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In loving memory of my grandfather, John Colburn Sr.
My grandfather was my closest friend. I loved him and miss him every day. I wrote this article to honor his memory and to say thank you for the lessons he taught me about money and business that are still benefitting me to this day.
Like many others, I was raised with false beliefs about money.
When I was a kid, we lived about a block from a Taco Bell. I loved getting the Chili Cheese Burrito which was about $0.99 at the time.
On special occasions, my mom would walk me down to Taco Bell to get lunch.
But before we would go I remember searching the house for spare change so we could get enough money for a few tacos. I didn’t know there was anything wrong with that, but I do remember times when we couldn’t find enough change and we couldn’t go.
Think about it, there were times we couldn’t find $0.99 in spare change!
I was very young, I didn’t know anything different, but something still didn’t feel right to me.
I recall my mom trying to make it fun, making a game out of who could find enough change. But I also remember it making me feel uncomfortable and not understanding why.
I didn’t know it at the time, but it was because I was hungry, and I began to associate being hungry with not having enough money. A realization I didn’t connect the dots on for many years.
As a result, I began to worry about money at a young age and I began saving every bit of spare change I could find throughout the week. This way, all I had to do was go into my change jar I hid in my closet and get the change I needed so I could always go get that Chili Cheese burrito I loved so much.
Looking back, it's fortunate for me that this was my intuitive reaction to this situation.
As a result of my saving habit/reaction, I removed the feelings of discomfort because now we could always go when the opportunity presented itself.
This saving habit never went away.
As a young child being raised in a very poor household, I always had money tucked away and hidden in my room.
Recently, I told my parents about this and they said they had no idea this was going on. When I told them about how much money I had tucked away in my room between age 5-18 they confessed that I likely had more money tucked away at any one time than they did.
A scary thought that I’m glad I didn’t know at the time.
At an early age, I learned the basics of saving, but I wanted to know more. The most financially stable person I knew and had access to was my grandpa.
Each year, my grandparents would go to their home in Florida for the winter. I determined that this year when they came back I was going to ask my grandpa to help me learn about money. I must have been about 10 because it was right before we moved to a new house.
The day they came over I was ready to talk, but it seemed my mom and dad had a similar idea. They wanted to talk to my grandpa about money too. But they were asking FOR money, not to help them understand money.
Since they were talking about money, I seized the opportunity and told Grandpa I wanted to learn about how money worked.
My dad was a little upset I interrupted them, but my grandpa asked me how much money I had saved.
“$237” I said proudly!
He laughed and said, “Let me see!”
I ran to my room, got my money jar, and brought it back to him. It was full of change and dollar bills up to the brim.
As he took hold of it he said to my dad, “I think maybe you should be taking money advice from your son! He may have more money than you do!”
My dad snickered with a mild irritation at the remark.
My grandfather set the jar down and pulled a $20 bill from his wallet. He handed me the money and said, this is your first lesson:
“Because you were responsible with what you had, you are getting more! People who are responsible with the money they have, get more money!”
I said “Okay”, and I thanked him for the lesson, and for the $20.
He asked, “What are you going to do with it?”
“I’m going to save it!” I replied while shoving it directly into the jar.
He just smiled and went back to talking to my mom and dad.
As I listened in the other room, I heard my grandparents talking about it with my mom and dad. I could hear how proud my grandpa was and for the first time in a long time, I felt secure.
Over the years my grandfather continued to teach me about money, investing, and business. These lessons lasted into my early 30s before he passed away.
It's been a little over 5 years since he passed and as I’ve moved into a new phase of my career I’ve thought a lot about my grandfather and the lessons he taught me. I’m so grateful for everything he shared.
I want to honor him today by sharing 5 lessons about money that he shared with me and have had the biggest impact on my life.
One of the most valuable lessons my grandfather taught me about is how most money is made.
Most of the money in our economy is created from debt.
Here’s how my grandpa taught me to use this.
When my grandpa was working, he used his income primarily to invest in real estate.
Over the years he bought single-family houses, then self-storage, then later an apartment complex. That apartment complex is how he taught me this lesson.
When my grandpa bought the apartment complex they got a loan from the bank, however instead of taking income from the rent, they used the rent payments to pay down the loan faster. This meant they ended up paying less interest to the bank because they paid it off faster.
After it was paid off, all rent payments went toward giving them ROI. But the greatest ROI came when my grandpa decided to retire.
He could have sold the complex outright and cashed out, but he understood that money is created from debt. He decided to offer seller financing to the new buyer on a 30-year amortized loan.
He became the bank.
Now he was getting the interest and the principal loan payment which generated him more money in retirement than any other investment.
He CREATED money that wasn’t there before, using debt.
This lesson has probably had the biggest impact on my life.
When I was in my late teens, my parents started having money problems again. Worse than ever before. I saw it as a result of them living beyond their means, which eventually led to them losing the home I grew up in.
I decided to do it differently.
So when I moved out on my own, I always lived very simply. My grandpa noticed and commended me for it and encouraged me to make it a lifelong habit.
He showed me how by living below my means I could achieve financial freedom much faster than most.
Here are the three steps he gave me in order to do so.
So it created a virtuous cycle or flywheel. As a result of this cycle, my unearned income would more quickly cover my living expenses and I could then remove the earned income (money I earned from my skills and time) faster than most.
I started in business from a young age, so by the time I was 23 I had already been in business for a few years.
As a result of those few years of sustained hard work, I had a few monetary windfalls. One right after the other. These put me in a really good spot financially and because of the lesson above, I now had enough to be financially free. I define this as I didn’t have to work to pay my bills because my unearned income was paying my bills.
However, I wanted to work still because I loved working and I loved business.
The problem was that I was really young to be in such a situation, and my inexperience started to come to the surface. I started to feel like I didn’t deserve it and started self-sabotaging.
I decided to talk to my grandpa. Like many other times, he decided to reference a story from the Bible.
In this case, he shared the story about the slaves and the talents*. The first slave was given 5 talents, the second was given two talents, and the third was given one talent. My grandfather highlighted the point for me, which was that each one was given “according to his own ability”.
He used this lesson to help me understand that our income is a direct result of our abilities or skills and the value we provide with those abilities.
If I wanted to make more money, I needed to increase my abilities or skills and focus on doing things that provided more value with those abilities.
He also helped me to have a shift in my thinking that this money wasn’t “bad” or “evil”. It was simply a result of providing value to others, and that as long as it came from my increase in skill and ability in providing more value to others, I could feel good about it.
Money comes to those who provide the most value.
Value is solving problems.
*A talent represented about 60,000 denarii and 1 denarii was about 1 day's wage. Thus each talent given in the illustration represented a substantial sum of money.
My parents continued to struggle with money and still do down to this day.
When I was in my late teens, their problems with money reached a climax, and they were on the verge of losing the home I grew up in (eventually they did lose the home). As a result of these tough financial times, they got really into following Dave Ramsey’s advice on money.
This meant that they became anti-credit, like Dave. Due to the time in my life, I also became anti-credit, even though this was against the principles my grandfather taught me.
My grandfather taught me the responsible way, especially for a business owner, to use debt.
The incorrect use of debt is on things that decrease productivity, and the proper use of debt is on the things that increase productivity.
It's kind of like if a farmer is sowing seed by hand. There’s only so much he can plant. But if he uses debt to buy a tractor and can now plant 1,000% more seed than he did by hand, this was a good and responsible use of debt.
Well, later in my career I went through “one of those times” entrepreneurs seem to go through and I lost almost everything I had built. Part of the problem was that I needed to drastically increase my productivity so I could make more money and the only way to do what I needed to do was use debt.
The problem was I had no credit history.
When I asked my grandpa for advice, he reminded me of the lessons he had taught about how to use debt and credit properly.
Because of the position I put myself in, the process wasn’t as fast as I needed it to be, but if I had listened to him in the first place, I would have been able to leverage debt when I needed it.
However, he did help me to begin building my credit and properly using debt to rebuild my business.
And after that experience, I won’t ever ignore his lesson again.
Money and mindset go hand in hand.
My grandfather taught me that the way we think about money and the stories we tell ourselves about it become our reality.
For example, my dad would always say:
"No matter how much you make, your expenses always seem to be 10% more."
He loved saying that. He still says it to this day.
That became his reality.
My grandfather brought this to my attention and helped me to see that my dad was creating his own reality by how he talked about money.
This type of speech pattern is damaging and self-deceptive. It becomes self-fulfilling. It makes money seem mysterious like there is nothing that can be done to control expenses.
We should avoid using self-deceptive speech patterns and self-talk when it comes to money.
What we say to ourselves and others gives our subconscious instructions on how to act.
These 5 lessons about money that I learned from my grandfather changed the trajectory of my life.
These lessons have benefited me, my wife, and my children, and I hope that they, along with many other lessons he shared, benefit my family for generations.
Over the past few months, I’ve been “putting myself out there” more and “building a personal brand”, which are actually things my grandfather encouraged me to do over 15 years ago (at the time he thought it would be through public speaking, not the internet).
I’ve always viewed these lessons as being very personal and private. Because of that, it’s taken me years to feel comfortable sharing them, but I know he would want them to benefit others too, and for me to share with them the lessons he shared with me.
I hope they benefit you and your family the way they have benefitted mine.
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