Welcome to episode #2 of “From $656k Debt to Financial Freedom” here with me, Jerry Banfield. I am currently $696k in debt and that includes my wife and I. This is my story and my journal, essentially, as I go through getting out of this debt.
My $656K Debt Story + Exit Strategy — Episode #2
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If you’re new to this, I recommend starting out with the pilot blog post: “35 with $484k in Debt and a Plan”.
Now, $484k is my debt. Then, I’ve started a journal entry, which is a live vlog called “$656k Debt to Financial Freedom”. It includes my wife’s debt and this is my journal of how we are getting out of this debt, and that I think it will be really helpful.
I like seeing when people relate to me and can say, “Oh, I understand because I’m in the same situation or I’ve been there.”
I’m doing these as live journal entries. That way, it keeps it as real as possible for you.
First, my debt story. How did I get into $656k in debt?
It all started with going to college. I had $0 debt when I was 18 years old and I borrowed student loans to pay for my college education at the University of South Carolina.
Then, I got in the habit of living in debt, instead of making my student loans payments a priority, I just made the minimum payments.
Whenever I was short on money, instead of cutting my expenses down, I would just take a credit card and figured I’d level up to a better paying job later.
What happened is that lifestyle has continued and now snowballed into $656k in debt. Even though I’ve made millions of dollars teaching online, even though I paid the debt down.
At one point, we just had $200k in debt.
What happened then?
We bought a house.
My business took a downturn. I started a new website and put a bunch of money into that, and then guess what?
Now, it’s at a record high of $656k and today, I’m committed to modifying my lifestyle and focusing on giving more value than ever in a way that is proven to earn me more income than ever.
The amazing thing is I have such strong faith today that this debt will be zero within a relatively short amount of time and doing this vlog is an essential part of that.
In fact, I’m actually enjoying being in this situation because it allows me to share my story in a way that I think will be really helpful for you if you’re in debt, especially if things look hopeless.
Objectively, my situation does look hopeless to a lot of people i.e. $656K in debt. My wife and I have not had a real job in a long time. We both work online at home and we have 2 kids and a mortgage.
The minimum payments are $10,000 a month when you include our health insurance and things like that and the total revenue for my business has only been $7,000 this year or so. I’ve spent much more than that.
If you look at it objectively, you’d think there’s no way you’re going to get out of this without bankruptcy and I completely disagree with that.
In fact, I’m going to walk out of this in a way that will just seem amazing, and I’ve got that faith and I’m taking actions to make that a reality today.
My $656K Debt Story Exit Plan
The plan is to cut expenses down to a prudent minimum and cut my business expenses, especially. I’ve absolutely gutted those.
The number one thing I can see that I contributed this year is I spent way too much in my business, and fortunately that’s something I can immediately change.
Thus, what I’ve done is I’ve cut my business expenses down to $2,000 a month, which is good because I make about $7,000 or $8,000 a month in passive income right now.
That means, even if I don’t do anything, I’ll still make $7,000 or $8,000 a month.
Now, I wouldn’t keep making that much indefinitely if I didn’t keep adding more YouTube videos, online courses, etc.
Thus, step one is simply getting a profit in my business every month.
I had a profit in September, and then in October, I again spent way too much money in my business trying to grow too fast.
Thus, keeping my business expenses for as low as possible and not aiming for any crazy ambitious growth, but simply spending the smallest amount of money that is prudent.
In other words, there are things I do need to spend money on like my website hosting, hosting for online courses and having blog posts from videos.
If I can just do a little bit of that, that’s a very good thing to spend money on for the long term.
I’ve found ways this month to cut my business expenses down to less than $2,000 a month, which will immediately give me several thousand a month in profit out of my business.
The second thing I’m doing is I’m focusing relentlessly on my time and on my highest value-producing activities.
My highest value-producing activities are making online video courses. This debt has inspired me to make the absolute best online teaching business system that I’ve ever made before.
I say “best” because best for the long-term and the lowest cost to host, and very simple to execute and run with maximum earning potential.
What I can see I’ve done is this year, I have not focused on my primary value-producing activity. I’ve tested lots of other things.
For example, I played video games, made music, done lots of live streams and so many experiments, but I got away from focusing 70% of my time and attention on my primary income sources.
For me, that is teaching online courses. That’s what you as viewers and the fellow viewers seem to want me to do best and are willing to give me money to do.
Out of the money I’ve earned online in the last 8 years, probably 60% to 70% of it has been teaching online courses.
What have I done very little over the last 3 years?
Teaching online courses.
I just finished a new course on TiKTok that I will have for you. It’s on Skillshare right now. One of the free preview videos went up on YouTube.
My plan is to operate with the smallest amount of expenses and to cut absolutely everything else except my highest income-producing activities.
That’s the basic plan.
I’m so grateful that in the middle of what looks hopeless to a lot of people, I’m actually loving and enjoying my life so much. I’ve really gotten into enjoying the challenge of this.
What I’ve noticed when I was making $30k, $50k to as much as $90k a month before, life seemed really easy and I wasn’t ready for life to seem so easy. I’ve made it difficult.
Today, I’m finding that the big opportunity with this debt is to enjoy a challenge to see this as an opportunity to learn and grow. I’m grateful and I’m enjoying it so much.
My first Udemy profile was taken down in 2016. I was making over $1,000 a day at the time and I was a top 10 instructor on Udemy. They chose to take my profile down.
Since then, I’ve collaborated with other instructors to put courses on Udemy on their profiles. Udemy has just approved a new profile for me and it only currently has one course on it. I’m not promoting anything of my own on Udemy anymore either.
All of my courses are available on Uthena.
Right now, I’ve been putting everything into building Uthena.com, which I am just about to list for sale because, with all of this debt, it seems pretty irresponsible for me to be funding a startup company and putting all the money into that.
I’m grateful, Udemy did approve my new profile. It has been three and a half years, and I’m very grateful for that. However, it does not have any of the courses you’re probably looking for on it.
I have partnered with some other instructors to get courses that I’ve paid to produce on Udemy. However, Udemy is something I see best used to just upload courses there.
I’ve discovered the hard way that if you’re going to promote something yourself, it’s important to put all of your promotional efforts into promoting your own website.
Thus, all of my YouTube videos and everything I do for my online courses will all point to jerrybanfield.com going forward. That’s a big change that empowers me to earn a lot more income going forward.
Pointing all the stuff I’ve done to promote Udemy, Skillshare, and even Uthena in the past, all of that has taken away from the centralized website jerrybanfield.com and that’s a big change I’m making.
Alex: Why does your shirt say 0 = 1?
This is the name of my third album.
I took about 6 or 8 months to make music online, which from strictly an income standpoint was not a very good idea because I spent thousands of dollars and a lot of my most valuable time to make music.
What I’ve done now is music is a side project or a little hobby that I’m able to just do and make maybe a song or so a month.
So, this shirt “0 = 1” is the name of my third album.
If you want to check that out, will you please go to just search for Jerry Banfield on Spotify, Amazon Music, Apple Music or wherever you listen to music?
I’ve got a bunch of music videos on YouTube. If you just look on my main YouTube channel page, I’ve got a whole list of “Music Videos by Jerry Banfield.”
I hired some girls on Fiverr to dance to my videos. The favorite video I’ve made is a video myself playing “Call of Duty Blackout” in the background with Jack’s dance. So, if you want to listen to my music, give that a try.
My music has earned a total of $21 in royalties. That’s another big change with this debt is respecting that limitation of 70% of my time and energy working devoted to the primary income-producing activities.
Then, I can play around in that other 30% with things like making music or whatever, but the big thing I’ve learned is to stay on top of that 70% income producing.
Now, this might seem obvious to those of us with jobs because while you go to your job, and then when you’re not at work, you’ve got time to play around.
The work I do today is setting up money that I can make indefinitely in the future, but I don’t get directly paid for it.
The opportunity to make mistakes and mess your business up is much greater with a business system like that because there’s not that concrete guidance of “You have to come to work for these many hours.”
Since my main thing is teaching online, the better I make my own business, the better I can teach everyone else to make their businesses.
A lot of the systems I see appear to have very high costs and are very difficult to get started with. I’ve run into lots of people who spent thousands of dollars on online courses that they’ve not successfully put into practice themselves.
I’m planning to offer all of my online courses for $36 on my website forever, which is the lowest price I’ve ever offered them at.
Often making up really good offers like that is a key to getting out of debt.
The way to get money in the door as I’ve seen is to offer really ridiculous value for the absolute lowest price possible, and then you can have high-priced services related to that.
For example, if someone wants coaching, I can charge a lot more for that.
Alex: Any changes coming on Uthena?
I’m intending to list Uthena for sale very soon. I’ve submitted a 6-page questionnaire to Flippa, and I’m imagining that selling Uthena can raise tens of thousands of dollars towards the losses I have this year in my business.
It will help pay down some of this debt and to have some more cash on hand just to make the minimum payments on the debt.
The nice thing is just by making the minimum payments on the debt, it is going down significantly, it’s thousands of dollars every month just with the minimum payments.
That said, the minimum payments with the debt and the essential expenses things like health insurance, car insurance, groceries, are over $10,000 a month.
Thus, once I’ve got my expenses down to the minimum, then all of my time and energy is free to focus on making more money.
I imagine whoever buys Uthena will be able to do whatever they want to with it. There may be some big changes coming to it depending on who the buyer is.
I trust the right buyer will come along for Uthena that will respect what we’ve done so far, and we’ll see that by maintaining the integrity of Uthena, that will be advantageous for the long term.
There are definitely days where I feel a bit hopeless and like it’s kind of pointless, but what I remember is a lot of those feelings came regardless of how much money I was making.
I felt a lot of times just stupid for being in this much debt given I’ve made millions of dollars online and that actually it is what allowed me to get in so much debt because I had massive credit card limits.
I had hundreds of thousands of dollars in credit card limits available at low-interest rates because my credit was so good and I wasn’t using any of them. It actually was easier than ever to run into the debt.
I started Uthena with the hope to make it a Udemy and Skillshare competitor. For that, I put a bunch of money into producing video courses that I could put up on Uthena and YouTube.
Also, I put a bunch of money into paying freelancers to help out with parts of my business and I’ve tested so many different strategies.
Nearly all of my experiments and strategies have failed. It’s actually shocking how many things have failed. Simultaneously, there are several success points though.
Uthena is making sales all on its own without any paid ads just straight from everything I’ve done so far. Uthena is about to be available for sale. I imagine it will raise tens of thousands of dollars selling it.
I’ve also learned exactly what I need to do. All I need to do is make video courses and do live streams once a week or so. That’s all I need to do.
Focusing on what I need to do is very helpful and this also has been a very good ego journey because I got into this debt by wanting to be a big deal.
I wanted to make something amazing and huge with massive plans and aggressive timetables.
So, I was like, “Let’s push it and make this happen fast.” It felt a lot like being the rabbit in a race.
The big lesson I’ve learned is to slow down. I don’t need to make the next Udemy overnight, which is what I was doing with Uthena this year and I don’t need to be the biggest deal of an instructor online or to be the top YouTuber.
All I need to do is show up every day, try, help someone and do what I love.
The secret to not being in debt is to not take that first loan. Now, I’m not saying debt is bad. Debt can actually be very useful.
In fact, the most money I’ve made online has been through teaching video courses and borrowing money empowered me to teach video courses.
As long as I was trying to just get money in the bank, I wouldn’t slow down to do something that could actually be the best for the long term.
I would always focus on “I’ve got to get clients today. I got to make that money today.
So, I wouldn’t slow down and do something like teaching video courses, which often requires a lot of time and energy up front for nothing, and then over years, it can have a huge payout, which it has for me.
Thus, I got into debt by going to college and borrowing student loans. Once I was in debt and used to having debt and making payments, I got credit cards and I’ve gone through several times a cycle of having credit cards and paying them off.
For all of 2018, I had all of my credit cards set to pay the full statement balance every month. I was essentially operating in cash.
As soon as the income ran out in my business from my lack of attention to the primary value-producing activities, I just started borrowing money and thinking, “Well, I’m going to make so much because of how I’m spending this money that the debt will just be wiped out.”
Well, I am. It’s just going to take longer than I thought with a different strategy.
I will do a new total every single month.
So, financial freedom is the path I’m on and this is documenting as I walk from $656k debt to my financial freedom.
This is kind of like describing my marathon. I’m at mile zero right now and this is week 2 walking to the finish line of having zero debt.
I will tell you more about this in my next post: My $656K Debt Story — Being #1!
I love you.
I appreciate the chance to serve you today and I will see you again soon.
Edits from video transcript by Michel Gerard at www.michelgerardonline.com.