Throughout my journey, I’ve had a lot of people ask me how I’ve made it here – financially – to creating six-figures a month in revenue for EntrepreneurOnFire. I try to explain that my journey to financial freedom didn’t start when I had my AH-HA moment, or right when I launched the podcast, or even at the moment when I brought on sponsors…
Be Your Own CFO: Take Control of Your Personal Finances
How I’ve made it here – financially – is something I’ve been working on creating for many, many years. As J.D. Roth would say, I’ve taken on the role of being the “Chief Financial Officer of my own life”, which has allowed me to take big risks others aren’t able to in order to create big rewards.
But John, how did you manage to pay for college at a private institution and come out on the other end debt-free?
I went to Providence College, a College that charges upwards of $30,000 a year for tuition alone, on an ROTC Scholarship. My ROTC Scholarship covered my entire education and housing bill for the full four years.
Okay, then how were you able to spend four months living in Guatemala, and shortly thereafter, another four months traveling in India?
Well, the day I graduated from Providence College, I was commissioned as an Officer in the U.S. Army. While on my 13-month tour of duty in Iraq, I was paid very well and spent close to nothing (and even closer to nothing at all). In addition, I spent the next two years of my active duty back in the States saving a significant amount more money than I was spending.
I’ll note here, these circumstances didn’t just happen to me – I made a choice to live my life as the master of own fate.
Was it tough? Of course it was. I was working at John Hancock when the financial crisis hit in 2008. But you see, I’ve always had a plan in place, and that plan has always included me being responsible for creating the financial freedom I desire. I know that no one else is going to create it for me.
What did my plan look like?
Well, a big part of my plan was simply living within my means. You might even call me frugal.
It would have been very easy for me to come back from Iraq with $100,000 in savings and buy a brand new car, or build a huge custom house, or buy clothes and other “things” that made me look good. But in my mind, these were all things that I didn’t need. None of them aligned with what I wanted my life – or my bank account – to look like.
I knew from a young age that in order to create the financial freedom I truly desired, I would have to fully accept the role and responsibilities that come with being in control of my spending, my savings, and my budget.
But not everyone knows these principles from a young age. Sometimes people are blinded by their own surroundings. Their friends are buying lots of nice things, so they need to, too. Their co-workers all drive nice cars, and so they have to, too. Maybe buying things is your go-to stress reliever? But it doesn’t have to be if you decide so.
I know that creating a financial plan, and eventually, financial freedom for yourself doesn’t happen overnight, but I do know what it feels like to have both.
Because everyone has the right to choose financial freedom for themselves – regardless of whether they’re currently in debt. struggling to make ends meet, or simply don’t know how to manage their finances – I want to share an excerpt from J.D. Roth’s new guide, “Be Your Own CFO”.
In it, he talks about being $35k in debt and how he got himself out of it, along with the importance of mindset: accepting responsibility for your circumstances. He also shares his financial philosophy throughout. “You can have the financial freedom you desire – if you’re willing to accept the role and responsibilities that arise with becoming CFO of your life.” – J.D. Roth
This excerpt is from “Be Your Own CFO”, the 120-page guide that anchors J.D. Roth’s newest course, Get Rich Slowly.
My name is J.D. Roth. For a decade, I’ve been reading and writing about personal finance. Today I’m debt-free and have a million dollars in the bank, but ten years ago, my financial life was a disaster.
In 2004, I had over $35,000 in consumer debt – credit-card balances, personal loans, a car payment – and was living paycheck to paycheck on a salary of $50,000 per year. I spent every penny I earned and had no savings. Naturally, my then-wife and I decided to buy a new house. And that was the final straw.
I was flooded with financial obligations. I felt like I was drowning. All I wanted to do was bury my head in the sand, to play computer games and read comic books. I wanted to give up. But instead – for reasons that remain a mystery to me – I stopped shirking responsibility, buckled down, and got to work.
Using skills I’d learned as a small-business owner, I began to methodically eliminate my debt.
Like Father, Like Son
You see, my father was a serial entrepreneur: He was always starting businesses.
Most failed, but some were wildly successful.
As a boy, I imitated him by starting kid-sized businesses of my own. My ventures were much smaller than Dad’s, but they had similar ups and downs. The lemonade stand by the side of the road failed miserably, but I made a tidy profit re-selling used books and baseball cards to my friends. I made even more money by marketing a homemade comic book at the school store.
After college, I took a job as salesman for the family box-making business. When Dad died in 1995, my brothers and I were forced to learn quickly how to manage every aspect of the company, from payroll to purchasing, from marketing to product design. Then, in 1998, I started a computer-consulting company to make money in my spare time.
As both businesses grew, I noticed something odd. My personal finances were a mess – I spent compulsively and was deep in debt – but when I managed money for the companies, I had a completely different mindset. I was careful, almost parsimonious. This was partly to appease the IRS, but it was also a point of pride. Maybe I couldn’t take care of my personal finances, but I was damn well going to run a ship-tight business!
I turned business management into a game. I imagined I was the Chief Financial Officer of a Fortune 500 firm. Even when my consulting company was making less than $5,000 per year, I challenged myself to make the best possible decisions. It worked. Even as my personal finances remained mired in muck, both businesses grew and prospered.
Becoming CFO of JD, Inc.
One night in October 2004, after I’d bounced yet another check and missed yet another payment, I reached rock bottom.
I began to wonder why I didn’t use my entrepreneurial skills at home. What if I made decisions in my personal life as if I were making them for a business? What if I installed myself as CFO of JD, Inc? How would I cut costs? How would I increase revenue? Where were the best places for me to direct my cash flow?
That night, I drafted a three-year plan to get out of debt. According to my calculations, I could pay off everything I owed by December 2007 – if I managed my money wisely. I decided to give it a shot.
I cut back on spending. I boosted my income. As JD, Inc became profitable and my cash flow improved, I paid down debt. I tracked my spending and created monthly reports to document my progress.
The results were remarkable.
In less than a year, I had set aside a $5,000 emergency fund with my wife and had increased my cash flow by $750 per month. I plowed that profit into debt-reduction. I continued to manage my life as a business, and in December 2007 – right on schedule! – I became debt-free for the first time in my adult life.
Today, nearly a decade later, I still manage my life as a business. Because I’m human, I occasionally make mistakes – occasionally I make dumb mistakes (I recently missed a credit-card payment!) – and some years are more profitable than others. Through it all, I do my best to treat my money as if it belonged to a corporation and not to me. I believe my most important work is as CFO of JD, Inc.
And I believe that your most important work is as CFO of You, Inc.
This is just one small piece of the year-long Get Rich Slowly course, which also includes 18 interviews with financial experts and a 120-page guide to mastering your money so that you can retire early, send your kids to college, or travel the world.
J.D. Roth on The Role of CFO
Contrary to what you might believe, CFOs are more than just bespectacled bean counters who carry calculators and spend their days noodling with numbers. The numbers are important, sure, but in the modern business world, the Chief Financial Officer often directs a company’s day-to-day operations, channeling financial resources to achieve growth and to meet business goals.
“Be Your Own CFO”, which you’ve just read an excerpt from above, is based on my belief that nobody cares more about your money than you do, and on the idea that people might be more successful managing their personal finances if they acted as if they were running a business.
But how exactly does one go about doing this?
“Be Your Own CFO” begins with a brief discussion of the role and mindset of the CFO. In it, I help you craft a personal mission statement, set goals, and develop an action plan to guide your decisions. When you know your destination, it’s easier to stay on course.
Next, I teach you how to analyze your past financial performance. You’ll discover tools to track your spending and get a crash course in creating basic financial statements. You’ll also gather other info about your history with money, such as your credit report and credit score.
Much of the guide is focused on managing your current financial affairs. I show you how to get organized, find the best banking accounts, and set up systems to handle your finances automatically. Most importantly, I tell you how to increase profits so that you have enough money to do the things you want – today and tomorrow.
Lastly, I help you set priorities for your financial future. You’ll build a budget and forecast cash flow. You’ll develop systems to manage risk. You’ll create a plan to achieve short-term goals, such as debt elimination and emergency savings, and you’ll learn how to use targeted saving to tackle long-term goals, as well.
Whether you hope to escape the chains of debt, to save for a one-year sabbatical, or to retire within a decade, you can have the financial freedom you desire – if you’re willing to accept the role and responsibilities as CFO of your life. As Chief Financial Officer, your motto must be, “The buck stops here!”
You can tell from my story and from J.D.’s story that financial freedom is something you choose – not something that happens to you. Being focused and setting priorities so that you, too, can achieve financial freedom is the only way it’s going to happen. YOU have to take control.
Are you ready to become the CFO of your own life?
J.D Roth’s year-long Get Rich Slowly course includes 18 interviews with financial experts and a 120-page guide to mastering your money so that you can retire early, send your kids to college, or travel the world.