As with many things, there are multiple ways to skin the cat (personally I'd never skin a cat but each to their own). When we first started we had a guy who owned the building we were helping renovate and despite getting a screwing by him (he was upfront with us that he was going to) he did give us our first start fresh out of school with a cool $100k+ in student loans. We had zero pesos to our name but used every last credit card to finagle our first frankenbrewery. We were ready to open but were out of money to buy our pizza ingredients so took all our furniture to the flea market and sold it even upselling a torchiere light for $30 that we had bought for $20. Took these dollars to Costco and opened. Even had enough left over to treat ourselves to some $.79 tacos! Anyways, once open and running our landlord who decided to secure his interest by demanding partial ownership (that we gave into) insisted we pay ourselves a salary from day one otherwise not worth being in the business. The reason I tell this story is that it is possible to bootstrap yourself into success; risky but what really do two 25 year olds with no kids have to lose? Fast forward and we kept that approach by taking out debt as long as we knew we could make more than the debt cost us! Our first $800k SBA loan ended up netting us enough to build our own place, ditch the original landlord (and buy back our shares), and then propel us into our second business. Again and again we did this maxxing out our available debt to grow faster than the debt cost us. Very stressful times with a tremendous amount of work but the one thing we always kept a close eye on us was what our efforts value was and if we exited at any time that the debt could be paid off and we'd be ahead. Nothing wrong with buying a million dollar brewhouse if it produces enough to make the business worth 5 million; you are an idiot to buy a $100,000 brewery that makes your business only worth $50,000! Whatever money you are investing into your business has to be making you multiples greater! Now writing this from the other side and other hemisphere of the world still building more breweries although not using commercial debt, we still look at it the same (if using personal funds it is still debt for the business, it just owes us vs a commercial lender). It all comes down to multiples. Even if you have a massive 20% interest rate, it is irrelevant if it allows you to make 5x more than what that debt costs you! Often opportunities are overlooked because of the fear of the risk and if you can make them work safely, go for it!
Tom's mention of the FIRE is very valuable. On Reddit there is a great FIRE subreddit and lots to learn. There is no feeling greater than financial independence and there are many ways to achieve it.
Now the big question/challenge is how to reprogram ourselves to stop taking on projects and stop working so hard. Easier said than done because there is so much ripe fruit ready for the picking!
Thanks again for taking the time to write these articles, much appreciated!
Looking forward to getting “A High School Graduates Guide to Financial Independence”. Do you know when it will be available? I’ll make sure my daughter reads it too when she gets a little older👍👍
I’m on the same page with you regarding saving/investing, cheers!
As with many things, there are multiple ways to skin the cat (personally I'd never skin a cat but each to their own). When we first started we had a guy who owned the building we were helping renovate and despite getting a screwing by him (he was upfront with us that he was going to) he did give us our first start fresh out of school with a cool $100k+ in student loans. We had zero pesos to our name but used every last credit card to finagle our first frankenbrewery. We were ready to open but were out of money to buy our pizza ingredients so took all our furniture to the flea market and sold it even upselling a torchiere light for $30 that we had bought for $20. Took these dollars to Costco and opened. Even had enough left over to treat ourselves to some $.79 tacos! Anyways, once open and running our landlord who decided to secure his interest by demanding partial ownership (that we gave into) insisted we pay ourselves a salary from day one otherwise not worth being in the business. The reason I tell this story is that it is possible to bootstrap yourself into success; risky but what really do two 25 year olds with no kids have to lose? Fast forward and we kept that approach by taking out debt as long as we knew we could make more than the debt cost us! Our first $800k SBA loan ended up netting us enough to build our own place, ditch the original landlord (and buy back our shares), and then propel us into our second business. Again and again we did this maxxing out our available debt to grow faster than the debt cost us. Very stressful times with a tremendous amount of work but the one thing we always kept a close eye on us was what our efforts value was and if we exited at any time that the debt could be paid off and we'd be ahead. Nothing wrong with buying a million dollar brewhouse if it produces enough to make the business worth 5 million; you are an idiot to buy a $100,000 brewery that makes your business only worth $50,000! Whatever money you are investing into your business has to be making you multiples greater! Now writing this from the other side and other hemisphere of the world still building more breweries although not using commercial debt, we still look at it the same (if using personal funds it is still debt for the business, it just owes us vs a commercial lender). It all comes down to multiples. Even if you have a massive 20% interest rate, it is irrelevant if it allows you to make 5x more than what that debt costs you! Often opportunities are overlooked because of the fear of the risk and if you can make them work safely, go for it!
Tom's mention of the FIRE is very valuable. On Reddit there is a great FIRE subreddit and lots to learn. There is no feeling greater than financial independence and there are many ways to achieve it.
Now the big question/challenge is how to reprogram ourselves to stop taking on projects and stop working so hard. Easier said than done because there is so much ripe fruit ready for the picking!
Thanks again for taking the time to write these articles, much appreciated!
Looking forward to getting “A High School Graduates Guide to Financial Independence”. Do you know when it will be available? I’ll make sure my daughter reads it too when she gets a little older👍👍
I’m on the same page with you regarding saving/investing, cheers!