July 29, 2025 • 39 mins
Are you a musician feeling the weight of financial stress? In this essential episode of Musicians Tip Jar, hosts Chris Webb and Dave Tamkin dive deep into the often overlooked realities of debt for musicians and the transformative power of investments for musicians.
Discover how carrying debt doesn't just drain your wallet, but also stifles your creative freedom and limits your music career longevity. We expose the hidden costs of debt, from missed opportunities and delayed investing to reduced creditworthiness and overwhelming stress. Learn why a "broke artist" mentality is a phase, but a "financially trapped artist" is a cycle you can break.
This episode is packed with eye-opening statistics on household debt, credit card burdens, and student loans impacting today's artists. More importantly, we provide actionable financial planning strategies. Understand the critical difference between good and bad debt, and why prioritizing high-interest debt is your first step towards wealth for musicians.
Whether you're battling credit card debt, navigating student loans, or simply looking to build a more secure music business, this episode offers clear insights and practical advice. We emphasize the importance of financial awareness, starting small with investments, and letting compound interest work for you.
Key Takeaways: * The true cost of debt: it steals your options and mental bandwidth. * Delaying your investments can cost you decades of potential growth. * Strategies to tackle high-interest debt and improve your credit. * How even small, consistent investments can lead to significant financial freedom. * There is an undeniable connection between financial peace and artistic freedom. Tune in to learn how to turn your passion into a thriving, sustainable music career. Stop treading water and start sailing towards your desires.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.com
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrock
Pictures by: Kit Chalberg https://kitchalberg.com/
Become a supporter of this podcast: https://www.spreaker.com/podcast/musicians-tip-jar--4698023/support.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.com
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrock
Pictures by: Kit Chalberg https://kitchalberg.com/
Discover how carrying debt doesn't just drain your wallet, but also stifles your creative freedom and limits your music career longevity. We expose the hidden costs of debt, from missed opportunities and delayed investing to reduced creditworthiness and overwhelming stress. Learn why a "broke artist" mentality is a phase, but a "financially trapped artist" is a cycle you can break.
This episode is packed with eye-opening statistics on household debt, credit card burdens, and student loans impacting today's artists. More importantly, we provide actionable financial planning strategies. Understand the critical difference between good and bad debt, and why prioritizing high-interest debt is your first step towards wealth for musicians.
Whether you're battling credit card debt, navigating student loans, or simply looking to build a more secure music business, this episode offers clear insights and practical advice. We emphasize the importance of financial awareness, starting small with investments, and letting compound interest work for you.
Key Takeaways: * The true cost of debt: it steals your options and mental bandwidth. * Delaying your investments can cost you decades of potential growth. * Strategies to tackle high-interest debt and improve your credit. * How even small, consistent investments can lead to significant financial freedom. * There is an undeniable connection between financial peace and artistic freedom. Tune in to learn how to turn your passion into a thriving, sustainable music career. Stop treading water and start sailing towards your desires.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.com
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrock
Pictures by: Kit Chalberg https://kitchalberg.com/
Become a supporter of this podcast: https://www.spreaker.com/podcast/musicians-tip-jar--4698023/support.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.com
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrock
Pictures by: Kit Chalberg https://kitchalberg.com/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the show that explores the methods and strategies
on rocking the financial side of your music business. With
over forty years combined experience, here are your hosts, Chris
Webb and Dave Damkin.
Speaker 2 (00:15):
Welcome to your Musicians Tip Job, where we talk about
musicians and money. Where we want our community to remember
we aren't just in this for the hustle of a
career in music, but also to live a full quality life.
I'm Chris Webb, joined by my co host who is
living his best life as a boat captain, Dave Dampkin.
Speaker 3 (00:34):
Thanks for having me back, Chris.
Speaker 4 (00:36):
Good to be here. I'm glad I really got close
to the microphone. Actually just told me to not move
my head. So maybe I'd be good at driving boats,
but not so much.
Speaker 3 (00:45):
At driving this microphone. Today. We'll see how it goes.
Speaker 2 (00:50):
I just want to preface that he is, in fact
a boat captain. Now I'm not just making that a
It's got my.
Speaker 3 (00:56):
Florida license, baby, I can.
Speaker 4 (00:58):
I can maneuver the waves, the waters anywhere in the world. Yeah,
I'm speaking of you know, doing different things. You couldn't
get anything done yesterday because you're golfing every time I
text him yesterday morning, Yes, Dave, I'll handle when I'm
done with the eighth hole. Yes, Dave, I'll handle when
(01:18):
I'm done with the twelfth hole. I mean, are you
just living your best life? On Friday mornings?
Speaker 2 (01:23):
That's the best time to go. I go early, like
six thirty in the morning. No one's there, Well, there
are people there, but just a few of us.
Speaker 3 (01:30):
Ho'd you shoot?
Speaker 2 (01:32):
Not good? But better? You know how it is? It
was a beautiful morning.
Speaker 4 (01:38):
Are you one of those people that after like a
bad round of golf, you can still smile because you
were just on a golf course all morning?
Speaker 3 (01:46):
Or do you really dig in and be like, oh,
how could I have done better?
Speaker 2 (01:50):
I do a little reflection, but I you know, I've
learned that. It's like I look for the few things
that might have improved. There was some moments, there was
a moment at least. Well today we get back to
the roots of our mission here and expose the reality
of what makes some musicians struggle financially. We discussed the
(02:10):
impact of carrying debt, the effects it has on our growth,
and some strategies to keep you sailing toward your desires
or motor boating your way.
Speaker 4 (02:20):
I didn't even read that earlier nice boat reference. You're
on your game.
Speaker 2 (02:24):
Debt doesn't just take away your money, it takes away
your options. The real cost of debt is the gigs,
the songs, and the risks that you never get to take.
Today's quote comes from Chance the rapper. The industry makes
you think being broke is part of the grind, it's not.
Speaker 3 (02:45):
Did you find that quote?
Speaker 2 (02:48):
I just was googling quotes about musicians talking about debt. Why.
Speaker 3 (02:54):
I'm just wondering if it found it by chance?
Speaker 4 (03:01):
Nonprofit Everybody Is White House of Music nineteen fifty three.
White House of Music made a commitment to provide music
for life to students, musicians, educators, and families throughout Wisconsin.
Believe that all people, regardless of location, income, and other limitations,
should have the opportunity to create, love and.
Speaker 3 (03:18):
Be inspired by music. That's why they created the Wife
The Wife House.
Speaker 4 (03:23):
Already commentingana next week's episode about relationships. That's why they
created the White House the Music Foundation, allowing all interested
children to receive the tools and support they need to
make music for life. You too can get involved in
the fundation through financial contribution, donation of new and used
band and orchestra instruments, providing musical opportunities for young people.
(03:44):
Learn more at white Houseofmusic dot com. You find this
information useful, please rate and subscribe to the podcast and
also slam that like button if you're on YouTube, so
you can help keep you up on the finance side
of your music business.
Speaker 2 (03:55):
We all know being in debt is generally not a
good thing. We have all felt the pressure of debt
in some way in our lives. It's important to be
a community here that supports each other in becoming wealthy
and thriving financially. Our mission is to create a community
of musicians that can do whatever they want with their
(04:15):
lives because they have the money to do so. Today
we examine debt versus investment and put a spotlight on
the realities our everyday decisions have on our wealth. This
is eye opening. Let's go. So, I thought it would
(04:42):
be a great place to start with some statistics that
I pulled up and just talk about the reality that
we face right now with the situation in debt. Obviously,
we're not talking about the government in the United States
is debt because that is growing faster than anyone can
keep up with, but just within households. The household in
(05:04):
twenty twenty four, in just quarter one, and so this
was a year ago, and a year and a half ago,
reached seventeen point seven trillion dollars. That includes mortgages, student loans,
credit cards, and auto loans and some other things like that.
Seventeen point seven trillion dollars. Credit card debt alone is
over one point one trillion dollars, with an average APR
(05:28):
of over twenty percent, making it the highest cost of
any consumer debt that's ever been And then student loans
is roughly one point six trillion of outstanding debt. Right now,
an average borrower owes almost twenty nine thousand dollars, according
to Education data dot org loans one point six trillion dollars.
(05:53):
I mean, people love their cars, we know that, but
they love cars more than they love their freedom, apparently
because they are so in debt with cars that they're
making payments that are almost as large as some of
their mortgages. Then there's delinquency. Delinquency on payments is rising,
especially in credit cards and auto loans. Delinquencies are up,
(06:14):
especially among borrowers. Between eighteen and thirty nine. So this
is a demographic that I think we're talking to right now.
And then on top of all that emergency fund savings,
they say fifty to seven percent of Americans don't even
have a thousand dollars saved for emergencies in case of
anything happening.
Speaker 4 (06:32):
That's why we put that so much higher than getting
out of debt faster than having your emergency fund funded.
Speaker 3 (06:41):
The financial scale, Yeah.
Speaker 2 (06:42):
We always want to make sure that it is the
number one place for you to start, right is to
get that at least that thousand dollars, is usually what
we say, because even just that is a big achievement.
Apparently for half of the United States.
Speaker 4 (06:56):
How long it took us to even realize that, you know,
enable to be fluent enough to speak about it, to
search this information out at first, to be able to
have that thousand dollars.
Speaker 3 (07:08):
So there's got to be all these people.
Speaker 4 (07:10):
That that doesn't even to their brain to have that
thousand dollars, just that little safety net to release some
stress and start focusing on other things.
Speaker 2 (07:21):
Yeah, and it is funny because the farther you get
from that time of your life, For me, that I
was in that situation, the more you forget how much
stress you're carrying with that reality of being on the
edge at all times. It is a lot to hold.
Speaker 4 (07:38):
We put Living on the Edge by Aerosmith in right here.
Couldn't get that copy right, We.
Speaker 2 (07:42):
Can't afford that. But let's talk a little bit about
the challenges that debt then creates to build any wealth.
Credit card debt doesn't just sit there. It grows like
a weed. Right, A five thousand dollars balance at twenty
one percent APR, which is pretty average as a low
action these days, will be one thousand dollars a year
(08:03):
in just interest if you're paying those minimum payments. So
you're adding and growing like a weed, all of this
debt that will never go away. You're just carrying it on,
growing and taking over your life. That's just interest, and
you still owe that five thousand dollars at the end
of the year. You're just paying those payments.
Speaker 4 (08:24):
I was just trying to bring in some terms that
we deal with every day and some payments. So if
you need a full merch order or short run of
vinyl your next EP budget, it's all lost to the
interest that you're paying. So I just thought some real
world reframing would be appropriate. So like the high interest
that it is a tax on your future goals, which
(08:47):
is what we've been talking about, and the longer you
carry it, the less fuel you have for your music career.
Speaker 3 (08:52):
Too.
Speaker 4 (08:53):
Delayed investing keeps you stuck in maintenance mode, not growth mode.
So if you're paying three hundred and fifty bucks month
to debt, three hundred and fifty dollars not going to
retirement stocks or even a home down payment, or like
you were saying, just your emergency fund, the earlier you
invest into yourself, the more compound interest works for you.
(09:15):
It's the reverse of what's happening with interest for a
credit card, especially if you're talking about high dividend interests.
You know, for any stock that is compounding that money
for you. Just like if you had one thousand dollars
that we use in the last example, you're gaining that
type of money, so you delay it and you miss
out on tens of thousands over time. Example, investing two
(09:38):
hundred and fifty dollars a month at the age of
twenty five verse thirty five can result in one hundred
thousand dollars plus difference in your retirement value. To reframe this,
every year you delay investing to service your debt, the
cost isn't just dollars, it's decades of potential growth. Like
we were saying earlier, it took us years to figure
(10:00):
this stuff.
Speaker 2 (10:01):
Out, and it's really hard to, I think, absorb that
if you're in a place where this is just how
you've been living. It's one of those things where as
we grow up, as we grow through life, there's so
many things that start to become more obvious to you,
and when you're younger, it's not a priority. I think
(10:23):
in my twenties it was not a priority to be
saving money, to be building wealth like those things were.
Obviously I was aware of them being at some point
in my life, these are going to be important, but
they were not priorities. It was all about living in
the moment, which is a great thing. It was all
about like going and doing the things that I wanted
to do in the moment and have fun. But what
(10:46):
happened in the same moment, I was ignoring these weeds
growing so quickly around me from those decisions, those in
those media gratifications, and it really does creep up on
you and then all of a sudden, it's a massive problem,
right it becomes then it becomes incredibly taxing on you.
(11:07):
And when it comes to delayed gratification, I think the
only way that you'll ever put any energy into that
is to start to feel that desire to have that
security or have that future. You be grateful for these
decisions that you're making right now, and sometimes it's a
mindset that needs to switch in order for you to
(11:27):
even care about this kind of reality and this discussion
that we're having right now.
Speaker 4 (11:31):
You think they should make that required class in high school, Yeah,
just to talk about credit cards, how to make credit
cards work for you, put a positive spin on it
if you want, I mean, learn how to make a pillow,
you know, out of crappy cotton that I never ever
slept on because you know, it would have been nice
to have that.
Speaker 2 (11:52):
Well, there's other two to other places where this should
information should be coming from. Right one is one hundred
percent should be coming from your adult or you know,
the people around you that are elders. And we don't
have those conversations in this culture. I don't think very much.
A lot of households don't what I've also noticed is statistically,
(12:13):
or income homes have less conversations about money. Higher income
homes have a lot more focus on money because there
I think it's about how they feel about it. Right,
If you enjoy talking about money because it's you're doing
well with it, you're more likely to share that information
and that knowledge with your offspring or your youth. And
(12:34):
then if you're feeling terrible about money, money is to
constant stress it for you. So you're in that low
income or you're in that stressor of that situation where
money is not a good thing in your life, you're
not going to want to talk about it at all.
And so kids, as they grow up and they get
into high school, it's a very different perspective because some
of them have really been exposed to it, some have not.
The other area where it should be talked about more,
(12:56):
which is what we're doing right here, is within your community.
Right musicians to be the same way. Musicians that are
not doing well with money do not want to talk
about money right because it doesn't make them feel good.
It just causes stress. So as we start to talk
about this, it's like pulling a band aid off in
some ways, for some people, I'm sure they're like, oh
my god, I gotta go look at how much I'm
(13:16):
paying in credit card interest per year. And that's probably
why my debt is not going down. It's going up
despite the fact that I'm making my payments. Right. So,
there's so much there that we're trying to unpack and
trying to just smooth over it. Hopefully this doesn't overwhelm anybody,
But the reality is you can't ignore it. You cannot
just pretend it's going to go away. It will eventually
(13:38):
overtake your house. If we're going with the weed metaphor here,
it will eventually become such a problem that you can't
ignore it and you're going to be in a situation
in which is going to be much.
Speaker 3 (13:49):
Worse like sinker boat Chris.
Speaker 4 (13:54):
Like the water weeds who are going to come up
and sneak up Anya on the back nine.
Speaker 2 (14:00):
The metapoid we're trying to throw in at one time.
But there's some other Number three on our list of
what we're talking about here is these reduced credit worthiness.
And if you following in the camp of somebody like
Dave Ramsey, he's very intense about zero debt and all things.
He actually wants you to have zero debt even on
your home right any real estate investments. So that's one
(14:24):
extreme end of it. And then there's people like Ramitt
who are are more about having good debt. When we're
sitting here talking, I think we're going to fall somewhere
in the middle. I think you and I and I
think what we've seen is that most people fall somewhere
in the middle where borrowing money for certain things as
(14:45):
investments it turns out to be a really strong way
to build wealth faster. But you really have to have
the understanding of the difference between good and bad debt.
And in addition to that, you have to understand how
the way you handle your money is going to make
you either qualified to borrow that money or not be
able to get those loans. And that's what we talk
about credit worthiness. Everyone's heard about their credit score. I
(15:08):
think those advertisements do a really good job of making
you curious about your credit score. But the main thing
that affects your credit score is how well you're handling
the current debt you have. Right, high debt will almost
always equal a low credit score. In addition, if you
haven't been making your payments if you're laid on anything,
(15:29):
If anything goes into default, that's all going to affect
it in the worse way too. If you're opening too
many accounts, that will bring it down as well. But
the main thing still always comes back to what is
your debt to income ratio and how are you handling
that situation. A lower credit score is going to then
mean you can't get approval on loans for a home
(15:51):
or an investment if you're going to borrow for a car,
which that was something I really don't think you should do.
But even getting gear, if you're in a pinsion, you
need to be buying gear before you have that money,
which can happen in a healthy environment. Still, you can
borrow the money, use it for the thing that you're
gonna make the money from, and then pay it off.
(16:11):
I'm not against that. I just get cautionary about it
because I see a lot of people never paying it off.
But those things won't be able to happen if your
credit score is low. So understanding that debt isn't just
about the debt itself, but also about your ability to
then make good investment with good debt is going to
also be hindered.
Speaker 4 (16:32):
Number four is increased financial stress. I experienced this quite
a bit when I moved from Chicago to Denver because
my whole egging career just kind of stopped.
Speaker 3 (16:44):
And this breast hits harder and people.
Speaker 4 (16:48):
Think it's linked to anxiety, insomnia, burnout, and for.
Speaker 3 (16:53):
Me, like physical health issues. It was crazy.
Speaker 4 (16:56):
I was so nervous about having just the money for
the next payment at that time. Financially stressed musicians can't
take creative risks. They're too focused on survival. And I
think even at that time when I was trying to
take different gigs saying this is the way I wanted
to go as far as singing just original music or
(17:17):
getting paid ticket venues, I had to take every single
gig that came my way, no matter how much it costs.
So all the things that we teach here was blown
out the window because I was in the fight or
flight mode. I just I had to go as fast
as I can. So you can look at like, when
every gig is about paying off a card, it loses
(17:39):
all the fun and creativity. It's hard to say no
to low paying shows or carve timeout for your own
music when you're experiencing that that keeps your creativity small.
So if you look at financial peace equals artistic freedom,
that's what we're trying to talk about in these steps,
and that does.
Speaker 2 (17:57):
Bleed into your sleep right and into your ability to
be nice to other people. Have you ever noticed that
there are two types of elderly people, the really happy
ones and the really pissed off ones. I always think
of this is over simplification, I know that, but I
think of it like they made choices that have led
(18:18):
them to those places, and one of them feels happy
and relaxed and grateful, and the other feels stressed and regret,
you know, and frustration, and all of it is like
always on their sleeve. But as in our age of things,
and in between the youth, the youth and the old,
there is a lot of that happening. We're just able
(18:41):
to mask it more.
Speaker 4 (18:42):
Learning this stuff also reframes the way your future can look.
So if you're a curmudgeon and you don't see a
way out of being a curmudgeon, or the way and
answers bring you down, you're gonna stay that way. But
just like being creative in a musical place at in
your late fourth and you think I can't grow anymore
(19:04):
because of my age. That's going to bring you down
finances too. If you can't grow anymore because you miss
out on so many opportunities behind you. If you don't
reframe it to say, hey, I could change the way
I do things moving forward, you're going to stay that way.
So hopefully these steps inspire you to say, hey, this
is the way I've been doing things, and I can
(19:25):
take each step and slowly move towards a better future
financially and creatively.
Speaker 2 (19:31):
Well, the next one on eis to talk about how
this stops you from building any assets. Right, we talked
about the fact that you can't get the money if
you can't borrow it. We also talked about the fact
that you're going to constantly be paying towards debt instead
of paying towards other things. So let's talk about what
those other things might be. Right, Debt payment often swallows
up twenty to fifty percent of people's income. That is
(19:53):
a massive amount. Right, This isn't We're not even talking
about your mortgage. If that was part of your you know,
your mortgage is generally going to be about twenty percent
of your income for most people, but that isn't even
counting what this is. This debt payment can often swallow
twenty to fifty percent in addition of your income. If
(20:16):
that's the case, you pretty much have no money to
be putting towards an emergency fund, or to be saving
for that tour that's coming up, or that release and
the promotion that you're going to need to do. All
that marketing costs a lot of money. These are goals
that you really want to be putting your money towards.
These are the assets that you're building, These are the
investments that you're trying to make. If you're putting fifty
(20:36):
percent of your income towards debt of stuff that you've
bought in the past, half of which you probably don't
even remember what you spent it on, now, you have
no chance to be saving and investing in yourself. And
that is a massive, massive disadvantage. And you'll see the
difference between growth of artists that have the money to
put towards these things because they aren't paying towards debt,
(20:58):
and you'll see that they'll grow faster, the results will
happen quicker, their motivation will stay higher. All of this
is because of their absence of death. Absence of debt.
I said, absence of death. Those are very different things
than absence of debt is.
Speaker 3 (21:18):
An awesome band name.
Speaker 4 (21:20):
Synth of death Number six limited job mobility and risk tolerance.
So one of debt's most dangerous effects, it's limits your
freedom to pivot if you need to. You can't quit
that day job to go to full time music. You
can't take an unpaid sync writing gig that could lead
to placements like Vince was talking about working with Ryan Carrey.
(21:42):
You know, can't go back to school, invest in new gear,
or move to different cities where you want to flourish
as a musician, or can't even get to that tour.
Speaker 3 (21:52):
To get to that music city because you can't pivot.
Speaker 4 (21:55):
So debt keeps you saying no the very things that
might change your life, makes you cautious when success often
demands boldness, and if you take that away from yourself,
you're not moving forward in your career or life or financially.
Speaker 2 (22:11):
So let's let's give a real world example just to
give the numbers of this concept. Let's say you have
ten grand of debt and you're going to have to
put three hundred and fifty dollars a month towards that payment,
versus having five hundred dollars of just free money. You
only have one hundred and fifty dollars left because you've
had to pay three fifty a month towards those debt payments.
(22:33):
So now you have a difference of investing five hundred
dollars a month versus one fifty a month. Right, So
this is a simple calculation that we're talking about of
having no debt versus having ten grand of debt that
you're paying payments on. After ten years between those two,
you'll have eighty five thousand dollars of money because of
(22:53):
those investments of five hundred dollars a month versus twenty
five thousand dollars because of that three point fifty being
robbed each month going to debt. Right, that's sixty grand
in lost opportunity because of paying debt of ten grand
that you've spent in the past. Right, That difference is
(23:15):
huge of what's going to come for you in the future,
whether because you're servicing that debt, you're paying back that
debt versus not having any debt to pay back. So
what's the real cost money spent on interest equals money
not spent on music. That three hundred and fifty a
month is a minimum payment. It's not even just paying
(23:39):
it's not it's just paying the minimum bill. So it's
your creativity that's being siphoned away. Your ability to express
yourself as an artist that's being siphoned away because of
that debt. That three hundred and fifty a month, that's
forty two hundred dollars a year, right, that could easily
pay for five song EP and the mastering, that could
(23:59):
easily pay for a four week regional tour, that could
easily pay for a PR campaign for your new marketing
new golf clubs or new golf clubs that would be
some real nice golf clubs. So that five thousand dollars
credit card balance with a twenty one percent interest rate
is costing you one thousand dollars a year in interest, right,
(24:22):
money that should be fueling your music career, not padding
a bank's profit margin because they totally take advantage.
Speaker 3 (24:31):
Of You can't say this enough.
Speaker 4 (24:32):
The mental bandwidth is burned when you're going through this debt.
Doesn't just drain your wallet, it clogs your brain. Creativity
requires space Debt brings stress. Constantly thinking about bills, late
fees and survival kills your ability to dream big.
Speaker 3 (24:48):
So you might sit down.
Speaker 4 (24:49):
To write a song and instead you're spiraling out about
credit score or your golf score from Friday morning. Mine
is racing about next month's rent. You're not building your tour.
It's emotional noise, baby.
Speaker 2 (25:02):
Yeah, debt is not just financial, it's emotional, right, And
that is the part that we really want everyone to feel,
is that we're not just talking about your problems with money.
We're talking about the problems that it causes you mentally
and emotionally, and it blocks you from taking those next steps.
Your big career leaps that take risk, they take risk.
(25:26):
All of this is risky, right. We always talk about
that being a musician for a living is a very
risky thing to do. Right. Whether you think that that's
a valid statement or not, it's truth in the sense
that it's financially risky. And part of what it takes
to do anything great is face that risk, right, And
(25:47):
if you can face that risk with confidence financially, it's
a huge difference in the likelihood of you coming out
on the other end. And so want to become a
full time musician. Well, you can't if forty percent of
your income is locked into a monthly payment, right, you
just can't. You'll never survive that way. All you're doing
is treading water. Huh, your boat's going down. You want
(26:12):
to invest in merch and drop a vinyl or hire
a publicist, I mean those things take up front capital.
You want to say yes to some unpaid opportunity that
could be career changing. Debt's going to make you say
no because you have to go with the way that's
going to get you the money to pay those minimum
payments instead. Financial freedom is creative freedom in this case, right,
(26:37):
Debt turns you into this cautious artist that's going to
hold back from those risks that could turn into the
biggest opportunities and those bold moves that can change your life.
Speaker 4 (26:47):
Those missed opportunities to build wealth. Lesson is right in
front of you. Because if you have debt, you're seeing
how that company makes money off of you not being
able to pay your bills. If you don't have that
debt and could put that money somewhere, that that percentage
of interest goes back into your bank account, that is awesome.
(27:07):
That is true wealth. That money is working for you.
So every dollar minimum payment dollar not going to savings,
retirement or your next opportunity. You can't build assets when
you're just managing your liabilities. I think for you and
I both talking about building wealth, it's about having these
(27:30):
choices where you can put that money. So that four
thousand dollars a year in payments that you brought up,
that's a wroth Ira contribution for pierment emergency fund that
we talked about to handle all those panic moments, and
you're now stress free because you can have it covered
a down payment on your first van or your studio gear.
(27:52):
Positions with no margin can't seize momentum. So I think,
I know we're going to go into investments later, but man,
if you can see where dividends go back into your
career and into your bank account, it's just the exact
opposite of what you're doing in debt, and you can
get wealthy quickly.
Speaker 2 (28:13):
There's more bad news with some of this because bad credit,
which comes from like if you said, a lot of
bad debt and bad debt or high debt to income ratio.
Life is expensive, right, and it just becomes more expensive
with this poor credit doesn't just mean denial from getting
loans and getting opportunities to use money for investments. It
(28:35):
means inflated costs on everything, higher deposits on rentals because
they're going to say you have a bad credit score,
so that's going to cost you more. Right, you might
even deal with more expensive phone plans or worse financial
terms on getting When you're getting things like a gear
purchase or a vehicle, you're gonna have higher interest rates
(28:55):
because of your credit score. So even your interest premium
can be higher because of a low credit score. If
there are two musicians, for example, that are renting the
same apartment, one with a good credit and one with
a bad credit, you're looking at a thousand dollars deposit
versus someone who might even have a three thousand dollars deposit.
That's two grand more just because of the bad credit
(29:17):
score that now gets robbed from you investing into other
things that you care about. Debt quietly bleeds your finances
through the years. Even if you no longer actively use
those credit cards, it's still bleeding your ability for anything
else because of them. If your money is always going
(29:38):
out to pass decisions, it can't be funding your future.
Speaker 4 (29:42):
Let's talk about next what musicians can do. What would
you say, Number one.
Speaker 2 (29:46):
Is, so we've put the most importance on your awareness,
on your ability to understand and to be aware of
what your finances are doing. And so the most simple
way to do that is use our financial scale tool,
which you can go to and musicians tip jar and
download the MTJ spreadsheet, the forecasting and budgeting tool free
(30:10):
that allows you to track your income and track your
expenses and understand what debt you have as a total,
and then understand what you're paying towards those minimum payments.
Speaker 4 (30:22):
If you don't track it, you can't improve it, Sam right,
So number one start by creating a clear snapshot of
your money. Lists all income sources, gigs, teaching, side jobs,
track fixed invariable expenses, rent subscriptions.
Speaker 3 (30:38):
Food gear.
Speaker 4 (30:39):
Know all your debts, know their balances, know the interest
rate and minimum payment for each At simple spreadsheet and
musicians tip jar downloaded, it has all this just laid
out for you very easily. All you have to do
is plug in the numbers. Most people think they're broke
when they're just unorganized, which Chris would say, my email
is very unorganized.
Speaker 3 (31:00):
Why use power, Chris?
Speaker 4 (31:02):
And sometimes I just need to see all the emails
in one place, and then I can never get to them.
And I'm working on it, don't give me that face.
Speaker 2 (31:10):
Place that I would like people to start with first
is prioritizing the high interest debt first. There are different
schools of thought for how to approach dealing with your debt,
but I just think the easiest way to start making
a dent is starting with the highest interest rates. So
pay off the high interest credit card first and then
(31:32):
keep working towards it.
Speaker 3 (31:33):
Now.
Speaker 2 (31:33):
Hopefully that high in credit card is also the lowest
amount of debt you have, and the two kind of
work together, because the other approach would be to pay
off the smallest debt first, so that you can use
that minimum payment that you were paying towards the smallest
debt towards the next one and kind of build the
snowball that way. Either one that you want to do.
(31:53):
The most important thing is that you're chunking away at
this at the fastest pace possible. Are these silent dream killers.
If you're carrying a twenty percent inchest on your cards,
you're going to be dealing with a lot of stress
from that. Every dollar you pay, every dollar you pay
in interest, is a dollar that you can spend.
Speaker 4 (32:13):
The three is pick projects with a return on your investment.
Invest only in releases, gigs that move the needle, not
just your ego, which is very easy to do when
it's always all about you anyway, because you're trying to
push your music forward. Before you spend two thousand dollars
on vinyl or five hundred dollars on a photo shoot,
ask will this create new opportunities or just feed my ego?
Speaker 3 (32:37):
A tour that.
Speaker 4 (32:37):
Grows your fan base and merch sales that's a good investment.
Speaker 3 (32:41):
See merch sales.
Speaker 4 (32:42):
That's one thing where you can spend one thousand dollars,
make a return on that investment, put it right back
into more merch and just have that cycle as free
advertising for yourself as a market in the expense market,
and in an expense invest in yourself and over again.
So focus on energy and money on projects that build
(33:05):
your brand or audience income potential for yourself and music
is art, but your career is a business. I suggest
we try to spend like that.
Speaker 2 (33:15):
And kind of along those lines, your music income should
be used strategically right with at the beginning. I think
I was talking to a musician last night at my
event that I was playing, and he is still in
that early phase where he has the ambition of being
a DJ, but he needs the paycheck right of the
(33:36):
job that he has. You kind of have to remember
you're analyzing where you're at with all this, and you're
looking at your finances, and I didn't ask him about
his debt, but that would probably feel like an awkward
question to ask in the middle of an event, but
at the same time it should probably have been asked,
because the faster you get rid of that debt, the
(33:57):
sooner you can make that transition right of doing in
the side gigs and hustling on the after hours of
your day job and working towards a transition towards doing
what it is you want to do full time. You know,
money will crush that ability if it's debt, whereas it
becomes the catalyst of getting you there faster if it's
(34:19):
yours to choose what you do with it. So setting
up a separate account for your side income might be
a good way to do that to kind of keep
that money flowing and keeping track of how much you're
making as an artist while you're working that day job,
and using that money then to just fully pay off
your debt and nothing else right now, as it's a
side gig, that might be another way to do that.
Speaker 4 (34:39):
If you have gone through all the steps of our
financial scale, and especially you have an emergency fund and
you've completely wiped out your debt, I would say start
small investing, even if it's fifty dollars a month. It
builds a habit. I started with Acorns. I don't know
if you've used acorns before, but it would slowly round up,
(34:59):
like sense on my credit card or my debit card.
So compound interest is your bandmate. You don't need a
windfall to start investing. You need consistency. You can open
up a roth Ira, which right now I believe the
government lets you write off six thousand, five hundred. If
you invest that each year, you can automate fifty dollars
(35:22):
a month or whatever you can afford, so you don't
have to look at it as one price, even if
it's fifty cents for every payment. Something like Acorns helps
you do that and also shows you the growth how
small numbers can really add up or pick a broad
index fund VTI or the S and P five hundred
from nineteen eighty six to twenty twenty five you invested
(35:47):
back then on average, that's a twelve percent gain cheer
on the S and P five hundred, which is huge.
So a decade of small, regular investments beat the big
break that you were waiting for that they've never come.
So you're investing in yourself fifty dollars a month, it's
(36:08):
seven percent. For ten years, that's eight six hundred dollars.
It doesn't sound like a lot, but over time it's huge.
Speaker 2 (36:17):
And I know we're getting a little bit intense about
it because we are so passionate about it. We feel
that we need to get this message out because we
think it's one of the number one ways that musicians
are being blocked from doing what it is they want
to do, and that's not fair. This is one of
those things where it could say you could say this
is not fair. Why do some people grow up with
(36:37):
the education of knowing the danger that debt brings and
other people think it's a good tool to be able
to use to get that car or buy that next
iPhone that they want so badly. Right, there is got
to be some sort of communication within our community that
makes us all on the same page that we understand
that debt is really just there to hold you back
with this bad debt will do nothing good for you
(36:59):
except for me make you feel excited to have that
phone for the first couple of weeks, and then you
don't care about it anymore. Right now, you're just dealing
with the debt for the next ten years. So no
matter where you're at, no matter how much this is
affecting you at this point or not, you need to
take account with what it is that you owe. You
need to add it all up. You need to use
(37:20):
our tool, go to that spreadsheet and enter in all
this information so that you are very clear on where
it is you're at and if your goals to get
somewhere in this music career are being challenged by your income,
we certainly encourage you. The first thing to look at
is how much of it is going out back to
debt before you've had a chance to do anything with
(37:41):
your money. So your one action set this week, if
you're in debt, you need to focus everything you got
on getting out of debt, figuring out what your strategy
is going to be and making a move towards it.
If you're out of debt, which a lot of our
listeners are, which is fantastic, you need to then create
(38:01):
your investment plan because as Dave said, it doesn't take
a lot to make a big difference. And time is
your best friend here, so the sooner you start, the better.
We know that your time is valuable and we appreciate
you spending this time with us and being a part
of this community. It is our hope that you feel
that sense of community here at Musicians Tip jar and
that you'll help spread the word to make us all stronger.
(38:23):
As always, thank you for joining us, and remember there
is already enough for everyone. You just need to know
how to get it. Until next time on behalf of
Dave Tamkin and myself Chris Webb, Stay happy, healthy and wealthy.
Being a broke artist is a phase. Being a financially
trapped artist is a cycle. This is Musician's Tip jarbo.
Speaker 3 (39:00):
On This show should be considered specific personal or professional advice.
Please consult an appropriate tax, legal, business, or financial professional
for individualized advice. Individual results are not guaranteed, and all
discussed strategies have the potential for profits. Lass the hosts
are operating on behalf of musicians Tip Jar LLLC exclusively
Welcome to the show that explores the methods and strategies
on rocking the financial side of your music business. With
over forty years combined experience, here are your hosts, Chris
Webb and Dave Damkin.
Speaker 2 (00:15):
Welcome to your Musicians Tip Job, where we talk about
musicians and money. Where we want our community to remember
we aren't just in this for the hustle of a
career in music, but also to live a full quality life.
I'm Chris Webb, joined by my co host who is
living his best life as a boat captain, Dave Dampkin.
Speaker 3 (00:34):
Thanks for having me back, Chris.
Speaker 4 (00:36):
Good to be here. I'm glad I really got close
to the microphone. Actually just told me to not move
my head. So maybe I'd be good at driving boats,
but not so much.
Speaker 3 (00:45):
At driving this microphone. Today. We'll see how it goes.
Speaker 2 (00:50):
I just want to preface that he is, in fact
a boat captain. Now I'm not just making that a
It's got my.
Speaker 3 (00:56):
Florida license, baby, I can.
Speaker 4 (00:58):
I can maneuver the waves, the waters anywhere in the world. Yeah,
I'm speaking of you know, doing different things. You couldn't
get anything done yesterday because you're golfing every time I
text him yesterday morning, Yes, Dave, I'll handle when I'm
done with the eighth hole. Yes, Dave, I'll handle when
(01:18):
I'm done with the twelfth hole. I mean, are you
just living your best life? On Friday mornings?
Speaker 2 (01:23):
That's the best time to go. I go early, like
six thirty in the morning. No one's there, Well, there
are people there, but just a few of us.
Speaker 3 (01:30):
Ho'd you shoot?
Speaker 2 (01:32):
Not good? But better? You know how it is? It
was a beautiful morning.
Speaker 4 (01:38):
Are you one of those people that after like a
bad round of golf, you can still smile because you
were just on a golf course all morning?
Speaker 3 (01:46):
Or do you really dig in and be like, oh,
how could I have done better?
Speaker 2 (01:50):
I do a little reflection, but I you know, I've
learned that. It's like I look for the few things
that might have improved. There was some moments, there was
a moment at least. Well today we get back to
the roots of our mission here and expose the reality
of what makes some musicians struggle financially. We discussed the
(02:10):
impact of carrying debt, the effects it has on our growth,
and some strategies to keep you sailing toward your desires
or motor boating your way.
Speaker 4 (02:20):
I didn't even read that earlier nice boat reference. You're
on your game.
Speaker 2 (02:24):
Debt doesn't just take away your money, it takes away
your options. The real cost of debt is the gigs,
the songs, and the risks that you never get to take.
Today's quote comes from Chance the rapper. The industry makes
you think being broke is part of the grind, it's not.
Speaker 3 (02:45):
Did you find that quote?
Speaker 2 (02:48):
I just was googling quotes about musicians talking about debt. Why.
Speaker 3 (02:54):
I'm just wondering if it found it by chance?
Speaker 4 (03:01):
Nonprofit Everybody Is White House of Music nineteen fifty three.
White House of Music made a commitment to provide music
for life to students, musicians, educators, and families throughout Wisconsin.
Believe that all people, regardless of location, income, and other limitations,
should have the opportunity to create, love and.
Speaker 3 (03:18):
Be inspired by music. That's why they created the Wife
The Wife House.
Speaker 4 (03:23):
Already commentingana next week's episode about relationships. That's why they
created the White House the Music Foundation, allowing all interested
children to receive the tools and support they need to
make music for life. You too can get involved in
the fundation through financial contribution, donation of new and used
band and orchestra instruments, providing musical opportunities for young people.
(03:44):
Learn more at white Houseofmusic dot com. You find this
information useful, please rate and subscribe to the podcast and
also slam that like button if you're on YouTube, so
you can help keep you up on the finance side
of your music business.
Speaker 2 (03:55):
We all know being in debt is generally not a
good thing. We have all felt the pressure of debt
in some way in our lives. It's important to be
a community here that supports each other in becoming wealthy
and thriving financially. Our mission is to create a community
of musicians that can do whatever they want with their
(04:15):
lives because they have the money to do so. Today
we examine debt versus investment and put a spotlight on
the realities our everyday decisions have on our wealth. This
is eye opening. Let's go. So, I thought it would
(04:42):
be a great place to start with some statistics that
I pulled up and just talk about the reality that
we face right now with the situation in debt. Obviously,
we're not talking about the government in the United States
is debt because that is growing faster than anyone can
keep up with, but just within households. The household in
(05:04):
twenty twenty four, in just quarter one, and so this
was a year ago, and a year and a half ago,
reached seventeen point seven trillion dollars. That includes mortgages, student loans,
credit cards, and auto loans and some other things like that.
Seventeen point seven trillion dollars. Credit card debt alone is
over one point one trillion dollars, with an average APR
(05:28):
of over twenty percent, making it the highest cost of
any consumer debt that's ever been And then student loans
is roughly one point six trillion of outstanding debt. Right now,
an average borrower owes almost twenty nine thousand dollars, according
to Education data dot org loans one point six trillion dollars.
(05:53):
I mean, people love their cars, we know that, but
they love cars more than they love their freedom, apparently
because they are so in debt with cars that they're
making payments that are almost as large as some of
their mortgages. Then there's delinquency. Delinquency on payments is rising,
especially in credit cards and auto loans. Delinquencies are up,
(06:14):
especially among borrowers. Between eighteen and thirty nine. So this
is a demographic that I think we're talking to right now.
And then on top of all that emergency fund savings,
they say fifty to seven percent of Americans don't even
have a thousand dollars saved for emergencies in case of
anything happening.
Speaker 4 (06:32):
That's why we put that so much higher than getting
out of debt faster than having your emergency fund funded.
Speaker 3 (06:41):
The financial scale, Yeah.
Speaker 2 (06:42):
We always want to make sure that it is the
number one place for you to start, right is to
get that at least that thousand dollars, is usually what
we say, because even just that is a big achievement.
Apparently for half of the United States.
Speaker 4 (06:56):
How long it took us to even realize that, you know,
enable to be fluent enough to speak about it, to
search this information out at first, to be able to
have that thousand dollars.
Speaker 3 (07:08):
So there's got to be all these people.
Speaker 4 (07:10):
That that doesn't even to their brain to have that
thousand dollars, just that little safety net to release some
stress and start focusing on other things.
Speaker 2 (07:21):
Yeah, and it is funny because the farther you get
from that time of your life, For me, that I
was in that situation, the more you forget how much
stress you're carrying with that reality of being on the
edge at all times. It is a lot to hold.
Speaker 4 (07:38):
We put Living on the Edge by Aerosmith in right here.
Couldn't get that copy right, We.
Speaker 2 (07:42):
Can't afford that. But let's talk a little bit about
the challenges that debt then creates to build any wealth.
Credit card debt doesn't just sit there. It grows like
a weed. Right, A five thousand dollars balance at twenty
one percent APR, which is pretty average as a low
action these days, will be one thousand dollars a year
(08:03):
in just interest if you're paying those minimum payments. So
you're adding and growing like a weed, all of this
debt that will never go away. You're just carrying it on,
growing and taking over your life. That's just interest, and
you still owe that five thousand dollars at the end
of the year. You're just paying those payments.
Speaker 4 (08:24):
I was just trying to bring in some terms that
we deal with every day and some payments. So if
you need a full merch order or short run of
vinyl your next EP budget, it's all lost to the
interest that you're paying. So I just thought some real
world reframing would be appropriate. So like the high interest
that it is a tax on your future goals, which
(08:47):
is what we've been talking about, and the longer you
carry it, the less fuel you have for your music career.
Speaker 3 (08:52):
Too.
Speaker 4 (08:53):
Delayed investing keeps you stuck in maintenance mode, not growth mode.
So if you're paying three hundred and fifty bucks month
to debt, three hundred and fifty dollars not going to
retirement stocks or even a home down payment, or like
you were saying, just your emergency fund, the earlier you
invest into yourself, the more compound interest works for you.
(09:15):
It's the reverse of what's happening with interest for a
credit card, especially if you're talking about high dividend interests.
You know, for any stock that is compounding that money
for you. Just like if you had one thousand dollars
that we use in the last example, you're gaining that
type of money, so you delay it and you miss
out on tens of thousands over time. Example, investing two
(09:38):
hundred and fifty dollars a month at the age of
twenty five verse thirty five can result in one hundred
thousand dollars plus difference in your retirement value. To reframe this,
every year you delay investing to service your debt, the
cost isn't just dollars, it's decades of potential growth. Like
we were saying earlier, it took us years to figure
(10:00):
this stuff.
Speaker 2 (10:01):
Out, and it's really hard to, I think, absorb that
if you're in a place where this is just how
you've been living. It's one of those things where as
we grow up, as we grow through life, there's so
many things that start to become more obvious to you,
and when you're younger, it's not a priority. I think
(10:23):
in my twenties it was not a priority to be
saving money, to be building wealth like those things were.
Obviously I was aware of them being at some point
in my life, these are going to be important, but
they were not priorities. It was all about living in
the moment, which is a great thing. It was all
about like going and doing the things that I wanted
to do in the moment and have fun. But what
(10:46):
happened in the same moment, I was ignoring these weeds
growing so quickly around me from those decisions, those in
those media gratifications, and it really does creep up on
you and then all of a sudden, it's a massive problem,
right it becomes then it becomes incredibly taxing on you.
(11:07):
And when it comes to delayed gratification, I think the
only way that you'll ever put any energy into that
is to start to feel that desire to have that
security or have that future. You be grateful for these
decisions that you're making right now, and sometimes it's a
mindset that needs to switch in order for you to
(11:27):
even care about this kind of reality and this discussion
that we're having right now.
Speaker 4 (11:31):
You think they should make that required class in high school, Yeah,
just to talk about credit cards, how to make credit
cards work for you, put a positive spin on it
if you want, I mean, learn how to make a pillow,
you know, out of crappy cotton that I never ever
slept on because you know, it would have been nice
to have that.
Speaker 2 (11:52):
Well, there's other two to other places where this should
information should be coming from. Right one is one hundred
percent should be coming from your adult or you know,
the people around you that are elders. And we don't
have those conversations in this culture. I don't think very much.
A lot of households don't what I've also noticed is statistically,
(12:13):
or income homes have less conversations about money. Higher income
homes have a lot more focus on money because there
I think it's about how they feel about it. Right,
If you enjoy talking about money because it's you're doing
well with it, you're more likely to share that information
and that knowledge with your offspring or your youth. And
(12:34):
then if you're feeling terrible about money, money is to
constant stress it for you. So you're in that low
income or you're in that stressor of that situation where
money is not a good thing in your life, you're
not going to want to talk about it at all.
And so kids, as they grow up and they get
into high school, it's a very different perspective because some
of them have really been exposed to it, some have not.
The other area where it should be talked about more,
(12:56):
which is what we're doing right here, is within your community.
Right musicians to be the same way. Musicians that are
not doing well with money do not want to talk
about money right because it doesn't make them feel good.
It just causes stress. So as we start to talk
about this, it's like pulling a band aid off in
some ways, for some people, I'm sure they're like, oh
my god, I gotta go look at how much I'm
(13:16):
paying in credit card interest per year. And that's probably
why my debt is not going down. It's going up
despite the fact that I'm making my payments. Right. So,
there's so much there that we're trying to unpack and
trying to just smooth over it. Hopefully this doesn't overwhelm anybody,
But the reality is you can't ignore it. You cannot
just pretend it's going to go away. It will eventually
(13:38):
overtake your house. If we're going with the weed metaphor here,
it will eventually become such a problem that you can't
ignore it and you're going to be in a situation
in which is going to be much.
Speaker 3 (13:49):
Worse like sinker boat Chris.
Speaker 4 (13:54):
Like the water weeds who are going to come up
and sneak up Anya on the back nine.
Speaker 2 (14:00):
The metapoid we're trying to throw in at one time.
But there's some other Number three on our list of
what we're talking about here is these reduced credit worthiness.
And if you following in the camp of somebody like
Dave Ramsey, he's very intense about zero debt and all things.
He actually wants you to have zero debt even on
your home right any real estate investments. So that's one
(14:24):
extreme end of it. And then there's people like Ramitt
who are are more about having good debt. When we're
sitting here talking, I think we're going to fall somewhere
in the middle. I think you and I and I
think what we've seen is that most people fall somewhere
in the middle where borrowing money for certain things as
(14:45):
investments it turns out to be a really strong way
to build wealth faster. But you really have to have
the understanding of the difference between good and bad debt.
And in addition to that, you have to understand how
the way you handle your money is going to make
you either qualified to borrow that money or not be
able to get those loans. And that's what we talk
about credit worthiness. Everyone's heard about their credit score. I
(15:08):
think those advertisements do a really good job of making
you curious about your credit score. But the main thing
that affects your credit score is how well you're handling
the current debt you have. Right, high debt will almost
always equal a low credit score. In addition, if you
haven't been making your payments if you're laid on anything,
(15:29):
If anything goes into default, that's all going to affect
it in the worse way too. If you're opening too
many accounts, that will bring it down as well. But
the main thing still always comes back to what is
your debt to income ratio and how are you handling
that situation. A lower credit score is going to then
mean you can't get approval on loans for a home
(15:51):
or an investment if you're going to borrow for a car,
which that was something I really don't think you should do.
But even getting gear, if you're in a pinsion, you
need to be buying gear before you have that money,
which can happen in a healthy environment. Still, you can
borrow the money, use it for the thing that you're
gonna make the money from, and then pay it off.
(16:11):
I'm not against that. I just get cautionary about it
because I see a lot of people never paying it off.
But those things won't be able to happen if your
credit score is low. So understanding that debt isn't just
about the debt itself, but also about your ability to
then make good investment with good debt is going to
also be hindered.
Speaker 4 (16:32):
Number four is increased financial stress. I experienced this quite
a bit when I moved from Chicago to Denver because
my whole egging career just kind of stopped.
Speaker 3 (16:44):
And this breast hits harder and people.
Speaker 4 (16:48):
Think it's linked to anxiety, insomnia, burnout, and for.
Speaker 3 (16:53):
Me, like physical health issues. It was crazy.
Speaker 4 (16:56):
I was so nervous about having just the money for
the next payment at that time. Financially stressed musicians can't
take creative risks. They're too focused on survival. And I
think even at that time when I was trying to
take different gigs saying this is the way I wanted
to go as far as singing just original music or
(17:17):
getting paid ticket venues, I had to take every single
gig that came my way, no matter how much it costs.
So all the things that we teach here was blown
out the window because I was in the fight or
flight mode. I just I had to go as fast
as I can. So you can look at like, when
every gig is about paying off a card, it loses
(17:39):
all the fun and creativity. It's hard to say no
to low paying shows or carve timeout for your own
music when you're experiencing that that keeps your creativity small.
So if you look at financial peace equals artistic freedom,
that's what we're trying to talk about in these steps,
and that does.
Speaker 2 (17:57):
Bleed into your sleep right and into your ability to
be nice to other people. Have you ever noticed that
there are two types of elderly people, the really happy
ones and the really pissed off ones. I always think
of this is over simplification, I know that, but I
think of it like they made choices that have led
(18:18):
them to those places, and one of them feels happy
and relaxed and grateful, and the other feels stressed and regret,
you know, and frustration, and all of it is like
always on their sleeve. But as in our age of things,
and in between the youth, the youth and the old,
there is a lot of that happening. We're just able
(18:41):
to mask it more.
Speaker 4 (18:42):
Learning this stuff also reframes the way your future can look.
So if you're a curmudgeon and you don't see a
way out of being a curmudgeon, or the way and
answers bring you down, you're gonna stay that way. But
just like being creative in a musical place at in
your late fourth and you think I can't grow anymore
(19:04):
because of my age. That's going to bring you down
finances too. If you can't grow anymore because you miss
out on so many opportunities behind you. If you don't
reframe it to say, hey, I could change the way
I do things moving forward, you're going to stay that way.
So hopefully these steps inspire you to say, hey, this
is the way I've been doing things, and I can
(19:25):
take each step and slowly move towards a better future
financially and creatively.
Speaker 2 (19:31):
Well, the next one on eis to talk about how
this stops you from building any assets. Right, we talked
about the fact that you can't get the money if
you can't borrow it. We also talked about the fact
that you're going to constantly be paying towards debt instead
of paying towards other things. So let's talk about what
those other things might be. Right, Debt payment often swallows
up twenty to fifty percent of people's income. That is
(19:53):
a massive amount. Right, This isn't We're not even talking
about your mortgage. If that was part of your you know,
your mortgage is generally going to be about twenty percent
of your income for most people, but that isn't even
counting what this is. This debt payment can often swallow
twenty to fifty percent in addition of your income. If
(20:16):
that's the case, you pretty much have no money to
be putting towards an emergency fund, or to be saving
for that tour that's coming up, or that release and
the promotion that you're going to need to do. All
that marketing costs a lot of money. These are goals
that you really want to be putting your money towards.
These are the assets that you're building, These are the
investments that you're trying to make. If you're putting fifty
(20:36):
percent of your income towards debt of stuff that you've
bought in the past, half of which you probably don't
even remember what you spent it on, now, you have
no chance to be saving and investing in yourself. And
that is a massive, massive disadvantage. And you'll see the
difference between growth of artists that have the money to
put towards these things because they aren't paying towards debt,
(20:58):
and you'll see that they'll grow faster, the results will
happen quicker, their motivation will stay higher. All of this
is because of their absence of death. Absence of debt.
I said, absence of death. Those are very different things
than absence of debt is.
Speaker 3 (21:18):
An awesome band name.
Speaker 4 (21:20):
Synth of death Number six limited job mobility and risk tolerance.
So one of debt's most dangerous effects, it's limits your
freedom to pivot if you need to. You can't quit
that day job to go to full time music. You
can't take an unpaid sync writing gig that could lead
to placements like Vince was talking about working with Ryan Carrey.
(21:42):
You know, can't go back to school, invest in new gear,
or move to different cities where you want to flourish
as a musician, or can't even get to that tour.
Speaker 3 (21:52):
To get to that music city because you can't pivot.
Speaker 4 (21:55):
So debt keeps you saying no the very things that
might change your life, makes you cautious when success often
demands boldness, and if you take that away from yourself,
you're not moving forward in your career or life or financially.
Speaker 2 (22:11):
So let's let's give a real world example just to
give the numbers of this concept. Let's say you have
ten grand of debt and you're going to have to
put three hundred and fifty dollars a month towards that payment,
versus having five hundred dollars of just free money. You
only have one hundred and fifty dollars left because you've
had to pay three fifty a month towards those debt payments.
(22:33):
So now you have a difference of investing five hundred
dollars a month versus one fifty a month. Right, So
this is a simple calculation that we're talking about of
having no debt versus having ten grand of debt that
you're paying payments on. After ten years between those two,
you'll have eighty five thousand dollars of money because of
(22:53):
those investments of five hundred dollars a month versus twenty
five thousand dollars because of that three point fifty being
robbed each month going to debt. Right, that's sixty grand
in lost opportunity because of paying debt of ten grand
that you've spent in the past. Right, That difference is
(23:15):
huge of what's going to come for you in the future,
whether because you're servicing that debt, you're paying back that
debt versus not having any debt to pay back. So
what's the real cost money spent on interest equals money
not spent on music. That three hundred and fifty a
month is a minimum payment. It's not even just paying
(23:39):
it's not it's just paying the minimum bill. So it's
your creativity that's being siphoned away. Your ability to express
yourself as an artist that's being siphoned away because of
that debt. That three hundred and fifty a month, that's
forty two hundred dollars a year, right, that could easily
pay for five song EP and the mastering, that could
(23:59):
easily pay for a four week regional tour, that could
easily pay for a PR campaign for your new marketing
new golf clubs or new golf clubs that would be
some real nice golf clubs. So that five thousand dollars
credit card balance with a twenty one percent interest rate
is costing you one thousand dollars a year in interest, right,
(24:22):
money that should be fueling your music career, not padding
a bank's profit margin because they totally take advantage.
Speaker 3 (24:31):
Of You can't say this enough.
Speaker 4 (24:32):
The mental bandwidth is burned when you're going through this debt.
Doesn't just drain your wallet, it clogs your brain. Creativity
requires space Debt brings stress. Constantly thinking about bills, late
fees and survival kills your ability to dream big.
Speaker 3 (24:48):
So you might sit down.
Speaker 4 (24:49):
To write a song and instead you're spiraling out about
credit score or your golf score from Friday morning. Mine
is racing about next month's rent. You're not building your tour.
It's emotional noise, baby.
Speaker 2 (25:02):
Yeah, debt is not just financial, it's emotional, right, And
that is the part that we really want everyone to feel,
is that we're not just talking about your problems with money.
We're talking about the problems that it causes you mentally
and emotionally, and it blocks you from taking those next steps.
Your big career leaps that take risk, they take risk.
(25:26):
All of this is risky, right. We always talk about
that being a musician for a living is a very
risky thing to do. Right. Whether you think that that's
a valid statement or not, it's truth in the sense
that it's financially risky. And part of what it takes
to do anything great is face that risk, right, And
(25:47):
if you can face that risk with confidence financially, it's
a huge difference in the likelihood of you coming out
on the other end. And so want to become a
full time musician. Well, you can't if forty percent of
your income is locked into a monthly payment, right, you
just can't. You'll never survive that way. All you're doing
is treading water. Huh, your boat's going down. You want
(26:12):
to invest in merch and drop a vinyl or hire
a publicist, I mean those things take up front capital.
You want to say yes to some unpaid opportunity that
could be career changing. Debt's going to make you say
no because you have to go with the way that's
going to get you the money to pay those minimum
payments instead. Financial freedom is creative freedom in this case, right,
(26:37):
Debt turns you into this cautious artist that's going to
hold back from those risks that could turn into the
biggest opportunities and those bold moves that can change your life.
Speaker 4 (26:47):
Those missed opportunities to build wealth. Lesson is right in
front of you. Because if you have debt, you're seeing
how that company makes money off of you not being
able to pay your bills. If you don't have that
debt and could put that money somewhere, that that percentage
of interest goes back into your bank account, that is awesome.
(27:07):
That is true wealth. That money is working for you.
So every dollar minimum payment dollar not going to savings,
retirement or your next opportunity. You can't build assets when
you're just managing your liabilities. I think for you and
I both talking about building wealth, it's about having these
(27:30):
choices where you can put that money. So that four
thousand dollars a year in payments that you brought up,
that's a wroth Ira contribution for pierment emergency fund that
we talked about to handle all those panic moments, and
you're now stress free because you can have it covered
a down payment on your first van or your studio gear.
(27:52):
Positions with no margin can't seize momentum. So I think,
I know we're going to go into investments later, but man,
if you can see where dividends go back into your
career and into your bank account, it's just the exact
opposite of what you're doing in debt, and you can
get wealthy quickly.
Speaker 2 (28:13):
There's more bad news with some of this because bad credit,
which comes from like if you said, a lot of
bad debt and bad debt or high debt to income ratio.
Life is expensive, right, and it just becomes more expensive
with this poor credit doesn't just mean denial from getting
loans and getting opportunities to use money for investments. It
(28:35):
means inflated costs on everything, higher deposits on rentals because
they're going to say you have a bad credit score,
so that's going to cost you more. Right, you might
even deal with more expensive phone plans or worse financial
terms on getting When you're getting things like a gear
purchase or a vehicle, you're gonna have higher interest rates
(28:55):
because of your credit score. So even your interest premium
can be higher because of a low credit score. If
there are two musicians, for example, that are renting the
same apartment, one with a good credit and one with
a bad credit, you're looking at a thousand dollars deposit
versus someone who might even have a three thousand dollars deposit.
That's two grand more just because of the bad credit
(29:17):
score that now gets robbed from you investing into other
things that you care about. Debt quietly bleeds your finances
through the years. Even if you no longer actively use
those credit cards, it's still bleeding your ability for anything
else because of them. If your money is always going
(29:38):
out to pass decisions, it can't be funding your future.
Speaker 4 (29:42):
Let's talk about next what musicians can do. What would
you say, Number one.
Speaker 2 (29:46):
Is, so we've put the most importance on your awareness,
on your ability to understand and to be aware of
what your finances are doing. And so the most simple
way to do that is use our financial scale tool,
which you can go to and musicians tip jar and
download the MTJ spreadsheet, the forecasting and budgeting tool free
(30:10):
that allows you to track your income and track your
expenses and understand what debt you have as a total,
and then understand what you're paying towards those minimum payments.
Speaker 4 (30:22):
If you don't track it, you can't improve it, Sam right,
So number one start by creating a clear snapshot of
your money. Lists all income sources, gigs, teaching, side jobs,
track fixed invariable expenses, rent subscriptions.
Speaker 3 (30:38):
Food gear.
Speaker 4 (30:39):
Know all your debts, know their balances, know the interest
rate and minimum payment for each At simple spreadsheet and
musicians tip jar downloaded, it has all this just laid
out for you very easily. All you have to do
is plug in the numbers. Most people think they're broke
when they're just unorganized, which Chris would say, my email
is very unorganized.
Speaker 3 (31:00):
Why use power, Chris?
Speaker 4 (31:02):
And sometimes I just need to see all the emails
in one place, and then I can never get to them.
And I'm working on it, don't give me that face.
Speaker 2 (31:10):
Place that I would like people to start with first
is prioritizing the high interest debt first. There are different
schools of thought for how to approach dealing with your debt,
but I just think the easiest way to start making
a dent is starting with the highest interest rates. So
pay off the high interest credit card first and then
(31:32):
keep working towards it.
Speaker 3 (31:33):
Now.
Speaker 2 (31:33):
Hopefully that high in credit card is also the lowest
amount of debt you have, and the two kind of
work together, because the other approach would be to pay
off the smallest debt first, so that you can use
that minimum payment that you were paying towards the smallest
debt towards the next one and kind of build the
snowball that way. Either one that you want to do.
(31:53):
The most important thing is that you're chunking away at
this at the fastest pace possible. Are these silent dream killers.
If you're carrying a twenty percent inchest on your cards,
you're going to be dealing with a lot of stress
from that. Every dollar you pay, every dollar you pay
in interest, is a dollar that you can spend.
Speaker 4 (32:13):
The three is pick projects with a return on your investment.
Invest only in releases, gigs that move the needle, not
just your ego, which is very easy to do when
it's always all about you anyway, because you're trying to
push your music forward. Before you spend two thousand dollars
on vinyl or five hundred dollars on a photo shoot,
ask will this create new opportunities or just feed my ego?
Speaker 3 (32:37):
A tour that.
Speaker 4 (32:37):
Grows your fan base and merch sales that's a good investment.
Speaker 3 (32:41):
See merch sales.
Speaker 4 (32:42):
That's one thing where you can spend one thousand dollars,
make a return on that investment, put it right back
into more merch and just have that cycle as free
advertising for yourself as a market in the expense market,
and in an expense invest in yourself and over again.
So focus on energy and money on projects that build
(33:05):
your brand or audience income potential for yourself and music
is art, but your career is a business. I suggest
we try to spend like that.
Speaker 2 (33:15):
And kind of along those lines, your music income should
be used strategically right with at the beginning. I think
I was talking to a musician last night at my
event that I was playing, and he is still in
that early phase where he has the ambition of being
a DJ, but he needs the paycheck right of the
(33:36):
job that he has. You kind of have to remember
you're analyzing where you're at with all this, and you're
looking at your finances, and I didn't ask him about
his debt, but that would probably feel like an awkward
question to ask in the middle of an event, but
at the same time it should probably have been asked,
because the faster you get rid of that debt, the
(33:57):
sooner you can make that transition right of doing in
the side gigs and hustling on the after hours of
your day job and working towards a transition towards doing
what it is you want to do full time. You know,
money will crush that ability if it's debt, whereas it
becomes the catalyst of getting you there faster if it's
(34:19):
yours to choose what you do with it. So setting
up a separate account for your side income might be
a good way to do that to kind of keep
that money flowing and keeping track of how much you're
making as an artist while you're working that day job,
and using that money then to just fully pay off
your debt and nothing else right now, as it's a
side gig, that might be another way to do that.
Speaker 4 (34:39):
If you have gone through all the steps of our
financial scale, and especially you have an emergency fund and
you've completely wiped out your debt, I would say start
small investing, even if it's fifty dollars a month. It
builds a habit. I started with Acorns. I don't know
if you've used acorns before, but it would slowly round up,
(34:59):
like sense on my credit card or my debit card.
So compound interest is your bandmate. You don't need a
windfall to start investing. You need consistency. You can open
up a roth Ira, which right now I believe the
government lets you write off six thousand, five hundred. If
you invest that each year, you can automate fifty dollars
(35:22):
a month or whatever you can afford, so you don't
have to look at it as one price, even if
it's fifty cents for every payment. Something like Acorns helps
you do that and also shows you the growth how
small numbers can really add up or pick a broad
index fund VTI or the S and P five hundred
from nineteen eighty six to twenty twenty five you invested
(35:47):
back then on average, that's a twelve percent gain cheer
on the S and P five hundred, which is huge.
So a decade of small, regular investments beat the big
break that you were waiting for that they've never come.
So you're investing in yourself fifty dollars a month, it's
(36:08):
seven percent. For ten years, that's eight six hundred dollars.
It doesn't sound like a lot, but over time it's huge.
Speaker 2 (36:17):
And I know we're getting a little bit intense about
it because we are so passionate about it. We feel
that we need to get this message out because we
think it's one of the number one ways that musicians
are being blocked from doing what it is they want
to do, and that's not fair. This is one of
those things where it could say you could say this
is not fair. Why do some people grow up with
(36:37):
the education of knowing the danger that debt brings and
other people think it's a good tool to be able
to use to get that car or buy that next
iPhone that they want so badly. Right, there is got
to be some sort of communication within our community that
makes us all on the same page that we understand
that debt is really just there to hold you back
with this bad debt will do nothing good for you
(36:59):
except for me make you feel excited to have that
phone for the first couple of weeks, and then you
don't care about it anymore. Right now, you're just dealing
with the debt for the next ten years. So no
matter where you're at, no matter how much this is
affecting you at this point or not, you need to
take account with what it is that you owe. You
need to add it all up. You need to use
(37:20):
our tool, go to that spreadsheet and enter in all
this information so that you are very clear on where
it is you're at and if your goals to get
somewhere in this music career are being challenged by your income,
we certainly encourage you. The first thing to look at
is how much of it is going out back to
debt before you've had a chance to do anything with
(37:41):
your money. So your one action set this week, if
you're in debt, you need to focus everything you got
on getting out of debt, figuring out what your strategy
is going to be and making a move towards it.
If you're out of debt, which a lot of our
listeners are, which is fantastic, you need to then create
(38:01):
your investment plan because as Dave said, it doesn't take
a lot to make a big difference. And time is
your best friend here, so the sooner you start, the better.
We know that your time is valuable and we appreciate
you spending this time with us and being a part
of this community. It is our hope that you feel
that sense of community here at Musicians Tip jar and
that you'll help spread the word to make us all stronger.
(38:23):
As always, thank you for joining us, and remember there
is already enough for everyone. You just need to know
how to get it. Until next time on behalf of
Dave Tamkin and myself Chris Webb, Stay happy, healthy and wealthy.
Being a broke artist is a phase. Being a financially
trapped artist is a cycle. This is Musician's Tip jarbo.
Speaker 3 (39:00):
On This show should be considered specific personal or professional advice.
Please consult an appropriate tax, legal, business, or financial professional
for individualized advice. Individual results are not guaranteed, and all
discussed strategies have the potential for profits. Lass the hosts
are operating on behalf of musicians Tip Jar LLLC exclusively
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