Welcome to a new series I’m doing named “From $656K Debt to Financial Freedom”. This is episode #1 here with me Jerry Banfield. I have 685k in debt and what I’m doing is making a live journal essentially of my journey from having this much debt in a position that might look hopeless to many of you that are reading.
I’m just going to document this from where we are today and move forward with new live episodes every week. What I’m imagining is by the end of this series, the debt will be completely gone and there’ll be cash, assets, and income.
From $656K Debt to Financial Freedom
This will be really inspiring over a long period of time to just watch and read all of these episodes in order. There are so many “How to” books that are telling me how I should get out of debt, what I should do and all such advice.
From my understanding, what I really can use is just some understanding. It’s like, “Hey, I’m in this position right now. This is my reality and I’m working my way out of this”. This is important to go from $656K debt to financial freedom.
That is why I’m doing these because when you get into a challenging situation in life, you often feel like you’re not alone and I want you to know that you’re not alone.
If you’ve got a lot of debt, you’re not alone at all and if you like this idea, please hit the like button. That’ll let me know this is a great idea.
I’m confident that you’d want to see some more of these and for that, please make sure to catch the whole series by subscribing to my YouTube channel and check the playlists. The playlists will give you access to all of the episodes in order.
These are all based on a video I did before which is kind of a pilot episode of this called “35 With $484k in Debt and a Plan.
I’ve chosen to update the amount of the debt and do this with my family instead of just myself because individually, I have $484k in debt.
As a family, when you include my wife’s $170k+ and student loan debt, it comes out to $656k in debt. Thus, my wife and I are a financial unit. We are doing this together to get out of debt.
Therefore, it shouldn’t be just my debt and plan but it’s my family’s debt and plan. This is important to go from $656K debt to financial freedom.
From $656K Debt to Financial Freedom
All the books I’ve read have made the consistent point that it’s all about your mindset. It’s all about having faith at this point.
I don’t see debt as a permanent part of my life. It’s something very temporary and yet there are real changes I need to make out of it.
What I’ve been working on is balancing all of the positive messages about “Just believe and it will happen” with “Okay, what’s my day-to-day reality? How do I cut down on my expenses and make some more money?”
Just a positive mindset and belief does not work on those day-to-day things itself. I need to work on that in a positive mindset and belief. This is important to go from $656K debt to financial freedom.
I’ve been reading books and some of the books I’ve read about making money got me in this position.
These were all advised to borrow money aggressively to spend in order to grow your business. That’s how I racked up over $200k in debt. This year was very aggressively going after building my business.
I borrowed money to pay people to build my business and things didn’t work out just how I’d planned. The one thing I’m doing to help with the situation is that I’m selling what I put all that money into i.e, Uthena. That will help raise some money.
Tony Shark: Why do you have debt?
I have debt because I started borrowing money to go to school. The first debt I got was from student loans at 18 years old. I had no debt and I operated completely in cash without credit cards.
The universal advice I got from everyone in my life was going to school. My parents said, “You have to move out when you’re 18 years old”. They hoped I’d go to a university which I did.
My primary plans fell through because the Iraq war started. The September 11th incident occurred and then all these wars started. I was thinking about going into the military.
Long story short, I ended up going to a college that had an ROTC program which was different than I had planned on and accepted an offer by signing on a letter of commitment.
I lost the full-ride scholarship and had to use my back-up plan which was to go to the University of South Carolina with a partial scholarship at which point I started borrowing money for student loans.
The key to being in debt is that t’s taking the very first loan that makes all the rest possible. Once, you’ve got one loan, taking another loan seems reasonable.
When you’ve got several student loans, taking a credit card, running up a small balance and ultimately buying a house seems very reasonable.
Similarly, when you’ve got a business, taking a business loan when your cash is a bit short seems fine as well.
When you’re in this mindset and lifestyle of debt all the time, you get used to it. If you’re like me, I’ve been constantly spending faster than it is ideal to get rid of the debt.
Instead of making “Paying off the debt” a priority which I paid off a whole bunch of debt before but I didn’t pay it all off.
I couldn’t get all of my wife’s student loans, the mortgage and the rest of my student loans paid off before the financial opportunities I had gone away and the finances slowed down.
Thus, I got into debt by taking student loans and staying in the habit of being in debt since then.
What I’ve gone through with the debt thing too is the blame game which is funny because, in things like cancer, we look around and say “Wow”.
You wouldn’t blame somebody for having cancer and yet we go on and blame people “Well, you are stupid for having all this debt”. Whereas, when someone has cancer, “Well, they’re not stupid for getting cancer”.
You could really look at someone who has cancer and say the same thing as “You are stupid for having cancer the way you lived your life”. You smoked, drank, poor diet and you didn’t exercise. The choices you made gave you cancer.
Thus, there is a big personal responsibility and everything in life but there’s also some not personal responsibility and everything in life.
All the people in my life that I trust told me to go to college at any cost. Borrow money if you have to. That was the universal advice I got. Similar to cancer, there were things I did. I just followed advices.
Thus, I take responsibility for the position I’m in today by doing something about it. I also recognize the reason why I’m in this position today. It is the best advice I got from my friends and family.
The advice was, “Well, if you want a house, get a mortgage. If you want to go to school, take student loans if you can’t get financial aid to cover all of it”.
Therefore, I had a hand in where I’m at and so did other people, which is good because to get out of debt, other people are going to have a hand in me getting out of debt and I am too.
Thus, I think that’s a pretty in-depth answer.
The way I see out of this debt is a combination of cutting my expenses and earning more money. I’m focusing on doing both of these. It’s easier to cut expenses and that can be done much faster and this is one of the lessons that has taken me a while to learn.
It is not only to cut expenses immediately and then focus on earning income, but also don’t grow the expenses back until the debt is annihilated. This is important to go from $656K debt to financial freedom.
This is the one I’ve run into a bunch of times and this is what I see people around me consistently doing as well.
What I noticed is anytime my finances started going in a positive direction, I paid off my debt but I also ramped up my spending to the point where I couldn’t pay as much off on the debt.
When I had things go really well with selling my courses on Udemy, I paid off over $100k of my debt and about $40k+ of my wife’s student loans with that Udemy money.
However, I cranked my expenses up pretty high trying to make more and more sales instead of just taking the income and taking a more patient and steady approach.
We could have had our debt nearly paid off if I hadn’t ramped my expenses up fast and then been so easy and comfortable to go back into debt.
What I can see I did this year is I raced ahead. I’ve noticed that huge ambition, racing and going ahead in this big tear that “I’m going to make something amazingly successful and I’m gonna do it overnight” allowed for borrowing too quickly.
I’ve made enough money that a lot of creditors gave me huge credit lines which is how I was able to rack up a lot more debt.
What I’m at today with this journal is giving some background of some context but it’s also important to just look at “What can I actually do today?”. This is important to go from $656K debt to financial freedom.
It doesn’t help me to go back through the history of it over and over again. Thus, the main thing in this journal is “What am I actually doing today?”. Today, I’ve been cutting my expenses all around the board everywhere I can.
From $656K Debt to Financial Freedom
I’m starting a new series on how my wife and I work our way out from $656K debt to financial freedom. Today’s episode #1 is based on the previous episode I did before.
I’m doing this series because I see that this has massive potential to help people just like me. I’ve read so many books about money and clearly, I’ve read so many books about money and they have not helped.
The problem/challenge is that it’s often written by someone who’s got a whole lot of money trying to tell me what I should do to get what they’ve got and often it’s told from a long time in the future.
What I’ve noticed, when I talk about my past, I often don’t do a good job because it’s muddled by my future and I’m so excited to share this because I’m listening to a book by Cheryl Richardson “Waking Up in Winter”.
She’s doing journal entries and this is really helping me. This is helping me to look around and identify in my life because I’ve noticed, the more I listen to things about making money, the more I get into making bad decisions with money.
It is because it’s out of an area where I don’t feel good enough about the money I have.
When I read a book and then Tony Robbins tells me how to make money in the stock market and I try. I followed that and I put something to work on it, and yet now I’m in more debt than ever.
What all of these books are telling me is how to hustle and change my mindset but really when I read all these books, I end up feeling not good about myself and that’s the ironic effect.
When someone tells you what you ought to do, there’s this implied thing where I’m not good enough.
Therefore, I’m hoping that this will help people who maybe read a bunch of books like me and they’re not making a difference to say, “Look, this is what I’m doing. I don’t know what you should do but this is what I’m doing”.
Maybe hearing what I’m doing will help you somehow.
From $656K Debt to Financial Freedom
Given my current financial situation, I’ve been in a habit of spending more than I make for a long time.
Now, that doesn’t mean I spend more than I make every single month. I’ve been in the habit of just spending without as much regard to my means to spend.
There’s a delicate balance with this because right after college, I lived with what I would call a cheap mindset.
I would go out to eat and not leave tips because I figured the waitress was making more money than me. Therefore, she didn’t need any more of my money. I ought to just keep it and that cheap mindset left me feeling broke and not making any more money.
When I got out of that mindset and I got a better job, I started going back to tipping.
There is a delicate balance in spending and giving money versus just being totally cheap and selfish with it and that’s a balance I’m trying to walk in the following way yesterday. This is important to go from $656K debt to financial freedom.
I went to talk to my personal trainer. I’ve been paying $600 a month for personal training for the last several months and I talked to her.
I said, “Look, you saw that video. You know how much debt I have. What can we do about personal training? $600 a month is one of my biggest personal bills”.
So, personal means not something for my business and I’ve gutted my business expenses. Personal training is a very valuable part of my life. It really helps me look good and feel good. I love hanging out with her and talking with her.
From $656K Debt to Financial Freedom
Business expenses are the majority of where I’ve run up a bunch of debt this year. In fact, it’s almost all the business expenses.
However, when you put maybe $10,000 of personal spending this year that could have been cut down or cut back and throw that in with the business expenses.
So, I gutted my business expenses last month. I did My Online Business Income Report for October 2019 — Live Q & A. You can watch the video below.
I spent $5,000 more than I made last month off my business. Why? Because I was trying to aggressively grow my business.
A lot of these books you read suggest “You got to spend money to make money. You got to be aggressive, take chances, go for it and spend money on ads”.
I’ve done so much of that this year and that approach provokes anxiety and I’m not interested in doing that anymore.
What I’m planning for my business going forward definitely is steady patient growth and it’s taking me a long hard road to get here. Minimum expenses to get all my debt across the board paid off. Very gently scale my business expenses up.
Every time my business is done well, I’ve ripped my expenses up super fast.
I’m so proud of my wife, especially she’s just so peaceful with the debt. She says, ‘I know we’re gonna work our way out of this”. This is important to go from $656K debt to financial freedom.
She’s so trusting and she has even allowed me to make a lot of mistakes with my business this year. Too rapidly advancing on starting a new company, overly ambitious project and spending $10,000 to $20,000 a month that I was sure was going to work.
I’m so proud of my wife for walking this journey with me and being ok with me sharing this openly with you.
Kyle: The stock market and the casino are the same.
Yes, the stock market and the casino have a lot in common. I sold all of the stocks I had in 2017 which was about $16,000 or so.
I sold all of them to buy a Dash Masternode, blew that up to like $87,000 and got into a bunch of cryptocurrency stuff and I really trashed the rest of my business doing that.
Even though crypto made great money for a while. I trashed the very foundation of my business which was the YouTube channel offering very helpful content and online courses.
Those are the actions I took after reading “Tony Robbins: Money Master The Game” to get out there and play smarter than other people which I did.
I bought something I knew I could promote. So, promoted, sold higher, did the same kind of thing and well, here I am.
It was said that it can be challenging to cut your expenses and to spend it within your means. Yes, that’s my experience too.
Borrowing money got me in the habit of spending above my needs and what I’m very grateful for is I’ve made every single payment on time for 13 years. I’ve never missed a payment on my debt or any of my credit cards.
I feel it’s important to honor my obligations. That means, I think it’s important that I pay that back as agreed rather than things I could do to just not pay it or get out of it.
I’ve paid back all and I’m paying back all the money I’ve borrowed and I intend to continue doing that because that’s honest. This is important to go from $656K debt to financial freedom.
To me, it’s not honest for me personally if I just take the money and I don’t pay that back because I wouldn’t want people to do that to me.