DFW Rockstars
DFW Rockstars
Dec 14, 2020
5. Avoiding Debt Like the COVID Plague
Play • 1 hr 13 min

Justin Shelley 

My concept when I started this podcast, DFW Rockstars, is around two things: 

I think all of us, every human on the planet, they have something to offer me. They're smarter than me at something. They have an experience that I can learn from. I believe that about everybody on the planet. So I'm a big believer in community and relationships and leveraging each other's experience. All right. So that's, that's one.  

 

 

Richard Gibson 

I would love to see that one, right? Yeah. 

 

Justin Shelley  

There's nobody that I know that came up with a business plan executed on it and went right where they projected, they were going to go.  

 

Richard Gibson 

No, everyone falls. They fall a lot. And hopefully if you fall on your face, you're at least going the right direction. It's when you fall on your rump and don't get back up, but you got to learn to get back up. And I think that's part of what you're helping do here is finding people to help you get back up and keep going, because you can't win every time in every business idea. Right. You know, you know, I hate to use baseball as an analogy to use it, but would you rather have someone that gets on base every time they get to bat or someone that hits a home run, you know, 20% of the time, which batting 200 for home runs is an amazing, right? Yeah. That's amazing. So would you rather have someone that gets on first, every time at bat batting a thousand to get on first or batting, you know, 200 to get a home run? 

 

Justin Shelley  

I mean, we want to, we want to get there every time, right? 

 

Richard Gibson: 

I think so. Yeah. You guys, that gives you, you know, cause that's the strategy you want to do and because you can't have every business ideas, a home run. 

 

Justin Shelley: 

And not only that, but the execution's never going to be perfect. The forethought, the strategy that you thought was going to work isn't I mean, hell who saw COVID coming, right? Let's beat this dead horse. 

 

Richard Gibson: 

Well, there are a few people that have been saying we were due another pandemic. They didn't see COVID itself, but they saw a pandemic coming true, you know, but you know it, but it's going to be like every other pandemic is going to circle the globe at least two times. Right. You know? And, and that's what we're going through as the second one we've been able to, as they say, flatten the curve, but at what cost. 

 

Justin Shelley: 

Yeah. Ooh. Now you're going to get me fired up. 

 

Richard Gibson: 

Well, yeah, me too. 

 

Justin Shelley: 

Cause that's not what we're here to talk about today, but that is my Oh, nothing gets me lit more than that. What the CDC refers to as excess deaths, suicide rates, you know, all this stuff that we're not even talking about. As we try to control something that is largely uncontrolled. 

 

Richard Gibson: 

Oh yeah. All's we're doing is mitigating. 

 

Justin Shelley: 

Right. Which is fine and mitigate away, but at the cost of what we've got to do a cost benefit analysis. And, and so few people do that.  

 

Richard Gibson: 

I'm not a real political guy, but poor governor Abbott. Yeah. I mean, try to make rules for a state this size. I mean, what's good for DFW metroplex. Doesn't work for Alpine, Texas. Doesn't work for Tyler, Texas. And so, you know, what he's doing is giving guidelines to the local ones to try to make the decisions. But then you have the problem, like when this was early on, you know, like you have a city, like Plato decides they're closing everything down and then the city right. North of, at Frisco, this is all we're not closing anything down. All right. And so I think that's where governor Abbott did actually an excellent job of saying, okay, here's the criteria. So like now with the hospital beds utilization over a seven day, rolling average being above 15% for COVID patients, we have to roll back. The, okay. That actually made sense to me, but going to zero and closing everything down, I really feel for people that had to, you know, suffer through all that. 

 

Justin Shelley: 

Well, and you and I are fortunate enough to be an industry that didn't get just shut off. 

 

Richard Gibson  

We didn't get shut off, but it Affected us back in april. 

 

Richard Gibson  

You know, I'm seeing it is like the faucet turned off. I don't know. 

 

Justin Shelley 

No. Cause that was right at your primary tax time. That's the primary tax preparation man. 

 

Richard Gibson: 

Government moved that late July to July. Um, okay. That's all right. That'll be good. That's nice. Oh wait, are these people are going to come in? Are they not going to come in? I just don't know what's going to happen. 

 

Justin Shelley: 

I had not contemplated that.  

 

Richard Gibson: 

It's just, you know, little regulatory change changes, everything you plan and budgeted for. And so it was like, you know, we're sitting here with the complete unknown what's going to happen. And then you've got people sitting at home saying, you know what? I think I'll start reading and figuring out how to do my own taxes and which was fine. But I had several people that said they started doing that. And that's why they came back. 

 

Justin Shelley: 

Absolutely. I played that game because it's like, yeah. Oh, have you read these instructions? This is why we pay people to do stuff. Exactly. 

 

Richard Gibson: 

You know, it's like, if you are comfortable doing it, then do it. It, it, it, there's nothing wrong with it. But if it's not something you are, have a propensity to do, don't. 

 

Justin Shelley: 

Agreed a hundred percent. So, on this subject, right. We're, we're dealing with globally, we're dealing with a challenge that very few people saw. There was, there was no plan in place. We're all scrambling.  

I was interviewing another gentleman a while back and they kind of said, well, this is really just normal. If you think about it, because business, like we said, there's no straight line to success. Everything about running a business is, or really life is about pivot. It's, it's taking your best guess acting on it. If, and when it doesn't go the way you plan, figuring out your next step.  

So, one of the things that I like to talk about on this show is the greatest pivot point you've dealt with the biggest challenge, the curve ball that was thrown at you, that knocked you off your rocker, um, that you, you had to get back up from. So, what was the point, if you could boil it down to the worst, the, you know, the, the most gut-wrenching challenge you had to deal with in the business world. 

 

Richard Gibson: 

All right. Well, I'd like to commend you on that. Great segue. Now that was, that was very good. Almost professional life. Now for me was the financial crisis of 2008 and 2009.  

I was, I don't want to say master of my universe then. Cause I thought I could do no wrong. Uh, I could go down to the bank, borrow a million dollars on my signature, go get another, do another business was no issue. Well then, that financial crisis came, and I learned how dangerous debt and leverage was. I've never been a big consumer debt guy. I've always thought, nah, I don't want consumer debt. I'll take business debt. I'll leverage it up so I can make more money. Well then, that financial crisis came in Texas. We weren't so bad, but then all the sudden the bank started calling my notes, due. Oh, Oh, Whoa. Uh, Oh, this line of credit that I was going to use to go through this slow time, they're going to say, “Oh, we must cancel that.” You can't do that. Um, okay. And so, I found myself all of a sudden in a position with a debt being so large and being called that I had, instead of being able to plan out over years of repaying this stuff days. 

 

Justin Shelley: 

So when, and this is a valid question and I'll show you my ignorance when it comes to finances. When the bank calls a loan, they're asking you to repay at a hundred percent, right then? 

 

Richard Gibson 

Within well with mine, it was within 30 days. 

 

Justin Shelley: 

And they can do that even though that wasn't the term that you originally agreed on or is that just in the fine print somewhere? And we don't know, it. 

 

Richard Gibson: 

It depends on what type of loan it is and such like that. So, each one is different depending on what the promissory note is. These were some lines of credit and mine just happened to be on a couple of my others. They were balloon notes that were coming due that were amortized longer. And so, it was time to do a refinance of the balloon because, okay. And then the financial meltdown came. They just said, no thanks. And they said, yeah, we're not going to do. And it's like, wow. Wow. Um, I didn't see this coming. And see, that's the one thing that also frustrates me is there are people that orchestrated that meltdown in the Northeast. I'm not going to name any specific street. Fair enough. You know, because I might hit a wall. Um, that none of those people went to jail. There was no penalty. There's no, nothing. Every time they do this main street, America gets hurt. But yet there's no. And I just, yeah, Goldman Sachs, Bear Stearns, you know, all them. It's just like, you know, it used to do things to facilitate. And now we have companies that don't make money that are on the stock market with ridiculous valuations. Uh, I just, I don't understand what it's all about them getting our money. The insiders and the outsiders were outsiders they're insiders and they want more of ours 

 

Justin Shelley: 

And then they've got the strings to pull, to make it happen. Yeah. 

 

Richard Gibson: 

And so with this, you know, and that's how that whole house of cards, debt, and that's what it did. And so what it took me to do is bringing in a close group of advisors to help me navigate this and figure out how to, how to finish advisors. Some are friends, some are professionals, actually a couple were, uh, pastors. I found that my, a couple of pastors that were, uh, friends of mine that are executive pastors of the churches, they don't really preach, but they run the churches. And so, you know, and they helped give me some guidance. They help give me some things. And then the other thing I did is I looped my staff in and had a meeting. I told them what was going on. And I was like, you know, you know, I got to one point, I didn't know if I was gonna make payroll at the end of the week. 

 

Richard Gibson: 

And so I told them, I said, the first per payroll, this is going to be cut as mine. And then I'm going to go through everything I can, you know, and of that at that time, I think I had 22 employees. I had one that left because they were afraid. But when they got their paycheck, they said, Oh, I thought you said, we weren't going to pay. I said, no. I said, you may not get the whole paycheck. They got 92% of their pay. So I was able to sell some things, do something and rearrange some things because I decided that taking care of my team was the most important thing. And you know, but it was, it was devastating. 

 

Justin Shelley: 

You touch on two things. I want to point out and maybe dig into a little bit more, but at least highlight. So, number one you're and I love that. I get kind of beat on a little bit. I'm told I'm too transparent sometimes, but I will. I like, I want people to know what's going on because the opposite of that is that they live in fear. Right. If our employees aren't dumb, they see what's going on. And if you're not honest with them, then they're probably going to be out job hunting anyways and not telling you about it because they are all wondering. Right.  

 

Richard Gibson: 

I want them to also be invested in the success. 

 

Justin Shelley: 

And then, so that was, that was my second thing I wanted to highlight where you, you bring them around and, and get them involved in the solution, I think is what I mean. 

 

Richard Gibson: 

Exactly. Yeah. And I tied their future success into it. And you know, it's just like, because you know, business is a team sport. It is, there are a lot of people that will say that, Oh, I done this. I've done that. There's always someone that's on that team with them because you can't do it by yourself. 

 

Justin Shelley: 

And, and I'm, I'm digging in here because, so I work.  I think I mentioned that I'm involved in this community of IT consultants, business owners that run it, firms, cyber security, whatever else. And most of it's about marketing, but we're very involved in each other's lives. We know each other's spouses. A lot of times we know what their kids are up to. Like it's a very tight knit community and it's also got a coaching component to it. So, in, in this community of my peers, I get to see very different leadership styles. And, and the reason I'm pointing this out is because I, I watch people who struggle. They might be doing okay financially with their business, but man, they can't find good people. They can't solve problems. They can't this, they can't that. And, when I will bring up say, Hey, go talk to them, get them together, ask them how they'd like to solve. 

 

Justin Shelley: 

Because for example, in the tech world, we have to log our time and our notes when we work with a client and it is like herding cats, trying to push a string uphill, whatever you want to, you know, to get them to do it is tough. And so, we're having this conversation and I'm like, sit them down and ask them how they'd like to solve the problem. “Well, it's my business. I'm not going to ask them how to run my business. I'm going to tell them, and they need to do what I say”, you know, that's, that's kind of the mentality. 

 

Richard Gibson: 

And then you're missing the opportunity for a perfect solution. Because the people that are in the trenches that are doing it may notice something that you don't, and I'm, I'm one, I'm not a micromanager. I am a macro manager. I am going to stand back I'm hands-off but I'll give someone enough rope to hang themselves. Sure. Yeah. And because I've learned that I don't know it all. And that's a hard thing for most entrepreneurs to it is because we do wear so many hats. I am good at a lot of different things, but I'm not perfect at everything. Right. I can't be 

 

Justin Shelley: 

Well, and we can't see everything that's going on. We're not talking to the people in the trenches and getting their feedback. I mean, we could be steering the ship completely the wrong direction and not even know it. 

 

Richard Gibson: 

Yeah. Cause they'll notice trends things going on. Well, before we do. You know, by the time it, if you're actually captaining a ship, you know, you're not the one steering, it, you're not the one doing everything. They have to come get you once they notice a problem, 

 

Justin Shelley: 

You're assimilating data and making decisions is really what you're doing. 

 

Richard Gibson: 

So, and if you're not going to talk to them, that means you have a closed-door policy. That means they're afraid to them to let you know what's going on. Right. So, they're willing to let the Titanic hit the iceberg. When, if they would have said, come up. Yeah. “Hey, you know, if we change our course, one degree, South, everything could be different.” 

 

Justin Shelley: 

Here's some data you might not be looking at. So. Okay. Yeah. And I love that. So, you've got this, you're in the middle of what sounds like a life altering crisis, a major issue. You bring your team around, you have employees and then you bring a team of consultants or outsiders who may be, can see things from a perspective that you're not seeing at all. 

 

Richard Gibson: 

At all. And, uh, then also reached out, you know, to some competitors that I knew that as a mentoring group, uh, and then relied upon my family, met a community around it. Nice. And you know, it's hard with some of those people, but you've got to what I recommend to start building that community before the emergency comes up. Because sometimes it's hard to have those conversations when your embarrassed. 

 

Justin Shelley  

A year nail in it, man, that is. 

 

Richard Gibson: 

You've got to get out of your own way. Right. And that was the biggest lesson back then for me was for me to get out of my own way. I could not let my pride, Oh, wait, pride. Come before the fall. Oh wait, I think I read that somewhere. Yeah. And I imagined, so it is, but it is true. It is my pride, my ego, all of that was in the way of me getting help because I was embarrassed. Oh, I may not look good in these people. They see it. 

 

Justin Shelley: 

Yeah. But we want to believe they don't some of that's human nature. I think it's worse with us as entrepreneurs. Um, and I, and I think it's probably different with all of us. I grew up in a family of nine children, single parent income. Oh, wow. Um, you know, we were fine. I don't want to make it sound like, cause there are people who deal with poverty. Um, but it, it took an emotional toll on me. Some of the financial struggles, my early life and in business to this day, when you talk about being embarrassed, when financials come up, I shrink like that is easily my weakest point in running a business. And to have to admit it is hard, brutally hard. It's so hard and terrifying and, and crippling. And so, um, you know, that's, that's me, that's my experience. But there are whether it's finances or any number of things, you know, and I'm, I'm referring to people who won't get their team around them. You know, whatever the issue is, we have these blind spots or these places where we won't go, um, pride, ego, trauma, whatever it is. We have these things that, that can be our downfall. 

 

Richard Gibson: 

Oh yeah. We know what we know. We know what we don't know, but we don't know what we don't know. What's dangerous and that's, what's dangerous. Cause that is the blind spot. That's what you, and so that's where you've got to find people that love you enough to help me see my own blind spots and be willing to take that information from them. Yeah. And that's hard to develop those relationships. 

 

Justin Shelley: 

That's the key. And I'm glad you said that because you can ask, but if you don't have the relationship where they feel safe giving you feedback, then you're screwed. 

 

Richard Gibson: 

Yeah, exactly. And that's why I, you really need to develop those relationships before the emergency happens. Yup. You know, and it was like, I'll be one of the first ones to admit back then. I had those relationships that people could, that I would give them in a point out their blind spot. And if someone pointed one out to me and I was like, eh, Pat him on the head, I'll be the first one to admit it. Yeah. You know, and it is a lot of personal growth that I had to go through at that time to get to where I could accept that and say, yeah, they're right. Yeah. It's tough. And it's gotta be cultivated. And it does. And ants in advance. 

 

Justin Shelley: 

Good point. So, um, I mean, you talked about finance, you are over leveraged and that's what you meant by overleveraged right. I'm just looking down at some of my notes here. Cause we can, we can be leveraged or under leveraged over leveraged on our, uh, pay, not payroll, but you know, staff inventory of time, whatever you want to call it there. 

 

Richard Gibson: 

In this case, I had to March debt for the income that was coming in right. In the short term. 

 

Justin Shelley: 

Okay. Okay. So you call your people around you. Uh, that was one thing. And then you also mentioned in here that you negotiated with your creditors and I highlighted that because I've heard that before, but I'll be honest. I've never actually done it. So can you walk us through what that process looked like? 

 

Richard Gibson : 

Well, for me, it was literally calling my banker and saying, we need to have a meeting and we made the face let's face down face to face. I am not a phone guy. I am not, emails will not, we got to sit face to face and we have to talk about this situation that what's happening. And it was doing, you know, and it's like, you know, let's come to a solution. Let's, I'm not trying to stiff anyone. I'm not trying to do anything, but we've got to come to work and let's figure out what we can do that works for everybody. 

 

Richard Gibson: 

So it took probably five or seven in-person meetings with going over different ideas over a couple of weeks trying to come up with. And some of it was just, I need another 30 day extension, you know, and, and just laying out in front of them, this is what I'm doing. I'm doing this, I'm doing X, Y, Z to try to do this. And so they were like is, and the part that was part of what it was communicating with the creditor that I was trying to do everything in my power to resolve this issue. You know, sometimes you'll get some, that'll play with you. Sometimes you won't, but being transparent again in it and be upfront and communicating. That is what I think gave me the credibility. And then what we were able to do is restructure a new deal finally, and everything, and kind of put me on a probationary status and all this. 

Richard Gibson : 

And it wasn't quite receivership, but it almost felt like it to me. And, um, so, and went through it, do it. And it's like, but I, I set out what I thought was a very livable and workable plan. And this is what we're going to do. And I hit every benchmark and I sure of it because I was going to do whatever it took to hit those benchmarks. So I could prove to them, I would do what I said. And that's the other thing, because what happens when I catastrophe of business magnitude like this, that happens when you stop communicating with whether it's the creditors, whether it's your employees, that's when you're doing the most ditch to yourself and the business, because you're leaving them to speculate about what's 

 

Justin Shelley: 

Going right. And fear starts. 

 

Richard Gibson 

And when they're speculating, that means that you're either A ignoring it or B you're trying to get away with it. 

 

Justin Shelley: 

True. And I want to point out that when they're speculating, they're usually coming up with worst case scenarios, far worse than what you're ever, probably trying to write. Right. 

 

Richard Gibson: 

It's like it's. And so that's why the communication being open and doing, you know, sometimes, like I said, it could be simply, they give you another 30 day extension, right. It could be, uh, they will do an emergency loan and finance it back out and do it 12 months. Another balloon, you know, there are all kinds of different options possibly on what happened, but it was just, you know, like when it happened for me, I knew it was going my original plan. Oh, well just refinance it for another one. We'll do another book, you know? But all of a sudden, in 2000, 2009, all the credit dried up there was nobody willing to do any of that anymore. And so what you, you know, where you're used to, as our government loves to kick the can down the road, all of a sudden I could no longer kick the can down the road. Apparently someone filled it full of concrete, broke my toes. 

 

Justin Shelley: 

Well, and I mean, the, the worst possible outcome of these meetings is that you're in the same situation. Exactly. And you burned a couple hours of time. Um, I love that you insisted on the face to face because if, if we look at human behavior connection, the way we operate, one of my biggest grievances about the face mask that we all have to wear is that it is a disconnect emotionally and socially because we've lost social cues, facial expressions, 

 

Richard Gibson: 

It, most people are horrible at body language anyway. Right? And then you put the mask on that covers the micro-expressions that are so that we pick up naturally, but we may not always read it. Right. But at least we get it. And then you work with a mask. Yeah. 

 

Justin Shelley 

It was where we're damaging relationships. We're damaging emotional connection. And I'm not here to, you know, go on an anti mask rant. But the, the point I want to make is when you say an email's not going to work, a phone call is not going to work. If the mask is doing this to us, which is only covering part of our face, there is just something about sitting across the table with somebody looking them in the eye, that changes how we treat people. You look at road rage. Why in the world do we put our lives and other people's lives at risk based on who's in front. I can't think of another case, another scenario where we'll like, take these three, four, 5,000 pound weapons aimed at people and then just live with complete rage over a who's where who's in the lineup. Right. But we can't see each other. We're not, we're objectifying in that process. 

 

Richard Gibson: 

You just reminded me of a comedy skit by George Carlin, which I will not repeat on here. Yeah. That, you know how it's directly disproportionate in ratio to how close they are, the closer they get, the quieter you get about it. Yeah, yeah, yeah. Yeah. It is true. It's just, it's human nature. 

 

Justin Shelley: 

There is. Yeah, there is just, and again, a phone call is better than an email because now at least we have intonations from the voice and stuff like that. But nothing beats that, that sit down face to face. 

 

Richard Gibson: 

I want to be able to look them in the eye. And I went to, and there are actually some business owners that get this. I think it's funny. I, it follows the law. I'm not going to speak the restaurant's name, but they bought these clear plexiglass things for masks. That just go so you can see the waitstaff smile and everything, but it doesn't seal. 

 

Justin Shelley: 

Is this place in Bartonville? No. No. Okay. But that's several levels. Another one, then that's doing it. 

 

Richard Gibson: 

Yeah. There's several that are now doing it, but that's the other thing. I get a kick out of them hanging the plexiglass everywhere. Right. I was like, what? Now you're a solid, you're a sneeze shield. We're still breathing the same air people, but it's the it's illusion about making you feel safe. Yeah. Yeah. But at least then you can see the facial expressions. True. And so I was like, all right, well, this is better. 

 

Justin Shelley: 

Yeah. But it's not that, not the same, not the same, but yeah. I mean that, that human connection, that COVID is killing that a phone call gets in the way of that. An email annihilates, uh, you were able to negotiate this, I believe, but just hearing your story because you went and you had a human connection with somebody. 

 

Richard Gibson: 

I think so. And I think it was my determination to, I think it was the openness of what I was going through. I would love to say it was the human connection, you know, that had something to do with it. But I think it was when they, the human connection where they can see the transparency go with it combination because when they looked at my eyes, they could tell that I was sincere, that I was doing everything within my power to come to a solution. Yeah. And I don't think I could, could evade it any other way than in person.  

 

Justin Shelley: 

Right, Right. I I'm reminded of a story. So I'm politics completely aside. I, I love to read. I like, so I'm a college dropout. I don't have a degree in business or anything. Um, and so that's a disadvantage and I have to compensate by. I mean, you can see my, my bookcase behind me I've read most of those books, not all of them, but most of them, um, anyways, story to the point, I was a fan of Donald Trump long before he ever got into politics. Okay. Um, and by fan, I just mean I've, I've picked up on some key things that he's done. That sound really smart to me. And one of the stories that just really struck me that he told him one of his books was, uh, you know, because he, again, like everybody, it wasn't a straight line to success for him. He had his down moments, uh, and there was a time where it said that the beggar on the street with a few coins in his can was richer than Donald Trump, because he was in debt and had no money. 

 

Justin Shelley: 

So he's, he's at this low point in his life and there's a banquet or something that he's supposed to go to and he doesn't want to go, like, he doesn't want to show his face. He's embarrassed, all this stuff we're talking about. Um, and he has access to a limo, but this, at this banquet are his bankers. And he also can't show up in his limo to talk to his bankers about why he can't pay the bills. Right. I, and I might be messing the story because I read it a long time ago. But so anyways, he, he walks to this thing, it's a few blocks away. It's raining. Like his life just sucks. And, and he, he gets in there and he ends up sitting by, I think it was coincidental that he ends up sitting by his banker and starts having a conversation, maybe similar to what you're talking about. 

 

Justin Shelley: 

Yeah. And it was that conversation that saved him because he was, he was looking at complete disaster. Um, and, and I hear again, I'm telling a story that I may not be getting all the details. Right. But it sounds very similar. And what I remember was that the catchphrase, maybe it was a chapter title, was you make your own luck. Yes. If he had stayed home, like he wanted to, if he had hid, if he had let that fear, cripple him, that shame, that guilt, whatever it was, keep him in his house where he was comfortable and dry. Um, whatever he took that step, he was uncomfortable. He sat down by a human, he had a connection, he was, uh, transparent. And, and it got him out of that crisis, you know, in, in some way, shape or form. So, uh, let's see, Richard, we've, uh, we've talked about your, your low, how you got through it. Did we miss anything on your you're coming out of there? 

 

Richard Gibson: 

You'd like to talk about, I don't think so. I think that, you know, the biggest thing that helped was the personal growth and developing a team around me that I could communicate with, you know, cause I still talk with some of these guys today, you know, and that's, you know, it says building the team, right. That is the, that's the big takeaway from it and start it now, whether you're in trouble or not. Yeah. Yeah. It it's, you know, like I said, I thought I had deep connections with the team cause I'd always helped and done and I had, you know, bounced ideas off, but it was never until I went through this that I really learned how important they were to me. 

 

 

Justin Shelley: 

Okay. Yeah. No, that makes sense. Uh, one thing that, I mean, maybe you've kind of already said it, but I've got a highlighted on my notes. And so I want to, I want to hit this real quick. Uh, you said to avoid situations like this is avoid debt. And then I titled the episode intentionally avoiding debt, like the COVID plague. Uh, we haven't talked a lot about that, but my question around this is some debt is responsible, some amount of debt and, and this is a hypothesis, feel free to shoot it down and, and some debt isn't like, what do you have a guideline? Do you have advice for, um, what kind of debt when the take on debt? Is it just completely flat avoid it? Like the plague or what's your take, 

 

Richard Gibson: 

I'm almost at the point of avoid it. Like the plague, uh, there's another radio talk show host that says all debt is evil. I'm not quite there for consumer debt in the Nashville area. Yes he does. Okay. Um, 

 

Justin Shelley: 

We don't want to plug a show unless he's going to plug our show. Right? 

 

Richard Gibson: 

Yeah. And so we won't mention any of that. Now, what I think is some debt in businesses are necessary, unfortunately, and you can't do certain things without debt, if you're trying to grow, right. Like let's use the idea of a building for renting versus owning. 

 

Justin Shelley: 

Yep. You're not paying cash for building, probably most people can't right 

 

Richard Gibson: 

Now, there were times that maybe you could save the money that, but with the real estate prices that have happened in North Texas, we can't do it. And so that debt may make more sense, excuse me, from a business standpoint. Okay. But now I want a new 86 inch TV to watch X, Y, Z, or the super bowl that makes no sense that you better save the money don't finance. Don't throw that on your 24% credit card. That makes, that is absolutely no. And credit cards for business. You know, if the interest rates are extreme, why do it, you know, there are places now like PayPal credit, I hate to plug down, but you know, you do things. They give you six months interest free. Okay. That may be okay. Yeah. You know why? Because it gives you a lay way to budget out the cash. You may even have the cash, but maybe because of like times now with COVID, I would like to pay it out over six months. Right. So I can manage my X flows, you know, my expenses going out because I don't know my inflows are going to be because of COVID 

Justin Shelley: 

Well, and because of always, all right. And that's, I think the biggest I'll throw myself under the bus here. I'm an optimist. And so it, a lot of times in my brain, it makes sense to take on debt right now, because I know I'm going to be so much richer. Just give me another week or two, and I'm going to have more money than I have today. And then a year, hell, I'm going to have all the money I need. So it makes sense to take on debt. It'll be so easy to pay it off later. I play those kinds of games in my brain up. I don't like to admit that publicly, but it happens. Um, another thing I want to point out though, is that statistically speaking, uh, people who start businesses with money, meaning whether it's an investor or their own money, but they have a significant amount of money to start a business with statistically are less likely to succeed than people who start out without money. 

Richard Gibson: 

You ever heard that? Yes, actually. I've heard that, but I've never actually seen the study that proves that same. Okay. And then maybe it doesn't matter. 

Richard Gibson: 

It doesn't matter. Not the premise is that your creativity starts when you can, when you want to go up. And there's the only way that you could go is either sideways or up. 

Justin Shelley: 

Well, let me give you the, you know what, I'm going to cut you off right now. And I'm going to give you the case study. You said you've never seen, okay. I got a line of credit. This was several years back. I got a line of credit for $50,000. A bank rep walked in my door, soliciting, Hey, we were, you've been approved for a line of credit. It's a reputable bank. I mean, it's not like it was a scam. I went down to the bank. I talked to him about it, filled out the paperwork, got approved for a line of credit for $50,000. I blew through that line of credit in about eight months. And I bought all the stuff that I knew was going to work out so well stuff I would have never done if it was my own money. Um, none of it worked out. I would not have done the things I did without that line of credit. I would have come up with more creative solutions, more careful solutions or thought out, more thought out. Yeah. So there's your case study? 

Richard Gibson: 

Yeah. Well, it's just the case study for individuals. When thinking about what you're going to buy and stuff, you know, it's been, there are studies that I have seen that if you pay with plastic, you'll spend 21% more than you would if you pay for cash. Rarely. Why? Because Benjamin hurts when it comes out of the wallet. That's true. Yeah. I know uncle Benjamin. Yep. Okay. Yeah. He wants to stay in my wallet. I like uncle Benjamin in my wallet, but swiping the card is easy. Why put a card? That's nothing. That's just, that's just digits. Well, what is that? And so, yeah, but there are several consumer studies that consumers will spend 21% more when paying with debit or credit cards as they will with cash. 

Justin Shelley: 

I think I've heard that before. And it actually reminds me of early in my marriage, we did the envelope system for budgeting and it was amazing what we could make happen because we had cash in envelopes. And when the money was gone to buddy's God, we got to do some, like, we can't do that thing anymore. We had an envelope for dining at, you know, eating out. We had an envelope for groceries. We had an envelope for rent and uh, yeah, we, we spent a lot less than, than we do now. I'll tell you that. Yeah. 

Richard Gibson 

Well living within your means. Yeah. Well, you can run a business just like that also. 

Justin Shelley: 

Are you familiar with profit first by chance while we're plugging things? 

Richard Gibson: 

 I have heard it, you know, I have a little different mindset. 

Justin Shelley: 

I like it. Honestly. I'm not, I'm not advocating it, but it's an interesting concept. It's similar to this envelope system for businesses, you know. But it's a mess when you try to do the accounting behind it. 

Richard Gibson: 

Oh yeah, it is. You know, but it, it boils down to. 

 

 

 

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