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I Ditched My Debt in 2014 – Was It Worth It?

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This post is written by Derek Sall, blogger and author at LifeAndMyFinances.com. He has an amazing story that just keeps getting better. If you like his stuff here, be sure to pay him a visit at his site!

My upbringing was pretty simple financially. My parents weren’t rich and they insisted on paying cash for everything – their furniture, their cars, even their house. The only mortgage they ever had was on their first house. After that, the story was always cash, cash, cash.

Sometimes a saver’s mentality is passed down to the next generation. Unfortunately, this wasn’t the case with me. To be honest, I wasn’t a complete disaster, but I was penny wise pound foolish.

Student Loan Debt

In my early college years, I worked pretty minimally in the summer and earned only $600. I then proceeded to spend my savings…not for tuition…but for two flat screen TVs, surround sound, and a massive entertainment system. Because of these foolish decisions, I started racking up student loan debt. I could have easily earned my degree without the loans, but instead I found myself with a $12,500 IOU. Penny wise pound foolish.

When it came time to pay back the loans, I was nowhere near ready. I was trying to live on my own and pay all the bills on a next-to-nothing salary. That first student loan bill came in the mail and it made me sick. I knew I didn’t have the money and couldn’t make the payment.

Long story short, I deferred the loan, paid way too much interest, and took care of that loan as quickly as possible. I vowed to myself that I would never take on debt like that ever again.

The “Smart” Home Purchase

A few months after the student loan debt, I decided to tackle some “good” debt and bought a house. All in all, I did it right. I bought a foreclosure for a great price, fixed it up with my own blood, sweat, and tears, and I therefore had a low mortgage payment in a pretty nice house.

While the house debt was supposed good debt, it still gave me that same bitter taste. In reality, “my” house wasn’t really mine at all. It was the bank’s. You know how I knew? If I stopped making the payments, who would get the house? Not me.

So if something bad happened in my life that left me penniless, not only would I have no money, but I would also have no house to live in! That’s a pretty scary thought! If I was struggling to clothe and feed myself, I wouldn’t want to also wonder where I was going to live after being kicked out of my house.

Soon after the bitter taste, I decided to wage war on the home loan.

The War on Debt

On January 1st, 2014, I started tackling my mortgage debt of $54,500. By December 11th, 2014 it was all gone. I saved money any way that I could:

  • I taught myself to love bologna
  • I rode my bicycle everywhere
  • I switched my insurance provider to save thousands
  • I negotiated a lower cell phone bill
  • I let the house heat up in the summer and cool way down in the winter
  • I even started changing my own oil and brakes

Like I said, I skimped on everything. Beyond this, I made money wherever I could:

  • I made my site into a better-earning business
  • I wrote articles for other blogs
  • I earned a promotion at work
  • I started mowing lawns….even for my sister and nephew

I was serious about paying off the mortgage, which is why it evaporated in less than a year. Complete debt freedom was definitely an accomplishment, but was it worth it?

What’s It Like Being Completely Debt Free?

Most people don’t become completely debt free until they’re in their 6o’s. Heck, today there are plenty of people who carry their mortgage into their retirement and here I was completely debt free before my 30th birthday! So what was it like? What have I noticed about my complete debt freedom?

1) Stress Freedom

I have no payments whatsoever. My biggest monthly expense is the grocery bill. Put frankly, I never have to worry about money at the end of the month. If I had the choice between a massive house on the lake with a large payment and a simple house with no monthly payment, I’d choose the simple house every time.

2) Cash Builds Up in a Hurry

Since I have no payments and don’t make any extravagant purchases, I put thousands of dollars into my bank account each month.

You want to know what I do with it?

Nothing.

I don’t try to pick individual stocks, I don’t buy precious metals, and I don’t blindly put my money into a 401k. I build up cash to buy real estate.

3) I’m Incredibly Weird

In today’s world, people think that home loans are smart and car loans are necessary. If I start telling people at work that I own two houses free and clear, they’ll look at me like I’m an alien. I’m getting ahead financially. Others choose not to.  From my perspective, they’re the strange ones, but regardless, I choose to keep my mouth shut and stock up my cash in peace.

4) My Financial Freedom Date Is Fast Approaching

The less debt you have, the less income you need. My wife and I live quite comfortably on $24,000 a year. My website nets nearly $10,000 a year and our rental property nets another $8,000. One more rental property and we could both ditch our jobs and do nothing for the rest of our lives. We likely won’t choose this option, but it’s pretty cool to think about!

I Highly Recommend Debt Freedom

Becoming completely debt free isn’t easy. It can take years. But is it worth it?

Absolutely.

Since paying off my home mortgage, I have saved up enough to buy a rental house with cash. With the rental proceeds and my work income, I‘ll be able to make another cash real estate purchase next year. Fast forward 10 years and I’ll be buying multiple rental homes each year!

If anyone tells you that you can’t get rich without debt, they’re lying through their teeth. Millions of dollars can be earned and if I can do it, so can you! Go out there and earn your millions!

Related: Best Savings Account

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Interview: Multi-Millionaire & CreditLoan.com Founder, Dan Wesley

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It’s not every day I get to interview an early Internet power player like this guy.

Dan Wesley founded CreditLoan.com in 2003 and then exited this startup 8 years later with an 8 figure payout. He’s also been a contributor for top publications like Forbes, Mashable, Huffington Post, and Inc.—among other impressive accomplishments.

Confident that Mr. Wesley is rich in knowledge and you guys would take away some solid insights from him, I asked him for an interview and he happily said yes.

The main topics covered below are financial ones like student loans, credit cards, personal loans—you know, that important stuff that ultimately decides how much money you end up with, which controls how free you are to do what you love. And then the interview finishes off with Dan sharing some of his best life lessons.

Getting your money right is a big deal and Dan is going to help us.

Let’s just dive into this goodness so you don’t have to wait any longer.

1. What led you to start CreditLoan.com and help millions of people financially in the process?

Humble beginnings – I grew up well below the poverty line with the deck stacked against me, like millions from all walks of life, face today. So, I decided to do something about it long before the Nerdwallet’s of the world.

As you can imagine in 1998, Google is, what, 3 years old? Yahoo, Lycos, Netscape are the main events. It took me awhile to get going (2003 is when I really started to publish consistently). It’s been a fairy tale of sorts, as I ended up completely bootstrapping this from a $5,000 tax return to an 8 figure exit.

I still run the business today, the only regret is I only started to scale things (with venture capital) just a year ago.

I could have been Nerdwallet… but I’ll take it!

2. Where do many college students go wrong with student loans and what should they do instead?

That’s a really great question. I’m 40 and while I don’t have college bound children yet, I took student loans to survive. I was the first to graduate in my family with a college degree. So my parents had just as much understanding as I did of student loans plus long term implications. This is a fancy way of saying basically no party had ANY idea what I was getting myself into lol!

But if I had a child college bound today, they would definitely be a beneficiary from my student loan experience. So is it survival? Generational knowledge gap equaling naivety across the board (parent <=>)? The lack of obvious life experience for most college students? You only learn from making mistakes right? Is that inevitable? I don’t know.

Personally, I know I should’ve just stuck to subsidized loans but I ended up taking on unsubsidized as well (I don’t believe these exist anymore and rightfully so). The student loan alternatives: are grants (is Matthew Lesko still around? ha!), employer tuition assistance, military GI bill, and scholarships.

3. Since 1998, when you started helping consumers on financial issues, until now in 2017, what’s changed most about personal finance in your opinion?

Great question! First off, the amount of personal finance information on the web, hands down. They call it “content shock”. Digital information overload plus ubiquity of mobile with always being “connected” (love this graphic…worth a 1,000 words I tell ya).

I read a few years back (2012 I believe), over 2 million pieces of content are published everyday. I can’t imagine how that has grown exponential today. Moreover, I think there’s a form of censorship in play (unintentional in my opinion, explained below).

As the top finance Google results are dominated by brands (nerdwallet, bankrate, thesimpledollar, thebalance) it’s tough for small businesses with better end user value propositions to overcome these behemoths. But I don’t think Google is doing this on purpose—naturally you have so many bad players that Google (as the police officer) ends rewarding the brands that are trusted the most.

If they are trusted the most, you can assume they’re content is commensurate (plays right into Google’s “yo money, yo life” search ranking guidelines).

At the end of the day, the consumer votes with engagement metrics and all Google does is aggregate that against the population of finance sites—it’s that simple in my opinion.

We always pander to the user, not the search engine.

4. Do you recommend 20+ year olds get a credit card? Why or why not?

Can we really stop them? Paraphrasing a great quote, “The only substitute for life experience is being 20”, right?

I’m 50/50 on this. It’s situational – some 20 year olds act like their 40 and others act like they are 10. The key here in my opinion, is limit yourself to just 1 major credit card. You want that credit card as an outlet, safety valve (discretionary or not, things happen and we are human after at all).

In my opinion, no credit card equals no life experience, more risk, potentially more costly to a 20 year olds’ cashflow. (Example: overdraft fee or a late electric bill payment sometimes exceed the interest only payment of that respective credit card.)

In my opinion, a credit card equals life experience if used responsibly; you want that credit card as an outlet, safety valve (discretionary or not…things happen and we are human after at all). Bad credit, as we know, has a nasty butterfly effect when you are trying to finance a car, get an apartment, it unnecessarily complicates your life (I’ve been there begging my parents to co-sign).

Related: Credit Cards Are Your Best Friend

5. How many credit cards do you personally have? What ones? And what’s the purpose behind each one?

I have an Amex Black, Discover, Visa Black. Primary use is, honestly, an additional layer of security (would rather have my credit card compromised vs my bank card).

The Amex Black is awesome for making a point though. I don’t play the I’m-a-multimillionaire-card (you can ask anyone). I’m a pretty laid back, humble guy, but I can totally upend any perceived judgement, underestimation fairly quickly ;).

6. I’m sure there’s a wealth of information you could go on and on about when it comes to this. But what’s your best single piece of advice for a young adult who needs a personal loan?

My single best advice involves one sheet of paper and two columns: pros on the left, cons on the right. Then you can truly figure out if it’s a need or a want.

Use cause and effect exercise so you can identify the drivers of obtaining a personal loan.

Secondary to that, if you embark on the personal loan quest, be sure to shop around. Get at least 3 quotes: 2 digital (like our site or lending club) and 1 brick n mortar (your local bank).

7. Say I’m 27 years old needing a mortgage for my first home. What’s a key point I need to know to come out with the best interest rate possible?

Due diligence, as you know, many governors in play here. Your credit score and income are two items that single-handedly dictate everything.

Assuming those items are in line, I would advocate for comparative shopping (get 3 quotes).

With so many businesses out there, like Nationwide at times, competing for your business, fully maximize that leverage and use points to buy down the rate.

8. Is there one final knowledge bomb you want to drop on us?

Take things one day at time,  can’t stress this enough. If one day at a time is too overwhelming, slow it down even further. One hour at a time, whatever it takes to catch your breath.

It’s so important. I always remind my 8-year-old son (he plays baseball) when his team is losing:

“How many runs can you score at once?”

He replies: “1 dad…”

I reply: “Then work on 1, son, then 2, then 3”, one at a time.

This puts the most important things into perspective, so you bite off what you can chew and this usually leads to a much better outcome in my experience.

Also, here are a few “Danisms”: “refuse to be a statistic”, “never be denied”, and “move like you got a purpose in life”.

9. Where can we go to learn more about what you do and you?

Here’s my LinkedIn profileI will be launching my personal website by EOY.

Like I mentioned before, I do write for Entrepreneur and my work has been featured in over 150 articles across 61 publications including Time Magazine, WSJ and Business Insider.

CreditLoan.com has also been featured in over 48 books and in 2011, I helped Guy Kawasaki launch his new book (view here).

Final Words

There’s a ton of important information shared in this interview.

But, if you’re a regular reader of Take Your Success, you should know by now that life isn’t about absorbing knowledge and calling it a day. You need to take what Dan Wesley said and put it to action if you desire to see positive results.

I want you to win. Do you want yourself to?

Related: The Best Time To Start Is Now

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Career

Why Your Salary Is Costing You Millions In Earned Income

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The average person craves a salaried job the for comfort, security, and the guarantee they can pay their bills.

But a salary will cost countless people millions of dollars in earned income throughout their career.

It’s ironic that we want a guaranteed income so we can live comfortably leading up to and through retirement.

That’s what society promises, at least, until things become uncomfortable.

Once something bad happens—you get fired, laid off, don’t save enough, salary increase doesn’t keep pace with inflation, make bad financial choices, have expensive kids, get divorced—and now you’re far away from a comfortable retirement nest egg plus have less skills and determination to go make your own money.

The salaried gig looks great on the outside, until you dive deeper to see that it’s often the single biggest demotivator and limiting factor to earning more money.

Your Salary Kills Urgency And Entices Laziness

Though not entirely similar, a salary shares some common characteristics of communism.

You get the same paycheck every month regardless of your performance—pretty close to communism.

At many jobs, a guy like Bill will voluntarily show up at 6 AM every work morning and leave at 8 PM, while slacker Johnny over there shows up at 8 AM and leaves at 6 PM and is paid the exact same wage as Bill.

The paycheck doesn’t reflect the reality that Bill worked 20 plus more hours than Johnny and got a heck of a lot more done than Johnny.

Talk about unfair? The salary gig is cruel, I’m telling you.

And since that situation isn’t fair, human nature will get Bill to think, “Stop working so hard. Why bother to put in the extra hours if I’m not rewarded? I’m going to start acting like Johnny because he’s doing just what’s asked of him and the boss doesn’t notice my performance.”

Now I’m not naive to think that bonuses, raises, and promotions aren’t a thing in the workforce—a differentiator from communism.

However, those are just too much out of your control to count on and you’re not rewarded until months or years later. And they often require smart salary negotiation, which is difficult if you’re not practiced, on top of luck.

Plus, in the example above, if Bill decides to work less and deliver less value then he won’t get the bonus or raise even if there’s one available.

The idea is that a salary often persuades workers to do the bare minimum to keep their job and keep getting paid.

It doesn’t entice individuals to give their all each and every day to not only make themselves double the income, but the company double the return on investment in them as well.

Knowing a paycheck is coming has a cocaine effect where you’re addicted to that monthly guaranteed income even though it’s not in your best interest to rely on it.

What’s worse is the damage it does to your overall net worth.

Guaranteed Income Costs You Millions Of Dollars

The addiction of needing a salary will costs millions of people, millions of dollars in lost income.

Let’s take a look at the multiple reasons why a salary sets you up to fail in the chase towards wealth.

For one, the average salary increase in the US doesn’t match the potential of a hustler who gets to decide their own income based on their work ethic.

A May 2017 forecast from WorldatWork predicts that salary increase budgets for U.S. employers will grow 3 percent on average in 2018 across most employee categories.

Say you make $50,000 a year at your 9 to 5 job you despise. Are you going to bust your butt for 261 work days in the year for a 3% salary increase? I’m not. We’re only talking about $1,500 at that rate.

The work compared to the payoff doesn’t add up to a good deal. It’s not motivating to me. It shouldn’t motivate you.

I could work at McDonald’s and come out with more dollars per hour than that thievery.

You’ll drag your feet for a 3% salary increase (+$1,500), but perform like a workhorse if you have a definite opportunity to double your current income (+$50,000).

That’s a difference in $48,600 between the two of them for the year and this is just the beginning. The difference is exponential over the lifetime of a career.

Second, when your income is entirely in your hands—be it as a beginner entrepreneur, commission sales rep, recruiter, or other job—your butt is on the hot seat from the get go to perform.

There’s no room to take it easy if you want to eat that week and keep your business alive.

Plus, you’ll be motivated to save extra money since this can turn into the business’ emergency fund or a payroll account to hire some contractors or full-time employees.

Meaning each dollar you earn has a higher purpose than eating expensive meals and treating yourself to materialistic clothing purchases.

And by investing in your business, your company and you personally will take home more profits than if your income was tied down by a normal 9 to 5 job.

I’m not surprised when I look at the richest people in each state only to find that none of them are salaried works but entrepreneurs and business owners.

Now you don’t have to be an entrepreneur, but you do need a job with no ceiling on your income if you want to get maximum performance out of yourself and the rewards that come with it.

Third, the rate of your learning is immensely sped up when you have to rely on your own work ethic to make money and pay the bills. You can’t afford to be out of the know in your industry if you want to compete with your competitors.

This is the pressure that forces you to gain knowledge and then use that experience to win more deals for yourself.

Plus, you can compound your knowledge to make more money in the future or consult others on the keys to success based on your experience. These opportunities aren’t there in the corporate world.

By getting off the addicting salary drug and choosing your own medicine, you force yourself to provide value to others so you can ultimately get paid what you’re worth.

And the more patient and skilled you become, the greater this income increases over years then decades.

That’s how your income grows by hundreds of thousands of dollars every year, which adds up to millions, instead of 3% and $1,500 (if that) every year.

Work Like You’re Not On Salary

You only get to do this thing called life once.

Why take the safe and boring road with a salaried job that is like driving a minivan straight on a flat road until retirement, when you can take the thrilling road in a sports car up a mountain with jagged cliffs and unbelievable views?

Bet on yourself. Work your face off. And work like you’re not on salary.

By mixing things up, you’ll discover if your company rewards you for going above and beyond what’s asked of you.

And if they do incentivize your efforts then you don’t need to find a different job. Maybe it doesn’t though and you see the writing on the wall: you’re worth millions more than you will ever earn here so you find a better job you love.

It’s like any pursuit in life, you need to get out of your comfort zone to truly push yourself, grow, and become the best version of yourself.

Happiness comes from personal growth. So take the jump and make the most of it.

Millions of dollars are nice, but the feeling of personal satisfaction from working incredibly hard and getting rewarded for it will far trump the money—every time.

Related: Would You Live Off A Dollar A Day To Achieve Your Dreams?

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Why 1 Bitcoin Can Be Worth $100,000 In A Few Years

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Bitcoin. What is it? How much is one worth? And how much is it going to be worth in a few years and long term?

You have questions. I have ideas.

Let’s break it down one by one. Because when we’re talking cryptocurrencies (already confused by that word?) like Bitcoin it can be easy to get lost in terminology and explanations.

For the sake of brevity, here’s my definition and my dumbed down explanation in parenthesis:

A Bitcoin is a digital currency (internet money) that is decentralized (completely independent of a central bank or country) and uses blockchain (encryption, or a digitally secure method) to prove transactions have been made and to keep an accurate ongoing record of activity.

Still confused? That’s alright.

People were confused about cars and the internet when they first heard about it. But they learned and those two inventions turned out to win the day over horses and newspapers.

Basically a Bitcoin is internet money for the people, and belongs to no bank or country. If you want another explanation, this piece from Coindesk should help.

The current market value of 1 Bitcoin at this exact time of writing this blog post is $3,630—well now it’s over $5,000 in just a week or two later when I first drafted this article. Excuse my Captain Obvious (just being mindful of the rookie investors here): that’s the rate you have to pay if you’re going to buy one today and the return you’d get if you’re selling one right now.

For a little personal back story, the first date I bought Bitcoin was in May 2016. That’s around 16 months before posting today’s article. That’s 16 months to grow in value—and let me tell you, it has been the best investment of my entire life to date. (Tesla is up there, but this takes the cake by far.)

I’ll do another video about my Bitcoin story to fill you guys in.

But for now it’s all about the crazy high potential of Bitcoin and why I see a rich future in this cryptocurrency years and decades from now.

What Will Bitcoin Be Worth In A Few Years?

Before anyone gets too carried away in what I’m about to write, let me preface this with a blunt statement: No one knows (including me) the future price of Bitcoin.

(And don’t trust anyone that claims they know. They’re either liars, or they’re liars and thieves trying to steal your money for their personal gain.)

However, I wouldn’t be surprised if in the future 1 Bitcoin is worth $100,000. That’d mean it rockets in price to be worth 20 times more than it’s worth today!

Though it’s not just me who sees insane potential in Bitcoin.

Check out what John McAfee—remember the guy famous for inventing the McAfee anti-virus software? this is the same man—tweeted:

mcafee-predicts-bitcoin-$500k

While no one may be as bullish on Bitcoin as McAfee, other recent estimates from super smart people in finance see high growth for this revolutionary cryptocurrency coin:

Here’s why I hold this lofty marker for Bitcoin and why I think it (along with other cryptocurrencies) can change the world as we know it.

(As the note at the bottom of this blog posts suggests, this is just my opinion and not investment advice.)

Strong Advantages Bitcoin Has Going For It

bitcoin-100000-price

I’m not just making a wild prediction when I say Bitcoin has the potential to be worth $100,000 someday. I don’t say stuff like that on pure whims.

My hopefulness is backed by some hard facts that Bitcoin has going for it:

  • Bitcoin is the first and top brand of all cryptos. Being the bellwether brand in this space gives Bitcoin more staying power and a better likelihood of reaching mainstream adoption than anything else. The first mover always has rare advantages that other coins have a difficult time catching up to. (See Facebook as an example of early acceptance and then dominating at the top spot.)
  • It costs money for miners to mine Bitcoin. Since it costs human resources, machine power, and money to mine Bitcoin (thousands of dollars or more), there’s real value in the coins unlike printed money where the federal banks can print as much as they want and create inflation.
  • Bitcoin and the blockchain can be a transcendent technology. Inventions like electricity and the internet changed the world forever and the early adopters in the internet are still reaping the absurd financial benefits today. Since Bitcoin eliminates the middle man (banks) in financial transactions to save people fees and time to send or receive money, this technology has the potential to completely upend the banking system, world financial system, and how society is run as we know it. If or when it does that, a serious price increase will follow.
  • Anyone can buy it, not just rich people. Investing in startups, real estate, and private companies is only allowed if you’re already wealthy, but you don’t need a private invitation to invest in this cryptocurrency and the others. The fact that anyone can buy Bitcoin gives it a tremendous advantage over other investment assets. By allowing the masses to get in this game or put their money into Bitcoin to protect themselves against government inflation, it makes Bitcoin more likely to be a fixture in the future.
  • The rising usage of Bitcoin means rising price and long-term value. As countries like India “legalize” Bitcoin and places like Japan open up Bitcoin ATMs the exchanging of Bitcoins is going to rise, which raises its monetary value. Plus more usage leads to more word of mouth marketing from businesses to non-profits to neighbors.
  • Talent is flocking to work on blockchain technology. Working in Silicon Valley used to be the hottest trend for the world’s brightest minds, but there’s been a flocking of brilliant people who are spending their every working hour on Bitcoin, the blockchain, and related opportunities.
  • There is a limited supply of 21 million Bitcoins. After all 21 million Bitcoin are mined, no more Bitcoins can be mined since that’s the limit. Then the supply plummets and the demand skyrockets. The problem with cash is the Federal Reserve and governments can always print more so supply is always there. The lack of unlimited Bitcoin supply will drastically raise its value over time.

Keep in mind two more things.

First, those details above are just some of Bitcoin’s advantages. I could have gone on longer but those are what I feel are the main benefits that give it insane potential to grow in price to multiples of the current value.

Second, none of those advantages mean Bitcoin is a guaranteed winner and it’s by no means a risk-free investment. Countries like China and Russia have been clamping down on cryptocurrencies which poses threat (or maybe more potential for success) to this space.

Final Words

In complete transparency, although I’d say I’m well read and “in the know” about Bitcoin, by no means am I an expert or the smartest guy out there on the subject.

What you read are just my quick thoughts off the top of my head that I intentionally tried to keep simple to avoid confusion.

What do you think about Bitcoin, its future worth in a few years, and the cryptocurrency space in general?

And while I’ve personally had unbelievable financial success investing in Bitcoin and I am still long on the technology going forward, it could drop by 50% or 100% of its value and go to $0 at any moment.

Tremendous risk surrounds this cryptocurrency space as of now.

So don’t invest money you can’t afford to lose. Don’t risk losing your car, house, or the stability of your family because you did something stupid and got burned.

Be smart with your money. Start small if you’re going to invest in anything, including Bitcoin. And realize that you can lose the shirt off your back if you make bad investing decisions.

Also, read the note below to be clear about the intention of this blog post. Good luck!

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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