part doesn’t really apply to me. And I totally agree that nobody who is rich and successful got that way by clipping coupons or making their own shampoo. That doesn’t mean the advice isn’t worth following, though. I don’t need to save 50 cents on a bag of Doritos, but I recognize that some people do. And if somebody can help them do that, they are doing a real service to society.

    But I think the advice these guys give now that they’re rich is even MORE useful, because it gives a blueprint for getting out of debt and building something valuable. People need motivation and inspiration even more than they need that free extra roll of toilet paper.

    • @KyleAAA Great point, Kyle. I wish each of them would write more about their businesses than they do, but maybe that’s not realistic or possible for them. I’m not sure how many readers actually knew that these blogs had been sold ( I definitely wasn’t aware that GRS was sold in 2009 until I heard about it last year).

  9. financiallyc says:

    Good argument Jeffrey. I don’t have any issus with PF bloggers in general that put forward smart ideas. Blogs are businsses; their creators produce content that must appeal to an audience for them to be viable. If we think of the blog as a product then it’s all about marketing. I don’t respect people that misrepresent themselves but a blog can represent a fraction of the authors value set and be a valuable resource. I’m with you, I don’t follow any one persons advice 100% of the time either.

    • @financiallyc Thanks, Hunter. I hope I was as clear as possible by saying that I deeply respect these bloggers and am not criticizing them in any way with this post. This post is merely to point out to people that they need to consider their finances beyond what they read in these frugal living blogs.

  10. I think following their advice is valid. They haven’t always been rich and at least JD is still trying to live on the frugal. I’d rather follow the advice of a successful entrepreneur than not.

  11. I agree with your points on the business structure side. I’m just guessing, but I bet a lot of readers don’t know much about the business backgrounds of these blogs nor do they think about that. Of course there will always be visitors that only read a few posts on these sites, so it’s even less likely they know the background story.

  12. Often I’ll just take some tips from guys like these. It’s a bit like The 4hr Work Week, does he really work 4hrs a week, I doubt it. But in among the fluff there were some interesting takeaways.

  13. ontargetcoach says:

    I find it interesting that many of the commenters (including myself) are trying to achieve some level of success of the above mentioned in the articles. Should we study and imitate the successful? Yes, that’s why we read biographies isn’t it? I will continue to follow the sound financial principals of the above, while also living in my strengths and following my passions.

  14. Great post and very true. The frugality advice is just step one. I think these blogs are great places to start for learning about money, but the authors have also become wealthy by building a personal brand and a business. Since many bloggers are trying to emulate that, they will have to look beyond the frugality blogs. But learning the principles from the blogs above is never a bad thing (it’s helped me a lot).

  15. prairieecothrif says:

    I think their advice is still valid regardless of their wealth now. In fact, it shows that you can reach wealth by following their advice. Sure you may not be able to sell your site for millions but you will have gained in the knowledge you have learned. This knowledge is what makes you rich.

  16. I look at it from this perspective – whatever their watershed moment was when they decided to get real and write about their efforts, they did something right. I think people recognize when someone is full of crap – these guys write about what worked for them, and they happened to be in the right place at the right time. They’re authentic. You are “getting them, but exponentially” when they write – the fact that they are able to write their passion lets them act more like ‘themselves’ than if they were doing something else for a living. I seriously think that Trent Hamm is making just as much toothpaste now that he has enough money to buy a Crest factory.

    It’s hard to stay authentic when you find success. Look at music – we have a term we like to throw around, “selling out”. Once a band or a performer goes corporate they lose a lot of the authenticity which drew fans to their first two albums. You see it all the time – a massive debut album, an improvement (usually reviewers term it maturity) in a second album (expanding on the themes of the first), then a lax effort on the third run. It’s hard to write about a hard life when you’ve already made it big. Just look at the number of stars who burn out once they reach the limelight.. and that doesn’t just apply to singers.

    Luck is merely the combination of preparation and opportunity. I don’t begrudge them their success, even if they (or their assistants) can buy laundry detergent from the store.

    • @PKamp3 Great points, PK. I don’t think they “sold out” and I don’t begrudge them, either. I would’ve done the same thing in their position. Plus, I think these writers that sold their blogs got the best of both worlds: they made a ton of money AND they can keep writing.

  17. It’s hard to talk about debt reduction and frugality once you become a multi-millionaire. Hence, the solution is to just hire staff writers and fade away.

    Your $1 million estimate for GRS is way short. I would guesstimate closer to $5-8 million, but that’s just my guess. Sam

    • @Yakezie Sam, I don’t completely blame JD for fading away. I’m glad he didn’t get burned out to the point that GRS doesn’t exist. To his credit, he has stuck around the whole time, and he even said that he plans to become more involved this year.

      Just to clarify, I didn’t estimate the sale of GRS for $1 million. I merely said “more than $1 million” to point out the magnitude of the sale even though we don’t know the exact amount.

  18. I agree, it definitely depends on the reader’s abilities. However, if you want to be rich, I think you’re much better off following Warren Buffett’s advice and path in life than following what Trent writes about.

  19. Hi Jeff,

    Based upon my understanding of what the guys you mention teach, very little of their advice is applicable to entrepreneurs. If you want to be successful you have to take calculated risks, and the “get rich slowly” advice is geared towards risk-aversion.

    Cheers,

    Tom

  20. Leah, perhaps you’re interpreting this post different than I intended, but no where do I say that their advice is invalid in any way. I do not believe that, either, as I think a lot of their advice is great.

    My point is merely that each of them spend the vast majority of their time talking about building wealth in ways different from the way each of them earned most of their fortunes.

    Personally, I don’t read the Mint.com blog because I prefer to hear about someone’s personal story like JD’s. Posts by JD on GRS are more helpful and interesting to me than are posts like “Top 10 ways to save on Valentine’s Day” that appear on some of these multi-author blogs like Mint.

    Yes, I do think the wealth and success of the person writing does have an affect on what I get out of their service or advice. If they aren’t successful themselves, it’s going to be harder for me to give them credibility. It all depends on the context, of course, but if someone on Mint is writing about “The top ways to become a millionaire by age 30,” better have done it for me to want to listen.

  21. SSmartFinance says:

    Jeff,

    In capitalist society, everyone can prosper. What JD or Trent has done is no different than several hotels that I’ve sold and made good money. I am Mechanical Engineer. So, don’t underestimate power of mind when it comes to business acumen engineers have. My mantra in life is not to do anything with objective of making money. Instead, love what you do and money will follow.

    In fact, using these statistics to get motivated to be as good as JD or Trent.

  22. The way I see it these guys found a great niche and capitalised on it. Isn’t this what most bloggers are doing? If the blog becomes successful then you reap the rewards.

  23. The trick is to watch and do what the successful people do, not what they say they do! I fully agree with you that you will NEVER get wealthy from saving money on washing detergent etc. The main focus should be on MAKING money, not saving it.

  24. Iam1percentblog says:

    I agree with you! You don’t become a millionaire from making coffee at home or clipping coupons. The tips I offer on my blog are for people who want to 1) grow their assets and 2) grow their careers. The biggest decision one will take is picking their college major. If college is not in the cards, entrepaneurship is the other avenue to becoming a millionaire.

    My wife and I chose careers that paid well and that we enjoy. The next step is to live within your means. Next, would be to invest the difference in a mix of assets (stocks, bonds, real estate, commodities). Lastly, you have to protect your assets through the right insurance vehicles. After all that is in place, there is not much to worry about….

    • @Iam1percentblog Sounds like you have much more of this figured out than most. I certainly think it’s great if you can find a career that you enjoy and that pays well. I’m not sure that’s possible for everyone, but there are different routes for everyone to go, too.

  25. Afford-Anything.com says:

    Wow, I can’t wait to have a site that’s valued at more than one million dollars. One day ….

  26. Philip Taylor says:

    I knew once I saw that headline you’d been reading MJ. I thought the same thing when I saw GRS sold. Pure irony that J.D. and Trent got rich “quickly.” To be fair, and you are for the most part in your piece, both of those sites preach building income as a way to improve your finances quicker. Also, I think the get rich slow advice is obviously sound. Not many people can get rich quickly. I think the answer is that people should be living to get rich slowly, and working on the side to make it quickly. Those principles are what will allow us to have a stable retirement (super important), but they will also help to keep us rich if we do hit it big (i.e. a fool and his money…). Good post that needed to be written.

    • @Philip Taylor “I think the answer is that people should be living to get rich slowly, and working on the side to make it quickly” I like that idea, Philip, and I hope that more people work towards that. Thanks for the comment and for stopping by!

  27. I think it comes down to not only working ‘harder’ , but working ‘smarter’ as well. A barber working his butt off and a pro ballplayer working his butt off are going to make radically different incomes. Its not just how much you do, but what you do that matters.

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  29. I agree there is not a one step system to become rich especially as you get older, there is making the effort to create wealth which is actually changing your life style and through those changes you will accumulate wealth gradually.

  30. I’m curious about something. It doesn’t look like The Simple Dollar does much to monetize the blog — at least not from what I’ve seen recently. Sure, there are downloadable publications, but not much else. Was it different before the sale? I wonder how the current owner is getting a return on its investment? Are the pdf books that profitable?

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