Slash Your Student Loans: Master Your Finances with the Shred Method

Adam Carroll is an influential figure in the realm of financial education, best known for his passionate advocacy for financial literacy and his innovative approaches to managing and understanding personal finance. His insightful documentary, "Broke, Busted, and Disgusted," casts a critical eye on the burgeoning crisis of student loan debt in the United States, offering a profound examination of the financial struggles that college students and recent graduates face in pursuit of education. Through compelling narratives and rigorous analysis, Carroll's work has sparked important conversations about the cost of college education and the true value of a degree.

Beyond the documentary, Adam Carroll has further contributed to the financial well-being of individuals through the development of the "Shred Method," a strategic approach to personal finance that emphasizes aggressive debt reduction and wealth building through savvy financial management. This method has been lauded for its practicality and effectiveness, guiding individuals toward financial freedom by teaching them how to eliminate debt swiftly and optimize their income for long-term financial health.

Carroll's multifaceted approach to financial education combines storytelling, strategic financial planning, and a deep understanding of the economic challenges facing individuals today. Through his documentary work, speaking engagements, and educational content, he has become a beacon for those seeking to navigate the complexities of personal finance with greater confidence and success.

As a speaker, author, and financial strategist, Adam Carroll's mission is to empower individuals to achieve financial independence and to make informed financial decisions that lead to a secure and prosperous future. His commitment to demystifying the financial landscape and providing actionable solutions has made him a respected and sought-after voice in the field of financial literacy.

Transcript

Speaker 1: 0:16

Hi everyone, this is Juggling Entrepreneurship Podcast and today we have Adam Carroll. Adam is a book author of four books and he produced an award-winning documentary on student loan debt a very interesting topic and also did a TED Talk which have millions of views, and today we are going to talk about his entrepreneurship journey, his parenthood journey and about his very well-famous the Shred Method. So, hi, adam, welcome to our podcast.

Speaker 2: 0:54

Thank you, Hema. It's great to be here with you and I'm excited to talk about the parent journey. That's one of my favorite topics of all time.

Speaker 1: 1:03

Yes, I'm very interested too, so I give a little bit of a preview around a couple of accomplishments out of millions that you have already accomplished, but would you like to add more?

Speaker 2: 1:16

You know it's funny, you're too kind, I think. What I like to tell people is I'm a bit of a serial entrepreneur and someone once called me a mediapreneur, because I like to create media and then turn around and sell that in a variety of ways, whether that's speaking engagements, books, ted Talks, documentaries and now software, which I've kind of jumped into the deep end on over the last three years, but it's been a wild ride.

Speaker 1: 1:48

Great, so tell us, Adam. We are a parent of three beautiful children, so tell us about your parenthood and what actually motivated you to start your entrepreneurship journey.

Speaker 2: 2:03

So I have three kids. They are currently 2018 and 16. So two of my kids are in college. My youngest son is a sophomore in high school, so he is still at home. The other two are not in the home anymore, they're out at school.

Speaker 2: 2:19

But I'll tell you, hema, my journey with being an entrepreneur and being a parent coincided the majority of their life. I mean, I think they were. Probably. I'd started another company when my second child was born, so I had been an employee when my daughter was born, and then my son. I have two boys and a girl, so my daughter was first and I was employee, and then I became an entrepreneur.

Speaker 2: 2:48

And I've pretty much been an entrepreneur ever since, and I'll tell you that there are pros and cons. Right, and I'm sure many of your guests will say the same. The pro is I've been there for them. For a majority of the events, whether it's a concert, a play, a basketball game, a golf meet, I'm able to be there and, as an entrepreneur, freedom and flexibility is one of the values that I hold most dear. The negative side of entrepreneurship are or negative sides are a lot of late nights. I mean, I tend to work on projects and I work on them into the wee hours of the night and sometimes I feel guilty about am I not spending enough time with them, particularly now that my kids are at school? My youngest is still home. I feel like I have this limited amount of time to spend with him and I'm trying my hardest to squeeze every moment I can with him before he's also out of the house.

Speaker 1: 4:01

That's definitely a challenge that's not going to go away anytime in the near future for any of the parents. But tell us, when did you get this idea to start your entrepreneurship journey? Was there been an incident or any experience that helped you to start this journey?

Speaker 2: 4:27

Yeah, I would say that this probably came out in therapy at some point for me, but one of my earliest memories as a child was my mom made a comment of oh, your dad's had a bad day at work. And then she subsequently said and then this could happen, and then we could be out of our home. And she made this super leap between my dad was having a bad day at work and maybe he'd lose his job and then we'd be homeless. And today I know that's not how it works you don't lose your job and you're homeless the next day.

Speaker 2: 5:05

But then I found out that my dad had been laid off from his job and I think in that moment I said to myself as a child I'm assuming this that I didn't want to work for someone else because they would have full control over whether or not I would be employed and be able to live in this home.

Speaker 2: 5:24

And so, deep down, deep inside, I always knew that I wanted to be an entrepreneur, I wanted to control my own thing. But it wasn't until I was about 28 where I had this flash of I know exactly what I want to go do, and I knew, from that point forward, everything that I had been doing in my professional career had set me up to go do that. So I think there are some people that tiptoe their way into entrepreneurship and I feel like at 28, I pulled the ripcord and went and just had long and did it. But it wasn't just for me, it was for my family, it was for future generations because deep down I believe that when you are in control of your own business, you're in control of your own destiny, and that's been a driving factor for me for the last 20 years.

Speaker 1: 6:20

I think it's very powerful, but it's also very real that most of the people don't really understand. Most of the people think that the entrepreneurship journey is like a movie you know in a flash everything would be successful and so on. But in reality it takes a lot of taking risks, a lot of failures in the beginning, a lot of rethinking and re-strategizing over and, over and over again. Tell us about the shred method. Did you start your entrepreneurship journey as the student loan, trying to solve the problem, or did you eventually get into that shred method?

Speaker 2: 7:13

Yeah, it's an interesting question and through line, because where I started in my career really ultimately helped shape where I am today. And when I started as an entrepreneur, my goal really was to educate people about money. I wanted to create an educational platform that I could go out and help present ideas around saving and investing and help change people's mindsets around money. I knew enough to be dangerous, I think, at the beginning, and the more experience that I had, hema, the more I realized that I was slowly developing the skillset that would lead to where I'm at today. So for me, the iterations that happened around business were I was dealing with a lot of college-age students early on. I wrote books. I would go present on college campuses, I was consulting with them in their financial aid departments. That led to me working with banks and credit unions.

Speaker 2: 8:16

My work with banks and credit unions led to me doing the documentary on student loan debt and really helping people understand the causes and repercussions of student loans. And then I had this break in the action where I started a mortgage company and I had been a broker for a period of time helping people find mortgages and buy and refinance homes. But there was something in the midst of that that it was like an aha moment that I realized I wasn't really helping people when I was refinancing their debt, because all I was doing was resetting the clock back to zero. They had maybe generated some equity in their property and then, when I refinanced them, they just went back to starting the clock at zero. And that's where the Shred Method came in, and it's known by some other different names, but we have enhanced what I think the process is and put a piece of software behind it that actually teaches people what to do with their income to create greater efficiency, allowing them to pay off their mortgage in record time, and for most folks that's between three and seven years.

Speaker 1: 9:29

That's interesting and I'm also guessing you had a lot of backlash when you came initially with that method. Talk us about that journey. I think you talked about the motivation behind creating that Shred Method, but tell us about the backlash and what is that core principle that people have to adapt to, why it's very useful for the people, especially for families who have kids, who are planning for the future and so on.

Speaker 2: 9:58

Yeah, you know, the biggest backlash or the hurdle that I've got had to come over with this business is we're a debt laden and, I would say, debt addicted society and we believe that debt is normal, natural and good. And I'm not saying it's not. I think debt can be a really useful tool. At the same time, I think that there are a lot of folks out there that they have used debt to acquire all of the things they want and then they wake up one day and realize I'm not getting ahead as fast as I should be. Why is that?

Speaker 2: 10:36

And we often point out to people that the two greatest expenses that we'll ever have in life are taxes and the interest expense on debt, and it's one of those.

Speaker 2: 10:47

Actually, both of them are somewhat overlooked.

Speaker 2: 10:49

We don't really think intently about the fact that we have property taxes, income taxes, sales tax, gas tax, liquor tax, travel tax.

Speaker 2: 10:59

I mean that we are taxed on literally everything, so it's one of the greatest expenses we have. Secondarily, the interest expense on debt is something that we don't normally pay attention to. We just go well, I can afford my house payment and I can afford my car payment and I can swing the minimum payment or a little bit extra on my credit card debt, but in reality that could account for, for most people, $20,000, $30,000, $40,000 a year in interest expense, and what we're trying to do is teach them how to claw back some of that interest so that they could have the funds necessary when their kids need braces or they want to take a lavish vacation or you want to write a check for college because you can cash flow college. That's ideally what we want people to be able to do, and those that we catch early enough, they'll experience that it's like I can't believe I'm writing a check for tuition. I can't believe I just wrote a check for my new car. That's the kind of power that we help people create.

Speaker 1: 12:06

Yeah, that is very, very intriguing and intimidating at the same time. So let's talk about you. You briefly mentioned that the books that you have wrote. It's kind of like a building blocks for the shred method what are? Tell us a little bit about the four books that you have wrote, and starting from book number one, and how it actually evolved to your latest book.

Speaker 2: 12:33

Yeah, the first book is called Winning the Money Game and the subtitle is a rule book to achieving financial success for young people, and the reason it was written early on was it was going to be a high school and college curriculum. So that book I think at last count it's probably sold somewhere in the neighborhood of 30,000 degrees, which I think by most indications would make it a best seller. And yet the problem is the majority of those have been sold in boxes of 100 to high schools and colleges around the country. So that book led to a book that it's kind of funny to say it, but I wrote it on two long airline flights across the United States and that book is called 30 Days to 1K. The idea behind that book was people were telling me it was hard to save $1,000. And I was like it's not that hard to save $1,000. Let me write all the ways that you can do that in 30 days. And so that book was a self-published deal through Amazon.

Speaker 2: 13:45

My third book is called Mastery of Money for Students, which is a little bit higher level I would say that's college, certainly college level and maybe a little beyond, also used in a variety of different colleges and universities as a curriculum. And then my latest book is called the Build a Bigger Life Manifesto, and this has sort of been my life's work over the last five years of teaching people how to build a bigger life, not a bigger lifestyle. And a bigger life for me is the idea of time with family and travel and getting to practice your guitar or your piano just because you want to. You know, having free time to do what you want, as opposed to having to work all the time to pay for the stuff you have. And the book itself was kind of a labor of love, and I finished it in Sorrento, italy, in 2019. So it's got a lot of great memories just in the completion of it.

Speaker 1: 14:48

That's really good. I think it's kind of I can see like the maturity level of the books, coming from book number one to two to three, and I think it's covering the different dimensions of what can you do the best in life, including the money savings idea. You're not just saying like, hey, these are the principles just for students, but also saying like, look at the life, as you can save 100, you know you can save $1,000.

Speaker 1: 15:21

It's not that hard. But also what is very interesting is, I think, your third book, where you mentioned that having a better life and how to save more money out of the student loans what most of the parents would be interested who are listening to the podcast. So let's let a bit dig into. Starting with, what are the common myths or mistakes that parents do in terms of planning for their, for the students, education and in terms of planning for the student loan.

Speaker 2: 16:00

I think the most, the one that stands out the most for me, hema, is not being in communication with your student about who actually is paying for school or how it's being paid for. And you know, we could be talking to any level of entrepreneur today, right, these could be folks just getting started or wanting to start entrepreneurs, we might call them, and those who are super successful and can stroke a check for their kids, college and everywhere in between. The challenge that I saw in doing the documentary on student loan debt and the amount of work that I did on campuses was that I would meet students all the time that when I asked them either how much will you have in student loan debt or how is college being paid for, they'd be like I have no idea. My parents just did it, so they didn't know how much they were borrowing. So if that was the case, maybe their parents filled out the FAFSA and approved the financial aid package. Or if they were in the know about the financial aid package, but it'd been three years or four years, they had no idea how much the loan had grown to in terms of interest and expense, and I think, from a parental perspective, one of the worst things we can do for our kids is not clue them into what they're actually getting themselves into, because there were also a number of students that said I don't know, my parents are paying for it. And then when they graduated, their parents are like surprise, here's your parent plus payment, right? Or here's your Stafford loan payment. And the kids were caught off guard. They thought their parents were paying for it.

Speaker 2: 17:40

So in our household, one of the strategies that we implemented that your listeners might appreciate is at the dinner table from the time my kids were preteen. I would say hey guys, what do you think it costs to go to USC? Hey, what do you think it costs for Purdue? What do you think it costs to go to Notre Dame? What do you think Harvard costs? And the kids would guess and I would look it up or we'd use Alexa or whatever to find out what total cost of attendance was. But I wanted my kids to understand what college costs were before they ever started thinking through well, how would we ever pay for that? Because it's hard for a 14, 15, 16 year old kid to fathom what $50,000 a year looks like, particularly borrowed over four years. That might become 200 or 220 by the time interest is calculated. So I think the biggest pitfall to avoid is not sharing more with your kids about how that process is gonna unfold.

Speaker 1: 18:48

I think that is, I think, the first and important step communication with the students so that they have an idea what they would be going through. It's not something that is coming for free or coming easily, but there is a lot of amount of work from the parent side, but also, potentially, if you didn't plan properly, from the student side too, from the kids side, once they graduated. Let's talk about your documentary, which is very, very interesting, but before hopping into the documentary, let's talk about the book. You said your first book have been distributed in high schools and colleges, or, okay, is it part of your strategy, part of your thinking, to say that, hey, you know what. This book really needs to go in the hands of the high schoolers, really needs to go in the hands of the college students. They really need to know that other side of the table. Was that something your idea?

Speaker 2: 19:53

It was, you know, my first book. I probably didn't have that much forethought, you know it was sort of like we have a story to tell. Let's tell it by the third book, the Master of Money for Students. I had been on college campuses for probably a decade and I had heard so many questions and you know, questions from students but also then the feedback I was getting or answers I was getting from my questions to them. You know, just as an example, hema, many students. They didn't know the difference between a 1099 job and a W2 job. And it may just be semantics, it may just be the language you're using. They didn't understand.

Speaker 2: 20:34

But I wanted that book to illustrate these are 1099 type careers, these are W2 type careers. This is how you invest money. This is the difference between a Roth IRA, a SEP IRA, a 401K. I wanted them to know that because it felt like the vocabulary that society is using when they graduate, maybe unbeknownst to them when they graduate. So there were a lot of recent grads who would say, yeah, in my first week on the job they asked me about a 401K but I declined it because I didn't want any money taken out of my paycheck and the book really was intended to help educate students about the power of a 401k and articulate why they should be starting early and building the right habits from a young age and things like that. So I think it would be great to say that I had this idea, you know, longstanding plan.

Speaker 2: 21:30

But I will say that I have students who've said I got your green book in high school, I got the black book in college, we watched your TED Talk in my high school financial literacy class and we watched your documentary in, you know, in my junior college class or my college class. I literally have had people say yes, you've been along for almost every step of the way and for me, like there's no greater satisfaction than knowing something I put into the world some time ago is still touching people you know, here or there. And, candidly, I like going into half price books every now and again and seeing if one of my books is on the shelf. But then I see that I inscribe this to somebody. And who do I need to call out on this? Because you know they sold my book, but I don't blame them. They got two or three bucks out of it, I suppose.

Speaker 1: 22:20

But I think I'm pretty sure after hearing this podcast, people would be shuffling through the bookshelves and online to find your books. For sure, and to the audience we will definitely put all the book names and the documentary, the names, the TED Talk, the links and TED Talk what inspired you did? Did you get like the overwhelming requests from people to give us a TED Talk, you know, so that we can sink in all along that? Or was the TED Talk also on the shred method or something different?

Speaker 2: 22:54

Yeah, it was something different.

Speaker 2: 22:58

And I wish that I could say it was it was like all these requests coming in to do one Really a good friend of mine. He said what's next for you? And this was like back in 2013 or 14. And I said you know, I feel like I want to do a TED Talk. I don't know what on yet, but I know I'm going to do a TED Talk. And he said well, how are you going to do it? And I said I have no idea. I'm going to leave it up to the universe. I'm going to ask for divine guidance on it. And this friend said why don't you put at the bottom of your email under a double dashed line it is my goal to one day grace a TED stage. If you could help me with that, I'd be forever in your debt.

Speaker 2: 23:41

And so I did that. I put it as my signature line and I sent out email after email after email, and lo and behold, about eight to nine weeks later, I got my first request for a TEDx event in Milwaukee, wisconsin, and then, about four weeks after that, I got another almost identical request for an event at the London Business School in the UK and so it happened.

Speaker 2: 24:10

And it happened sort of I would call it the law of attraction and action for me. But the TED Talk that went viral. You know what really inspired me about that was my work on college campuses and all these students that they didn't have a clue what they were doing with money, and it occurred to me that money just wasn't real. They were in this environment where they just swipe their university ID or use a thumbprint to get into the lunchroom. And then I came home one day from a trip on a Friday, saturday morning we're playing a game of Monopoly as a family and I noticed that my kids were just playing outside the rules of the game. They just wanted to roll the dice and move the pieces. So the money was like irrelevant to them and I went oh the money's irrelevant.

Speaker 2: 24:57

I wonder, if the money were real, would it be relevant to them? And so that inspired the talk, which is basically me playing a cash game on Monopoly with my kids and the lessons we learned from that. You know, having 10 grand in cold hard cash on the kitchen table.

Speaker 1: 25:15

That is. You know, it's sometimes really interesting and funny how we get the motivation from the little cute parts of our life and how it blossoms into a whole new fantastic idea, in your case, for the chat talk. So again, thanks a lot, adam, for this interview, for motivation and again, I would say, for a big reality check for a lot of parents who would be here in this podcast, who will be there, for planning for the kids future and how communication is important, how planning is important, how having an open communication with the kids about how their future going to be, what they will be getting the tuition paid and so on. Thanks for watching this. Wrap up this podcast, but with three main important key takeaways, adam. What would your suggestion would be for fellow entrepreneurs? We are not talking about the shred method, we are not talking about your SME, but from one parent entrepreneur to another, what would your suggestion be? What would be the three key points they have to remember to get them going and motivated and keep on going?

Speaker 2: 26:41

I think, on the children perspective and raising kids. I met this gentleman one time who his one son had a full ride scholarship.

Speaker 2: 26:53

Both kids had a full ride scholarship to undergrad and then they both received full ride scholarships, one to law school, one to med school. I was having coffee with this gentleman and I said how did you do that? How does a parent inspire their kids to do full ride on both of those? He said Adam, your children will do pretty much whatever you expect of them. Be very clear in your expectations. I love that idea With my kids. One of the things that I said was it is my expectation Now I had a lot of them around how well they'll do in school, academically and things like that. One of the things I said was I expect that you'll have an MBA before you ever go to college. An MBA was a massive bank account. I was teaching them habits of saving and investing from the time they were young, but I wanted them to realize that by the time they went to college they could easily have $5,000 or $10,000 sitting on the sidelines or in investments. All of them have done it. I think there is some truth to your children will do what you expect of them.

Speaker 2: 28:05

I would encourage entrepreneurs out there as a second tidbit or point is have conversations with your kids about how your business works Specifically. You might even ask them what do you wonder about in mom's business or dad's business? What are the things that maybe your friends ask? What do you wonder about how this business works? Because they're not always that inquisitive, but they're something they're wondering about. How did we take that nice vacation two years ago? What did that cost? How did we do that? Was that a business expense? How did you make it a business expense? Those kinds of things. Ask them what they wonder, because we want to inspire curiosity in our kids around our business.

Speaker 2: 28:50

Then, last but not least and it goes hand in hand with the other two is, I feel like, being very clear with kids about what the vision is is important, because I think too many parents go through their daily life without sharing what the vision for this month or this quarter or this year looks like for the kids. I like to sit down with my family at the beginning of the year and say, listen, my vision for the year looks like this. This is what our vacations will look like. This is what I want our weekends to be. What do you want it to look like? I'm doing it for two reasons One, to set the vision for them. And number two, to let them know it's okay to have their own, and if I know what their vision is, I'm going to be 100% supportive of helping them achieve that. So those are my three.

Speaker 1: 29:44

I think, very, very well articulated, to be frank with you. And next key takeaway for parents who are planning for the kids to go to college, to have their own mortgage to pay, but they also want to start planning for the student loan or for the student tuition fee savings and so on, is 529k better or are there other best options, like Roth IRA or right now we see the teen related IRA options too? What would be? How can they decide which is best? What are the metrics they need to consider?

Speaker 2: 30:30

Yeah, so much of this depends on do you see your child going on to a four year school and how much schooling might they require? I wish this was like a super hard and fast answer. Hey, ma, I'm not sure it's going to be. I can tell you what. I can tell you what we did and it worked.

Speaker 2: 30:51

You know, we funded a 529 plan as much as we could, as early as we could, knowing that the rule of 72 is in play, right, which is, whatever your interest rate that you're making on that money is divided by, divided into 72, will tell you how many years it will take to double your money.

Speaker 2: 31:11

And we figured that if we had put enough away that it would double twice, we'd have enough for at least two, maybe three years of college. And the assumption was that our kids would probably get scholarships, just given academically, how they'd done and what we were really driving home for them was there's so much free money for school. It's going to be a priority for you to go find it and we'll help you, but you're going to find free money for school. And so you know, using that plan, we used 529 plan money to help fund the majority of their college career, and I believe I'm going to knock on wood here, but I believe all three of them will finish with no student loans whatsoever and my daughter's applying for a master's program where she'll get paid to go. So I hope the other two do something similar. We'll see, but I feel like we've set them up, you know, from a financial mindset perspective and from a financial perspective, to help them get through school with a limited amount of stress.

Speaker 1: 32:17

Yeah, and I think that's very, very important for kids to know that there is, there are options for you to get paid, for you to go to college and you need to find a way, you need to be the best, in whatever way you can, to match that expectations of the college. And I think it's kind of like pitching your startup idea to the investors. I would say it in that way, saying like why you are unique compared to the other 500 applicants that are trying to apply for the scholarships. And last equation for young entrepreneurs right, they might be a parent of a baby or a toddler, or who want to start their journey from a corporate nine to five job to hopping in, or they might want to think about a side hustle to start with and then eventually go down. What do you think is a very important point? The starting phase of entrepreneurs have to learn or have to keep it in mind when they start the journey.

Speaker 2: 33:40

What comes to mind for me. My answer to that question is I think that if it is one unit of a couple, that they need to be 100% on board with each other, that this is what they're going after. And that might mean, if the female is the entrepreneur and the other partner is the spouse, okay with either having a job or being stay at home, that there is time dedicated to build that business and that they're supportive of that time. Because what I find in couples where one is an entrepreneur maybe they're raising kids together is that the entrepreneur gets pulled away from their entrepreneurial duties into parenting and right, wrong or indifferent, it happens.

Speaker 2: 34:29

but it's really important for one spouse to really protect the time for that entrepreneur to devote time and energy and attention to the business, because the level of focus and the level of focus, time and effort and energy that you put into your business will translate to how much traction and growth you have in the business in short order, whereas if it's very distracted, it's going to take you a lot longer and maybe you lose steam.

Speaker 2: 34:57

So I find that partners who are aligned on the vision, on the commitment, on the expectations, they can go really far together.

Speaker 1: 35:07

Yeah, I do remember when I was trying to get the tech startup and I want to quit my corporate job to start my tech startup, me and my husband had around like six months of continuous discussion, or it's like, are we sure, if I go this way, then this is how our family life would be, this is how our finances would be, and it's not easy.

Speaker 1: 35:36

It's not at all easy for parents who want to even start the side hustle or even go through the parent entrepreneurship journey. And I mean a big kudos to all the parents and entrepreneurs who are there who are even starting as a side hustle, because it's hard. It's hard, yeah, because you're not single. You have your duties as a spouse, you have your duties as a partner, you have your duties as a parent, and it's something that is not easily ignored because it's going to impact the family overall. So, thanks again, adam and everybody. Adam, carol, again, the author of four books, the inventor of thread method and parent entrepreneur by himself. So thank you, adam, once again for your amazing episode and eye opening facts around the shred method, the student loans and mainly about the parent entrepreneurship journey.

Speaker 2: 36:42

Love it, Thank you. Thank you for having me.

Speaker 1: 36:45

Thank you.