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I Am John Schmoll, Founder Of Frugal Rules, And This Is How I Work

John Schmoll

My grandparents were storytellers. I could sit down with any of them and become engrossed in their words. I loved their insight, experience, and thoughtfulness. That love of learning about others continues, and now I’ve been spending some time interviewing the best of the personal finance community (like the founders of Budgets Are Sexy, The Broke And Beautiful Life, and Modest Money).

Surprisingly, it’s a tight-knit group of writers and financial experts. Some are certified financial planners, while others (like me) are experts in another field. Today, I have the privilege of interviewing one of the top financial bloggers, John Schmoll from Frugal Rules. John graduated with upwards of $20,000 in credit card debt after college. That’s when he turned it all around, got an MBA, and worked in the financial services industry. I’m lucky to be able to share his thoughts and insights with you today!

What inspired you to begin FrugalRules.com?

That’s a good question Sam. It really all started as I was looking for a way to be able to talk with others about money. I had just left my job to help my wife run our business and was missing talking about money all day with others. I had been in the financial services industry for roughly 15 years, in various capacities. That’s how it was born. From there, I just started looking for a good domain name and shortly after Frugal Rules was born.

How did people (friends, family, etc.) react when you first started?

Honestly, most of my family thought it was somewhat comical. I have absolutely no technical experience to speak of and have never done anything online in terms of business. They thought I’d either give up due to lack of time or get frustrated with it and throw in the towel. I just took it as a challenge to show that I could do it. 🙂

What was your experience with design, code, web work prior to starting your site?

Frugal Rule Website Screenshot — *A screenshot of FrugalRules.com*

Lol, absolutely zilch. My wife had a bit of design knowledge and that’s stretching it quite a bit. Because of that it was a bit of a challenge designing the site, but I was happy to just get something that worked. This is something I want and need to change going forward though…I just need to get started on it. 😉

What advice would you give to those thinking about starting their own site?

Find what you’re passionate about and go after that so you can establish your “voice.” You could write about many a number of things, but you want it to be something you care about otherwise it’s going to be a challenge. Beyond that, be prepared for some serious time and effort to make a go of it. The writing is the easy part, it’s the technical things, networking, and building relationships that take time. There are many bloggers out there and in order to make some decent headway you need to be able to make connections and get your name out there. The great thing is that many other PF bloggers out there are nice people and more than willing to help. Just remember that it’s a give and take kind of relationship though and really you should be more on the giving end of things than anything else.

Other than that, I say be yourself. Readers can tell when you’re being genuine and if you’re being yourself it’ll likely come out in your writing. Lastly, don’t get into blogging because of the money. Yes, you can make money blogging, but it takes a lot of time to get to that level and many that start out simply to make money most often give up out of frustration.

How do you make money from your site?

I make money from the site in a number of ways: affiliate advertising, freelance writing, and blog writing through our business. Now that I have a blog, we’re able to pitch blog writing to a number of our clients and we get to sign them on for that all because of Frugal Rules.

I also just started a new site recently with my friend Grayson (Debt Roundup), Sprout Wealth, where we plan to do some of the same things. Other than that, I’m looking to buy other websites to add to what I’m already doing.

What do you think you’ve learned from your readers and fans?

I’ve learned a ton from the community over at Frugal Rules, but it essentially comes down to seeing that we all come from different walks of life and that will color our view of money. I had seen that on one level in my last corporate job, but that was strictly with investments. I know it may sound cheesy, but I’ve seen first hand how there are many shades of gray when it comes to finances. There are a few things that can go across the board, but beyond that there are many things which can be done differently.

How can somebody in lower incomes best overcome financial hurdles and prosper?

Start tracking everything you spend. It sucks and is contrary to what we hear preached to us in our culture, but watch how you’re spending your money. Do that for a few months and see what mistakes you’re making and commit to changing. That could also mean starting to budget and, if so, find something that works for you and run with it. Beyond that, look for ways to can create additional sources of income through things like side gigs. Pair that cash with your lower expenses and you’ll greatly increase your chances of climbing out of that.

Who are your financial role models?

That’s a tough one. I don’t know that there is really one or two people out there that stick out to me. What really inspires me is seeing people who make a modest income that are able to really put themselves ahead financially. I got to see that a number of times in my past and was always challenged to see people who made very little, relatively speaking, that were rocking it with their saving and investing. That is what I aspire to do no matter how much we’re bringing in each year.

What personal finance sites do you read?

There are so many good sites out there that it’s really difficult to narrow it down to a small selection of blogs that I visit. My taste is pretty eclectic, but here are a few of the ones I go to on a regular basis:

Club Thrifty
Budgets Are Sexy
The Heavy Purse

And a few others that I’ve really been digging lately are:

Living Rich Cheaply
Broke Millennial

What else would you care to share with the readers of Frugaling?

First off, I’d like to thank you Sam for asking me to do this interview! In terms of your readers, my encouragement is to remember that finances are personal. We all have different goals in life and that is going to mean different things for different people. Just remember to make sure you’re doing all you can to make your money work for you as opposed to being enslaved to it.

Want to read more interviews like this one? Read the entire interview series here!

The 5 Minute Guide To Reading Credit Card Terms And Conditions

By Frugaling 7 Comments

Flickr Photo Creative Commons — *Photo: Philip Taylor PT*

What Are Terms And Conditions?

I applied for my first credit card in 2007. On that fateful day, I was approved for a cash back card, a small signup bonus, and given a starting credit score – all with no annual fee. The glory days were here! I was finally an adult, with a credit card.

But it wasn’t until I received the credit card in the mail that I finally spent some time reviewing all the fine print – the terms and conditions. Printed on fine, tissue-like paper was a series of rules – all in small, black font – that extolled the consequences of misuse and the agreements that I must follow. What had I signed up for?!

Now, as a frugal, thrifty, and penny-pinching maverick I’m here to tell you a simple truth: You need to read the terms and conditions before you signup for a credit card. Isn’t that simple? When you signup for a credit card, you’re entering a formal contract with a bank to repay all debts – no matter what. As a member of this contract, it’s important to spend some time reviewing these documents to make sure it’s a fair deal.

The Schumer Box

In 1988, Senator Charles Schumer from New York introduced the concept of a box (“The Schumer Box“) that would graphically outline the details of credit card agreements and accompanying materials. The Senator’s idea became a law and took effect in 1989. Essentially, the Senator was pioneering what education and literacy experts were arguing for: An easier way to read financial documents.

Included in the Schumer Box:

Any annual fees
Annual percentage rate (APR)
Other APRs (i.e., balance transfers, cash advances, default APRs)
Grace period
Other transactions fees

Jargon and complicated contract law had largely prevented people without excessive degrees – or letters behind their name – from understanding what the heck was being said. The Schumer Box was an easy interface for everyday people, and it increased comprehension across socio-economic divides.

But in 2007, as I applied for my first credit card, the Schumer Box didn’t help me. I wasn’t paying attention, and was just too “grateful” to realize I need to critically evaluate the documents in front of me. These days it’s easier to find out more information online. For example, you can read a review of the Chase Sapphire Reserved card and get some critical details at a glance. This is key: Better to prepare than react when it comes to finances and debt. Actually, it’s better to prepare in every facet of life – finances should be no different.

The Credit Card Act Of 2009

In 2009, the Credit Card Act was signed into law. The goal of the legislation was to

“…establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.”

With the lofty desire to enhance the transparency of credit card terms and conditions, the CARD act encouraged companies to create shorter documents that were easier than ever to understand. A variety of stipulations such as overlimit fees and distress-inducing repricing actions were nearly eliminated. These fees normally hit low-income and lower-middle-class households. They were being nickel and dimed by a variety of these increases and fees – with a seemingly unregulated market for swift changes that targeted consumers trying to pay off credit card debt.

Isn’t it ironic that a law aiming to increase transparency used direct financial jargon to explain the purpose? Nonetheless, “open end consumer credit” is a credit card and/or revolving line of credit that is issued by a bank to a consumer (you). The Act told credit card issuers to find ways to explain their products, terms, and liabilities in plain English. But like so much legislation in Congress, it didn’t have teeth.

“One of the expressed goals of the CARD Act was to improve transparency in the credit card market, but the Act did not explicitly mandate any changes in the length and form of credit card agreements.”

Despite the cautious recommendation to streamline and enhance comprehension, credit card companies actually conformed to these new standards and tended to aid in the presentation of credit card terms and conditions. Between 2008 and 2012, the average word count of agreements fell 24.4% (see picture below).

*Average Word Count Decreased Between 2008 To 2012 For Terms And Conditions*

Flesch-Kincaid Reading Analysis of Credit Card Terms and Conditions

Along with shorter agreements, the banks issued terms and conditions that were easier to read. In 1948, Rudolf Flesch introduced a simple mathematical formula that suggested a grade level equivalent for the amount of text, sentence structure, and word choice. Using this method of analysis, the credit card companies have lowered the average reading level from 11.5 to 9.8 from 2008 to 2012. By doing so, the banks made agreements more accessible and easier to understand; frankly, they became fairer instruments, as both parties could better understand what they were agreeing to.

What Does This All Mean For You?

Next time you’re thinking about signing up for an awesome rewards credit card, think about the terms and conditions you’re ultimately agreeing to. Scientifically speaking, it’s easier than ever to understand and comprehend what a credit issuer is offering. By taking some time to critically evaluate what’s being shared, you can save yourself lots of heartache down the road. Use the Schumer Box to check for ancillary fees and exorbitant annual percentage. Use the CARD Act’s regulations to read carefully through the agreement and don’t hesitate to ask the issuer questions before you sign the dotted line.

Do you read the terms and conditions before you signup for a new credit card?

Cut Costs On Your Daily Commute With These Gas Savings

By Frugaling 9 Comments

Gas Savings Commute Russia Gif — *At least your commute isn’t this bad*

This is a contribution from Syed of The Broke Professional! He runs an up and coming personal finance site for working professionals. On top of that, he’s a practicing doctor. Thanks for the article, Syed!

Cars give you the freedom to go wherever you want – anytime you want. It’s a climate-controlled environment, built for listening to music and rocking out. But, convenience has a cost – cars are no exception. Car insurance, maintenance, depreciation, and gas can quickly devour a healthy budget. Luckily, there are some easy ways to save some money when filling up your tank.

Drive slower

As with most things in life, the middle ground is usually the right way to go – conserving gas is no exception. Most modern car engines work most efficiently when cruising at 55 mph. Going any faster will force the car to burn off more gas than it needs to, which translates to a lower overall gas mileage.

Plan ahead to find a good price

Use websites such as gasbuddy.com and/or billshrink.com to find and get alerted to the best gas prices in your area. You can also simply take notice of cheap stations when driving around and use them when you are in the area. But beware not to drive too far out of the way just to save a couple of cents off a gallon as the time and gas spent going to the station can negate your per gallon savings.

Consider a rewards credit card

The best way to use reward credit cards is to use it on stuff you already buy. Gas is a must. By using a rewards card, you’ll receive cash back and points on purchases you’d be making either way. Likewise, a lot of cash back cards offer rotating, 5% categories on gas purchases throughout the year. If you use rewards cards wisely, you should always be saving on gas purchases.

Check your tires

Tire pressure should be checked regularly, as it can fluctuate with outside temperature. It’s important to make sure your tires are filled to their optimum pressure not only for the longevity of the tire but also for your gas mileage. According to the US Department of Transportation, under-inflated tires waste about 5 million gallons of fuel every day. A poorly inflated tire has to work harder to produce the same speed as an optimum inflated tire, which burns more gas. Tire pressure can be checked by a simple pressure gauge which can be found at any auto parts store or at most gas stations.

Replace your air filter

The air filter is responsible for keeping out useless stuff from the environment such as dirt and bugs. These things can really hurt engine performance. If the air filter is in need of being replaced, that can affect gas mileage because the engine is not working as efficiently as it should. According to a survey by Advanced Auto Parts, a dirty air filter can reduce gas mileage by as much as 20%. Most filters should be replaced every 5,000 miles, but your cars manual should have the exact information.

Fill up late

It’s interesting to see when people start feeling uneasy about the level of gas left in their tank. Some feel the need to fill up when the empty light is on, while others like to fill up if half a tank is gone. For gas mileage purposes, it is better to fill up as late as you can, because having less gas will make your car lighter and more fuel efficient. Just don’t wait until you are stranded on the side of the road!

Ferrari Supercars Gas Savings Tips — *Photo: Axion23*

Consider a fuel efficient car or a hybrid

Many people drive cars that just are not very fuel efficient. Consider trading in for a fuel efficient vehicle and/or hybrid. ConsumerReports.com has comprehensive lists of which cars have the best mileage.

Drive less

Many people can’t think of another way to get to work or school other than driving. While not practical for everyone, some people can use services like public transportation, carpooling, biking, or simply walking to get to their destination. Not using your car helps the environment and your health.

Most people spend hundreds of dollars a month on gas. Enlist these tips for quick, easy gas savings! What do you do to save on gas?

Credit Card Usage Drops Among College Students

By Frugaling 2 Comments

Surprisingly, credit card usage dropped from 42 to 35 percent among college students from 2010 to 2012. While this may signal more discerning students for credit card offers and tightening budgets, the reduction may have resulted from the CARD Act’s provisions regarding the application of new credit.

Before 2009, anyone over 18 could apply for a new credit card with little concern. Applicants were not usually asked to verify their current income, either. This led to a tragic susceptibility for wild spending and damaged credit. Nowadays, 18 to 21-year-olds must apply for credit with a verified income or co-signed with a parent.

When I was 19, I applied for my first credit card. I spent too much, churned cards, and wasted my time researching far too much about them. But, in establishing good credit, it has been a success. Sitting at around 767, I am in the highest bracket for lending. While my goal is to reign in my debt for all accounts, the strong credit score has eased my ability to receive credit cards, car loans, and student loans. In the end, I wonder how credit scores will be affected by this swing away from credit cards and reduced accessibility 18-21.

Maybe this reduction will prevent early credit card debt and uncontrolled spending. Maybe it will reduce credit scores and make loans more expensive and inaccessible down the road. Either way, we may be seeing a changing demographic for who traditionally uses credit cards.

I Am John Schmoll, Founder Of Frugal Rules, And This Is How I Work

What inspired you to begin FrugalRules.com?

How did people (friends, family, etc.) react when you first started?

What was your experience with design, code, web work prior to starting your site?