January 3, 2025 • 47 mins
In Episode #2 of the American Gutter Monkey Radio Hour, Chris and Dennis dive into debt and debt management for personal and business finances. They discuss how understanding when to use debt strategically, and when to avoid it, is key to financial success. With 39% of Americans carrying credit card debt month-to-month, often with high-interest rates, the episode explores the consequences of poor debt management.
Chris and Dennis reflect on how debt has evolved, from home mortgages in previous generations to today’s wide variety of debts, including student loans and credit cards. They share how businesses can leverage debt for growth using options like SBA loans and lines of credit, based on their own experience scaling their business.
The episode concludes with advice on maintaining strong cash flow and savings. Their key message: sales are king, cash flow is the steering wheel, and debt should be the spare tire—a tool, not the driver of your business.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris (00:04):
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (00:13):
Really, what it's threatening is their livelihoods
, their jobs.
It's threatening the way theydo things and every time that
happens, whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins, they
have their hands on the switch.
A way of doing business, orwhatever the people who are
holding the reins, they havetheir hands on the switch.
They go batshit crazy.
Chris (00:29):
Hello, I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:50):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:12):
Business Radio.
Hello everyone, welcome toepisode two the truth about debt
and debt management.
Hello Dennis, how are you doingtonight?
Chris, doing good, doing good,good to be back.
Yeah, important subject tonightdebt, debt management,
especially for small businesses.
It's a great topic.
Yeah, what do you start to me?
(01:33):
I guess we're going to start.
You have a story for us.
I do, I do.
I've heard this story manytimes the last couple of weeks
here.
Dennis (01:46):
I love this story because as a kid I grew up
cutting lawns.
My brothers and I had a greatlittle lawn business.
My neighbors had lawn.
We all cut lawns as kids.
This story begins where anolder gentleman is out for his
morning walk and he noticed ayoung boy cutting a lawn.
And then the man inquired andthe young boy, james, explained
a friend of mine just bought anew bike and I liked it so much
I bugged my mom into buying me anew bike just like it, and now
I have to cut lawns to earnmoney to pay her back.
(02:07):
The man continued on his wayand he saw another young boy
cutting a lawn and the young boy, david, told him that all my
friends are getting new bikesand now I have to cut lawns and
earn enough money to buy my ownbike.
And the man continued walkingand he came across a third boy
cutting a lawn and he inquiredand the third boy, whose name is
Mark.
He said I'm cutting mycustomer's lawn.
(02:30):
And the man asked if he wassaving up to buy a new bike.
And Mark said no, no, I alreadyhave a nice bike.
And the man continued if youalready have a nice bike, then
why are you cutting lawns?
And the boy replied I cut lawnsbecause it's what I do.
I'm in the lawn cuttingbusiness.
(02:51):
The first boy, james, incurredsome debt.
He borrowed money from his mom,and as soon as he pays his mom
back, he'll probably stopcutting lawns.
The second boy, david he set agoal of purchasing a new bike,
and the implication here is thathe'll likely stop cutting lawns
as soon as he has purchasedthat new bike.
And the implication here isthat he'll likely stop cutting
lawns as soon as he haspurchased that new bike.
And the third boy, mark.
He's in the lawn cuttingbusiness.
Therefore, he has a nice bike,money in the bank and zero debt.
(03:15):
While it may appear that thethree boys are all doing the
same thing cutting lawns,nothing could be further from
the truth.
James is trying to pay off debt, david is working to keep up
with the Joneses and Mark isbuilding a company.
I love this story, chris.
I grew up cutting lawns.
My brothers and I we had atremendous lawn cutting business
(03:35):
as a kid.
I think you did too right.
That's right, yep.
Chris (03:38):
I had quite a few jobs, pretty much from the age of
fourth grade, fifth grade.
I had a steady business ofcutting lawns all the way
through pretty much my sophomoreyear in college.
Yeah, yeah it was great money.
Dennis (03:49):
Yeah, it was great money .
Chris (03:50):
Schools were cheaper then , so it would pay for the pretty
much for most of my education,but still, it was a good job,
put money away every week and,yeah, I didn't have any boss.
I don't think I ever had a bossuntil pretty much I was in my
sophomore year in college.
Dennis (04:04):
Lawn cutting was a great financial tool for us.
It taught us how to earn money.
We in turn would turn aroundand bank that money and into the
70s, with hyperinflation, wewere able to put that money into
CDs.
Take it from your normalpassbook savings account, put it
(04:25):
into CDs at a much higher rate.
So we learned how to work, welearned how to save and we
learned how to invest.
Chris (04:30):
Yeah, and that's when interest rates were pretty good
too.
Dennis (04:33):
Yeah, exactly, all just from cutting lawns.
Chris (04:35):
Incredible.
Yeah, so we pretty much paidfor my college education cutting
lawns, a few other side jobs,but it was always the cutting
lawns.
It was always the best part ofit.
Money's misunderstood.
Dennis (04:45):
It's a misunderstood commodity since ancient times.
It's written about, it's talkedabout, especially today with
e-banking, automatic withdrawal,direct deposits, credit cards,
debit cards, venmo.
There's a lot of tools outthere, to the point where a lot
of people are two or three stepsremoved from ever handling cash
.
You know, add online shopping,subscription-based buying, zero
(05:10):
money down purchases it's easyto see how people can be dragged
down into financial hell.
Everyone needs money, but a lotof people don't know how money
works.
And it's not necessarily thethings that we purchase, but the
method and timing of purchasesthat will determine future
financial status.
I mean, let's face it, chris,wealthy Americans and poor
(05:32):
Americans all have cell phones,flat screen TVs, internet access
, two cars in the driveway, butone significant indicator of
future financial status is howand when these items are
purchased Right 80% of Americanshave some form of debt on
credit cards and 39% carry itmonth to month.
(05:52):
So 39%.
39% of Americans carry creditcard debt into the fall.
Chris (05:58):
Wow, right, right.
So an $8,000 per average rightnow, $8, dollars on a credit
card.
So for americans, brutal.
Dennis (06:07):
Financially skilled people buy things last.
But I say that after thepaycheck has cleared, the
money's in the bank and hismonthly allotted amount is
dispersed into the savingsaccount.
That's when the financiallyskilled person considers
purchasing an item that's not onthe docket.
(06:27):
And when he does make thepurchase, it's only after
consideration of the need he hasfor that item and what other
items can satisfy that same needand the value that the item
brings, and only then will hepurchase that item and that item
will be paid for with cash.
A financially unskilled personis far more likely to make a
(06:51):
purchase first that means beforethe paycheck clears, prior to
building a savings account,prior to consideration of the
need for the item, the valuethat it will bring and other
items in the marketplace thatcan serve the same need.
Chris (07:04):
You see a lot of that in the marketplace today.
You can get your what do theycall it paycheck, prepaycheck
payouts.
Sure, you can go to a company.
They'll actually give you themoney before you actually get
your paycheck.
Dennis (07:14):
And they take a little piece of the action, they take a
big piece of your action.
Chris (07:17):
I don't know how much it is, but it's brutal.
Dennis (07:19):
Yep, but the financially unskilled person will just put
it on a credit card and they canhave that same item that the
wealthy person purchased forcash after all, his financial
needs were met.
You know what I'm saying?
It's just do you want it firstor do you want it last?
You see it all the time.
(07:40):
I mean, two people can purchasethe same thing, but the person
who pays cash will pay lessbecause he has more leverage.
He can consider many otheroptions, whereas the person who
wants it now, who doesn't do hishomework, his due diligence,
will purchase a similar oridentical item and put it on a
credit card.
He's likely to end up paying alittle bit more on the front end
(08:02):
and then on the back end.
He's likely to end up paying alittle bit more on the front end
and then on the back end.
If he doesn't pay that off,that credit card off, right away
, he's carrying debt into thenext month and now he's paid a
higher price up front and thensubsequently until it's paid off
.
This is why I say early on inyour financial life you can make
(08:25):
decisions.
Whether you buy it first orlast.
That will determine if youbecome wealthy or if you remain
in the lower income bracket.
Chris (08:31):
Yeah.
Dennis (08:32):
A lot of traps out there .
Yeah yeah, the credit cardcompanies have found additional
revenue streams 15% on.
Chris (08:40):
what is it?
15% on top of the prime rate,right?
So that's pretty much whatthey're charging nowadays.
So we had a 0% interest rate,so credit card companies were
able to increase their marginswhile there was this very low
prime.
And now the prime's creepingback up, and so is the credit
card rates.
Dennis (08:57):
I remember my dad in 1972, 73, got a credit card and
well, he was probably 40 yearsold and credit cards were
becoming a popular financialtool and back then the credit
card companies made their moneyon the 3% fee that they charge
every month for the use of thecard.
(09:18):
Today they found additionalways penalties, late fees and
interest on the penalties andlate fees.
So the credit card companieshave found a lot more revenue
streams to be drawn from thatcredit card.
It's become an industry.
Chris (09:36):
Yeah, and when you start adding on all those late fees
and things like that, you're upabout 30% interest, 29 point,
something I think is the averageright now.
Dennis (09:45):
Debt's a misunderstood financial tool.
Debt let's define it it's moneythat is borrowed and it must be
paid back over a time or at alater date, almost always with
interest.
Debt can be used by individualsor companies to make purchases
that they normally couldn't makewithin the confines of normal
(10:07):
cash flow.
There's personal debt, there'sbusiness debt, and debt can come
in the form of credit card debt, car loans, school loans, right
Home mortgages.
There's a lot of forms of debtout there today, more so than
ever before In the businessworld.
There are SBA loans.
(10:27):
There were PPA loans during thewhole COVID years.
There's commercial loans,commercial construction loans.
There's also commercial linesof credit.
So there's a lot of debt thatcan be had by companies and
businesses that can help themgrow.
Working capital loans, forexample, or commercial mortgages
(10:48):
, can help a business owner withmajor purchases that will allow
the company to grow beyond itscurrent infrastructure.
Chris (10:56):
So what sort of loans did you use to build this company?
Basically, your choice of webootstrapped.
Dennis (11:05):
There's a couple of ways to raise money, a couple of
ways to start a business.
Bootstrapping is when thebusiness owner takes the money
out of his own checking savingsaccount, keeps it all in-house
and he starts the companyhimself.
I think I've started almost allmy companies that way.
I think I've started almost allmy companies that way.
Another way to generate revenueif you're an upstart business
(11:29):
is with a traditional SBA smallbusiness loan, which is
government-backed and somewhatgovernment-regulated.
There are second mortgages onyour home.
You can take out some debt thatway.
(11:49):
A third method of generatingrevenue for an upstart company
or the upstart owner is sellingstock in the company.
He sells 20% of the company forX and he can use X as his cash
to start the business.
The downside to selling stockright away is you don't own your
company, you, the new owner.
(12:11):
You don't own 100% of yourcompany right out of the gate.
You have a partner of some sort, whether it's a silent partner
or he's a participant in theday-to-day business operations.
Borrowing money from a bank oranother lending institution has
its upside and downside as well.
The upside is it gives you ahuge level of cash flow right
(12:35):
away.
So you're starting out, you hitthe ground with both feet
running.
Bootstrapping it can be tighter,it can be a little more
difficult.
The owner of a company that'sbeen bootstrapped he really has
to start producing sales rightaway because he's funded it with
his own money.
He doesn't have an endlesssupply of that, so he's far more
(12:58):
likely to push sales, keep areal tight line on accounts
receivables and effectively he'sgot to run that company in a
very conservative and tightfashion.
So a couple of different waysto finance a company.
Business debt can really helpthe debtor, the business owner,
(13:19):
in many ways.
Business loans, sba loans theycan be very helpful.
Working capital loans are goodfor some upstart businesses.
But debt it's like a finelysharpened chainsaw.
A skilled woodsman can drop thebiggest tree in the forest with
that chainsaw and an unskilledwoodsman can cut off his right
(13:47):
hand with the same.
Saw Right.
Chris (13:49):
So when did you start adding trucks, things like that,
a couple of years in right Tothe gutter monkeys.
Yeah, a couple of years in, youstarted adding some trucks.
No, no, you know How'd youstart adding them with the Andy
and I were lifelong friends.
Dennis (14:06):
We were 54 years old when we first decided to step
away from our previous lives andstart the Gutter Monkeys.
We had a 2005 Toyota Tacoma andthat's it.
We each kicked in $8,000, Ithink, or six grand a piece, and
that funded the startup.
We quickly bought a van.
Two years later we bought aninstall truck and basically we
(14:30):
add one or two trucks every year, depending on the growth.
We've pretty much been growingat a one or two truck, two to
four employees per year over thelast several years.
So as we need that new truck,we buy it.
We've been able to pay cash forthat.
We haven't had to borrow moneyin that way.
We did take out a line ofcredit on the business but we
(14:56):
never used it.
We didn't have to.
That's a story for another time.
So basically we bootstrappedthe Cape Cod gutter monkeys,
which then grew into Americangutter monkeys, south Shore,
south Coast gutter monkeys.
It all grew out of that.
But once the Cape Cod guttermonkeys, you know, grew and got
up up over a million, 2 millionin sales, we had plenty of
(15:18):
cashflow to fund future growth.
But uh, yeah, yeah, chris, youand I are about the same age.
Your mom and dad weredepression babies like mine.
Right yeah, that's right.
Yeah, chris, you and I areabout the same age.
Your mom and dad weredepression babies like mine.
Right yeah, that's right.
Yeah, I didn't take on debt ingoing to college.
(15:51):
I'm certain my parents nevercarried credit card debt of any
kind.
That whole generation generallytook out one type of debt and it
was a home mortgage.
And when it was paid off, thatwas it my wife and I.
In our early years we flipped alot of houses.
We bought, sold, owned andflipped more than 20 properties
and we had a good system wherewe always had a big line of
(16:16):
credit with one of our banksthat we had established a good
relationship with.
So if we needed to purchase aproperty and we didn't have the
money in-house, we had a line ofcredit through a local bank we
could tap into and borrow 100grand, purchase that property.
We could go in and do a quickthree to six-month renovation,
(16:39):
flip the house, sell it and payoff what we used of the line of
credit and take the profit andreinvest it, and that line of
credit remained intact.
So during those years we didhave a home mortgage at one time
, and then we also used lines ofcredit without creating
(17:01):
long-term debt?
Chris (17:02):
Why don't you explain a little bit lines of credit,
because a lot of people outthere might not know what you're
referring to.
Dennis (17:07):
There's a lot of ways to borrow.
One of my favorite ways is anasset-based line of credit.
The most simple example of thatis if you own a home and you
want to use the equity in thathome to draw some money so you
(17:29):
can get what is called a secondmortgage or a home equity loan.
That's an asset-based line ofcredit.
The bank will look at the valueof your house and they'll be
willing to loan you up to, say,70% of that.
So if you have a house that'sworth $400,000 and you only have
a $200,000 mortgage, they mightbe willing to loan you $100,000
(17:51):
to bring you up to a $300,000mortgage.
That $100,000 can be used byyou for anything you want home
improvement, vacation, whateveryou want to do with it.
An asset-based line of creditis just like that.
If you have an asset and youhave a good relationship with
your bank, they will be willingto loan you money based upon the
(18:13):
value of that asset.
So when we were building ournew building, for example, we
looked into a number of lines ofcredit and there was commercial
construction loans, commercialbusiness loans, a whole variety
of traditional loans and Iapproached my banker my personal
(18:34):
banker, erin from RocklandTrust.
She's a wonderful branchmanager, a good friend and a
part of my inner circle.
We were receiving manydifferent loan packages from the
different branches anddifferent companies.
Eventually, rockland Trustoffered me a couple of different
packages, but I talked to Aaronand I said I want an
(18:56):
asset-based loan.
Our company had a lot of assets.
We owned a building, we had asmall fleet of trucks.
We had a small fleet of trucks,myself and Andy.
We each also had homes thatdidn't have debt.
So our banker was willing toloan us or set up a line of
credit for a significant amountof money based on the assets
(19:19):
that we had.
The beauty of that is there'sno upfront fees at all for an
asset-based loan like that,whereas a commercial
construction loan, for theamount we were looking for was
going to be about $35,000 or$38,000 in upfront fees.
The SBA loan also had about$33,000 in upfront fees and
(19:43):
those loans do come with somelevel of compliance and there's
some hoops to jump through andso on and so forth, whereas an
asset based loan doesn't haveany of that.
So we set up a line of creditbut then COVID came and it kind
of kicked us in the ribs.
We couldn't pull the permits onour land.
It was taking longer becausethe local town offices were shut
(20:05):
down Even when we pulled thepermits.
It took months and months toget permits.
Even when we pulled thosepermits, we couldn't even build
the building because product andmaterial wasn't available.
When we finally got clearance,we got product.
A year, year and a half hadgone by and we had banked enough
money that we didn't need totap into that line of credit.
(20:28):
So we were able to complete ourconstruction project without
tapping into it.
But let me ask you somethinghow would you feel if you tied
into a commercial constructionloan and you paid the $35,000 in
upfront fees and you found outa year and a half later you
(20:50):
didn't need it?
You just spent $35,000 on feesthat you didn't need to.
Chris (20:56):
Yeah, and I'm shocked the SBA was so high.
I would always think that theSBA is so small business
friendly, but it's not.
Dennis (21:03):
They got to make money too.
It's brutal.
We were at a closing one time.
I don't know if we were buyingor selling, but our attorney who
was doing the closing he hadjust finished a closing on a
different property that involvedan SBA loan and he was telling
us about it before the bankerand everybody gathered.
We were just sitting around inthe conference room at the bank
(21:26):
and he said my gosh, youwouldn't believe the amount of
compliance and the amount ofcosts that are associated with
an SBA loan.
And it takes months and monthsbecause it's backed by the
federal government.
So this paperwork got to bedone in triplicate.
I mean, it's really a process,and he had mentioned at that
(21:46):
time because he's done a numberof closings with us.
He said you guys don't know howfortunate you are that you have
learned to expedite thisprocess.
You want to buy a property.
You make an offer, you alreadyhave your line of credit in
place.
You can make a stronger offeron that property because you can
close in 10 days, right, yepand Like buying a house with
cash.
Chris (22:06):
It is it really is.
And what about the COVID years?
Did you use any of the PPEmoney?
Dennis (22:14):
No, no, I have an interesting story.
Those loans were offered to usby my bank.
My accountant one of ourattorney friends mentioned it as
well.
I told my wife at the time.
I said go to the bank and lookinto it.
If it takes more than 30minutes, we don't want to do it.
And we didn't.
(22:34):
Instead, what I focused on atthe very beginning of COVID was
radio advertising.
I happened to be over at CodcomRadio in Hyannis here on the
Cape and I had just made acommercial.
And I came down and Tim, who'sthe station manager, called me
into a meeting and at the timeJohn Hagopian was still the
(22:55):
owner of those radio stationsand they were having a little
powwow and he invited me into itand we went in.
We sat down and they weretalking about this COVID thing.
This was in March of 20.
And they had just lost alltheir summer Cape Cod restaurant
radio advertising, which is asignificant part of their
revenue.
(23:15):
And another significant pieceof the revenue is the auto
industry and car dealershipswere now finding out that the
manufacturing plants of theautomobiles were shutting down,
so they stopped advertising.
So I was sitting in this meetingconsidering PPP loans and
wondering what the heck thiswhole COVID thing.
(23:36):
This is March of 2020.
And it dawned on me there's awhole barn load of radio
advertising that I could pick upfor pennies on the dollar barn
load of radio advertising that Icould pick up for pennies on
the dollar.
So I started contacting alleight or 10 or 12 of the radio
stations that I advertise on andI asked what kind of
(23:57):
advertising do you haveavailable that I could pick up?
And I doubled my radiofootprint for about 15 cents on
the dollar.
Wow.
And I signed two two and a halfyear contracts to take me
through 2020, about the end of22 or 23.
I can't remember at this time,but I signed some long-term
(24:18):
contracts and I was able todouble my radio footprint for
about 15 cents on the dollarcents on the dollar.
So to me, that was a wise useof my money during COVID.
It allowed us two or threetremendous growth years and then
, when those contracts were done, we just renegotiated our
(24:38):
normal radio contracts and itwas business as usual.
Chris (24:43):
So you didn't take any additional debt on during COVID?
No, no, we actually had agrowth year there wasn't.
Dennis (24:48):
It was a little one, not a big growth year, but it was a
little, a little growth year.
But we also ended up shuttingdown five weeks that year for
various covid things, right.
But, um, one thing you see alot of you watch a shark tank.
Oh yeah, I love the shark tank.
One thing that that we often seenow is some of these presenters
(25:09):
on the Shark Tank talk moreabout revenue generating through
either selling equity or takingon debt early on, and there's
times that I wonder where arethe sales?
You know sales is what bringsrevenue into your company.
(25:33):
Sales is how we reachprofitability.
Sales is how we reachprofitability and so a lot of
times you see companies takingon debt and or selling equity
early on.
With the PPP loans we didn'tknow what it was all about, but
sooner or later there'simplications and some businesses
(25:56):
are still trying to pay thatmoney off.
Some businesses werefinancially skilled and they
were able to become exempt frompaying some of it off.
I've talked to people from bothsides of that fence.
But yeah, we did well duringCOVID.
It was hard work, it wasdifferent than normal, but I
(26:16):
think we thrived, we grew, wegrew, we grew.
Chris (26:20):
That's unusual because a lot of businesses didn't.
I lost a lot of businesses inthose days, especially down in
the Cape.
Dennis (26:25):
Yeah, restaurants, the service industry down here
Restaurants took a hit?
Chris (26:29):
Still not.
I live up in Bretton Woods andit still is not back to where it
was before.
Hotels still closed,restaurants still closed, most
of almost Littleton I don't knowif you know, if you've been
downtown, you used to live therebut most of the downtown
Littleton is only open Thursday,friday and Saturday.
Dennis (26:44):
That's what I've heard yeah, yeah, monday, tuesday
don't even open the shops.
Chris (26:48):
Still, it's all based on, you know, still trying to
recover from COVID.
Dennis (26:52):
Getting back to the topic of debt our generation we
took on a home mortgage, maybe alittle college loan debt, maybe
a truck loan or a car loan ortwo.
Credit cards were hard to getthen.
Credit cards are easy now.
So a lot of millennials and GenXs, a lot of the younger kids
today, incur some additionaldebt through credit cards
(27:14):
because they're not financiallyprepared or educationally
prepared to handle that, and sothat's something that we want
our kids and our youngergeneration to be aware of is
that this credit card can be agood thing, but it also can be a
bad, like the chainsaw.
That's right Well.
Chris (27:32):
I think that first generation too had only.
I think there was, say, in the50s, like 7% of US adults owned
a credit card at the time.
So it's 7%.
60s, it was about 15.
Ownership increased in the 80sto about 50%.
Now it's 82%.
So I think a lot of the timeswhen I started thinking about it
, I think our parents were awaredidn't really warn us that much
(27:53):
about credit cards, because Ithink the majority of adults at
the time didn't really have themand understand themselves.
So their kids got a hold ofthem.
There was no real warning.
My parents were scared to deathof debt.
So it's kind of drilled into usfrom an early age about running
up debt in any sort, andparticularly they did talk about
credit cards.
(28:13):
But I think that was kind ofthe problem back then.
Dennis (28:16):
One of the things we hear about is the credit score.
It's an industry today, thecredit score.
That phrase didn't exist whenwe were in our 20s.
It simply didn't exist.
And when you talk to a lot ofthe younger kids today, what I
hear and we have a lot ofyounger employees, I've got kids
(28:38):
with friends and you hear a lotabout building up their credit
score and they'll tell you theycan put purchases on their
credit card and then pay it offevery month and that helps build
their credit score.
But if you skip a month or twoand you don't pay it off now,
you have a spiraling debt issuethat's hard to catch up, and so
(29:02):
it's my belief that if a companyhas excellent sales, zero debt
and disciplined ownership, thenthe company bank account will
reflect this.
A disciplined business planwith a strong bank account will
carry the startup company a longway to maybe where they don't
(29:23):
ever have to take on debt.
But if they ever did, theywould be a strong company three,
four, five years out and they'dbe ready to take on some big
debt if that need ever arised.
While borrowing small amountsof money can build your credit
score, it may also tend todiminish your ability to save,
(29:44):
and the savings account used tobe our safety net.
Using the credit card to buildcredit is almost like the tail's
wagging the dog, speaking ofwhich, barley's trying to get
out of the studio.
Chris (29:58):
We have a dog in the studio, barley's trying to get
out of the studio.
Dennis (30:02):
You know, the savings account, while it's not designed
to earn high interest it isn'tbut it's a great tool that can
help the owner of the businessweather those tough times.
You know that savings accounthas always been our safety net.
There's some seasonality toalmost every business and the
savings account has always beenour safety net.
There's some seasonality toalmost every business and the
savings account is what hasalways served us in my whole
(30:26):
lifetime to get through thosedifficult times.
We've seen booms and crashes.
There's Y2K, there was 9-11.
Covid, the crash of 08.
There was a crash of 96.
The savings account has alwaysserved us very well during those
times and that's where I highlyrecommend using the savings
(30:47):
account as your safety net andthe credit card as a financial
tool for your company.
Right, chris, the personal needsof the business owner.
Let's talk about that becausewe work with a lot of
franchisees, a lot of smallbusiness startups in our group
and I am oftentimes talkingabout the financial needs of the
(31:12):
new business owner, the newfranchisee, the manager of the
startup, and how the personalfinancial needs of the owner of
a startup, how that can impactthe company.
One major barrier to entry inthe world of self-employment can
be the financial needs of theowner.
(31:32):
I mean, think about it.
How many times do you talk tosomebody who has a great idea
for a business or a company or aproduct, but he just doesn't
have the financial tools to doit?
He just doesn't have thefinancial latitude.
Yeah, we do it on a regularbasis.
Chris (31:47):
We talk to people who are interested in our franchise
American Gutta Monkey franchisebut the vast majority of them
that we talk to don't have anysavings at all, and it's kind of
striking.
They're hard workers, theymight have their own business.
Don't have any savings at all,and it's kind of striking.
They're hard workers, theymight have their own business.
A couple of them have their ownbusinesses but they're just so
financially strapped that theycan't even consider some of the
financial requirements ofactually owning our franchise.
(32:07):
So it's a shame.
Dennis (32:08):
It is.
And savings and savingsaccounts is a process, it's a
discipline and it doesn't reachout and grab you.
It's not sexy, it's notexciting, it's actually kind of
rather ordinary and boring.
But think about it.
Imagine a 28-year-old executiveworking in the corporate world
(32:32):
with no debt, and maybe thatperson has a better than average
savings account and she mightbe inclined to take advantage of
a potential businessopportunity.
And imagine, alongside, let'ssay, there's a 30-year-old man
who has a wife and two kids andanother one on the way, and
maybe he has some college debtand he's got two car loans
(32:53):
parked out in the driveway.
Which one of these two do youthink stands a better chance of
being successful in a startup?
And it's kind of a rhetoricalquestion, right?
This is why good financialtools are important for
everybody, not just businessowners.
Chris (33:13):
It limits your ability to do things.
It's not just even a debt thingin terms of money.
It's actually limiting yourability to do things.
It's really.
It's not just even a debt thingin terms of money.
It's actually limiting yourability to live your life, to
take on opportunities andpresent to you and to get a
franchise or buy your ownbusiness.
It's limiting what you canaccomplish in your life.
Dennis (33:33):
You know, it's so true, it's so true.
And when you're ready to takeon debt, it's so true, it's so
true.
And when you're ready to takeon debt, if you and I've had
some companies that I started,that I bootstrapped that a year
or two in.
I was looking for a big growthopportunity and I was able to
tap into an equity line throughmy bank.
(33:54):
It's happened to me on a coupleof occasions.
It's kind of hard to imagine, orit's unusual, that a startup
business owner would have enoughmoney to get the company up and
running and reach profitabilityand then all of a sudden, three
years in, he would need someassistance financially.
(34:15):
And in each of these two orthree circumstances that I can
think of is is I wanted to putan addition on, or, in this case
, I wanted to build a newbuilding.
You know, and with little to nodebt and a really strong
balance sheet, on each of thesetwo or three occasions I was
able to secure the money I needfor that growth.
(34:37):
I think we talked a little bitearlier here when Andy and I
were, we had outgrown yetanother building the Cape Cod
Goddard Monkeys and we needed aline of credit, and I was able
to secure that line of creditthrough Rockland Trust and
because of COVID.
It dragged out the constructionprocess almost a year and a
(34:59):
half to where we were able tosave additional money through
cash flow and we actually didn'tneed the line of credit, but it
was there.
It was there.
If we did, it allowed me tosleep at night without worrying
about that.
Chris (35:11):
What would have happened if you had taken out a
construction load prior to COVIDgoing off and you had to sit on
it for to COVID?
Dennis (35:17):
going off and you had to sit on it for Well, I also.
For each of the two other orthree other options, there was
about $33,000 to $38,000 inupfront fees.
So I would have been out$35,000 and then I would have to
sit on that loan andunfortunately found out I never
needed it.
Unfortunately found out I neverneeded it.
But again, we were able tosecure, in our case, a loan that
(35:43):
didn't require any upfront feesand only interest, if we
actually tapped into it and, asit turned out, we didn't need to
.
Funny thing too, we moved intothis building two and a half
years ago.
About a year and a half ago, mycredit card company was bought
(36:03):
out by a new company and it wasmy personal credit card, not my
company card.
But my personal credit cardcompany was sold.
A new company bought it and thevery first month I didn't even
know it, but I got a bill from acompany I never heard of and
when I opened it I realized thatthis particular company had
(36:25):
purchased my credit card companyand there were some extra
charges on there.
It was like late fees,penalties and then interest on
the penalties and late fees.
I didn't pay it, of course,because I didn't know what it
was.
I inquired about it, no oneever got back to me.
I paid my bill and the nextmonth there were hundreds of
dollars on there because Ididn't pay that amount.
(36:45):
The last month I would come tofind out that the new company
changed the due date.
So I always pay my bills on the7th and my due date is the 15th
and I have a five-day graceperiod.
So even if it gets dragged outin the mail, it always gets
there on time.
Well, the new company changedthe due date, I think, to the
12th.
Anyway, they were charging meall these fees and after four or
(37:09):
five months of fighting withthem, the total of the fees was
like $1,700.
That didn't include purchases,just the late fees, the
penalties and the interest onthe penalties and the late fees.
It skyrocketed and so I cut thecard up, threw it away and I
(37:29):
went to get a new credit card.
And of course I went to my goodfriend and partner, rockland
Trust.
And I went and I talked to mybranch manager down here, erin
Frost, and I said hey, erin, weneed a couple of new credit
cards and I explained the story.
She said no problem, she calledme a day or two later and I
(37:50):
went down to meet with her andshe said we kind of have a
problem.
You don't have any credit.
She said you don't have anycredit.
She says you don't have badcredit, you have no credit.
You know what's going on.
I guess, if you pay everythingon time and you don't have any
loans out and you don't haveanything going on like that, you
(38:11):
have no credit, not bad credit,not good credit.
And she said I can only approveyou for a $500 credit line.
And we laughed about it.
My credit card would only have$500 worth of room on it.
And we laughed and I said look,aaron, I know you'll take care
of it.
Just call me whenever you can.
And within an hour or two shehad pulled some strings and got
(38:31):
me a credit card with, I mean,$10,000.
It's just my personal one, Ididn't need to too much.
But the funny thing is this isthe same bank that had floated
me nearly a million dollar lineof credit a year and a half
earlier.
Now it tells me that the creditcard company that they use
doesn't like my credit score.
(38:51):
So I don't know what the answerhere is.
I think it was a funny story.
I think it's kind of unusual.
Chris (38:58):
And we had a similar thing.
I was working, just bought ahouse.
My wife, sandy, takes care ofmost of the bills, pays the
bills.
Most of the credit cards thatwe had we only had a couple, but
they were probably in her name,and I needed to go get one
because I was traveling forbusiness.
Can't rent the car without one.
So I applied for one.
(39:20):
Came back Nope, can't get it,you don't have no credit.
So we complain and complain.
Same thing happened.
They gave me a $500.
Now here I am, I just bought ahouse, I'm working in the tech
industry doing pretty well, andI can't get a credit card.
So they gave me a credit card,the first one they sent us.
I got $500 on mine.
Of course, she's got $10,000 onher and she was laughing at the
(39:43):
time because she worked fromhome.
She stayed at home with thekids.
Yeah, it was crazy, absolutelycrazy.
And that same thing happened tous with the changing of the due
date, because that bank, thatcredit card company, did not
take deposits directly from ourbank, dcu, to pay the credit
cards off.
You had to mail them.
So, since they were beingmailed, they were mailed on the
not enough time because the datewas changed and we ended up
missing a bunch of payments.
You know, late payments andstuff like that took us a while.
Same thing we cut up the card,got rid of it.
(40:04):
Yeah, same experience.
Dennis (40:06):
You want to keep an eye on that.
I remember when that situationoccurred where the credit card
company was charging me forthings I didn't purchase One of
my young coworkers at the time.
He was riding with me, he wason my crew and we chatted a
little bit about that and hesaid I think that my credit card
company does that to me everymonth, but I'm afraid to look.
Chris (40:28):
Oh geez.
Dennis (40:29):
Yeah, and I explained to him bring it in and you and I
will review it.
He never did.
He was so afraid of opening upthat credit card bill.
What he did was he just letthem automatically withdraw out
of his bank account.
And I hear a lot of this.
A lot of these subscriptionsnow that some of the younger
folks get onto are $9.99 or less, and a lot of companies gear
(40:56):
their subscription models to$9.99 or less because it appears
on your credit card every month, whether you use it or not.
If you join one of these largegyms, these national chains of
gyms.
Sometimes they say you can joinfor $1 down and $10 a month.
But I recently read a piecewhere I think like 82% of the
(41:20):
subscription users of thisparticular chain of gyms don't
ever show up.
They show up three or fourtimes and after a month or two
they stop showing up.
But the company still can take$9.99 off of your credit card
every month.
And some people have lots ofthese subscription models that
(41:45):
they're using or maybe thatthey're not using but they're
being charged for.
Chris (41:47):
Yeah, there's actually apps now that track your apps.
I've seen that.
So now you need an app to keeptrack of how much money you're
spending on apps and you pay forthat app.
Dennis (41:58):
Think about that though, if you get caught up in that
cycle, that terrible spiral ofnot being able to keep up with
your credit card debt and someof them are charging 20, 21, 22%
on the unpaid balance if youcarry a balance over to the next
(42:20):
month, you may have justfinanced Burger King, a burger
fries and a Coke at the highestrates available by law.
I mean, that's a scary thought.
Chris (42:33):
Yeah, yeah.
Yeah.
It's too bad, it's too common.
There is some hope, though, Ithink now with I don't know if
you're familiar with Venmo, butVenmo I use quite a bit now.
I know it, I don't use it yeahso the sort of indications that
Gen Z is carrying the Gen Zgeneration.
They're carrying a lot lessdebt than the millennials and I
think some of it comes from someof these peer-to-peer payment
(42:55):
plans that a lot of these peopleare on.
I know my kids all use it.
Actually.
They use it to buy Christmaspresents and things for each
other.
They swap money and they'reusing it all the time.
I know my barber and differentpeople are using it.
I think it's kind of maybestarting to reinforce the idea
of buying things and having cash, because when you use Venmo you
(43:16):
can't buy something on credit.
It's not a credit card.
You have to have cash.
Got to be money in the bank,got to be money in the bank.
So I think there's some hopeactually, because it looks like
Gen Z is actually having lesscredit card debt.
Unfortunately, gen Z is alsocarrying the highest tuition
debt.
Dennis (43:33):
That's true too Double-edged sword.
We're getting wise to it as aculture, but from the early 90s
till the recent, you know, lastsix, seven years, the whole cost
of of college education, theprocess of paying it back, has
really gotten out of hand.
Yeah, yeah, I mean an industrythat didn't exist in the 80s,
(43:54):
the 70s, is college debtmanagement.
Yeah, now it's atrillion-dollar industry, right,
yeah.
Chris (44:01):
It didn't exist 10, 15 years ago, certainly not.
When we were going to school.
I went down to my bank I forgetwhat it was, it was probably
Shawmut Shawmut Bank Went downand got my $900 loan for my
semester or my year Off.
I went no, it's just completelydifferent.
And actually the ability to getthese loans so easily, of
(44:22):
course, has enhanced the abilityof the colleges also to raise
their tuitions.
Dennis (44:26):
Sure, yeah, because if the kid doesn't have to have any
sort of credit or any sort ofline or anybody backing this
loan, they can kind of go in,they can kind of raise it as
high as they want and most ofthe young folks don't realize
the full gravity of what theysigned on for at 18 until
they're done with college andthey realize there's a huge
(44:49):
impact that they didn't know at18 years old and now, at 22, 23,
some of them have saddledthemselves with six figures of
debt without realizing it Right.
For those who are financiallyliterate and skilled in debt
management, debt is a tool thatshould be taken out as needed,
(45:11):
used for a specific purpose, andthen just neatly put away back
in the toolbox until it's neededagain.
What we want to do is we wantto perfect the art of operating
well within our means, whileusing debt to explore other
opportunities that would maybenot be available to us.
I highly recommend being on afirst name basis with your
(45:34):
banker, your accountant, yourattorney and take this tool that
we call debt, take it out whenit's needed and then, just like
every other tool, clean it upand put it back away until you
need it again.
Don't make debt a lifestyleright In business.
(45:56):
Debt a lifestyle Right.
Right In business, sales isking.
Cash flow is the steering wheel.
Debt should be your spare tire.
Chris (46:07):
I'll leave you with that.
Yep, it's a great way to go out, all right?
Well, thank you for joining uson this episode.
We look forward to producinganother one for you next week, I
hope.
Dennis (46:15):
No monkeys were harmed in the making of this podcast.
All right, we'll see you guyslater.
Chris (46:20):
Bye.
Thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
(46:42):
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
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We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (00:13):
Really, what it's threatening is their livelihoods
, their jobs.
It's threatening the way theydo things and every time that
happens, whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins, they
have their hands on the switch.
A way of doing business, orwhatever the people who are
holding the reins, they havetheir hands on the switch.
They go batshit crazy.
Chris (00:29):
Hello, I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:50):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:12):
Business Radio.
Hello everyone, welcome toepisode two the truth about debt
and debt management.
Hello Dennis, how are you doingtonight?
Chris, doing good, doing good,good to be back.
Yeah, important subject tonightdebt, debt management,
especially for small businesses.
It's a great topic.
Yeah, what do you start to me?
(01:33):
I guess we're going to start.
You have a story for us.
I do, I do.
I've heard this story manytimes the last couple of weeks
here.
Dennis (01:46):
I love this story because as a kid I grew up
cutting lawns.
My brothers and I had a greatlittle lawn business.
My neighbors had lawn.
We all cut lawns as kids.
This story begins where anolder gentleman is out for his
morning walk and he noticed ayoung boy cutting a lawn.
And then the man inquired andthe young boy, james, explained
a friend of mine just bought anew bike and I liked it so much
I bugged my mom into buying me anew bike just like it, and now
I have to cut lawns to earnmoney to pay her back.
(02:07):
The man continued on his wayand he saw another young boy
cutting a lawn and the young boy, david, told him that all my
friends are getting new bikesand now I have to cut lawns and
earn enough money to buy my ownbike.
And the man continued walkingand he came across a third boy
cutting a lawn and he inquiredand the third boy, whose name is
Mark.
He said I'm cutting mycustomer's lawn.
(02:30):
And the man asked if he wassaving up to buy a new bike.
And Mark said no, no, I alreadyhave a nice bike.
And the man continued if youalready have a nice bike, then
why are you cutting lawns?
And the boy replied I cut lawnsbecause it's what I do.
I'm in the lawn cuttingbusiness.
(02:51):
The first boy, james, incurredsome debt.
He borrowed money from his mom,and as soon as he pays his mom
back, he'll probably stopcutting lawns.
The second boy, david he set agoal of purchasing a new bike,
and the implication here is thathe'll likely stop cutting lawns
as soon as he has purchasedthat new bike.
And the implication here isthat he'll likely stop cutting
lawns as soon as he haspurchased that new bike.
And the third boy, mark.
He's in the lawn cuttingbusiness.
Therefore, he has a nice bike,money in the bank and zero debt.
(03:15):
While it may appear that thethree boys are all doing the
same thing cutting lawns,nothing could be further from
the truth.
James is trying to pay off debt, david is working to keep up
with the Joneses and Mark isbuilding a company.
I love this story, chris.
I grew up cutting lawns.
My brothers and I we had atremendous lawn cutting business
(03:35):
as a kid.
I think you did too right.
That's right, yep.
Chris (03:38):
I had quite a few jobs, pretty much from the age of
fourth grade, fifth grade.
I had a steady business ofcutting lawns all the way
through pretty much my sophomoreyear in college.
Yeah, yeah it was great money.
Dennis (03:49):
Yeah, it was great money .
Chris (03:50):
Schools were cheaper then , so it would pay for the pretty
much for most of my education,but still, it was a good job,
put money away every week and,yeah, I didn't have any boss.
I don't think I ever had a bossuntil pretty much I was in my
sophomore year in college.
Dennis (04:04):
Lawn cutting was a great financial tool for us.
It taught us how to earn money.
We in turn would turn aroundand bank that money and into the
70s, with hyperinflation, wewere able to put that money into
CDs.
Take it from your normalpassbook savings account, put it
(04:25):
into CDs at a much higher rate.
So we learned how to work, welearned how to save and we
learned how to invest.
Chris (04:30):
Yeah, and that's when interest rates were pretty good
too.
Dennis (04:33):
Yeah, exactly, all just from cutting lawns.
Chris (04:35):
Incredible.
Yeah, so we pretty much paidfor my college education cutting
lawns, a few other side jobs,but it was always the cutting
lawns.
It was always the best part ofit.
Money's misunderstood.
Dennis (04:45):
It's a misunderstood commodity since ancient times.
It's written about, it's talkedabout, especially today with
e-banking, automatic withdrawal,direct deposits, credit cards,
debit cards, venmo.
There's a lot of tools outthere, to the point where a lot
of people are two or three stepsremoved from ever handling cash
.
You know, add online shopping,subscription-based buying, zero
(05:10):
money down purchases it's easyto see how people can be dragged
down into financial hell.
Everyone needs money, but a lotof people don't know how money
works.
And it's not necessarily thethings that we purchase, but the
method and timing of purchasesthat will determine future
financial status.
I mean, let's face it, chris,wealthy Americans and poor
(05:32):
Americans all have cell phones,flat screen TVs, internet access
, two cars in the driveway, butone significant indicator of
future financial status is howand when these items are
purchased Right 80% of Americanshave some form of debt on
credit cards and 39% carry itmonth to month.
(05:52):
So 39%.
39% of Americans carry creditcard debt into the fall.
Chris (05:58):
Wow, right, right.
So an $8,000 per average rightnow, $8, dollars on a credit
card.
So for americans, brutal.
Dennis (06:07):
Financially skilled people buy things last.
But I say that after thepaycheck has cleared, the
money's in the bank and hismonthly allotted amount is
dispersed into the savingsaccount.
That's when the financiallyskilled person considers
purchasing an item that's not onthe docket.
(06:27):
And when he does make thepurchase, it's only after
consideration of the need he hasfor that item and what other
items can satisfy that same needand the value that the item
brings, and only then will hepurchase that item and that item
will be paid for with cash.
A financially unskilled personis far more likely to make a
(06:51):
purchase first that means beforethe paycheck clears, prior to
building a savings account,prior to consideration of the
need for the item, the valuethat it will bring and other
items in the marketplace thatcan serve the same need.
Chris (07:04):
You see a lot of that in the marketplace today.
You can get your what do theycall it paycheck, prepaycheck
payouts.
Sure, you can go to a company.
They'll actually give you themoney before you actually get
your paycheck.
Dennis (07:14):
And they take a little piece of the action, they take a
big piece of your action.
Chris (07:17):
I don't know how much it is, but it's brutal.
Dennis (07:19):
Yep, but the financially unskilled person will just put
it on a credit card and they canhave that same item that the
wealthy person purchased forcash after all, his financial
needs were met.
You know what I'm saying?
It's just do you want it firstor do you want it last?
You see it all the time.
(07:40):
I mean, two people can purchasethe same thing, but the person
who pays cash will pay lessbecause he has more leverage.
He can consider many otheroptions, whereas the person who
wants it now, who doesn't do hishomework, his due diligence,
will purchase a similar oridentical item and put it on a
credit card.
He's likely to end up paying alittle bit more on the front end
(08:02):
and then on the back end.
He's likely to end up paying alittle bit more on the front end
and then on the back end.
If he doesn't pay that off,that credit card off, right away
, he's carrying debt into thenext month and now he's paid a
higher price up front and thensubsequently until it's paid off
.
This is why I say early on inyour financial life you can make
(08:25):
decisions.
Whether you buy it first orlast.
That will determine if youbecome wealthy or if you remain
in the lower income bracket.
Chris (08:31):
Yeah.
Dennis (08:32):
A lot of traps out there .
Yeah yeah, the credit cardcompanies have found additional
revenue streams 15% on.
Chris (08:40):
what is it?
15% on top of the prime rate,right?
So that's pretty much whatthey're charging nowadays.
So we had a 0% interest rate,so credit card companies were
able to increase their marginswhile there was this very low
prime.
And now the prime's creepingback up, and so is the credit
card rates.
Dennis (08:57):
I remember my dad in 1972, 73, got a credit card and
well, he was probably 40 yearsold and credit cards were
becoming a popular financialtool and back then the credit
card companies made their moneyon the 3% fee that they charge
every month for the use of thecard.
(09:18):
Today they found additionalways penalties, late fees and
interest on the penalties andlate fees.
So the credit card companieshave found a lot more revenue
streams to be drawn from thatcredit card.
It's become an industry.
Chris (09:36):
Yeah, and when you start adding on all those late fees
and things like that, you're upabout 30% interest, 29 point,
something I think is the averageright now.
Dennis (09:45):
Debt's a misunderstood financial tool.
Debt let's define it it's moneythat is borrowed and it must be
paid back over a time or at alater date, almost always with
interest.
Debt can be used by individualsor companies to make purchases
that they normally couldn't makewithin the confines of normal
(10:07):
cash flow.
There's personal debt, there'sbusiness debt, and debt can come
in the form of credit card debt, car loans, school loans, right
Home mortgages.
There's a lot of forms of debtout there today, more so than
ever before In the businessworld.
There are SBA loans.
(10:27):
There were PPA loans during thewhole COVID years.
There's commercial loans,commercial construction loans.
There's also commercial linesof credit.
So there's a lot of debt thatcan be had by companies and
businesses that can help themgrow.
Working capital loans, forexample, or commercial mortgages
(10:48):
, can help a business owner withmajor purchases that will allow
the company to grow beyond itscurrent infrastructure.
Chris (10:56):
So what sort of loans did you use to build this company?
Basically, your choice of webootstrapped.
Dennis (11:05):
There's a couple of ways to raise money, a couple of
ways to start a business.
Bootstrapping is when thebusiness owner takes the money
out of his own checking savingsaccount, keeps it all in-house
and he starts the companyhimself.
I think I've started almost allmy companies that way.
I think I've started almost allmy companies that way.
Another way to generate revenueif you're an upstart business
(11:29):
is with a traditional SBA smallbusiness loan, which is
government-backed and somewhatgovernment-regulated.
There are second mortgages onyour home.
You can take out some debt thatway.
(11:49):
A third method of generatingrevenue for an upstart company
or the upstart owner is sellingstock in the company.
He sells 20% of the company forX and he can use X as his cash
to start the business.
The downside to selling stockright away is you don't own your
company, you, the new owner.
(12:11):
You don't own 100% of yourcompany right out of the gate.
You have a partner of some sort, whether it's a silent partner
or he's a participant in theday-to-day business operations.
Borrowing money from a bank oranother lending institution has
its upside and downside as well.
The upside is it gives you ahuge level of cash flow right
(12:35):
away.
So you're starting out, you hitthe ground with both feet
running.
Bootstrapping it can be tighter,it can be a little more
difficult.
The owner of a company that'sbeen bootstrapped he really has
to start producing sales rightaway because he's funded it with
his own money.
He doesn't have an endlesssupply of that, so he's far more
(12:58):
likely to push sales, keep areal tight line on accounts
receivables and effectively he'sgot to run that company in a
very conservative and tightfashion.
So a couple of different waysto finance a company.
Business debt can really helpthe debtor, the business owner,
(13:19):
in many ways.
Business loans, sba loans theycan be very helpful.
Working capital loans are goodfor some upstart businesses.
But debt it's like a finelysharpened chainsaw.
A skilled woodsman can drop thebiggest tree in the forest with
that chainsaw and an unskilledwoodsman can cut off his right
(13:47):
hand with the same.
Saw Right.
Chris (13:49):
So when did you start adding trucks, things like that,
a couple of years in right Tothe gutter monkeys.
Yeah, a couple of years in, youstarted adding some trucks.
No, no, you know How'd youstart adding them with the Andy
and I were lifelong friends.
Dennis (14:06):
We were 54 years old when we first decided to step
away from our previous lives andstart the Gutter Monkeys.
We had a 2005 Toyota Tacoma andthat's it.
We each kicked in $8,000, Ithink, or six grand a piece, and
that funded the startup.
We quickly bought a van.
Two years later we bought aninstall truck and basically we
(14:30):
add one or two trucks every year, depending on the growth.
We've pretty much been growingat a one or two truck, two to
four employees per year over thelast several years.
So as we need that new truck,we buy it.
We've been able to pay cash forthat.
We haven't had to borrow moneyin that way.
We did take out a line ofcredit on the business but we
(14:56):
never used it.
We didn't have to.
That's a story for another time.
So basically we bootstrappedthe Cape Cod gutter monkeys,
which then grew into Americangutter monkeys, south Shore,
south Coast gutter monkeys.
It all grew out of that.
But once the Cape Cod guttermonkeys, you know, grew and got
up up over a million, 2 millionin sales, we had plenty of
(15:18):
cashflow to fund future growth.
But uh, yeah, yeah, chris, youand I are about the same age.
Your mom and dad weredepression babies like mine.
Right yeah, that's right.
Yeah, chris, you and I areabout the same age.
Your mom and dad weredepression babies like mine.
Right yeah, that's right.
Yeah, I didn't take on debt ingoing to college.
(15:51):
I'm certain my parents nevercarried credit card debt of any
kind.
That whole generation generallytook out one type of debt and it
was a home mortgage.
And when it was paid off, thatwas it my wife and I.
In our early years we flipped alot of houses.
We bought, sold, owned andflipped more than 20 properties
and we had a good system wherewe always had a big line of
(16:16):
credit with one of our banksthat we had established a good
relationship with.
So if we needed to purchase aproperty and we didn't have the
money in-house, we had a line ofcredit through a local bank we
could tap into and borrow 100grand, purchase that property.
We could go in and do a quickthree to six-month renovation,
(16:39):
flip the house, sell it and payoff what we used of the line of
credit and take the profit andreinvest it, and that line of
credit remained intact.
So during those years we didhave a home mortgage at one time
, and then we also used lines ofcredit without creating
(17:01):
long-term debt?
Chris (17:02):
Why don't you explain a little bit lines of credit,
because a lot of people outthere might not know what you're
referring to.
Dennis (17:07):
There's a lot of ways to borrow.
One of my favorite ways is anasset-based line of credit.
The most simple example of thatis if you own a home and you
want to use the equity in thathome to draw some money so you
(17:29):
can get what is called a secondmortgage or a home equity loan.
That's an asset-based line ofcredit.
The bank will look at the valueof your house and they'll be
willing to loan you up to, say,70% of that.
So if you have a house that'sworth $400,000 and you only have
a $200,000 mortgage, they mightbe willing to loan you $100,000
(17:51):
to bring you up to a $300,000mortgage.
That $100,000 can be used byyou for anything you want home
improvement, vacation, whateveryou want to do with it.
An asset-based line of creditis just like that.
If you have an asset and youhave a good relationship with
your bank, they will be willingto loan you money based upon the
(18:13):
value of that asset.
So when we were building ournew building, for example, we
looked into a number of lines ofcredit and there was commercial
construction loans, commercialbusiness loans, a whole variety
of traditional loans and Iapproached my banker my personal
(18:34):
banker, erin from RocklandTrust.
She's a wonderful branchmanager, a good friend and a
part of my inner circle.
We were receiving manydifferent loan packages from the
different branches anddifferent companies.
Eventually, rockland Trustoffered me a couple of different
packages, but I talked to Aaronand I said I want an
(18:56):
asset-based loan.
Our company had a lot of assets.
We owned a building, we had asmall fleet of trucks.
We had a small fleet of trucks,myself and Andy.
We each also had homes thatdidn't have debt.
So our banker was willing toloan us or set up a line of
credit for a significant amountof money based on the assets
(19:19):
that we had.
The beauty of that is there'sno upfront fees at all for an
asset-based loan like that,whereas a commercial
construction loan, for theamount we were looking for was
going to be about $35,000 or$38,000 in upfront fees.
The SBA loan also had about$33,000 in upfront fees and
(19:43):
those loans do come with somelevel of compliance and there's
some hoops to jump through andso on and so forth, whereas an
asset based loan doesn't haveany of that.
So we set up a line of creditbut then COVID came and it kind
of kicked us in the ribs.
We couldn't pull the permits onour land.
It was taking longer becausethe local town offices were shut
(20:05):
down Even when we pulled thepermits.
It took months and months toget permits.
Even when we pulled thosepermits, we couldn't even build
the building because product andmaterial wasn't available.
When we finally got clearance,we got product.
A year, year and a half hadgone by and we had banked enough
money that we didn't need totap into that line of credit.
(20:28):
So we were able to complete ourconstruction project without
tapping into it.
But let me ask you somethinghow would you feel if you tied
into a commercial constructionloan and you paid the $35,000 in
upfront fees and you found outa year and a half later you
(20:50):
didn't need it?
You just spent $35,000 on feesthat you didn't need to.
Chris (20:56):
Yeah, and I'm shocked the SBA was so high.
I would always think that theSBA is so small business
friendly, but it's not.
Dennis (21:03):
They got to make money too.
It's brutal.
We were at a closing one time.
I don't know if we were buyingor selling, but our attorney who
was doing the closing he hadjust finished a closing on a
different property that involvedan SBA loan and he was telling
us about it before the bankerand everybody gathered.
We were just sitting around inthe conference room at the bank
(21:26):
and he said my gosh, youwouldn't believe the amount of
compliance and the amount ofcosts that are associated with
an SBA loan.
And it takes months and monthsbecause it's backed by the
federal government.
So this paperwork got to bedone in triplicate.
I mean, it's really a process,and he had mentioned at that
(21:46):
time because he's done a numberof closings with us.
He said you guys don't know howfortunate you are that you have
learned to expedite thisprocess.
You want to buy a property.
You make an offer, you alreadyhave your line of credit in
place.
You can make a stronger offeron that property because you can
close in 10 days, right, yepand Like buying a house with
cash.
Chris (22:06):
It is it really is.
And what about the COVID years?
Did you use any of the PPEmoney?
Dennis (22:14):
No, no, I have an interesting story.
Those loans were offered to usby my bank.
My accountant one of ourattorney friends mentioned it as
well.
I told my wife at the time.
I said go to the bank and lookinto it.
If it takes more than 30minutes, we don't want to do it.
And we didn't.
(22:34):
Instead, what I focused on atthe very beginning of COVID was
radio advertising.
I happened to be over at CodcomRadio in Hyannis here on the
Cape and I had just made acommercial.
And I came down and Tim, who'sthe station manager, called me
into a meeting and at the timeJohn Hagopian was still the
(22:55):
owner of those radio stationsand they were having a little
powwow and he invited me into itand we went in.
We sat down and they weretalking about this COVID thing.
This was in March of 20.
And they had just lost alltheir summer Cape Cod restaurant
radio advertising, which is asignificant part of their
revenue.
(23:15):
And another significant pieceof the revenue is the auto
industry and car dealershipswere now finding out that the
manufacturing plants of theautomobiles were shutting down,
so they stopped advertising.
So I was sitting in this meetingconsidering PPP loans and
wondering what the heck thiswhole COVID thing.
(23:36):
This is March of 2020.
And it dawned on me there's awhole barn load of radio
advertising that I could pick upfor pennies on the dollar barn
load of radio advertising that Icould pick up for pennies on
the dollar.
So I started contacting alleight or 10 or 12 of the radio
stations that I advertise on andI asked what kind of
(23:57):
advertising do you haveavailable that I could pick up?
And I doubled my radiofootprint for about 15 cents on
the dollar.
Wow.
And I signed two two and a halfyear contracts to take me
through 2020, about the end of22 or 23.
I can't remember at this time,but I signed some long-term
(24:18):
contracts and I was able todouble my radio footprint for
about 15 cents on the dollarcents on the dollar.
So to me, that was a wise useof my money during COVID.
It allowed us two or threetremendous growth years and then
, when those contracts were done, we just renegotiated our
(24:38):
normal radio contracts and itwas business as usual.
Chris (24:43):
So you didn't take any additional debt on during COVID?
No, no, we actually had agrowth year there wasn't.
Dennis (24:48):
It was a little one, not a big growth year, but it was a
little, a little growth year.
But we also ended up shuttingdown five weeks that year for
various covid things, right.
But, um, one thing you see alot of you watch a shark tank.
Oh yeah, I love the shark tank.
One thing that that we often seenow is some of these presenters
(25:09):
on the Shark Tank talk moreabout revenue generating through
either selling equity or takingon debt early on, and there's
times that I wonder where arethe sales?
You know sales is what bringsrevenue into your company.
(25:33):
Sales is how we reachprofitability.
Sales is how we reachprofitability and so a lot of
times you see companies takingon debt and or selling equity
early on.
With the PPP loans we didn'tknow what it was all about, but
sooner or later there'simplications and some businesses
(25:56):
are still trying to pay thatmoney off.
Some businesses werefinancially skilled and they
were able to become exempt frompaying some of it off.
I've talked to people from bothsides of that fence.
But yeah, we did well duringCOVID.
It was hard work, it wasdifferent than normal, but I
(26:16):
think we thrived, we grew, wegrew, we grew.
Chris (26:20):
That's unusual because a lot of businesses didn't.
I lost a lot of businesses inthose days, especially down in
the Cape.
Dennis (26:25):
Yeah, restaurants, the service industry down here
Restaurants took a hit?
Chris (26:29):
Still not.
I live up in Bretton Woods andit still is not back to where it
was before.
Hotels still closed,restaurants still closed, most
of almost Littleton I don't knowif you know, if you've been
downtown, you used to live therebut most of the downtown
Littleton is only open Thursday,friday and Saturday.
Dennis (26:44):
That's what I've heard yeah, yeah, monday, tuesday
don't even open the shops.
Chris (26:48):
Still, it's all based on, you know, still trying to
recover from COVID.
Dennis (26:52):
Getting back to the topic of debt our generation we
took on a home mortgage, maybe alittle college loan debt, maybe
a truck loan or a car loan ortwo.
Credit cards were hard to getthen.
Credit cards are easy now.
So a lot of millennials and GenXs, a lot of the younger kids
today, incur some additionaldebt through credit cards
(27:14):
because they're not financiallyprepared or educationally
prepared to handle that, and sothat's something that we want
our kids and our youngergeneration to be aware of is
that this credit card can be agood thing, but it also can be a
bad, like the chainsaw.
That's right Well.
Chris (27:32):
I think that first generation too had only.
I think there was, say, in the50s, like 7% of US adults owned
a credit card at the time.
So it's 7%.
60s, it was about 15.
Ownership increased in the 80sto about 50%.
Now it's 82%.
So I think a lot of the timeswhen I started thinking about it
, I think our parents were awaredidn't really warn us that much
(27:53):
about credit cards, because Ithink the majority of adults at
the time didn't really have themand understand themselves.
So their kids got a hold ofthem.
There was no real warning.
My parents were scared to deathof debt.
So it's kind of drilled into usfrom an early age about running
up debt in any sort, andparticularly they did talk about
credit cards.
(28:13):
But I think that was kind ofthe problem back then.
Dennis (28:16):
One of the things we hear about is the credit score.
It's an industry today, thecredit score.
That phrase didn't exist whenwe were in our 20s.
It simply didn't exist.
And when you talk to a lot ofthe younger kids today, what I
hear and we have a lot ofyounger employees, I've got kids
(28:38):
with friends and you hear a lotabout building up their credit
score and they'll tell you theycan put purchases on their
credit card and then pay it offevery month and that helps build
their credit score.
But if you skip a month or twoand you don't pay it off now,
you have a spiraling debt issuethat's hard to catch up, and so
(29:02):
it's my belief that if a companyhas excellent sales, zero debt
and disciplined ownership, thenthe company bank account will
reflect this.
A disciplined business planwith a strong bank account will
carry the startup company a longway to maybe where they don't
(29:23):
ever have to take on debt.
But if they ever did, theywould be a strong company three,
four, five years out and they'dbe ready to take on some big
debt if that need ever arised.
While borrowing small amountsof money can build your credit
score, it may also tend todiminish your ability to save,
(29:44):
and the savings account used tobe our safety net.
Using the credit card to buildcredit is almost like the tail's
wagging the dog, speaking ofwhich, barley's trying to get
out of the studio.
Chris (29:58):
We have a dog in the studio, barley's trying to get
out of the studio.
Dennis (30:02):
You know, the savings account, while it's not designed
to earn high interest it isn'tbut it's a great tool that can
help the owner of the businessweather those tough times.
You know that savings accounthas always been our safety net.
There's some seasonality toalmost every business and the
savings account has always beenour safety net.
There's some seasonality toalmost every business and the
savings account is what hasalways served us in my whole
(30:26):
lifetime to get through thosedifficult times.
We've seen booms and crashes.
There's Y2K, there was 9-11.
Covid, the crash of 08.
There was a crash of 96.
The savings account has alwaysserved us very well during those
times and that's where I highlyrecommend using the savings
(30:47):
account as your safety net andthe credit card as a financial
tool for your company.
Right, chris, the personal needsof the business owner.
Let's talk about that becausewe work with a lot of
franchisees, a lot of smallbusiness startups in our group
and I am oftentimes talkingabout the financial needs of the
(31:12):
new business owner, the newfranchisee, the manager of the
startup, and how the personalfinancial needs of the owner of
a startup, how that can impactthe company.
One major barrier to entry inthe world of self-employment can
be the financial needs of theowner.
(31:32):
I mean, think about it.
How many times do you talk tosomebody who has a great idea
for a business or a company or aproduct, but he just doesn't
have the financial tools to doit?
He just doesn't have thefinancial latitude.
Yeah, we do it on a regularbasis.
Chris (31:47):
We talk to people who are interested in our franchise
American Gutta Monkey franchisebut the vast majority of them
that we talk to don't have anysavings at all, and it's kind of
striking.
They're hard workers, theymight have their own business.
Don't have any savings at all,and it's kind of striking.
They're hard workers, theymight have their own business.
A couple of them have their ownbusinesses but they're just so
financially strapped that theycan't even consider some of the
financial requirements ofactually owning our franchise.
(32:07):
So it's a shame.
Dennis (32:08):
It is.
And savings and savingsaccounts is a process, it's a
discipline and it doesn't reachout and grab you.
It's not sexy, it's notexciting, it's actually kind of
rather ordinary and boring.
But think about it.
Imagine a 28-year-old executiveworking in the corporate world
(32:32):
with no debt, and maybe thatperson has a better than average
savings account and she mightbe inclined to take advantage of
a potential businessopportunity.
And imagine, alongside, let'ssay, there's a 30-year-old man
who has a wife and two kids andanother one on the way, and
maybe he has some college debtand he's got two car loans
(32:53):
parked out in the driveway.
Which one of these two do youthink stands a better chance of
being successful in a startup?
And it's kind of a rhetoricalquestion, right?
This is why good financialtools are important for
everybody, not just businessowners.
Chris (33:13):
It limits your ability to do things.
It's not just even a debt thingin terms of money.
It's actually limiting yourability to do things.
It's really.
It's not just even a debt thingin terms of money.
It's actually limiting yourability to live your life, to
take on opportunities andpresent to you and to get a
franchise or buy your ownbusiness.
It's limiting what you canaccomplish in your life.
Dennis (33:33):
You know, it's so true, it's so true.
And when you're ready to takeon debt, it's so true, it's so
true.
And when you're ready to takeon debt, if you and I've had
some companies that I started,that I bootstrapped that a year
or two in.
I was looking for a big growthopportunity and I was able to
tap into an equity line throughmy bank.
(33:54):
It's happened to me on a coupleof occasions.
It's kind of hard to imagine, orit's unusual, that a startup
business owner would have enoughmoney to get the company up and
running and reach profitabilityand then all of a sudden, three
years in, he would need someassistance financially.
(34:15):
And in each of these two orthree circumstances that I can
think of is is I wanted to putan addition on, or, in this case
, I wanted to build a newbuilding.
You know, and with little to nodebt and a really strong
balance sheet, on each of thesetwo or three occasions I was
able to secure the money I needfor that growth.
(34:37):
I think we talked a little bitearlier here when Andy and I
were, we had outgrown yetanother building the Cape Cod
Goddard Monkeys and we needed aline of credit, and I was able
to secure that line of creditthrough Rockland Trust and
because of COVID.
It dragged out the constructionprocess almost a year and a
(34:59):
half to where we were able tosave additional money through
cash flow and we actually didn'tneed the line of credit, but it
was there.
It was there.
If we did, it allowed me tosleep at night without worrying
about that.
Chris (35:11):
What would have happened if you had taken out a
construction load prior to COVIDgoing off and you had to sit on
it for to COVID?
Dennis (35:17):
going off and you had to sit on it for Well, I also.
For each of the two other orthree other options, there was
about $33,000 to $38,000 inupfront fees.
So I would have been out$35,000 and then I would have to
sit on that loan andunfortunately found out I never
needed it.
Unfortunately found out I neverneeded it.
But again, we were able tosecure, in our case, a loan that
(35:43):
didn't require any upfront feesand only interest, if we
actually tapped into it and, asit turned out, we didn't need to
.
Funny thing too, we moved intothis building two and a half
years ago.
About a year and a half ago, mycredit card company was bought
(36:03):
out by a new company and it wasmy personal credit card, not my
company card.
But my personal credit cardcompany was sold.
A new company bought it and thevery first month I didn't even
know it, but I got a bill from acompany I never heard of and
when I opened it I realized thatthis particular company had
(36:25):
purchased my credit card companyand there were some extra
charges on there.
It was like late fees,penalties and then interest on
the penalties and late fees.
I didn't pay it, of course,because I didn't know what it
was.
I inquired about it, no oneever got back to me.
I paid my bill and the nextmonth there were hundreds of
dollars on there because Ididn't pay that amount.
(36:45):
The last month I would come tofind out that the new company
changed the due date.
So I always pay my bills on the7th and my due date is the 15th
and I have a five-day graceperiod.
So even if it gets dragged outin the mail, it always gets
there on time.
Well, the new company changedthe due date, I think, to the
12th.
Anyway, they were charging meall these fees and after four or
(37:09):
five months of fighting withthem, the total of the fees was
like $1,700.
That didn't include purchases,just the late fees, the
penalties and the interest onthe penalties and the late fees.
It skyrocketed and so I cut thecard up, threw it away and I
(37:29):
went to get a new credit card.
And of course I went to my goodfriend and partner, rockland
Trust.
And I went and I talked to mybranch manager down here, erin
Frost, and I said hey, erin, weneed a couple of new credit
cards and I explained the story.
She said no problem, she calledme a day or two later and I
(37:50):
went down to meet with her andshe said we kind of have a
problem.
You don't have any credit.
She said you don't have anycredit.
She says you don't have badcredit, you have no credit.
You know what's going on.
I guess, if you pay everythingon time and you don't have any
loans out and you don't haveanything going on like that, you
(38:11):
have no credit, not bad credit,not good credit.
And she said I can only approveyou for a $500 credit line.
And we laughed about it.
My credit card would only have$500 worth of room on it.
And we laughed and I said look,aaron, I know you'll take care
of it.
Just call me whenever you can.
And within an hour or two shehad pulled some strings and got
(38:31):
me a credit card with, I mean,$10,000.
It's just my personal one, Ididn't need to too much.
But the funny thing is this isthe same bank that had floated
me nearly a million dollar lineof credit a year and a half
earlier.
Now it tells me that the creditcard company that they use
doesn't like my credit score.
(38:51):
So I don't know what the answerhere is.
I think it was a funny story.
I think it's kind of unusual.
Chris (38:58):
And we had a similar thing.
I was working, just bought ahouse.
My wife, sandy, takes care ofmost of the bills, pays the
bills.
Most of the credit cards thatwe had we only had a couple, but
they were probably in her name,and I needed to go get one
because I was traveling forbusiness.
Can't rent the car without one.
So I applied for one.
(39:20):
Came back Nope, can't get it,you don't have no credit.
So we complain and complain.
Same thing happened.
They gave me a $500.
Now here I am, I just bought ahouse, I'm working in the tech
industry doing pretty well, andI can't get a credit card.
So they gave me a credit card,the first one they sent us.
I got $500 on mine.
Of course, she's got $10,000 onher and she was laughing at the
(39:43):
time because she worked fromhome.
She stayed at home with thekids.
Yeah, it was crazy, absolutelycrazy.
And that same thing happened tous with the changing of the due
date, because that bank, thatcredit card company, did not
take deposits directly from ourbank, dcu, to pay the credit
cards off.
You had to mail them.
So, since they were beingmailed, they were mailed on the
not enough time because the datewas changed and we ended up
missing a bunch of payments.
You know, late payments andstuff like that took us a while.
Same thing we cut up the card,got rid of it.
(40:04):
Yeah, same experience.
Dennis (40:06):
You want to keep an eye on that.
I remember when that situationoccurred where the credit card
company was charging me forthings I didn't purchase One of
my young coworkers at the time.
He was riding with me, he wason my crew and we chatted a
little bit about that and hesaid I think that my credit card
company does that to me everymonth, but I'm afraid to look.
Chris (40:28):
Oh geez.
Dennis (40:29):
Yeah, and I explained to him bring it in and you and I
will review it.
He never did.
He was so afraid of opening upthat credit card bill.
What he did was he just letthem automatically withdraw out
of his bank account.
And I hear a lot of this.
A lot of these subscriptionsnow that some of the younger
folks get onto are $9.99 or less, and a lot of companies gear
(40:56):
their subscription models to$9.99 or less because it appears
on your credit card every month, whether you use it or not.
If you join one of these largegyms, these national chains of
gyms.
Sometimes they say you can joinfor $1 down and $10 a month.
But I recently read a piecewhere I think like 82% of the
(41:20):
subscription users of thisparticular chain of gyms don't
ever show up.
They show up three or fourtimes and after a month or two
they stop showing up.
But the company still can take$9.99 off of your credit card
every month.
And some people have lots ofthese subscription models that
(41:45):
they're using or maybe thatthey're not using but they're
being charged for.
Chris (41:47):
Yeah, there's actually apps now that track your apps.
I've seen that.
So now you need an app to keeptrack of how much money you're
spending on apps and you pay forthat app.
Dennis (41:58):
Think about that though, if you get caught up in that
cycle, that terrible spiral ofnot being able to keep up with
your credit card debt and someof them are charging 20, 21, 22%
on the unpaid balance if youcarry a balance over to the next
(42:20):
month, you may have justfinanced Burger King, a burger
fries and a Coke at the highestrates available by law.
I mean, that's a scary thought.
Chris (42:33):
Yeah, yeah.
Yeah.
It's too bad, it's too common.
There is some hope, though, Ithink now with I don't know if
you're familiar with Venmo, butVenmo I use quite a bit now.
I know it, I don't use it yeahso the sort of indications that
Gen Z is carrying the Gen Zgeneration.
They're carrying a lot lessdebt than the millennials and I
think some of it comes from someof these peer-to-peer payment
(42:55):
plans that a lot of these peopleare on.
I know my kids all use it.
Actually.
They use it to buy Christmaspresents and things for each
other.
They swap money and they'reusing it all the time.
I know my barber and differentpeople are using it.
I think it's kind of maybestarting to reinforce the idea
of buying things and having cash, because when you use Venmo you
(43:16):
can't buy something on credit.
It's not a credit card.
You have to have cash.
Got to be money in the bank,got to be money in the bank.
So I think there's some hopeactually, because it looks like
Gen Z is actually having lesscredit card debt.
Unfortunately, gen Z is alsocarrying the highest tuition
debt.
Dennis (43:33):
That's true too Double-edged sword.
We're getting wise to it as aculture, but from the early 90s
till the recent, you know, lastsix, seven years, the whole cost
of of college education, theprocess of paying it back, has
really gotten out of hand.
Yeah, yeah, I mean an industrythat didn't exist in the 80s,
(43:54):
the 70s, is college debtmanagement.
Yeah, now it's atrillion-dollar industry, right,
yeah.
Chris (44:01):
It didn't exist 10, 15 years ago, certainly not.
When we were going to school.
I went down to my bank I forgetwhat it was, it was probably
Shawmut Shawmut Bank Went downand got my $900 loan for my
semester or my year Off.
I went no, it's just completelydifferent.
And actually the ability to getthese loans so easily, of
(44:22):
course, has enhanced the abilityof the colleges also to raise
their tuitions.
Dennis (44:26):
Sure, yeah, because if the kid doesn't have to have any
sort of credit or any sort ofline or anybody backing this
loan, they can kind of go in,they can kind of raise it as
high as they want and most ofthe young folks don't realize
the full gravity of what theysigned on for at 18 until
they're done with college andthey realize there's a huge
(44:49):
impact that they didn't know at18 years old and now, at 22, 23,
some of them have saddledthemselves with six figures of
debt without realizing it Right.
For those who are financiallyliterate and skilled in debt
management, debt is a tool thatshould be taken out as needed,
(45:11):
used for a specific purpose, andthen just neatly put away back
in the toolbox until it's neededagain.
What we want to do is we wantto perfect the art of operating
well within our means, whileusing debt to explore other
opportunities that would maybenot be available to us.
I highly recommend being on afirst name basis with your
(45:34):
banker, your accountant, yourattorney and take this tool that
we call debt, take it out whenit's needed and then, just like
every other tool, clean it upand put it back away until you
need it again.
Don't make debt a lifestyleright In business.
(45:56):
Debt a lifestyle Right.
Right In business, sales isking.
Cash flow is the steering wheel.
Debt should be your spare tire.
Chris (46:07):
I'll leave you with that.
Yep, it's a great way to go out, all right?
Well, thank you for joining uson this episode.
We look forward to producinganother one for you next week, I
hope.
Dennis (46:15):
No monkeys were harmed in the making of this podcast.
All right, we'll see you guyslater.
Chris (46:20):
Bye.
Thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
(46:42):
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
the episode valuable, and makesure to share it with anyone who
might benefit from our tips andstories.
We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
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