Personal Finance Interview with Jeremy Biberdorf on Living Modestly for Mint.com
While he might not be a financial expert, Jeremy Biberdorf is passionate about helping others learn from the poor financial decisions he's learned over the years.
The website marketer started his personal finance blog Modest Money in 2012 as sort of a self-improvement venture. He not only wanted to get back on track with his own spending, but also help steer other young people in the right direction.
And he grew up with a great finance teacher: his mom.
"I probably have a deeper appreciation for personal finance as I grew up fairly poor, but witnessed my mom turn our family's finances around as a single mother," he says. "This showed me that with the right mindset almost anyone can achieve financial success."
We recently caught up with Jeremy who told us all about his blog and how it's saved him from making big money blunders. Here he shares why living modestly has helped him feel rich.
Can you tell us about Modest Money? When and why did you start your site?
I officially launched Modest Money in January 2012. Around that time I was just getting out of a long-term relationship. I decided that it was the perfect time to turn my life around and spend time improving myself. One specific area that I knew needed major improvement was my finances. It was clear that I needed to get saving more for retirement and stop blowing so much money.
So I decided that I would start a finance blog to help bring in some extra side income. As I had previous experience with running financial websites, I was well aware of how profitable the niche was. What I didn't know at the time was just how beneficial running a financial blog would be. Suddenly, I was immersed in an incredible community where I was learning so much about finance on a daily basis. Plus, I was getting to know so many great bloggers who were very supportive.
With Modest Money I wanted to create a solid resource for a wide range of financial topics. Although I started as the only writer, I envisioned a knowledgeable collaboration of writers working together to help educate people about finances. Since we generally don't learn much about money management in school, I figured people could benefit from another source for this kind of information.
Who should be reading it?
While I try to cover topics that appeal to all kinds of audiences, my main focus is people who are trying to improve their finances. This is mostly people who are in their 20s or 30s who have previously neglected their finances or might have even made mistakes with managing their money. I knew people like that could really benefit by reading about my own mistakes and successes.
How has blogging about finance helped you get a handle on your finances?
Honestly it has helped me more than anything in my life. Early on I was reading dozens of personal finance blogs every single day. I was a sponge absorbing a massive amount of advice and lessons. All of it was on a personal level that was very easy to relate to and was not dry reading straight out of a textbook. This advice was coming from people from people with varying backgrounds.
When I would cover topics on my own blog, I would often need to do some research to write a more informed post. Then readers and fellow bloggers would leave comments further expanding my knowledge on the subject. So not only was I educating myself, I also had countless teachers.
By writing about my finances on a personal level, I found a certain level of accountability too. If I wrote about mistakes, I was acknowledging those mistakes and ensuring a lesson was learned. If I wrote about things I needed to improve upon, I would be accountable to follow through for when I published related posts that mentioned my progress.
And the supportive blogging community has been awesome. Whenever I was unsure about something, bloggers and readers would help guide me in the right direction. They would support my decisions and cheer me on. When necessary they argued anything that they didn't agree with.
You said in starting the blog that you wanted to rediscover the joys of living modestly; so what do you think are the upsides of modest living?
Really there are all kinds of benefits to living modestly. When you stop relying on money to make you happy, you take away a lot of the stress associated with money and chasing material possessions. Once you adopt that mindset, you find that you start having extra money to put towards retirement, to spoil loved ones or to take the occasional vacation. In other words, your money can go to things that are more meaningful.
People who rely on money for happiness often don't appreciate other things in life as much. They sometimes get so caught up chasing more money that they lose sight of what's truly important. They say the best things in life are free, but the money obsessed manage to convince themselves that luxuries are even better. Things that cost less become noticeably inferior and less enjoyable.
Also, you will end up dealing with debt less often resulting in less money wasted on lenders. Your overall financial picture becomes brighter when you live modestly.
Do you think there are downsides to modest living? If so, what are they?
Just like how people can get obsessed about accumulating more money, getting obsessed about spending less can also affect your happiness negatively. If you let it go too far, you end up getting stressed when things cost too much. You might start feeling too guilty to enjoy all the extra money that you're saving.
The other potential downside that comes to mind is how this mindset will affect your social and family life. Becoming too strict with modesty could prevent you from spending as much time with friends and family. Unless they are taking up that lifestyle too, they will want to keep blowing money. That could include expensive activities that you might want to avoid. Extreme modesty could even affect your view of people who don't live so modestly. Think of emotions like jealousy or bitterness and on the flipside, a feeling of superiority or arrogance.
The trick is to balance your financial modesty to the point where you can sometimes let loose without stressing out. Being too extreme in either direction can cause various problems.
What do you think are some misconceptions about living modestly and/or within your means?
I guess the biggest misconception is that people living modestly are being too cheap to really enjoy life. While that sometimes is the case, the reality is that most of those people have just realized what priorities are really important.
An outsider might think that modesty means major sacrifices and a willingness to live a less satisfying life. That's all a matter of perspective of what makes you happy though.
It doesn't have to be a black and white life change. Simply finding ways to gradually integrate financial modesty into your life will help you with financial goals.
What financial mistake has taught you the biggest lesson?
The mistake that stands out the most to me is buying a brand new car that was really way out of my budget. Due to be overly optimistic about my side hustle, I thought I deserved to splurge. That purchase ended up handcuffing my finances for many years to come. Even now that the car is paid off, the higher insurance premiums are unnecessary. If I had instead bought a used car, it would've been paid off much quicker and I would've had more money in savings.
The mistake that is easier to overlook is how much I wasted on dining out and entertainment. I tell myself that I was paying for experiences, but really I don't remember much about all those "experiences." I was just dumping money down the drain every week. At the time I was just ignoring long-term finances and focusing on the present.
What are some of your favorite go-to methods for earning extra income?
Well considering that I do website marketing for a career, I think you can probably guess. Since 2004, I've been running my own websites as a side hustle. Traditionally, I would rely on affiliate income to make money from those sites, but I've since diversified with money from freelance marketing services, selling private advertising and brokering advertising for other blogs. In my case it really made sense to put to use my daytime job skills in my spare time.
When looking to earn side income you should focus on your strengths and interests. What works for others might not necessarily work as well for you. Spend some time researching what lines up with your skill set and you're bound to find something you can try pursuing.
What are your favorites go-to methods for curbing/trimming your spending?
As mentioned above, dining out was previously a weak spot for me. That definitely isn't the case anymore. I've managed to get in the habit of cooking the vast majority of meals at home, including cooking enough for lunch leftovers the next day. Combining that with smarter grocery shopping has drastically limited how much we spend on food.
Also my entertainment expenses have dropped a lot as I've cut back on drinking and some other expensive activities. For a budget hobby we've been getting into hiking. It's tough to get cheaper than a hobby that only requires a decent pair of hiking books.
Another thing I make a point of doing is charging as much of my spending as possible to a cash-back credit card. Then I pay that card off in full each month. It might not be much savings on a $5 purchase, but added up throughout the year, it's a decent savings with minimal effort. With a wedding and honeymoon coming up in the not too distant future, I will be switching over to an airline miles credit card instead.
Saving money usually isn't about cutting big chunks out of your budget. To make it sustainable long term, it's much easier to find ways to get small savings in many different areas. If you limit yourself too much, it may be tough to keep up that discipline.