← The Journey with Morgan DeBaun
The Journey with Morgan DeBaun
From Rich to Wealthy: Morgan DeBaun on Redefining Freedom & Success
00:15:40
This episode originally aired in June 2023 and quickly became one of the most popular episodes of The Journey. Whether you're tuning in for the first time or revisiting this conversation, this episode will help you redefine your wealth mindset! In...
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Morgan Debon
The girls on TikTok have been talking about this soft life, and one of the things that is really driving me nuts is that everybody is really correlating all these things that are material things. You know, I've got the Rolex, I've got this fancy car. I don't have to work all this stuff that's really about cash, as if that is what's making them have a soft life. And I think that's a mistake. I think that's wrong. In my opinion, soft life and being a person of leisure is actually about being wealthy, and wealthy is not about cash. It's about freedom and independence. Hey, everyone. I'm Morgan Debon, a passionate entrepreneur and life advisor. With the Journey podcast, you'll discover that success isn't about the destination, it's about the journey. I'm sharing stories of amazing people who've taken control of their lives. Join me on my own journey to discover the secret sauce behind reaching success. And with permission from no one else, welcome to the Morgan Devine podcast, your journey. And I'm so excited that you're here today. Today we're going to talk about the difference between being rich and being wealthy, because the girls on TikTok have been talking about this soft life. And one of the things that is really driving me nuts is, is that everybody is really correlating all these things that are material things. You know, I've got the Rolex, I've got this fancy car, I don't have to work. All this stuff that's really about cash, as if that is what's making them have a soft life. And I think that's a mistake. I think that's wrong. In my opinion, soft life and being a person of leisure is actually about being wealthy, and wealthy is not about cash. It's about freedom and independence. So let's get into the difference between rich and wealthy today. So a rich mindset is when you're prioritizing cash and material items. And in my opinion, the consequence of a rich mindset is it's never enough. I saw this a lot when I lived in L. A, where people would get a raise, people get a promotion, and they'd immediately, like, less than three months later, be like, hey, I need more. I'm like, bro, you just got more. But it's never enough. If you have a rich mindset, there's always going to be more money. There's always going to be someone with more money than you, a flashier car than you popping more bottles than you flying on more private jets than you or whatever. Like, there's always going to be somebody else willing to spend more cash. And I think that keeping up with the Joneses, especially in cities like la, is super toxic. And that rich mindset is what will keep you there. We also see this a lot on Instagram. When you see all these people stunning with their Louis Vuitton this and our Gucci dad and all of this stuff, it's just very much a rich mindset. And I get it. People work really hard to go from the mud to becoming rich, but then people need to move from, okay, you're out the mud, you are rich, but let's be wealthy. Let's get to the next phase. Like, it does not end with rich. Now I get it. You got to be rich to get to wealthy. It's not like you're going to go from the mud to wealthy. That's never going to happen. But shifting your mindset from just cash and money to freedom and independence and the ability to choose is really, really important. So let's say you're a nine to fiver and you're trying to think about, like, what is a from going from a rich mindset to a wealthy mindset. Looks like going from rich to wealthy as a mindset might look like this. You get your cash bonus at the end of the year, call it $10,000. And rich. You would be like, I'm about to go to Nordstrom and I'm about to buy those pair of shoes that I wanted. Like, what are you talking about? Or I'm about to go to Sephora and I'm about to rack it up right? And I'm going to treat myself wealthy. You is going to say, you know what? I'm going to take that $10,000 and I'm going to spend $800 a month on somebody who's going to come into my house and do my laundry and clean up the house and make sure that all my clothes and everything is folded. And they're going to do that every month for the rest of the year so that I have more time and I have more freedom and I'm not doing something I don't like to do. That is the wealthy mindset. It's being willing to spend the money on something that's going to bring you joy beyond just the. The quick moment of buying an item. So one of the things that I want to tell you guys about my experience with my wealth journey, if you will. When I first started off being a founder, I made no money. I made Negative money. In fact, I was bootstrapping the business and I was spending all of my discretionary income from my day job on the company. So I was very cash poor, if you will, but in some ways privileged too, because I had the cash to even start spending money. So the first things that I did with my discretionary income was hire people. I had a fellowship program for Blavity and we paid people for the fellowship, but it was really just coming out of my personal bank account, you know, and we did that for maybe like six months. And then I raised my first round of funding. And when I raised my first round of funding, and this is what. Where a lot of people make a mistake, you raise your first round of funding and then you change a lot of things because you just got money in the bank. And what I did instead, and this is the wealthy mindset, is that, okay, now that we have money in the bank, how are we going to 2x this money? And that doesn't mean I'm going to pay myself because I'm going to work as hard whether I'm making money or not. So paying myself actually is just taking cash out the bank that I could use to pay our first video hire Sankara, who's behind the screen now, or our first salesperson, who I think was Shane, so that we could actually make more money. Right? So that mindset of saying, all right, I'm willing to make a short term sacrifice so that I can have a more sustainable lifestyle and freedom was really, really critical. And I think that was my first transition from, okay, we've got money to how am I going to sustain to make sure that this money is translating into freedom. And when I say freedom, I mean the ability to choose. When you spend all this money, sometimes you get stuck in a lifestyle and then it's hard to go backwards, right? So I kept my roommates when I first raised money. Then when we moved into an office, I lived in the office we had. One side of the office was office, the other side was my bedroom. And even then my co founder, Aaron, who was in business school at the time, he would travel down from business school and he would stay in a loft that we built in the room. You know, so we had a lot going on in a very small space. But we were using every piece of, like, dollars that we were getting from revenue to invest in things that were going to change the trajectory of the business. The other thing that was interesting was I was using the company's money basically so that I could just exist. But like for example, the company paid my rent, but I didn't take a salary. Right? And here's the thing about taking a salary and you can do things like this. I mean, maybe it was legal, I don't know. But clearly we made it. So it's fine, don't come for me, irs. But basically, instead of taking a salary, which I'm taxed on and the company is taxed on, you know, you're paying double taxes, I just said, cool, I'm not going to take a salary, but Blavity will cover my rent because it's the office, you know, food. I'll pay for myself and all these different things. But for the most part, my career, my life and everything was all together and I was willing to make that sacrifice temporarily. Now, eventually we outgrew that office pretty quickly. I think it was like maybe less than a year. We got a bigger office, you know, with. I think we got a little hood rich. So we started buying all types of stuff. I raised about $6 million, maybe a little bit more, my first round of funding. And then that's when I started to take a salary for the first time that was like, significant. But even then, I think my salary was barely like six figures, like maybe like $110,000. Now, mind you, we had millions of dollars in the bank, but again, that willingness to say, okay, we're going to keep our overhead low while we're building so that every single dollar that's invested is invested in something that's going to get us 10x return or 5x return. And that, I think is what's really critical is what a lot of people make the mistake of doing is they get the money and then they go spend it on something that's not actually an asset. We're not going to give them a return on investment. And that's what I see so much of what's happening on the Internet, I'm like, what are y'all doing? Why are you wasting your money on things you can't really afford? This lifestyle. So fast forward a little bit. You know, obviously my business has done really, really well. And I'm at a new place where, you know, I'm not just paying myself barely six figures anymore and we could afford that. So I got my wealth manager for the first time and I was meeting with him and, you know, I have multiple business. I have my, the bond and company business. And then I have, you know, Blavity, of course, and then I do brand deals and all these different things. So I was meeting with him about my finances, and I was talking to him about some of the brand deals that I was doing, and he made a really good point. And it was the first time that I heard someone really explain it to me this way. But he was like, you actually need to shift your mindset from wanting to get cash to wanting to get assets, because you're at the point in your life where more cash doesn't actually change your trajectory, but having more assets gives you the freedom to leverage, to do the things that you really want to do. And he had me do this exercise, which I really encourage everyone to do, and I tell everyone about it, which was write out. If you were just, like, as rich as you could possibly imagine, write out what you actually would do in a day, what you would do in a week, what you would do every quarter, what you would do every year. So your vacations, you know, if you want a chef, if you want a driver, if you want to have someone do your makeup every day, if you have. Want someone to pick out your clothes every day, if you want people, like, whatever you view as freedom and enjoyment and leisure, ride it out and then go look up how much that actually costs you to have. What was really interesting about that exercise was that I thought it was going to cost me probably like 2x what it actually would cost me. And then the next thing that he had me do, he said, okay, how much money do you think you're going to need to have to be able to afford to spend that every year? And what was also really interesting about that was the lifestyle that I wanted really only wound up being about, like, $50,000 a month now. $50,000 a month, don't get me wrong, is a lot of money. You know, 50,000 times 12, you got me make about $600,000 a year post tax cash. Like, it's. You're in the top 1% of the 1% of the 1%. And I recognize that. But when I found out it was only $50,000 a month, I was like, I think I can get there. Like, I don't think I need to wait till I'm 50 to live this life if that's really what I want to do. And what was really fun and I think so freeing about that was this is the next part that I felt was like, oh, man, you got me with this. And first of all, shout out to Adam, my wealth manager. I'm gonna give y'all his info. He then said, all right, let me build a financial model for you. And him and his Team said, okay, cool. If you get $10 million in cash, this is what it looks like when we invest this cash. This is the distributions of income that you can expect to get. This is how big it will get over a 15, 20 year period of time. And then I saw those numbers, right? So let's just assume a 10% return a year on $10 million. That's a lot of money, right? That's. That's a million dollars. Like, that's a million dollars if every year. And he's like. And so if you just said, cool, you're going to spend your interest every year. You basically have your. Your ideal lifestyle. So, Morgan, we just need you to get to $10 million in cash or $10 million of investable assets. I was like that, like, I feel like I could get. I definitely could get to that, right? And then I said, okay. And I was having them model out also. What would happen if we sold the business? Like, if we sold Blavity, what would it look like, what my finances look like? I'm not selling Blabity. Don't go. Start rumors. I still own it. I'm still here. Okay, let's move past that for just a second. So, so let's say we sold Blavity and my take home was more like $30 million. Then he showed me the math on investing $30 million. I was like, yo, why do people work? Like, there are people for sure that are making, like athletes that are making 20, 30 million dollars, all these different. And then I see the interest. I'm like, what is going on? And what he was trying to show me was being wealthy is about making smart decisions about your assets. But you can be rich and literally still be broke. But you have to have a abundance mindset and you have to be patient in the short term, but not for that long. Right? And I look back at a lot of decisions that I've made in the last few years, and I've probably wasted probably like 300, $400,000 in cash on just random things or, you know, investments that I've made that I know probably aren't going to pay off and just different things. And I'm like, man, if I had to just give him Adam that money, you know, and if every year I just give Adam, like some money and we start building this nest egg, like I could be more free and feel more free earlier in my life. So since starting I've started working with him, I've definitely changed how I've, I've, you know, my relationship with money and even how I consider my investments, whether that's angel investments or real estate investments. You know, really trying to get to that point where how I spend my time is not tied to the amount of income that I want to make. How I spend my time is about really fully being embraced by my purpose in life and not worrying about money, but worrying about the impact that I'm making with the work that I'm doing. And if there's ever a time in which I want to step away from working, it won't matter. It won't actually change the quality of life or the freedom that I have with my time. So I hope that this helps you guys and inspires you to also build that wealthy vision for yourself. And it doesn't have to just be about cash. It really could be about freedom and time. And that's what it meant for me, was like, I don't want to think about doing my makeup. I don't want to be thinking about what I'm eating. I don't want to drive. I don't want to do these things. I do them, but I don't want to. So let me envision a life in which I don't have to, and let me figure out what I'm willing to sacrifice today in order to get there in the future. Thanks for listening to the Journey podcast. If you enjoyed this episode, make sure you leave a review and head to our Instagram and YouTube to leave a comment. I look forward to hearing how this podcast has made an impact on your own.