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- [00:01]
Sponsor Voice 1
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- [00:28]
Sponsor Voice 2
You're listening to the Travis Makes Money podcast presented by gohighlevel.com for a free 30 day trial of the best all in one digital marketing software tool on the planet, just go to gohighlevel.com travis
- [00:42]
Travis
is there such a thing as good debt or is all debt bad? That's what we're talking about here on the show today. Welcome back. This is one of my solo shows where it's just me, you and the mic talking about something that I've been wrestling with, thinking about, or learning about over the last last few years. And I have to say, my tune has changed a little bit on this over the years. When I first got started, it was basically like, yes, leverage debt as much as you can and there's a lot of good debt out there. And then I sort of went hard the opposite way where it was like, yeah, debt is not a good thing and you should be able to try to bootstrap whatever it is that you're trying to do and not get into a lot of debt. And now like, I feel like in most things in my life I've ended up somewhere in the middle. And so today I want to talk about some of the times where I've leveraged debt in my life and where it's, I feel like, worked out for me. And also just understand I'm not a financial advisor, this is not financial advice. And most of the stuff that I do, in fact, in this episode in particular, just understand that this is not me preaching at you to tell you what you should be doing. In fact, we just did this filming and Alex Shamozi came on and he was one of the guests there and one of the things that he said I really liked a lot, which was that my content is documenting what I'm doing. It's not a sermon. I'm not telling other people that they should do what I'm doing, but it's just documenting that if this is the path you also want to take, these are the things that I've found to be helpful and useful and that's how I feel about this particular topic because you'll hear, you'll hear from both sides in the online world. And as most areas are, whenever you get into a polarizing conversation, the people who get the most attention are the people who are on the opposite sides of each other in that conversation. So you get the Ramsey no debt ever. All debts, bad debt, don't even have a credit score. Don't even worry about that. And then you have the opposite, you know, cardone thing of expansion. Expansion, expansion at all costs. Leverage as much debt as you can. So I've ended up a little bit in the middle. And the first time that I did this, this was 2017, I want to say, and I was a door to door sales guy at the time. I was trying to become a podcaster and I knew nothing about making money online, but I knew that I wanted to learn about making money online because it allowed me the types of freedom that I really wanted in my. To me, true freedom was a mixture of, yes, financial freedom, you have enough money coming in time freedom, you can do what you want with your time for the most part. But also the third one was location freedom, which is that you can travel wherever you want and be wherever you are and still be able to make money when you're gone. And at the time when I was doing door to door, it did not check off all of those boxes to the degree that I wanted it to. So making money online was a big motivating factor for me. And I jumped into the space, really both feet. It was not a weight in the water type of a situation because the people that I was following, I looked at their journeys and saw that they were also people who just jumped in the deep end. And so I figured, why not just follow the path of the people who have already figured this thing out? Seemed to have worked well for them, see if it works well for me. So I, when I was starting my podcast, I went and pulled out a 0% credit card. And this is to me probably one of the, one of the sort of quote unquote debt hacks is that not all debt comes with an unbearable interest rate. Some debt you can get for if it's smaller dollar amounts. And which is another reason why I think having a good credit score is valuable in these situations, because even at that time I was only 24, 25, but I pulled out a 0%. I think it was a chase freedom. And it was $42,000 credit limit. And I remember the exact amount because I filled that baby up with basically everything that I possibly Could. And while I was doing door to door, and the one point, the total debt on that card was greater than the total cash balance in my bank account, which obviously did not make me feel super comfortable. However, at the time I was just like, I don't know anything about this world, so I'm going to do my best to learn as much as I possibly can. So it's important to note that that $42,000 of debt, none of it was for new equipment. It wasn't, oh, I need a new computer and I'm going to get a new tv, I'm going to get all this other stuff that you don't actually need to make this successful. Almost all of it was you. A couple, a couple actual assets like, you know, an LLC or a website, things like that, that I, that I had paid for. And I got like a $60 USB microphone that I could plug into my computer. So some things like that. But the, the vast majority of it was basically hiring a one on one coach, going to my first ever Mastermind experience, joining another Mastermind six months after that one, travel, going to events. I went to an event in Australia that year just because that was where that I wanted to hang out with, which ended up being a great decision, by the way, because it was, it was the largest podcasting event in that part of the world, but largest at that time was like a hundred people, 150 people. But this because it was in Australia and because they could reach out to the speakers and it was sort of a plus to go to Australia. They had a great speaker lineup. So that was the first time I got introduced to a few people who are still friends of mine to this day. And then I got invited back the next year as a speaker and got to go to their speaker retreat and stuff like that. So anyway, just to say that it was like it was travel, it was flights, it was hotels, it was entry fees for the events, it was the VIP ticket upgrade so I could meet more people who were serious about making this thing successful. And when I looked back over a 12 month period of time, I filled that thing all the way up, $42,000. But because I was only investing into knowledge and learning, what happened was by the end of that time period, I paid off the entire limit of that card without ever paying a point in interest. So it was basically 12 months, zero interest of. I hesitate to use the term free money because you have to pay it back. But free debt anyway, that I didn't get charged anything to have that debt. So I Was able to leverage that, to be able to get into the space, to be able to learn as much as I possibly could. And then the money that I started making at the beginning, I'd take all of it and just throw it down on the balance of the card. And then that enabled me to be able to switch from doing door to door to being full time online. Now it was a significant cut in pay. Not pretend like it was all sunshine and rainbows. It was basically going from making six figures in sales to making 3,4000 bucks a month on the podcast stuff. But I just loved doing it. So I broke a lease on a big nice house that we had. We moved into my brother in law's spare bedroom in his two bedroom apartment. We split rent there. Our expenses were almost nothing and enabled me to be able to start attacking this other thing that I really wanted to do with 100% effort, which then the first year in podcasting I made 50 grand, but then the next year it went up to like 200 grand and then it went up to 400 grand and it just kind of kept, kept scaling up from there. So the second time that I used debt was for another business which was a software startup which didn't end up going the way that I wanted it to go. But I still learned a lot from that experience. And I started that with, with also just taking on debt. And the same thing, I pulled out two or three different 0% interest credit cards. This time I got that up to like 90, 80, $100,000 credit limit spread across those cards and they probably had 70 to $80,000 of like so development, pitch decks, things like that. But then we were able, with the money that we made on the agency side of the software, plus some of the money that we were able to raise through a round of funding that we did again before we ever paid a diamond interest on that, on, on those cards. We were able to pay off all of the money that was on those cards with the money that we were earning from the new business. So there's that credit card situation, there's this credit card situation and then fast forward. My wife and I decide we want to get into the brick and mortar space. So we opened up an Acai bowl store that was, that's a franchise and we, we still have that.
- [08:44]
Sponsor Voice 2
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- [12:06]
Travis
This is a couple of years ago we got into that franchise for $0 out of our pocket. We split up even like the franchise fee we put on zero percent interest. We opened up some more zero percent interest credit cards. You guys are noticing a theme here.
- [12:19]
Sponsor Voice 2
I like debt.
- [12:19]
Travis
If it's super cheap debt and 0% interest is the definition of cheap debt because it's free debt. So we opened up some cards through the balance down for whatever we could put on credit cards. Right. Because not is able to be charged to a credit card. But we, you know some of the construction that we, that we did for the build out on the franchise, the franchise fee itself, we put on credit cards and then we borrowed a little bit of money so that we could from, from like friends and family so that we could go basically secure an SBA loan to get us through the first year. Because in any, in any, in any business it's not necessarily going to be a profitable venture year one but especially when you're putting a lot of what they call capex capital expenditures into opening a business like that. So, so we went and got an SBA loan and then had the credit cards that we, that we opened to open that store. So fast forward and we ended up when, when that zero interest period was coming up, I basically took a couple extra contracted side jobs. I did some more coaching and consulting on the side and was able to make it up, make enough money in that first quarter of of last year to be able to pay off all of those credit cards without paying a diamond interest again. And then we just had the SBA loan. So at the end of last year I Went to work and did a bunch of extra side stuff, made some money and put down a massive chunk of change on the balance of the SBA loan because I didn't like the interest on that SBA loan. I still don't like the interest on that SBA loan. However, making that big chunk towards the end of last year, we're able to get the payment down to a reasonable amount that the store can comfortably cover while still remaining profitable. So now we're a year and a half, almost two years into that store, and we are already to profitability with a restaurant. And it being a franchise, which is already, again, fairly difficult, like in any restaurant, the margins are going to be slim. A franchise is a little bit more that way just because you have to pay royalties, obviously to the franchisor. So there's been several times in my life where we have leveraged debt to get ourselves into a position that we would not have been able to comfortably do with just cash in the bank account. And then the psychological concept for me has always been powerful because I don't like debt. So when I see debt, it makes me go into hyperdrive in terms of my ability to go earn more income so that I can start paying down balances and taking care of things. Whereas if I didn't put my feet to the fire in that type of context, I probably wouldn't have worked as hard during those periods of time because I wouldn't have had to. There was this thing that was compelling me to go work more and make more money, take this other side gig, take this other contracted work. I do more things that that enabled me to earn more money and then ended up being a really great earning year. But the majority of the money that we made just went down on debt that we had taken out to open these other businesses. But now, again, that business is this year going to cash flow decently well. Next year, projections are even better. Obviously, year over year should increase as we continue building a base of customers, because the product is really, really good. And so whenever people try it, they want to have more of it. So there's been several times in my life where I've used debt to put myself in a better position and to get there much faster. There are obviously downsides to this, and that's why I say, I'm not preaching at you. This is not a sermon. I'm not telling you to go open up a bunch of credit cards and throw a bunch of debt on there and put yourself in a bad financial position. But for me, psychologically it was always helpful. Put my back against a wall, and I work better sometimes when my back's against the wall. So it was psychologically helpful to me. But it was also, obviously, financially help me because we could remain cash strong with some of our other stuff, but we could also, you know, start this new venture of like, hey, let's see how this restaurant thing turns out. And again, we would not have been able to do any of that if we did not leverage debt. So my position ultimately is that you have to do what works best for you. If you don't like taking debt and you think it's terrible or you got yourself and maybe you have a bad experience with debt that you got in recently and you clogged your way out of it and you finally are on the other side of it, then probably not a great idea to go put yourself in a bunch of other debt to go do something else. But sometimes I think that it can be really, really valuable and helpful as long as you don't lean on it too much, where you just, like, keep taking more and more and more loans, keep taking more and more and more debt in order to, like, pay off the other debt that you have. Like, that was always something I just didn't want to do. I never wanted to get into the business of, like, consolidating all the debt and then taking out more debt to cover other debt. My MO is always like, is this. Is this dollar amount that I'm taking out against this small enough where I know I can comfortably outwork the debt in period of time and be able to make big chunks down on these. On these payments. So I. I am in the, in the camp of do what's best for you. But ultimately, I do not fully agree with the never take any debt thing. Never have any credit cards thing. It's been helpful for me multiple times throughout my career. Not to mention, I know this is something that irritates the Ramsey Tribe a little bit, but not to mention all the credit card points that I got. It was like, all these things I was. I had to spend money on them for the businesses that I was creating. There was no way of avoiding.
- [17:34]
Sponsor Voice 2
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- [22:08]
Travis
spending that money so when we'd open up these different credit cards, we did some research on like which sort of which cards are the best, what has the best bonuses and rewards and things like that. And a bunch of my travel for the past five years has been completely paid for in points because we've leveraged debt multiple times throughout our lives. The danger is kind of what I alluded to before, which is that when you have debt, it becomes easier to get into more debt, especially if the balances are high. And I caught myself doing this the first time I had that $42,000 credit card limit, the one I was talking about the beginning of This, I caught myself doing that towards the end because when you have like a $32,000 balance, another thousand bucks doesn't seem like that much in light of the fact that there's already 32 grand there. So you start making purchasing decisions that are not actually necessary just because you're looking at it as like, well I have another ten grand, so why not use it it? And you start to use it foolishly. So I definitely fell into that trap early on and then sort of reeled myself back to say that like I have to still maintain the same level of financial discipline and decision making rigor regardless of the total balance of debt that I have against this particular business or something like that. So there are some things that you want to watch out for. You want to watch out for some of those psychological principles, like you never want to go spend money just for the sake of earning a credit card reward for something that you did not have to purchase just because you want that 500 welcome bonus. Like some of that stuff obviously doesn't make any sense. Don't do that. Don't buy stuff that doesn't have a direct impact in your ability to go earn more money and be able to pay off the debt. Only buy things that are actually conducive for your ability to go earn more money. So there's some rules and things that I've set in place over the years that I've learned from trial and error and making a bunch of mistakes and failing a lot. But ultimately, ultimately I still think that it's still really useful and valuable. And obviously we have like, we have debt, the house that we're in, you know, but obviously that to me feels like I don't, I don't feel this internal need to like, I gotta pay off my house as soon as possible. And to be fair, our interest is pretty fantastic. So it's a little bit different in today's, you know, interest rate environment. But, but yeah, I've, I've leveraged that multiple times throughout my career. It's been really, really helpful for me. So interrogate, interrogate. The concept is basically all I'm really trying to say. If you, if you're part of the, if you're part of the Ramsey, you know, no debt ever, all debt is
- [24:30]
Sponsor Voice 2
bad tribe, then maybe just ask yourself
- [24:32]
Travis
a couple of quick questions and see if you actually agree with that on every single case. Because to me it's just a case by case thing. And on the opposite side of that, you know, I think there's a lot of people that went that whole, you know, 10x, let's go bigger, let's go bigger. Let's leverage as much as we possibly can who are now regretting that decision. And for the first time ever, or losing properties, and especially in the real estate space, or losing businesses if you have the SBA loan. So there's definitely danger to doing that and you don't want to just get in the habit of doing it. But also, I found it to be really useful in my life. So remember, this is just me telling my experience. It's not a sermon. I'm not preaching at you to tell you that you should do this as well, but I do think that it's worth at least asking the question, like, is this helpful? Is it valuable? What are the downsides? What are the upsides? What's the risk to reward? And really just weigh out the decision based on your particular situation, because everybody's situation is a little bit different. So that's it for this episode of the show. Thanks so much for tuning in. We'll catch you guys in the next one. Peace.