I recently was a guest on the Inspired Money podcast, where I spoke about walking away from my lucrative business and “critical acclaim” in order to work less, save money, and spend more time with my family.
Here are four key takeaways from the interview, as told by the host Andy Wang…
Paying Off $70,000 in Debt
Joe finished school with $30,000 in student loans and $15,000 in credit card debt. Moving to an expensive place like New York City while working an entry-level job in post-production and that debt quickly grew to $70,000.
It’s not easy to pay off debt when your income doesn’t cover your expenses! Luckily, as Joe advanced his career with a series of promotions, his paycheck grew to the point he was in the black every month and he could begin chipping away at his debt.
Buy A House (or as Joe likes to say…”Own your Residence”)
Eventually, he also saved enough to buy his first house – which had an important role in fully getting out of debt. It’s a valuable lesson about prioritizing where your money goes. Joe initially paid down his credit card debt while saving enough for a down payment on a house.
“That actually made a really big, big difference in my life. Having worked hard to buy a house early on. I look at your house as an investment, and the reason I look at it that way is because you have to be paying rent, whether you like it or not. If you're putting money out every month for something, you want to do your best to turn that money into some sort of investment. A house is a great way to do that because you're building equity.”
The house he bought in 2004 appreciated so Joe was able to refinance some money out that cleared out his remaining credit card debt. He then made a good profit on that house, selling it tax free.
“All the gains were tax free, which is remarkable thing about owning a house. And we put that money into a bigger house in a better neighborhood. And then we made a bunch of money on that house tax free.”
Also notable, Joe turned non-deductible interest into deductible interest at a much lower interest rate. The rest of the equity he had available to put toward starting his own business
Own Your Own Business
After a stint as a bond salesman, Joe realized that the corporate job was not for him – especially maintaining a clean shave, wearing a suit, and having a daily commute. A road trip landed him in Los Angeles.
“Ever since I got to college, I wanted to buy a house and I wanted to own a business. Those were my two goals.”
Even while working at a company with co-workers who became his closest friends in Los Angeles, Joe was already quietly preparing for eventually starting their own company. He was figuring out how to get the money, established a Corporation, and doing side design jobs to raise funds.
There was a benefit to starting the business young because they had little to lose. The partners were all under age 30. They didn’t yet have kids and could use home equity loans to finance startup costs for their business. Again, another benefit of owning your house.
Viewing Life in Four Acts
Joe and his wife, Kristen, still like working and were really enjoying their careers. But post-production in the entertainment and advertising business is very time consuming. The birth of their child changed their priorities. Here’s how they view life in four acts.
Act 1: Education
Act 2: Devote 20s and 30s to building a business and building wealth.
Act 3: Downshift where maybe you work but not as much. You could do consulting, change your career, or spend more time with your kids.
Act 4: Retirement
After recurring discussions, a decision was made to “retreat to cheaper ground”. This meant abandoning their lives and selling their house. By lowering your overhead, you can work less and spend more time with your family. Being able to spend more time with their son while he’s young is important.
“He's only going to be young once you know.”
Find show notes at www.inspiredmoney.fm/160 and listen to the entire Inspired Money interview on your favorite podcast app that’s probably already on your smartphone.
About Inspired Money
Improve your money mindset with host Andy Wang, named a top influential financial advisor by INVESTOPEDIA, as he interviews actors, entrepreneurs, non-profit leaders, and even a former WWE wrestler to help you get inspired, shift your perspectives on money, and achieve incredible things. Whether you want to launch a side hustle, pay down debt, or give money to charity, listen to Inspired Money because big things begin with just a little inspiration.