At 27, Jason Fieber realized that he was worth less as an adult than he was at birth. Setting out to change that resulted in a whole host of life changes, which he documents on his blog, Dividend Mantra. Jason spoke with us about frugality, investing and saving money.
On your blog, you note, interestingly, that you were worth more as a baby than you were as an adult. What led to that insight?
I found myself unhappy with my life back in early 2010, at 27 years old. And though money cannot buy happiness, a lack of it meant I was unhappy. I had no options, freedom or flexibility. But I didn't really know how bad my situation was until I took a look at my net worth.
Net worth is simply your net financial position in life - how much you're worth, financially. You take all of your assets, deduct all of your liabilities, and what's left is your net worth. While I don't think net worth is the end-all, be-all to finances, it gives you an idea of where you stand. And I calculated my net worth to be -$19,000, as in negative nineteen thousand dollars. I was in the hole. And that meant that after being alive for 27 years, I had actually managed to put myself in a worse place than I was when I was born.
As babies, we're worth $0. We have no assets, no liabilities. We can't talk or walk. Yet, as a 27-year-old man who was fully capable of walking and talking, I was in worse financial condition than I was when I was three months old. That woke me up.
What surprised you when you first started on a frugal lifestyle?
I think what surprised me most about living frugally was that it wasn't all that hard. I figured it would right away be this miserable lifestyle where I wasn't able to do everything I wanted. But I quickly realized that what I wanted was time, freedom and flexibility - not a fancy car, big house or expensive visits to restaurants.
Sometimes, I think people get caught up in this rat race where they automatically assume that the amount of money they spend somehow corresponds to the amount of happiness they have. So you have everyone racing against each other to occupy the biggest house they possibly can, drive the nicest car in town and wear the nicest clothes. But that has nothing to do with happiness.
Living frugally allowed me to clear my mind and approach life from a different perspective. My point of view changed. It was no longer about spending money versus not spending money. It was about concentrating on what really made me happy. And I found that a lot of the stuff that makes me happy, like writing, reading, spending time with loved ones and exercising, is free or low-cost.
What do you wish you'd been taught about money, growing up?
I wish our education system concentrated more on money management. Even one course in high school would provide tremendous value, in my opinion.
I wish I had been exposed to basic budgeting, a quick course on the power of compound interest and maybe a book or two on financially successful people. I think it's cool that you're given exposure to Shakespeare. But what about a book on Warren Buffett? I think there's value there.
Do you feel there's still a taboo that surrounds talking about money?
I definitely think money is a very taboo subject here in America. And I'm not sure why that is. I think you probably have some insecurity there, and that's because a lot of people don't want to admit how bad they are at money management, or how in debt they really are. Ignorance is bliss, right?
However, I think people have to want to change. It goes back to Plato. People are stuck in the cave, and I think many people want to stay stuck in that cave, enjoying the puppet show on the wall. But there are resources out there for those that want to get out of that cave and step into the real world. I try to provide one of those resources in the form of motivation and inspiration as I march toward financial independence.
I think the only way you can really break through the taboo nature of money is to get more people comfortable with the topic. And that probably goes back to the previous answer. A little more education when people are young goes a long way. If money is talked about early on, it limits how uncomfortable people might be later on.
What's a challenge of the frugal lifestyle people don't expect?
That's actually an interesting subject. I would say, for me, the biggest challenge has been to to actually spend money at times. I see the power of savings, frugality and compound interest. So every dollar I spend is one less dollar I can invest and eventually turn into two or three dollars.
So I sometimes have difficulty with finding a proper balance between spending today and saving for tomorrow. Frugality has come quite easily to me, and perhaps too easy. So I suppose it can be a challenge to lighten up at times and spend money.
However, I would never recommend to spend money just to spend it. Every purchase I make has to have value for me. If I'm spending $50 on a crappy concert for a band I hate, I think that's just a waste. However, spending $50 on a great summertime baseball game with family and/or friends might be a lot of fun. So there's always a value proposition at play. And perhaps that's another difficulty: over-thinking expenses.
What are some trends in personal finance we should be keeping an eye on?
I see trends with people moving towards healthier eating, a more conscientious way of living with a focus on the environment and online shopping.
I also think more people are going to live in cities in the future. And there are going to be much more people alive in the world, as we continue to populate. So this puts a strain on resources. I think it's important to recognize that both on the macro level as you want to invest in companies that recognize these trends, but also on the micro level where you try to limit your own footprint, downsize and place a value on relationships and time over money.
One last trend that's a bit alarming is student loan debt. It's really limiting people. I've personally felt the ill effects myself, as one major reason I had a negative net worth early on was student loan debt. I'm not sure what's going to happen here, but it's easy to see that this trend is unsustainable. I think education could go a long way here as well, as I remember very little counseling on how exactly the loans I was taking out would affect the rest of my life. Although, with the way education costs are rising, a lot of people have no choice in regards to taking loans out to afford their degree.
So I think people have an important choice to make. Is the degree necessary to do what makes you happy? Should you start a business instead? Will your degree make economic sense? I think there's some personal responsibility there, as that philosophy degree or creative writing degree might not be worth the price tag. I'm not saying everyone should go to trade school and be a plumber, but I think people jump into college assuming that the degree will be worth whatever price tag is associated, and that's not always the case.