Interview: Derek Sall Reveals How He Paid Off $54k of Debt In 12 Months
I recently had the exquisite honor of interviewing Derek Sall, debt elimination expert from LifeAndMyFinances.com, about his journey of eliminating large chunks of debt in less time than the average person would think possible. The full interview is available just a couple paragraphs below.
His advice speaks directly to me, and I hope it speaks to you as well! My wife and I purchased our first house last month (August 2017) so I'm personally inspired by Derek's story to pay off my house debt as quickly as possible to begin building wealth.
So have an open mind, suspend the limits in your mind of what you think is possible, and be inspired by Derek's words of wisdom…
(bold/italic text is my question, and Derek's response is indented below the question)
You've rid yourself of $21k debt in 6 months and another $54k mortgage in 12 months. How did you do that, and what motivated you do to that?
They say there's two motivators for action – fear and greed. I discovered a third: anger.
My wife of not even three years walked out on me and filed for divorce, and then she had the nerve to demand her half of our estate…$21,000. I was mad that she left and I was livid that she was asking for half of all the money I was able to keep away from her crazy spending habits! I vowed to pay it back as quickly as possible to break the ties for good and to never deal with her again.
The house was a similar story. I could just see it – two years from now she comes back into my life because her name is still on the mortgage, which means the bank won't lend her a cent toward the new flashy flat she wants to buy (sheesh, I still sound bitter, don't I…? Oh well. 😉 ). So, I figured heck, if I could pay off $21,000 in 6 months, why not try to pay off $54,000 in a year? Done and done. And now I'm moving on to building serious wealth.
What advice would you give someone who is driven to eliminate debt but doesn't have the support of their spouse?
As much as you try to get out of debt without your spouse being on board, it probably won't happen. Sorry to burst your bubble, but you just can't make someone do something that they don't believe in – not without seriously straining the marriage anyway.Instead of trying to control the finances (and your spouse), it's probably best to put your energies toward going to financial classes and setting up dinners with like-minded couples that have gotten out of debt. Eventually (hopefully), your spouse will come around and maybe even think it's his/her idea to get out of debt, which means they'll obviously be more receptive to the change that's about to happen.
What advice would you give someone who desperately wants to get out of debt but feels so overwhelmed that they don't know where to start?
There are so many people that have trouble getting a handle on their finances, and most of the time it's because they're trying to do 20 different things at once! And THAT's stressful!Instead, I always encourage people to follow Dave Ramsey's baby steps. Step #1: Save up $1,000 for emergencies. Step #2: Pay off your debts from smallest to largest with a vengeance (here's a free tool to help). Don't invest in your 401k, don't stash away more money just in case. Just save up $1,000 as fast as you can and then tackle your debts in order of size starting with the tiny one. That's it. Anyone can do it!
Some financial advisors recommend that the best way to pay off debt is to invest in an asset (such as real estate, a business, or stocks) and use the revenue from the asset to pay off debt. Other advisors recommend paying off debt first so more money is available to invest. What do you recommend to people who have significant debt: focus on paying off debt, or focus on making more money?
If someone has no money, I would never recommend that they borrow money to hopefully earn more and dig themselves out of the hole. Doesn't that sound risky to you? Instead, I always recommend that people first get out of consumer debt by taking on extra jobs, starting a small business (something that costs basically nothing to start like blogging, mowing lawns, detailing cars, cleaning houses, etc.), or working overtime at the job they already have. I recommend iPage if you're launching a new blog. Then after they pay off their debts, I recommend that they invest 15% of their income and then put the rest of their money toward paying off their house. Imagine if you had no debt and had a paid-for house. How much extra money would you have each month? $2,000? More? I bet you could get pretty wealthy with that, and in a hurry too!
How do you foster the mental and emotional discipline to not buy certain luxuries (fancy car, fancy house, big TV, etc) when you know you can't afford them?
Millennials call it “adulting”. If you don't have the money to buy it, then you don't deserve having it. And, if you have a problem stopping yourself, I'd seriously consider chopping up your credit cards because they're going to do you more harm than good.Alright, now what about handling the actual issue here which is your dissatisfaction with yourself and your life? I encourage people to think about two things: 1) Their life's purpose, and 2) Their distant future. When they're about to buy something, I want them to ask themselves if this is getting them closer to their life's purpose, and then also how this will impact them 20 years from now. If the answers aren't fulfilling what you want out of your life, then put it back!
What prompted you to launch LifeAndMyFinances.com?
I graduated with a degree in Finance in 2008…when all the banks were shutting down, and I honestly couldn't find a job in my field. The closest I got was, “Pricing Analyst”, which basically meant that I searched through catalogs and circled prices that did not end in a “9”. Seriously, that was my job.I wanted to keep myself sharp in the financial industry and I absolutely loved helping people with their personal finances, so viola, LifeAndMyFinances.com was born. It's where I talk about my own life, my own finances, and about anything else I think my readers will need in order to propel them toward wealth.
You've written about your experiences as a landlord on your blog in 2016. What advice would you give someone thinking about becoming a first-time landlord?
No matter what anyone tells you, landlording is absolutely fantastic. It's been the investment choice of countless millionaires and it's propelling us there as well. Just to give you some quick numbers, we bought our first rental for $81k, we put $8k into it, and today (just 1.5 years later) it's worth $125k. AND, we've already earned more than $10,000 in profits from the monthly rent! It's an absolute cash cow and I'd recommend it to everyone.If you're looking to get into real estate investing, you first have to find a deal. This could take a week or it might take a year. You just never know, but as with anything, the money is made at the buy, so don't get over-anxious and just buy a random house because you want to get started.
Second, you've got to create criteria in your hunt for renters (like that they need a take-home pay that's 3x the rent, they need three quality references, and their credit score should be no less than 640) and STICK TO YOUR CRITERIA. We had to cycle down to our 7th applicant before all our criteria were met. It took a couple weeks longer, but we have FABULOUS renters that always pay on time and they're keeping the house in great shape.
Finally, if you're good to them, they'll be good to you. If you're a jerk, then they'll likely return the favor with a torn-up house once they move out.
What books our courses do you recommend to people who are serious about eliminating debt and building wealth?
For starters, read the book, “Total Money Makeover” by Dave Ramsey. Everything you need to dig your way out of debt is in that book.
I haven't found a great course yet that I can recommend. In fact, it's really prompting me to start my own! Anyone interested? 🙂
You're constantly adding new topics to your blog. What kind of topics can we expect to see coming up over the next couple months?
Ha, looks like I just gave one of them away – an online course for getting out of debt, saving up money, and becoming wealthy! Besides this, my wife and I have saved up enough cash to buy a second rental property. I suspect that we'll find something and close on it before Christmas. So, you'll definitely see a bunch of renovation photos and more articles about the entire process! Stay tuned!
– – End of interview – –
Thank you, Derek, for taking the time to share your story and advice!
If you'd like to follow Derek and his financial journey you can follow him on his website, Facebook, Twitter, and Pinterest.
Comment below to share what you learned from this interview, and if you'd like to see more interviews like this in the future!