From Credit Card Debt to Millionaire in 10 Years

Welcome Back to the MikeAndYs podcast where we discuss the ins and outs of owning a small business. If you're new here, the mikeandys podcast is all about taking your business to the next level. We had someone ask the question recently. I'm in credit card debt, but I want to be a business owner. I want to be valued at $1 million in just 10 years. We say go for it, but Mike actually knows what to do to make this happen. He's going to break down year by year what you can be doing to hit your lofty financial goals. As always, you can find all this and more over at the Mikeandys YouTube channel. But let's get into it. This is the 10 year journey from debt to a million dollars.

Today I'm going to be showing how you can go from being 10 to $20,000 in credit card debt all the way to becoming a millionaire by your net worth within the next 10 years. And I walked through this process came from a question that someone said in the comments. They said, hey, I'm not a business owner. I want to be a business owner. But right now I'm 10 or $20,000 in debt. What do I do? I want to become a millionaire in the next 10 years. Now, typically when I hear someone saying something like 10 years, I want to become a millionaire, I write it off. Because when you start putting arbitrary deadlines like 10 years, it makes you very short sighted. I think the longer term you can think the better. Now, if you want to become a millionaire in your lifetime, the steps I'm talking about today will work. But let's go ahead and try to use that framework of 10 years and see what we'll be doing over the course of 10 years to get to that million dollar marker. So let's go ahead and write this down. First and foremost, this is going to be 1 through 10 in terms of the years that we are operating inside of. All right, so we got 1, 2, 3, 4 and 5. And then down here we're gonna have 6, 7, 8, 9 and 10. And we're gonna go over in today's video exactly what you need to be doing each of these years in order to hit your target of becoming a millionaire. And again, that is by net worth, where you could sell all of your assets and ultimately have more than a million dollars in your bank account. Most people don't become actual millionaires with cash of a million dollars plus in their bank for several years into actually becoming, from a net worth perspective, a millionaire. So let's go Ahead and break it down. First year, we are $10,000, $20,000 in credit card debt. Ultimately, the only thing I want you to do at this stage is learn. Now, most people would probably switch number one and number two, because in years two, this is when I want you to pay off the debt. Okay? Now most people would say, oh, well, you need to pay off the debt first. And they listen to Dave Ramsey and he says, you know, get a job doing pizza or doing, you know, whatever you gotta do. Deliver pizzas, do waitressing on the weekend, whatever you gotta do to make extra money. And I like that. But I honestly believe if you took up the first year to learn and educate yourself, that your second year, you'd be able to pay it off way faster because you have actual skills. And so this is the thing, most people will stay in year number one and then they keep learning and learning and learning and learning and they just have paralysis by analysis. They watch YouTube videos like this a thousand times and never actually do anything. So that's the fear that I have in saying this. But I really believe that if you actually took a year and learned a skill and then deployed that against paying off your debt, you'd do it way faster. Because when you go get that second job, when you work on the weekend during year two, you'll make two to three times X compared to just getting an entry level pizza delivery job or bartending or whatever you're doing on the weekend in order to pay off the debt. So in year one, what are you going to do? You're going to figure out a skill. This could be anything from an online course to a certification. For example, I just recently got my real estate license. You could probably get that in a matter of a few months of studying and you could do that, or you could get an online course. I have landscapebusinesscourse.com, lots of other people that are very industry specific, that have been very successful in their field, create online courses that you can buy for 500 or $1,000, or get a book. You don't even have to get a course. Get a book and learn how to do some sort of service, do some sort of business, do educate yourself. It might not even take you an entire year. If you're really ambitious, you could probably do this in a month and then jump right into step number two. But let's assume you take this entire first year just to learn. Now what that could mean is you get an online course, for example, like landscapebusinesscourse.com let's just use that example. I've been in the lawn care and landscaping industry for a very long time. We have now 100 locations around North America. At Augusta Lawn Care, we do over 20 million in revenue. I think I know a thing or two about lawn care, so let me just stay in that vertical. So what I would recommend is learn from something like landscapebusinesscourse.com or a book, watch a bunch of my videos, learn how to run your business and then what you're going to do is you're going to go get a job working for a competitor in this industry on top of your current job. Or maybe you're at school right now, but ultimately we have 10,000 to $20,000 worth of debt. I want you to take every penny you can and throw it towards that debt. But ultimately learn in this year as much as you possibly can. And in the industry that you are trying to educate yourself from a actual book knowledge, book smart perspective, try to go get some industry knowledge and work experience. So if you are trying to learn landscaping, you want to start a lawn care landscaping business, go get yourself a job as an employee in that field. At the same time or previously having learned about that industry, learning about the business, taking a course, go into your local community college and get yourself a course in a variety of different things that are real skills. For example, if you want to get your real estate license in that year one great. Also go maybe for free. Go shadow a broker, go do their open house for free, do a couple walkthroughs with them, go shadow a property manager, go ask if you can for free work at a contractor's flip that they're doing and their remodel and actually work on site and learn how to do certain things like changing out the plumbing or fixing the wiring or learning about electrical systems and H Vac systems. These are all things that you can do in year one. I don't care if you make a single penny, because if you learn a lot during year one, year two, you'll be able to pay off that 10 or $20,000 in debt very quickly over the matter of just several months of you working the weekends and evenings using the skills that you had in year one, you will pay off the debt. And the reason I'm concerned about that debt is because 10 $20,000 worth of credit card debt is probably eating every penny of leftover discretionary income that you're taking home because you're probably paying five a month just in interest, probably even more. That's going to kill you in terms of having the ability to save up money. Now what you're going to do is you're going to pay off this debt for the first half of year number two. Then the second half of year number two, what you're going to do is take that money that you're making from that skill that you honed in year number one and you start stocking that aside again. This is a weekend and evenings and holidays type of job that you're doing. For example, in this year one you did landscapebusinesscourse.com and then you went and worked at a landscaping company. Your number two rolls around the spring rush, you go get yourself some 10, 15, 20 lawns that you are mowing on the weekends, in the evenings, on the holidays. It's a grind, it's a hustle. But what you're going to do is pay off that debt and in the second half of the year you're going to start stacking money aside so that in year number three you can go full time. Alright, this is where you're going to become full time business owner is ultimately where you no longer gonna have your W2. You give your two weeks notice and I have a video inside of mbaforantrepreneurs.com and landscapebusinesscourse.com about the 60 day transition between going from an employee to a full time business owner. But ultimately what you're doing in year number three is at the beginning of the season, especially if you're doing something like lawn care, landscaping or you're in some sort of home improvement industry where you have a spring rush, you're probably going to start doing that at the beginning of the season. Season you're gonna go full time. So Instead of having 10, 15, 20 customers now, you're gonna have 50, 60, 70 customers during this timeframe. Now over the next couple years, I want you to be able to grow to the point where you have $100,000 in cash. Now everyone's like, well that's really, really difficult. I'm giving you three years. That is a very long time to be running your small business and only make $100,000 that you can stock aside. This is the three years of the most lonely part of being an entrepreneur. Most people will not make it three years. Majority of small businesses will not be able to start full time and three years later be in business, let alone have $100,000 set aside in cash. And so because of that, most people quit, most people give up. It's very, very demoralizing. During this period of time. And because even if your goal is to put aside 100,000 in year one, you probably don't get anything in year two. You might have like 20 or 30,000 set aside. It's usually year three that you're gonna be able to start making a healthy profit in your business. But again, majority of small business owners won't even stay, keep their doors open. Because these first two years are just absolutely grueling when it comes to figuring out your systems, figuring out how to find customers, figuring out how to make those customers profitable, figure out how to find employees. And what the goal is is by year five, what you are really doing is using. What you have to figure out is how do I take the labor of other individuals and scale it? How do I leverage the labor of other employees that potentially are in this stage of their business and their stage of their journey in wealth and they're just learning, they're just working for somebody else. How do I use that and leverage that labor? Because back here I was getting paid, let's just say $15 an hour. As a business owner, maybe I was making $30 an hour. Now my goal is how can I pay someone else $15 an hour, make $30 an hour and be able to leverage that labor and have a way of making that $15 turn into $30? That is leveraging labor. You give them the tools, the equipment, the resources, the training to make their labor go from the value of $15 to you to $30 to the customer. Now what you're doing is leveraging someone else's labor in order to make you more money.

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Now in the year six, you have to start looking beyond just labor. Now we're going to start scaling something beyond labor and that is capital. Alright, so now we've been three years in business and we're asking ourselves, okay, we got $100,000 in cash set aside in the bank. What do I do with that? I've got to now deploy capital over the next couple years to be able to actually use something beyond just labor and scale it up and leverage it. So now that capital I'm going to take $100,000, I'm going to spend 50,000 of that on my business. That $50,000 is going to allow me to grow my business up to about 500 or $600,000 in annual revenue. And the other 50,000 of that 100 I'm going to deploy against a real estate deal. Now the really cool thing about real estate is I can get in for 3.55% down on an FHA mortgage. So I'm going to go ahead and get an FHA mortgage on a property and I'm going to put 5% down. That would mean that I would be able to get a $1 million dollar property. And again, this is in year number six, a one million dollar property that's going to allow me get a four plex. Alright, so this fourplex over the course of these three years, you can see I'm drawing across the number six, seven and eight over the course of those three years is going to go from $1 million in value all the way up to $1.4 million in value. How is that possible? Well, I'm living in one of these units out of the four. But other three units I'm going to rent out to other renters. And I'm also going to be on the weekends repairing the property, improving it, painting it, making improvements on the property. My goals over those three years to improve the property value by $1.4 million. So now my net worth has gone up $400,000 here from this one real estate deal that I bought, a 4 Plex. Because a fourplex is still considered residential real estate, I'm able to still use an FHA and use the government basically trying to incentivize first time home buyers into buying this property. I'm going to put $50,000 down 5% on a $1 million property. It's a 4 Plex. I rent out all three units. The other one I live in so I can get away with low living expenses. And my goal is to improve the property value over the course of three years by raising the rent and by improving the property manually by myself without spending a whole bunch of money, I'm going to do all the labor myself on the weekends. So just that real estate deal I was able to leverage $50,000 of my capital again, I'm trying to leverage capital here and turn it into 400,000 or an 8x return on my equity by the time 3 years rolls around. This is absolutely possible. And this is the form of using your home, using the house that you need, the shelter over your head in order to build your real estate value and your net worth by $400,000. Now in the business, I took this $50,000 and I am now trying to build this business up to 500,000 in revenue in this seventh year. Now this is actually the fifth year of my business. This is the fifth year of my business. I'm trying to grow it to 50 in annual revenue. Now at this point I should be at least 20% profitable in my business. I'm five years into my business. I should have my systems down. After I pay myself, after I pay myself a reasonable W2 salary for me as a business owner, I should be making $100,000 in profit from the business profit take home after I've been paid. So maybe I pay myself 60 or $70,000, but after that the business business is 20% profitable and I'm at $500,000 in revenue. So therefore I'm taking home 100k. Now again, when we're trying to become a millionaire, I'm not so worried about the money in my bank. I'm trying to build net worth. So even though right here I might only be cash flowing from this property, a few hundred dollars a month because I have three tenants, maybe I'm cash flowing 5, 6, $, 700amonth after I pay taxes, insurance, et cetera. I'm not really too concerned about that. Everyone get so worried about how much money they're making when it comes to becoming a millionaire. When becoming a millionaire has nothing to do with how much cash you're making, it's simply what to do. Your net worth is what's the value, the equity you have in businesses and the equity that you have in real estate, stocks and other assets. Now, speaking of stocks, this is also an opportunity where you could do that. But I don't really look at stocks as something that is long term wealth building. Some people like to put money slowly aside and get 8, 10% year over year. But I'm not going to be able to become a millionaire in 10 years simply by investing in S&P, 508,9% interest rate year over year. You're not going to be able to do that. You're going to have to take more risk in the form of learning, working for free. You're taking more risk in the form of working on the weekends and evenings to pay off your debt. You have to take more risk, like going full time and starting your business. You're going to have to go into more risk and liability by hiring employees and scaling up their labor and leveraging their labor and training up people and dealing with all the employee issues to be able to stack aside 100 grand in those five years. You're not going to stack aside 100 grand in cash by investing $10 here and $15 here and $20 there in the stock market. Anyone that wants to tell you that is just delusional. I'm just honest with you. If you look at people like Warren Buffett, who talks about investing in dollar cost averaging in index funds, he started businesses before he ever started investing into other companies. He started businesses, bought businesses, turned them around, made them better. That's what allowed him to grow to the point where he can take billions of dollars and get 8% on 10% or 15% return on it. You're not going to be able to do that working for five dollar ten an hour and think that you're going to somehow become a million in the next 10 years. Maybe over the course of 40 years. That's definitely possible. And everyone likes to read those articles about the UPS traffic driver that has a million dollar net worth when they retire because they slowly invested over the course of time. But if you're trying to go from debt to owning a business, owning real estate, and in 10 years becoming a millionaire, you're gonna have to take more risks than just dollar cost averaging in index funds. Okay, now if you wanna take your time again, more, probably less risky to just do it over the course of 40 years. But this is using 10 years. So now in year number eight, I really want to scale my business up to 800,000 in revenue. Again, I'm assuming I'm going to be 20% profitable. So what that means is I'm going to have $160,000 in profits from the business on that, $800,000 in revenue. Now, what is my current net worth at this stage? Alright, I have a $400,000 equity position in my $1.4 million property. Because I grew my rents, I increased the property value I probably had. Let's assume maybe a little bit of market appreciation, just the value of the property going up in time, but I really just want to look at forced appreciation by improving the property and increasing the rents. Because if I increase the rents, that makes it a better business. It makes it a better investment for the next person that comes and buys the piece of property. So let's look at what our actual net worth is here at this position. Okay, I have $400,000 here. That's an equity in real estate. And then up here I have a business that's doing 800,000 in revenue and $160,000 in profit. Now I'm going to assume that on this $800,000 business I have. Let's just put in black here so you can see a little bit differently here on this 800,000 business. Let's assume I have $100,000 in assets. These are things like trucks, equipment, etc. But the real value, the real net worth of a business that creates real profit after the business owner has been paid is the fact that I can have a multiple and I'm just going to use a 3x multiple on the profits, the distributions, the net free cash flow of the business. So If I take $160,000 in annual profits after the business owner has been paid and I multiply by three, which is kind of common for most home improvement businesses, small business, service based businesses, I take 160, multiply that by three, that's $480,000 in value that I have created. Now this business is technically worth $580,000. Oh, look at that. I have $580,000 business. That's the value of the business because it has free cash flow and $100,000 in assets. And I have $400,000 in the form of real estate. So Now I'm at $980,000. I am almost there. I'm almost to a million dollars and I still have two years to go.

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Now this is where it gets interesting. This is how people really get wealthy and start to multiply their wealth. Because what I'm going to do now is I'm actually Going to take a home equity line of credit on this property here at the bottom. This is my primary residence. This is not an investment property. I live at this property. But what I'm going to do is I'm going to take a home equity line of credit that's a HELOC. Now I'm going to take this $400,000 in equity, go to the bank and say, hey, Look, I have $400,000 in equity in this property. Can I please get $150,000 out of this property? And they're going to say, fantastic, yes, we'll go ahead and do that. Your property is looking good. You're getting great cash flow. We're going to go ahead and give you $150,000 in the form of a HELOC. Now, this $150,000, the beautiful thing about real estate is I can take this and immediately go get a property for 600,000, because I know I can put 25% down and pretty much get most pieces of real estate. So I'm going to go get 600,000. Going to go get a property that's a little bit beat up. It's another fourplex. Okay. Another residential loan that I can get, another fourplex. But this one definitely needs a little bit of help. Maybe the market's come down a little bit. But more importantly, this property is not in great shape. It's falling apart. And what I'm going to do is I'm going to spend 150 grand to get that $600,000 property. But now my goal is to spend another 50 grand on this property, another 50 grand in repairs. But now I'm going to improve it by spending $50,000. New roof, paint the thing up, new carpets, make it look good on the outside, do the landscaping. And what I'm going to do is, even though Now I'm adding $50,000 in repair cost, this property is going to go from worth $600,000 all the way up to $900,000 or a 50% increase, because not only did I just. I'm going to increase the value of the property by making it look better. I'm going to make sure I can go, like, double the rents by making it a better place to live. And you're like, oh, no, you can't do that. I have done this now 20 times at my rental properties. And that is, you take a property that's like a C value, it doesn't look great. It's falling apart. It's 20 years been neglected. You go in There, you make it, paint it well. You, you do the carpets well. You change out the cosmetics, you change out fixtures and features like light fixtures, the handles, the covers on the outlets, the light switches, all the little cheap things. But doing that makes the property pop. Get new carpet, rip out old carpet, put new vinyl plank flooring in. That's like basically bulletproof. You can do that for $50,000. Okay, I put $50,000 into a $600,000 property. So the value of the property has gone from 70, $600,000 all the way up to $900,000. There's an increase of $300,000 of the value for the cost of just 50,000. So my net positive in my net worth is going to be 250k. I create $250,000 worth of value by paying $50,000 in improvements, raising the rents, managing the property well, getting good leases that have contracts and in place. Instead of just doing month to month, people struggling, they're not paying, they're sometimes late, all the rest of it. You can get a property distressed where the landlord doesn't want to have to deal with all of those issues, come in and professionalize the management, make the property look better, get leases in place, and absolutely make it go from 600,000 to 900,000 in value. I just created an additional $250,000 worth of net worth for myself personally by Simply taking this 4 Plex, getting better renters, improving the property, and making the value of the property go up dramatically. Absolutely possible. Now at the top here, this business doing 800,000 annual revenue. My goal is that by year 10, I'm able to get this to $1 million. Okay. When you cross the 1 million dollar marker, now you're able to get a manager, someone who run the business for you. You're gonna pay them a good amount of money, and now your profits are actually gonna go down to just 15% per year. Because remember, I look at profits as after the management has been paid, after you as the business owner for whatever role you're playing in the business, you've been paid your W2. I'm gonna assume now you're only making 15% profit on this $1 million in revenue simply because you've hired a general manager to run the business for you. But watch what happens. Your net worth, everyone's like, why would you do that? Because at 15% of 1 million, that's only $150,000 in profits. Take home extra distributions to you as the owner. And what happened? You went from 162 years later, you're actually making less money in distributions. But here's what's really cool when it comes to your net worth. Check it out back here. I had a 3x multiple in my profit, but I was in the business. I, I was working every single day. Now this business, not only does it run without me as the business owner, it runs by someone else managing it and someone else running. And the systems in place run without me as a business owner. Now the multiple on this is probably more like 5. So a 5x multiple on that profit. So now if I look at my business, I say, okay, now what is my business worth from a net worth perspective? Well, well on that $1 million, let's just assume that we've bought some more assets as we've grown. And maybe you have $120,000 worth of assets in the business like trucks, equipment, etc. Very, very likely that you have about that much assets in a one million dollar business. But now check this out. The actual value of this profit, because the multiple is five. And you say, well, why did it go from three to five? Because now the business runs on systems, procedures and management is place that the owner is not required to be there. So now this business that has a million dollars in revenue, which is only about 25% more than what I was doing a couple years later, but now there's $750,000 net worth that has been added to my wealth because of the fact that I've created a business that can run on systems and procedures and not me working inside the business sweating like crazy every single day. So now that distribution is worth gone from 480 to 750. And now I'm able to sell my business. The business is now worth $870,000. That's $120,000 worth of assets and $750,000 worth of the cash flow that's being created. I could easily go sell this business for $870,000. It's literally kicking off 150 grand. Assuming the business owner never shows up to work, they don't have to do a single thing, and again, only 15% profit margins. You can make it, optimize it, make it better. But let's just assume that we now have been worth $870,000. We have a portfolio of real estate that is worth $250,000 after taking into account our improvement on the second property. So take the 150 out of that 400. We have $250,000 worth of equity still in the first property plus the $250,000 in the second property for a total real estate net worth equity after. If we paid off all of our debts of $500,000, we now have a net worth of over $1.5 million in year number 10, starting from 10 to $20,000 in credit card debt. Now, the reason most people will never get here is because the evolution of these 10 years starts like this, very slowly, and then the trajectory to getting to a million dollars in net worth happens in just these last few years. Most people are not patient enough to learn and grow and work for free and educate themselves and read books and listen to podcasts, watch videos about how to make more money, then to go through the absolute drag of working on weekends and evening to pay off the debt or starting their own business. People are not willing to do the work. And once they start their business, working for five years without seeing a whole lot of results, as if they're never going to get that 10 year marker. The momentum of net worth is incredible. When you get just a little bit of success, it compounds and compounds and compounds. And that's why people that are billionaires make tens of billions of dollars in a year, is because their wealth has compounded. It might have taken them three decades to make their first billion dollars, and then literally they're making $10 billion over the course of a matter of a few months. Why is that? Because they were patient. They went through the this whole process. They looked at building their wealth, and like building a snowball, it slowly compounds over time. It gets more and more momentum as it gets bigger. And I trust me, if you went 11, 12, 15, 20 years into the future, you'd probably build a net worth of tens of millions of dollars. If you kept using the strategy of growth, expansion, and wisely using your investments to build your net worth. This is the roadmap that many have used. At Augusta Nation, we have franchisees that start just like this, just starting to start from the bare bones, a push mower, a weed whacker and a blower. And our goal in 10 years is literally this. This is exactly what I want to be doing. Over the course of 10 years, they're able to take these profits from their business, make second and third and fourth locations, and start to duplicate the same way we did here at the bottom with real estate, by getting a second property. The same thing should be done now in this business if you want to continue to grow. But if you're just getting started, if you're in school, if you're in debt, whether it be college debt, credit card debt, whatever it is, you've got to realize it's going to take you at least 10 years to get there. And you can absolutely do it if you're diligent about getting your net worth up, if you're diligent about cutting expenses so you can throw more money toward your debt. These things take time. They take effort, they take dedication, they take discipline. But it's worth it if you want your net worth to become what your goals are. My name is Mike Annis. I'm the founder of Augusta Lawn Care. We have over 100 locations around North America doing lawn care and landscaping. I also have a $7 million real estate portfolio, stock portfolio, and I have multiple businesses like a gym, online businesses, books that I've written, courses. A lot of that stuff is in the links in the description. And I really hope that this kind of information helps you, regardless of what stage you are at. I promise you. Give yourself five, ten years of just constant dedication to one goal of getting yourself out of poverty, getting yourself out of debt, getting yourself to a better financial position, and it's absolutely possible.

This has been the Mike Andes Podcast. Now you have some ideas on how to take your business to the next level. And if you liked what you heard, we have tons of lectures, interviews, and more over at the Mike Andy's YouTube channel that'll be right up your alley. That's all we have for you today. We'll see you next time.