The Money Rules No One Taught You About Building Wealth | Marcus Barney - Financial Education Expert

In this lessons episode, uncover the truth about credit and how it shapes financial freedom or traps. Learn how the system is built to benefit banks, not consumers. Learn why most people misuse credit due to miseducation and conflicting advice and learn how using strategic credit and business can fuel growth without giving up equity. It's so confusing because you have Dave Ramsey saying don't buy shit on credit. And now you have predatory credit cards and then America's built on credit. I actually just learned this recently that credit is actually like a relatively new concept that was like based in the US where in Europe for a long time there wasn't as much credit as there is in the US. Like the thought of buying shit with not your own money in history is actually I think very new if I'm not mistaken and nobody knows how to play that game like really really well and there's so much conflicting advice. I think that's what really spurs people. And it's a you gotta understand that it comes from a capitalistic place, right? In reality, I believe in credit because it's available tools so we should know how to utilize tools when you don't have any. But if you look at it on the flip side is that the way the credit is is even pushed out and pushed into the community and for you to be able to finance things, it's not for the benefit of the consumers for the benefit of the bank 100%. And so when you start to realize and identify that you start for me, I was going, okay, well, how do I make this beneficial for me? I understand you guys set us up on a spin wheel for your benefit. I'll allow you to finance this or pay. Imagine on on on on the mortgage, I'll allow you to pay 30 years. First eight years interest only. Year 15 you follow them hard times. We got our interest and now we four close on you and year 15, year 12, but we've already collected the interest. Now at this point, once it starts going to principle, if you ever fall on hard times, you lose the house. Yeah, I people don't realize any of that. There's so many levels to this. Even with auto loans. You have a bet. You got bad credit. Like, okay, think about it. The car is $80,000. If you have great credit with interest, you'll pay 93, 95,000. Bad credit, you'll pay 140, 160,000. Okay. In that buffer for the same car, you came in ideally, you don't want to help people with good credit. It makes more sense to serve as people and have people with bad credit. I rather you be confused if I'm going to make double the money. You take advantage of people. So it's just that's the importance of his understanding that this system is not created to help you grow if you're not educated on how to properly use it and navigate it. That's why they say, well, why don't they teach credit in schools? Well, why would they? They don't teach business in how to be your entrepreneur and how to not believe in a school system is good either. It's a circle that we kind of go into where we have to realize that there's pros and cons. The cons are naturally sitting and presented to us more. The miseducation is often much easier to get than the correct information. And that's one of the key things that I like about where I'm at is that I teach people how to use credit the right way to their own benefit. Don't get suckered into doing anything. You know, this is how I was taught to do it in his room. So Tita for people because we talk a lot about investment on this show and like should you raise money from investors and angels and VCs or should you just bootstrap? I've never really had a conversation on this show about like strategic credit for business. So just frame it for people. Where in their business should they use credit versus bootstrap and fund it with customer cash versus VC versus angel investing like I don't think it's a bad idea. But it's not something that if I watch 100 videos on entrepreneurship, I don't think any of them are going to talk to me about how to use strategic like credit or is it debt I guess for a business compared to all the other types of ways to fund it. So when you bootstrap, ideally, honestly, if you most entrepreneurs will end up, they'll start bootstrapping. And so when a bootstrap at the beginning, what happens is that I believe that's the proof it meant it because it's a lot of things that you have to prove to yourself. It's a lot of things you have to prove to your customers, develop and prove your brand. After you bootstrap and let's just say you get to a point to where you're doing six figures. You do a multiple six figures and you figured out the Kings, right? You went through it, you're going through it. Now it's going, okay, I have a proven model. I've worked out my customer support. I understand the lifetime value of my customers. I understand customer acquisition, how to get customers. And I now I understand my business. I'm actually a business owner at this point. I'm not I'm no longer risky and gambling. And I don't know what's going to happen. I kind of have numbers on the board that I can actually check have data to be able to look at. At that point, most people go, I'm ready to scale. That's the point when you're ready to scale. You'll get asked for a story. I just want to scale, but you don't know your numbers. You don't understand the psychologically. If you don't have a control over your business, you don't understand it. Can't look inside the hood. You don't really, you're not running a business, run the hustle. You're just running and you really don't know what's going on. You take that. That's going to mess crushes it. Yeah. But when you have somebody who understands it, now when you deploy somebody else's money into it, you know what your what atmosphere and what environment you're putting that money into. So you imagine as an entrepreneur and business owner, you figure out, okay, I'm actually profitable now. This is how I make money. These campaigns work for me. These marketing styles work for me or this yellow pages work for me. This billboard works for me. Okay. Now, how can I use somebody's capital and be able to put it out? And most entrepreneurs go, I want to scale. And if I say, Hey, I'll give you $50,000 for 15% of your business. They go 15 maybe 10 or 12 like and they're willing to do a deal. But they don't know of of banks like Marcus and the Goldman Sachs in Apple, right? Like you can get an Apple credit card. Same thing with the Goldman Sachs Goldman Sachs is that you can go and apply for a pre-approval. You go apply for a pre-approval and it'll tell you if you're pre-approved and what you're pre-approved for. You now know what you can get access to. You don't even have to get a hard inquiry or apply or do the full application. You just check the pre-approval. And now you say, okay, well, here's $25,000. Here's $20,000. I have $45,000 sitting there if I need it. I got it. Now I put that into my business, right? Because you already have the business figured up. That's the difference. And it's growing and it's working. But you realize, hey, if I had to extra $10,000, $15,000, $20,000 to put into products or to be able to expedite and grow my marketing and advertising or to hire more staff to get things out faster, whatever it may be dependent on the industry, you realize you get to a point where you can operate and you understand it. And now I can actually deploy somebody else's money to put gas on something that works. Yeah, I think that's smart too. But plus, you also get to hold on to 100% of your business. You're not diluting yourself. You're not giving up equity with credit. Where did... I know that your interest in credit came from failed businesses. Shit, that wasn't going so well. Did you get any? Because I'm thinking back to when I was in school and I got zero financial education about credit, to your point, nothing. Did you have any education growing up? Why is our education system so messed up? And we just don't give kids the tools that they need? Because I honestly think that it's a different... I don't think this is for kids, right? Because it often comes up. They should put it in teaching in schools. And it's like, no, there's other things that are more important about the human development, about self-development, and actually allowing people to develop versus putting them right into the rat race of finances and dealing with money. Because what we realize, and we can even look at adults once they figure something out, or they get miseducated or a misunderstanding, they can stay and live with that miseducation and misunderstanding for 10 years. And if you're not properly educated on how to be cognitive, how to think, how to process, how to analyze, how to use your discernment, teaching people about how to go get access to capital is dangerous for a 16-year-old who looks someone's lion wants a hillcat, who wants to be able to spend money on streaming. And he's figuring out ways, you know, now when it comes to financial, when it comes to credit, right? But now when it comes to budgeting, things like that, it's super important. Those are things that need to be taught in schools, like how do you actually manage the relationship with money? How do you manage the relationship with money on a spectrum of not going and getting money from other people, but just how to deal with it? How to deal with your bank account? How to actually look and check? Nowadays, we got apps and things like that out there now to tell us all of our how we're spending, where we're spending that, things like that. But it's like, okay, well now, how do we read these things? How do we actually govern it to make ourselves better? I mean, we can kind of outsource our thinking to apps. We still don't do a good job of managing money. And even now there's, I know there's apps that like show you like, hey, you're spending this much on your monthly subscriptions. And I think those are smart. But I think that that early child, the dedication about finance, that's important just to figure out how to like where you're spending, what a balance is, like how much, you know, your personal cash flow? Kind of that's really the way that I think about it. And that doesn't exist in schools. But then like when you're older, like credit is important. I mean, there's a really mandatory for kids going into college. I agree with that. As opposed to just having like a little booth at the credit card on the campus. No, it needs to be, it's something that should be a prerequisite in college, not as much high school. So when you think, well, I think about kids, I think about high school, I think high school needs to have a very strict strategic across the board course and in trainings on relationship with finances, right? To understand it. But I think by the time people get to college, now it needs to go into actually understanding finance is how it works. The understanding credit, what it is because at this point, now you're available to you. So coming in freshman year, it should be automatically, how you got to take prerequisites on credit. Because what happens is that now all the credit card all for start. And now it's like, okay, I'm just taking things and I don't know any better. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.