♪ ♫ ♪ “Let’s talk about debt, babyyyyy. Let’s talk about you and me. Let’s talk about all the good things and the bad things that may beeeee. Let’s talk about debt… Let’s talk about debt!” ♫ ♪ ♫
This season, I gave myself an early Christmas present: A zero balance on my credit card. In a world so often obsessed with “stuff,” the making of stuff, the buying of stuff, the collecting of stuff, and the showing off of stuff, I can understand if celebrating nothing seems anticlimactic. So allow me to give you some background to this little big win as well as share with you how I did it and how you may too.
As with my other posts on wealth building and/or debt reduction, I will say outright that neither my jabs nor my advice is aimed at those with legitimately tough circumstances: For example, those with little to no access to education or training, those with major disabilities or illness, or those who have been saddled with huge medical expenses or the like. If you’re dealing with situations like these, it’s possible you may need to recruit the help of a debt-relief or bankruptcy attorney or any number of nonprofit or government programs designed specifically for your needs. Even so, the following tips still hold true and will be applicable to the majority of the folks reading this post.
Some anti-establishment rebels might proudly claim themselves to be anti-Capitalist, anti-profit, or even entirely anti-money. All of that is bogus in my opinion unless you teach and practice first and foremost being firmly anti-debt. What’s the point of batting around a scholarly gabfest about wealth disparity if you’re not doing your own part to close the gap? (Ahem… posers.) The power of any people is most realized in the cumulative strength of its individual members. As the saying goes, “Don’t talk about it. Be about it.” I do take this work seriously. Though I have been known to lighten the dialogue by joking that I am a starving artist in recovery. That was my former incarnation before I began studying, understanding, and applying some basic sciences.
Familiarity has a magnetic quality about it. Sameness is, well, safe. Maybe even cozy, even if it ain’t right. In this respect, scarcity-thinking and -living are not unlike a type of addiction. As with drug-abuse, no one that is hooked can see that they’re making bad choices, often times because they are too caught up in the full rapture of the high. Only from time to time, when one hits a proper low, do they get those “moments of clarity,” however infrequent and elusive. I find the comparison to be fair also because of the stigma and deep shame associated with scarcity-thinking and -living. Guilt for not having enough and being enough. A hole in the chest that to their own detriment, many people attempt to fill with “stuff,” all in order to feel some sense of worth.
I’ve been there. I was a proud anti-materialist (Still am, only a more knowledgeable and better practicing one these days). However, I still had the bad habits and moreover the awful results of a typical shopper. I was broke and had nothing to show for my spendings. Nothing that I could build upon anyway, no game-changers, no legacy to leave my successors whoever they may be. Though I did have… stuff. Cursed stuff. An atrocious collection of stuff. I shake my head when I think about it. The last time I changed housing in 2007, I threw out nearly twenty 40-gallon plastic bags full of junk. All kinds of junk. Sure, I might have reasoned that it was “art” or “vintage” or memorabilia. Some items I was able to sell or donate. But at the end of the day, the lot of it, garbage. Things no sane man would heave onto a UHaul truck and deliver to his new home. That might have been the beginning of my waking-up process. And it is a process, not any quick fix.
In 2008 through 2010, I had the mixed blessing of being hit hard with the recession. My main income streams, two teaching-artist contracts, dissolved one after the other. I’m generally an optimist though, annoyingly so for people who love hosting bitch sessions because I usually don’t care much for participating in them. “No matter,” I thought. “I’ll work it out. Salgado always works it out.” (Yes, somehow if you’re going to talk to yourself, it’s fun to narrate parts of your story in the third person. And might as well go all out and also do so in Howard Cosell’s voice… Salgado always works it out.) But nothing did work out. No one wanted to help me. No one could help me. The job market was frozen shut.
Dios mio, I even considered *in hushed tones* selling out. Yes, the artist’s artist was over it. Starving artistry quickly loses it’s appeal when you’re, like, you know, on the verge of actually starving. I scanned craigslist ads for entry-level positions at companies in the financial district. Nothing. I was too late. I learned that I spent too much time in a career path with virtually no transferable skills (or so I thought, but we’ll get to that later in the story). F**K!!! What have I done? I can’t begin to describe how the hopelessness and anger did a number on me. I started listening to Mr. Lif’s “Phantom” on repeat because that’s how I felt. Like a ghost. After committing my entire professional life to a particular set of ideals, I was betrayed by the very field I’d given everything to. None of those “money doesn’t matter” swindlers had anything for me when I needed most for that proposition to be true. Liars. All of them.
If I have to witness another pseudo-revolutionary tell an audience (especially inner city youth) that money doesn’t matter, I will likely slap the mic clear away from their face, drag them by the ear offstage, and ask with squinty eyes and extreme consternation, “What the hell are you thinking?” That en vogue asceticism is best fit for the hyper affluent. For the rest of us who came up on low to moderate income — working-class type folks — it’s a total heap. To me, that spiel is fighting words. I don’t know why those who are already resource challenged should be targets for these impoverishment peddlers but it’s morally objectionable. Like Bernie-Madoff-wrong. I had no right (or privilege more accurately) to adopt that nonsense to begin with. My family and I were immigrants. We came to the States during another crappy recession in the early 1980s. The siblings were divided between households. We slept on floors and on sofabeds till we got on our feet. We shared clothes and wore thin coats through New York blizzards. Money matters, okay? Money definitely matters.
Still, there was hope. There had to be. Enter rage. And a moment of clarity.
From now on, solutions only. Ever! The pity party was over. I had to do something. Something out of the box. No more attempts to piece back together the old model. The old model was vomit, rightfully retired, and never to be resurrected again, dammit. Complete overhaul. That’s what was needed.
What follows here is how I fell in and then climbed my way back out of that financial ditch. These are the actions and new principles I’ve collected that shape my current reality. And that may help reshape yours too. First, I made an awfully wrong but unfortunately necessary and all too common mistake. I borrowed against my credit card to help keep me afloat. I tell ya it’s a slippery slope. Mounting interest is a killer. On top of that, I’d been a “loyal customer” to my credit provider for many years so periodically they’d stretch my credit limit to “reward” me. And loyal doesn’t mean you’re any good with money. It only means you’re able to make the minimum payments and never fully default.
No sarcasm, I was the perfect customer. This is because I’d let the interest accumulate like a dummy. In fact, people who do the opposite, that is regularly pay their bills in full and on time are referred to by lenders as “deadbeats” (It’s true! Look it up.) because they don’t generate the company any revenue through interest. At the start, my limit was raised a couple thousand dollars. A few years passed and again another couple thousand. Before I knew it, I had a $20,000 line at my disposal. Plus, another fun fact as I understand it, you’re not allowed to ask them to reduce your limit once it’s given to you or you risk it negatively affecting your credit report. It’s like a very high-level Shaolin kung fu obstacle course. No place for rookies, especially not anyone whose only relationship to money was an extreme aversion to learning anything about it.
That’s right, think like an immigrant. Or like a startup. Whichever floats your boat. I relate to both. In any case, it means get downright scrappy. This website has a pretty strong archive of the methods I employed during some of my rougher days. Just browse about. I’ve already written at length about the measures I took to get discounts and savings, possessions I sold, how I cut down on my electricity, came up on office supplies or phone deals, did calculations for bus fare, and collected pennies (literally). I am not embarrassed. Many people would be. But this really is step one! Let me explain why.
Everyone has what the economically enlightened know as a “financial set point.” This is frequently illustrated as a thermostat, an image I believe that was made popular by author T. Harv Eker. It is your identity, your underlying self-image, your emotional comfort zone with owning a certain amount of money, which more often than not is shaped by how you were raised by your family, your various communities, your circle of friends, your culture, and your neighborhood. A lot of people have theirs set for low or for negative dollars even.
What does this mean? It means you will want to purge anything that feels like excess. If you’ve acclimated to having little to no money, you will find a way to get rid of the supposed surplus. You will spend it, you will give it away, you will burn it, you will lose it. It’s a fact. More than 80% of lottery winners will vanish their entire winnings only a few years after scoring big. The same phenomenon holds true for professional athletes — multimillionaires — shortly after retiring from their given sport. They go back to being broke. I’ve met people with six-figure salaries — which isn’t exactly chump change — that were still living paycheck to paycheck. Most problematic is that these actions aren’t intentional. They are driven by stealthy and treacherous psychological malware.
This is why I get that “Oh, really?” look on my face when I hear people pray for infusions of cash. They’ll say, “If only I had a thousand dollars, everything would be fine.” The same when I hear organization leaders say, “If only we had a million dollars, we’d be alright.” Bullsh**. And bullsh**. They wouldn’t even know what to do with a million dollars except, you know, evacuate it from existence. If you don’t know how to manage, say, $500, how the heck do you figure you’ll have the knowhow to manage five million or five hundred million? The money doesn’t come with an instruction manual, you know? What — you think having more money will make you smarter? You’ll just magically inherit the skills to supervise and grow it? Nah, son. You’ll only handle it the way you’ve already trained yourself to handle it. “How’s that?” you ask. Look no further than the evidence in your bank accounts. Either they’re healthy or they’re not. This is why investors in both the for-profit and nonprofit arenas never want to get into bed with underperforming companies no matter how attractive the vision. They’ve already demonstrated what they’d do with the money — lose it.
In this respect, cash doesn’t solve anything. Frikkin’ nothing, okay? It only works to stave off the inevitable. Which is that your funds will always equalize back to the norm as specified by your financial set point. I know this because it describes my own experience as well, even at my lowest of lows. I’d reach the limit on my credit card (Yes, twenty effin’ thousand dollars!), then receive some help from loved ones to shave the mountain down, and just as fast, it would be up again. Lesson: cash has no power whatsoever against a poorly calibrated financial set point. None. So stop wishing for more cash. Write this ish down. What is needed instead is cash knowledge and wealth consciousness.
Wealth consciousness is a topic that I could talk about and explore for years but for the sake of keeping us on track, here are my key takeaways. As a practice, learn to tightly monitor every dollar you have, right down to the penny. Do so like your next meal counted on it. One day it might. And what you’ll find is, if all goes according to plan, you’ve been overspending on a bunch of foolishness and it needs to stop. Also, through the course of this exercise, you’ll finally get down to what you recognize as truly important in your life. Both your physical and psychological space will start becoming more curated, populated more deliberately. You will find a deeper enjoyment and happiness — like how former smokers often comment on the new taste of ordinary foods.
This is no put-on. Even at the worst of my monetary situation, I mean after I took mental control over the matter, I enjoyed myself quite a lot. I had a good attitude, I had an active social life, I was physically fit, I was intellectually sharp, I did a lot of professional development research, heck, I even built a business, all sorts of things. I started having fun conjuring ways to stretch money or earn money. Neither my rejection nor attraction of money were as tightly bound to my sense of self-worth. I was effectively chillin’. More importantly, I was working to rewire my set point. I was developing money management abilities that were previously largely absent from my life experience. I was getting liberated. And the bulk of that work happened first in my mind. Then and only then did it make sense for me to come up on some cash.
The immigrant narrative is a powerful one. People who up and move their families to another country are assuming big risks. There can be many hazards. Still, the folks that take on this herculean endeavor do so relying on two things: luck (which isn’t up to you) and determination (which very squarely is). I don’t care if you were born here. Unless you’re a Kennedy or a Rockefeller, somewhere in your lineage you have relatives that started with nothing, made moves and did so successfully enough to afford you the time to read books and blogs. When I say work like an immigrant, I mean pay tribute to your predecessors and work your ass off.
As bummy as the artist’s life is, there is still something remarkably chic about the culture. It is bohemian poor, poor-lite if you will, quasi poor without any of the real hardships, fears, and anxieties of being bona fide poor. It’s the privilege to repel wealth. Our ancestors did not have that privilege. And we do their toil an injustice by pissing away opportunities that may otherwise continue to build upon their efforts, simply because some of the options may be deemed displeasing to our fashion sense.
While some of my friends got jobs at the mall, one of my first jobs as a teenager was that of dishwasher. I much prefer using the dishwashing machine these days, but I still feel like I have dishwasher guts, dishwasher strength, and dishwasher drive. I know how to move quickly and efficiently through a busy kitchen, whether literally or figuratively. I called upon my immigrant roots and my dishwasher alter ego to boost my recession fighting powers. We’ve all made lists of things we imagine buying. I flipped the script and made lists of things I imagined building. Rather than a register of items to spend money on, I jotted down items to make money from. It started out simply enough. In a notebook, I asked myself what I would do if I had to conjure one dollar from thin air. What resources would I draw upon to make that happen? And I’d write down all the ways I could do that. The next day, two dollars. And later in the week, four dollars.
This generated a wide array of solutions, odd jobs and freelance work: landscaping, child care, copywriting, and commercial acting gigs, all of which I made good on. I was retraining my mind to develop answers instead of obstacles, production ideas instead of consumption ideas, selflessness instead of selfishness. Then an interesting thing happened. By the time I got to the thousands of my brainstorming exercise, I realized I had to go bigger if I was ever going to get in front of the ball. This is how I started plotting my very first service business ideas including a short lived storytelling workshop series called Act Write, and the more successful coaching and consulting program that we know today as Art of Hustle.
On a related note, according to the U.S. Small Business Administration, one out of ten immigrants is a business owner and up to 100,000 immigrants start businesses each month. Work like an immigrant means be industrious but it also means be entrepreneurial when possible.
In 2010, I launched my coaching practice which showed good promise though it wouldn’t be a sustainable enterprise for another few years. Fortunately, in 2011 after three years of brutal unemployment, I was welcomed back to the land of the “living.” I scored a salaried job! Albeit one that I would have to break up with just a year later. In the time being however, I was putting in about 80-hour weeks to sustain my two roles.
Fortunately, my tribulations gifted me with a new financial set point before coming upon this crispy paper. I had a meager startup and a nonprofit position so it wasn’t “make it rain” money, but my genuine contentment, living with fewer destructive purchasing habits, meant I essentially struck it rich. My earlier impulse to shed leftover funds was vanquished. I tell you, it’s a beautiful thing. I produced an honest to goodness money magnet. I continued to live simply and super contently, and I at last had the financial weaponry to wage true battle against my debt.
It’s very common for people to make monthly payments for the amount your bank tells you is your minimum due. But this is wrong. Listen. You are basically in a race against time. Your attack plan has to be aggressive because your interest rate is aggressive. Your attack plan must be unforgiving because the rate of your interest is unforgiving. I’d already been double-crossed by the job market once. I wasn’t about to kick my feet up and think this salary joint would last forever. And lo and behold, it didn’t! Speeding against your interest rate is like a game of Tetris. You have to very actively manage and vaporize the blocks or they’ll quickly pile up to the top of the screen, and the higher up the screen you allow them to get, the faster it grows and the less easy it is to beat, until finally the game is over.
Let’s go over some easy math so you have a clear example. Let’s say you owe $20,000, your interest rate is 20%, and the minimum payment is $400. It would take you 109 months to get to zero. That’s nine years!!! And that’s assuming you never needed to put another purchase on that card ever again. You’d pay over $43,000 in total and over $23,000 of it in interest alone. Does that not blow your mind? $23,000 pure profit for scheisse, inc. At a seemingly slight increase of $24,000 of debt with all the other numbers remaining the same, you would owe money till infinity. Literally. Mathematically-speaking. Till infinity! Die and come back and still be broke until forever!!! If that isn’t a high-tech death trap, I don’t know what is.
In my own situation, although I didn’t know it at the time, I only had one year of salary to use toward my debt reduction. At the minimum of $400 monthly, I would have spent $4,800 and still have ended up at only $19,122 by the time that job and I had parted ways. Think about that. Nearly five thousand dollars in effort and not even a dent bigger than $1,000. If I didn’t have the income to continue making those minimum payments, in just two months I’d be right back at more than $20,000 debt. Twelve months of work undone in two. That’s how insidious debt interest is.
This is why I threw every punch I had at the beast. I paid $1,000-$2,000 regularly and kept on doing so till this past month. I can hear it already, some individuals whining, “Oh, but I don’t have $1,000 extra a month to put toward my card.” These are the people I want to grab by the collars, shake vigorously, and say, “Yes. You. Do!” Hence the major importance of Step 1. Reformat that set point, people. I cannot emphasize it enough. I recognize it may be hard to understand how your money woes are caused by faulty programming in your brain but it is. I have crossed over and have seen it for myself, and I’m back to let you know it is. Just because you can’t see it, like you can’t necessarily see that your computer’s been hacked, it doesn’t mean a bug isn’t running around in the background totally screwing up your life. I am continuing to fortify my financial skills and to further raise my set point. We can all awaken but I can’t awaken for you. You have to put in the work.
Today, I have a revving economic engine of my own design. In January, Art of Hustle will celebrate its fifth year anniversary. I have served countless people — sole proprietors and small businesses — in accomplishing what I have in terms of strategy and profit. And I command an hourly that is twenty times the rate of my last “real” job. Look, there are “gurus” and socialites and alleged ballers, and then there are real people like you and me.
Many people suffer from severe disgrace when it comes to their financial situation. It can be very painful. I have felt that humiliation too. That’s why I’m sharing this story. To let you know it’s not impossible to surmount. You can beat it. What I provide in this post is a very personalized outline but its core lessons are applicable across the specifics of our respective situations. A true artist is that individual who can apply their imagination toward all facets of life, not just to a genre. I encourage you to use your boldness and your creativity toward your survival and abundance-making. I wish you luck, but moreover, I wish you a wellspring of determination.
Godspeed. And welcome to the real deadbeat club!
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