I’ve been asked by my PR Company to write an article for a major UK publication on debt. There’s a series on successful people getting into debt, and then getting out of debt. My PR Company will probably not want me to publish this before the articles. So, don’t worry, I won’t be doing that. This will be going out well after.
9 questions on getting into and getting out of debt:
1. Can you tell us about the debt you’ve built up initially?
I built debt from when I went to University, until about the age of 26 or just before. I went from no debt to nearly £50,000, pretty much £50,000 in consumer debts. That’s not including good debt and mortgages on assets. It’s just bad debts. So, it’s loans, credit cards, credit cards on credit cards on credit cards, balance transfers, which you think are fine, because you’ve got as interest free. But you actually get charged a fee for that, which you don’t see or I didn’t see, because I didn’t know. Then of course, when it reverts to interest, interest could be 20 percent or 30 percent. That happened to me.
I was only really overspending a small amount each month. I wasn’t educated about finances or managing my money, because I wasn’t taught it at school. And it crept upon me slowly. Going out in University, buying things on credit, thinking I could pay it off, and then I couldn’t, not quite earning as much as I was spending. And I racked up a debt on car loan and on credit cards of nearly £50,000 over a 7-year period.
2. How did it feel to be in debt at a young age?
Like I said, it creeps up on you. Sometimes, you’re in a career, you don’t really know. You’re just slightly going down the wrong road. One percent degree off target over 1,000 miles might take you 30 or 90 degrees. And I just found that it crept up on me slowly, slowly, slowly. And probably for the first 2 or 3 years, I didn’t really think much of it or notice it. It wasn’t huge. I thought I could manage it. Then I would say, once it started getting big, and I realised that all the money I was earning was going on servicing the debt. Then I realised that servicing the debt, it wasn’t even paying off really any of the capital, because I was only able to hit the monthly minimum amounts. That was really only interest that was getting swallowed up. It made me feel useless, worthless, terrible at managing money, and my own personal affairs. It gave me a very low self-worth, embarrassed and shameful.
3. What prompted you to make a change?
Well, I often tell people now, don’t wait for the event. Make the event. And what I mean by that, is, don’t wait for something really bad to happen. A divorce, a bankruptcy, an insolvency, or just like a real shock, Brexit, recession. Don’t wait for those things. Actually, take control now.
But unfortunately for me back then, my dad had a nervous breakdown in his pub in front of all of his customers on December 15th, 2005, which is, also his birthday. I felt shame, and guilty, and embarrassment. I felt part of that. My dad had paid for my school fees. He paid for me to go to Uni, even though I still was spending more and getting into debt. He gave me a job in his pub for years after, and through school, and through University. I just felt like I was putting strain on him financially. But I didn’t know what to do. I didn’t know what to do with my life. I didn’t know how to help financially. And I became dependent on my parents.
That thing that happened to my dad, which I felt partly responsible for, just made me stand up, and that I’ve got to do something. I cannot stand for this anymore. I’ve got to be independent. I’ve got to stand on my own two feet. Then I got into property, and business, and now, into authoring and podcasting. I became a millionaire between the age of 30 and 31. This event happened when I was nearly 26.
4. How exactly did you clear your debt in one year?
I cleared my debt in 2006. So, up to 2005 was the apex of my debt, nearly £50,000 over a 7-year period. And when that event happened on December 15th, 2005 with my dad, I started taking things really seriously. I started pushing my art out there, because I was an artist, not selling any. I actually started pushing it out and selling some. My gallery owner had been telling me for ages to get into property, and go to a local property meeting. Of course, I was like, I can’t get into property, I don’t have any money. I don’t have any experience. I don’t have any knowledge.
But then I went back to him and said, tell me this property event. I went to this property networking event. And I met my property business partner, who is still a business partner with me. 13 years later, we own, co-own, and manage hundreds of properties together. And we both became millionaires in our early 30s. In that year, I’d got a job, sourcing properties for a company. I earned minimum wage. I was paid commissions. I’d never really done property before. I’d read a few books. But I learned really fast.
I sold some property deals. Mark and I started investing in our own properties that year. And we got to nearly 20 in that first year. So, it was a mix of selling more art, selling some property deals, and buying some properties myself. I cleared all the debt. And I earned nearly 6 figures in that first sort of year.
That sounds to some people like, it’s quite short amount of time. But I was motivated. I was desperate. I was hungry. It was like my whole life had been given up to this point. You can get a lot done in a short period of time, if you put the work in, if you work smart and hard, and if you really want it.
5. Were you also making money during that time?
The answer is yes. Not only did I clear all the debt, I earned nearly 6 figures. I bought a Nissan 350Z, a 2-year-old one. I think I bought it with cash actually. But I definitely bought it with affordable income. Everything had completely turned around. It gave me a good solid foundation for the second year to invest, to save, to build assets.
6. how did you change your money habit?
After December 15th 2005, I changed my mindset. It didn’t happen overnight. It was like an eureka moment like, they portrayed in movies. It was the trigger and the catalyst. Before 2005 I didn’t know how to do that. I couldn’t do that. I don’t want learn from you, because I don’t like people who make money, even though I was jealous of them and envious of them, and bitter, and twisted. I don’t read personal development books, because I’m not into self-help. That’s all a load of mumbo jumbo. And I had a very terrible attitude. Life isn’t fair. I’m a victim. Why me? Why are these people lucky? Why am I unlucky?
But I changed my mindset to be more openminded to learning from people. My gallery owner, I was more openminded to listen to him. He sent me to a property event. At the property event, I was openminded to listen to the speaker. When I was networking, I was openminded to meet people. I met my business partner. He got me reading some books. He sent me on some courses.
Really, the change was being openminded to learning. School has always made me resistant to learning, because most of the subjects I didn’t like. And it was imposed upon me. But now, learning about money, and mindset, and property, and business, and I actually get the results from this at school. But what’s it for? But when you run your own business, and you’re changing your own financial situation, you know that what you learn, the more you learn, the more you earn.
Then it just happened over time. I’d say within the first year, I probably read 40-50 books. I’ve done a few courses. I, now of course, listen to podcasts. I run a podcast myself, The Disruptive Entrepreneur. For me, learning is one of the most fun things in life. Growth and progress, is, one of my highest values. And I am now, a committed ongoing student of business mindset psychology. Personal development of money and economics, and the mindset, skillset, the strategies, the tactics, the story and the history of money. Of course, I’ve now written a book called, Money.
7. What sacrifices did you have to make to become debt free?
I had to work harder. I had to learn sales and marketing, instead of just avoiding that. I had to embrace collaborations like with gallery owners who’d hang my works. I used to think they’re taking 30 percent for nothing. But in reality, they were taking 30 percent so I can make 70 percent.
I had to stop being like a scarce mindset, and think more abundantly about partnerships. Definitely not hiding from selling, not hiding from rejection. Obviously, putting in more hours. Working on the right tasks, the important tasks, the income generating tasks. Being productive. Because I always used to work a lot, but I used to work on the wrong things, and not being that productive. I did sacrifice a bit of social life. I didn’t exactly date for very long. But for me, that was okay, because it was just like a short amount of time I didn’t have children. I didn’t have too many responsibilities. For me, it was a worthy sacrifice.
8. What are the biggest lessons you have learned about earning and saving money, and avoiding debt?
The fundamental rule of money is going to sound so simple, but most people don’t do it, is, NEVER SPEND MORE THAN YOU EARN! Because, if you never spend more than you earn, month by month, you’re going to earn more, and earn more, and earn more, and earn more.
The next thing, is, preserve capital at all costs. Lumps of cash that you’d saved, preserve it and don’t spend it. Then what you do, step 3, is, you take that capital, and you invest into assets. Many assets will match your capital sometimes on a ratio of 4 or 5 to one, i.e., you can leverage and get good debt on the capital. You use the capital to invest in assets. The assets produce the income, and then you spend the income.
If you spend the capital, it’s gone. But if you spend recurring income from property rental, or from commissions, or for example, royalties from books, and podcasts, and ads that you run, you spend that month, and then the next month, it drops in again. And you spend that month, and then the next month, it drops in again.
The 4th thing, is, to get your emotions out of the way. I used to spend emotionally. Ah, I feel down, I’m going to spend to cheer myself up. Oh, I feel really excited, I’m going to spend to celebrate. Oh, I don’t really feel good about myself, I’m going to spend money on clothes to try and look better, and feel better. So, we’ve got to get the emotions out of it.
So, that links to rule 5, which is, in any major purchases, don’t buy there and then. Don’t buy on impulse. Buy on smart, on strategy, on intellect rather than on impulse.
9. What made you decide to share your financial wisdom with others?
Well, I’ve found after years of investing in property and running businesses, that as much as I love property in terms of the outcome, I actually enjoy the teaching, the training, the podcasting, running the courses, doing the public speaking. I enjoy that more than the nuts and bolts of dealing with tenants, boilers, gas and boiler safety checks, and the legalities, and the tenancy agreements. That all has to be done. And it’s important to do that properly. But I like to let letting agents, or partners, or specialists to do that. And I just love the building of the personal brand, the sharing of it. So, I really do believe that as soon as you learn something, and you master it, not only is it fun to teach, because it is fun to teach. I almost think like, it’s a humanity obligation for you to teach, to pass onto others. It connects me with amazing people, that makes me feel alive. It makes me feel I’m contributing. Of course, that goes into the authoring of my various books, of which, Money is probably the most relevant to this article.
