When I met Randall Blaum during a unique Getting To Know
You exercise at Marshall Thurbers introductory program for positive
deviants (See Networking Times, Nov/Dec 2007 issue), I immediately
liked himas did the other fifty participants. Thurber challenged us to
decide who you would want on your team if your business was in trouble.
Using a speed dating model, we spent less than one minute interviewing every
participant. Randall Blaum emerged as the clear #1 pick in that program. I was
delighted to get to know Randall better through this interview and confirm my
initial impression of his competence and heart for service.
While Randalls business, Marketing Experts International, works with Fortune 100 clients such as American Express, Coca-Cola, Disney and Starbucks, his heart serves individuals who, in search of the good life, find themselves on a path of financial destruction: the downward spiral of growing credit card debt.
Randall knows this path, because hes been down it. After a highly successful career as a promoter in the film business, he succumbed to the addiction of consumerism and found himself in serious debt. Twenty years and two bankruptcies later, he discovered a way to get out of debtand stay out forever.
Randall, youve been called Americas Dump Your Debt Expert.
How did you acquire such expertise?
Although its hard to imagine, because of my financial success today, about twenty years ago I owed $50,000 in credit card debt. I was living the high life. I not only kept up with the Joneses, I bypassed them. It was a lot of fununtil mounting debt snuck up on me.
It happened very slowly. You start by going out to dinner, getting your laundry dry-cleaned, buying that fabulous pair of designer jeans. Credit cards were a convenience. Besides, I thought, Its only $20 a month. When I maxed out the first card, the next one was only $15 a month. I didnt realize it, but I was addicted. Before I knew it I had three cards, five cards, ten cards and those its onlys added up to hundreds of dollars a month.
How did I become the expert? I was so deep in debt that I simple had to learn how to dump my debt in order to survive.
Didnt you know that you were spending more than you made?
Yes, but its strangesomehow I ignored that piece of the puzzle. I imagine its like people who are heavy smokers.
Havent you heard that smoking is bad for your health?
Yes, I have.
Then why dont you quit?
I dont know.
Maybe its just part of the human condition. I was easily able to ignore the fact that I was spending more money than I made. Suddenly, no matter how hard I worked, no matter how much I made, I couldnt pay my bills. It was downright frightening. I had about twenty credit cards all maxed out, plus I had my regular living expenses.
What did you do?
Night after sleepless night, I would pray that the sun would never rise. I couldnt face the endless calls from bill collectors. I avoided my mailbox. I tried to hide by moving to seven different states. But you know what, Marian? It never goes away.
It is not easy to admit how deeply in debt I was, and I can hardly believe that I now stand before huge audiences and say, Here I am, with all my faults. Heres how I got into debt and heres how I found the way out. I am determined to help people avoid the pain I went through. Theres just no reason for anyone to suffer the way I did.
Randall with Director of Photography Bryan Swobda for movie U R Pre-Approved in Washington, D.C.
Are you suggesting that we not use credit cards?
Not at all. Lets be practical. While I suppose its possible to live life without a credit card, have you ever tried to check into a hotel or rent a car without one? Credit cards are not inherently bad; they are a convenience and as such they are neutral.
After your experience as a credit card addict, do you still
use credit cards?
Yes, I do. I have one for personal use, one for business, and one for emergencies. The difference is not whether I have cards, but how I use them and pay them off. I no longer feel the need to impress anyone (including myself) with what I own. Although I can afford whatever I want today, I paid only $199 for my twenty-inch tube TV. It suits me fine, and Im not concerned that people might think less of me because I dont have a plasma screen TV. Im now more in tune with who I am, rather than what I own.
Secondly, my post-debt plan has been to pay off any credit card loans within ninety days. If I need a $5,000 widget for my business, I give myself up to ninety days to pay it off. If it costs me $100 in interest, I figure that into the cost. Of course Ive learned how to make credit work for me, so when possible, I use 0 percent interest cards.
So your advice is to pay off credit cards within ninety days and use cards
with the lowest possible interest rates?
Yes, but theres a catch. No matter what the credit card marketing material says, if you read the fine print in the middle of the disclosure statement, it may say something like this, We reserve the right to change your rate at any time for any reason, including no reason. So if you think you just got a credit card for 0 percent forever, youre fooling yourself.
Lets be real. If your internal sensor knows you can pay off your card in thirty to ninety days because youve got money coming in, by all means use a credit card. Even a 30 percent annual interest rate for just one month wont be too much. But if youre lying to yourself and you dont know when you can pay it back, youre asking for trouble. You can learn the cost of borrowing money by using one of the free online interest calculators (see p. 42).
Can you show us an example of how an interest calculator works?
Sure. Lets assume you have a brand new credit card with a $1,000 limit and a zero balance. Lets say youre going to spend the whole $1,000 buying products and marketing materials. Type in $1,000. Then enter your interest rate, lets say 18 percent, which is around the national credit card average.
If youre thinking youll make the minimum payment, that might be about $20 per month. So type in $20 a month, and the calculator will show you how many months or years it will take to pay it off. Change the amount youll pay per month and watch how that affects the period in which you will be able to pay it off.
Are certain types of people more prone to credit card debt than others?
Absolutely. First lets take a look at the big picture: Americans are more than $900 billion in credit card debt right now, and the average American household carries more than $9,300 in credit card debt.
Recently, I read on ABCNews.com, Congra-tulations! If you make $40,000 a year, you are one of the top income earners in the country. I was stunned. Im not making any judgments about earning $40,000 a year, however it is obvious that these earnings are not enough for most people to cope with the average credit card debt most everyone carries.
So who are the people in debt, and why are they in debt? On one end of the scale are senior citizens. Just one generation ago, senior citizens paid for everything in cash and followed societys norm, If you cant afford it, dont buy it. Today, because the cost of basics is rising, senior citizens are facing massive credit card debt for the first time in our countrys history.
Then theres the nuclear family, who is under tremendous peer pressure: Does Bobbie have the newest Xbox? Is Sue wearing the latest designer clothes? If not, what does that say about our family? Living for external approval can be expensive as well as deeply unsatisfying.
The third at-risk group for credit card debt are our young adults. When turning eighteen, a youngster can apply for credit cards with limits of thousands of dollars without the parents even knowing about it. Its scary. Right next to the table at the college campuses where our children register for courses is a table with a credit card dealer, pushing credit cards on our children!
Teens entering college may not be financially savvy. They may not realize that the $100 they blow on a pizza and beer party could cost them much more than $100 if they charge it to their credit card. Thats why we show real teen and young adult credit debt stories in the film, U R Pre-Approved.
Our seventeen-year-old was captivated by the film.
Im glad to hear that! We designed the film to appeal to both young and old. For the young, we have cool skits and real stories of youth in trouble. For business folks, we showcase experts such as Elizabeth Warren, professor at Harvard Law School and author of numerous books on the topic, including As We Forgive Our Debtors: Bankruptcy and Consumer Law in America.
Randall, what about people who are starting a home-based business? Isnt
it sometimes necessary to go into debt to take steps towards creating wealth?
No doubt about it. Its how Donald Trump builds his buildings. Its how Oprah built the Harpo Empire. Based on the research Ive done and in my own experience as a network marketer, about 70 percent of all network marketers carry a balance on their credit cards. I dont know any entrepreneurs who havent at some point put at least part of their business expenses on a credit card, fully aware that at that particular moment they couldnt afford to pay it off.
Entrepreneurs seem DNA-coded to take a slightly higher risk than the norm. The big question you have to ask yourselfand youve got to be honest about itis, what if the worst case scenario happens? If you dont see any revenue from your network marketing business for the first ninety days, do you have enough money coming in to support you? Most savvy entrepreneurs will have a solid plan for generating money before they spend it.
On the other hand, a network marketing business can become successful without
spending much money, if any, other than on products for your own personal consumption.
Thats true. Great network marketers are so passionate about their product or service that they talk about it with genuine enthusiasm. And talk is free. Other than your own product purchases, you dont have to carry inventory, you dont have to buy 50,000 tri-fold brochures, you dont have to create a $10,000 website. Most of these are done for you as part of belonging to the network, either for free or for a nominal fee.
For those who didnt get your advice for staying out of debt,
whats your advice for getting out of debt?
Follow this three-step process:
First, get rid of temptation. If you took an alcoholic to a bar every single day for months, what do you think the chances are that at some point he or she would have a drink? Probably pretty high. Get yourself on a government do-not-mail list directed at credit card and insurance companies. Heres how: call 1-888-5OPTOUT. You can stop those insidious You Are Pre-Approved mailings.
Second, reduce access to your own credit. Lets say you have three VISA cards. Carry only one of them in your wallet at any time. If youve got a $1,000 limit, and youre at $500 when you see a new jacket at Nordstroms, you might not get it because its all you have with you.
The third step is to pay more than the minimum payment, even if its only a dollar. As you start to act on reducing your debt, you actually form new synapses, rewiring your brain to think, Im getting out of debt instead of Im always in debt. This is an important piece of the puzzle. Paying more than your minimum payments creates a snowball effect. By reducing the principal, you lower the amount of interest youll be charged. Then, when you get one credit card paid off, add the amount you were paying on that card to your regular payment for card number two. This way you snowball your payments and reduce your debt more quickly.
Also, let your family support you in getting out of debt. I know its tough to stand up and say, I dont know how I got here and I dont know what to do. But if you dont, when youre a grandparent witnessing the debt cycle hurting your children, youll say, I wish I had done something about it thirty years ago.
As parents, we are responsible for teaching our children financial literacy.
As networking leaders, should we be responsible for teaching financial literacy
to our new business associates?
I think its essential for networking leaders not just to sell a path to financial freedom and then stay in touch via auto responders, but to offer information about how to understand and manage finances. This may sound like a lot of work: (Just because Im Mary Janes upline, now I have to teach her how to balance her checkbook?!), but its really a win all around. If your downline can keep ordering products and doesnt have to drop out because theyre over their heads in debt, whats that worth to you and your business? How much more rewarding is this way of building an organization? It is essential that networking leaders do not create debt slaves at the same time they are building new leaders.
Do you recommend any tools to help us help our downlines?
Absolutely. My passion for helping people get out and stay out of debt has led me to create a free tool called Dump It! A Debt Reduction Quick Start Guide (available at www.DumpDebtGrowWealth.com). Helping people earn financial independence through network marketing and debt-reduction work hand-in-hand. Both are designed to help people enjoy a better life.
Any final thoughts for networking professionals who are on the road to financial
Because of todays rising prices, some people are forced to go into credit card debt in order to feed their families. Others find themselves in debt after suffering a major illness, losing a job or getting a divorce. Using the plastic safety net sometimes seems unavoidable. But going into debt in order to impress your friends and family with the things that you do and own is avoidable. I know; I was there.
When I look back on how I got into massive debt, I can see that it really came from running away from myself. We must be more diligent in educating our younger generationsand our downlinesabout one of the fundamental aspects of financial freedom: learning to be happy not because of what we own, but because of who we are inside.