Dave Wolcott:
Hey guys, welcome to another episode of Well Strategy Secrets. Today we’re joined by Adam Carroll. Adam is a renowned financial literacy expert, celebrated author, and captivating speaker who has delivered over a thousand speaking engagements worldwide. With his thought-provoking TED Talks, which have amassed over six million views on YouTube, Adam has become a prominent figure in the field of finance. His groundbreaking documentary, Broke, Busted, and Disgusted, aired on CNBC and continues to be screened in numerous high schools and colleges nationwide, inspiring young minds to take control of their financial futures. Adam’s expertise extends beyond the stage as he is the visionary behind the Shred Method, a fintech company that empowers individuals and families to achieve remarkable debt freedom in their lives at exceptional speed. Adam, welcome to the show.
Adam Carroll:
Dave, thank you for having me. I’m super pumped to be here. And let me just first say thank you for your service to our country.
Dave Wolcott:
You bet. Uh, super appreciate that. Uh, really grateful for that, Adam, for sure. Um, I, you know, I think the folks are in for a treat, uh, today and, you know, a lot of what we talk about in terms of, you know, wealth strategy secrets and, and building wealth and preserving wealth. Um, a lot of this is around financial engineering, you know, if you kind of think about it, right. And, you know, I kind of come from the consulting background, so I always think about, you know, How do we solve problems, right? What are the problems? How can we look at different ways to do that? And in the world of finance, right, there’s all these different tactics and strategies that you can do that sometimes aren’t all necessary commonplace, right? People might not have necessarily heard about them. Their financial advisors aren’t really talking about them. So
Adam Carroll:
Yep.
Dave Wolcott:
really excited today to unpack the Shred method, understand that and other, pearls of wisdom that you can share with the audience. But before we jump into that, tell folks who aren’t familiar with you, tell us about your background, your story, and how did it start for you, Adam?
Adam Carroll:
Yeah, I love telling this story because I really tried to make my mess my message. And I was a debt statistic when I graduated from college. Having grown up in a household that it was sort of like the mindset and methodology was, well, we’ll figure it out. So we would go buy things and then little did I know my parents were putting that all on a credit card. And at the end of the year, there’d be this big ballooning credit card bill that would have to be paid off. And so when I graduated from college, I had $30,000,000 in student loans and eight grand in credit card debt. I was upside down on my car and I realized that was not where I wanted to be. Um, I happened to meet a woman my senior year in college who said, get rid of your debt or I’m going to get rid of you. And, um, we, we together learned all the lessons we needed to learn to blast away that debt in the first couple of years of marriage. And as you know, and can attest and probably teach your clients, it’s amazing what happens when you have a significant amount of discretionary income at the end of every month. And so we strove for that. And then once we got there, I realized, well, this is easier than most people think it is. I should go teach people how to do it. And so that was, oh gosh, in the early 2000s, Dave. And since then, I’ve presented on over a thousand stages. I’ve been a guest lecturer at over 700 colleges and universities. And my passion deep down is just helping people create freedom in their lives because I’ve gotten to experience so much of it in mine.
Dave Wolcott:
Yeah, I really love that. And, you know, that, that word freedom, this is really what it’s all about, right? If you kind of, if you go a little bit deeper on the things around, you know, financial, you know, financial independence, right? Getting to retire, all these things people talk about, right? I mean, isn’t retirement really is just having, you know, enough income coming in that you’ve got the time freedom to do what it is you want to do. You’ve
Adam Carroll:
Yeah.
Dave Wolcott:
got freedom of purpose. to spend the time how you want to. You’ve got freedom of relationship to choose who you want to be with, right? So totally agree with that. And it’s interesting that you had the courage as well at such a young age to go to that next level of teaching other people. Because if you really look at the trajectory, right, of learning a subject, you know, true mastery is actually teaching other people. So you
Adam Carroll:
Absolutely.
Dave Wolcott:
were really at the top of your game at that. And if turned that into a great career, so, you know, kudos to you for that. So it’s really cool. So tell us about, you know, what, what is your business look like today?
Adam Carroll:
Yeah, today I have a fairly even split between speaking and doing some consulting work. Largely, it’s in the line or the industry of financial education of some kind. So, candidly, this last year, 30% of my business has been in the ag industry. Don’t know where exactly that came from other than, you know, once you get into one kind of pool of business, other people hear about it and start. requesting you to come present. So I’m also in the Midwest. So there’s a lot of ag companies around. And this may not come as a surprise to anyone, but families everywhere are challenged by what they don’t know about money. And so we have folks who are striving to get ahead or striving to create wealth, but they may have been raised in a family that never talked about it. And so the core message for me when I get out and I speak is around What’s our psychology of money? How do we grow up? And did we grow up learning that money was abundant? Actually, it’s one of the most abundant things in the world. Because, I mean, candidly, they’re printing more of it every day. So all we have to do is figure out how to dip a teaspoon into the river of the $4 trillion a day that’s flowing through society, and we can become multi-multi-millionaires. Um, but we have to figure out what is that teaspoon for us? How do we find it? So about 50% of my business is speaking and consulting and about 50% of my time is spent building the shred method, which I’m sure we’ll get into. And this is a cashflow technique and technology that we leverage and help people leverage to create freedom, to pay down debt, but ultimately to create massive passive permanent streams of income. that allow them to do what you’re talking about, have money freedom, time freedom, relationship freedom, purpose freedom. So that’s kind of my world in a nutshell. And then we try and sprinkle a month or so of vacation in a year. And I’m a guy who really likes mini-retirements. So if I can get all four weeks in one lump sum, I can work for six months, go take four weeks off, and then come back and go, all right, let’s get after it. Because I’m refreshed and ready and… still purposeful about what I’m doing in my life.
Dave Wolcott:
Yeah, that’s excellent. Being able to reconnect with your vision and your purpose. And I just had the opportunity to take some time off with my family as well. And, um, it’s just so rejuvenating, right? To be able to, uh, unplug and it’s almost like putting on a different pair of glasses, right? When you
Adam Carroll:
Yes.
Dave Wolcott:
come back and now you can kind of see the world a little bit differently. You can reprioritize things. Um, you know, you, you just have this new level of thinking, which I think can be very powerful. especially in today’s world while we’re kind of inundated with, you know, being reactionary, right? There’s just so much information that’s coming at us, you know, but if, if we can actually unplug, we can actually scale and grow and learn, you know, a lot more. So that’s, that’s really cool that you’ve been able to do that. Um, before we jump into, uh, shred stuff, um, you know, what do you think is really the problem, right? At, at, at the root cause of this problem around financial education in this country.
Adam Carroll:
Well, it goes back to what you just said about how many messages are flying at us every day. I mean, I’ve heard that there are as many as five or six thousand marketing messages a day that we’re getting and many of them are subconscious or unconscious, right? It might be the ad we hear in the background on the radio or the series of ads. It could be on TV, it could be the internet, it could be the fact that Instagram is, you know, showing us what we, or what, what they believe we need to see in terms of the algorithm. But we’re getting those, whether we know it or not. And a guy that I used to work for, he would call any kind of digital distraction device, mental chewing gum. So whether it was the radio, the TV, the internet, social media, he’s like, it’s just digital. It’s just mental chewing gum. They’re just giving you something that to chomp on and distract you. And a friend of mine was a Silicon Valley entrepreneur and he sort of affirmed this idea and said, when we build an app, if you are distracted, we win. That’s what our goal is, is to distract you. And so I think from, to answer your question about what is the problem with financial education is that people are counting on the ads they’re seeing as practical financial advice. And if you trust the ads, the ads are telling you debt is normal, natural, and good. Go into debt, drive as big a vehicle as you can, as much house as you can afford. Uh, keep up with the Joneses, take lavish vacations. Instagram itself celebrates rich lifestyles, but as you and I both know, most of those are probably either borrowed to pay for, or they’re fake. There are people who are renting the jets and the Ferraris and all those things posting. their first class life, when in reality, we’re seeing the highlight reel, not the behind the scenes. And so I think from my perspective, one of the things that’s really set my family and I and our clients apart is we tell them, hey, look critically at the messages that you’re getting from the world. Look critically at what the bank sends you, at your banker’s desire to see you do well, right? Banks, I’m seeing pop up all over my neighborhood. and you can’t drive a two mile radius around my house without hitting a $10 million bank building. And they’re building them constantly all around me. And so I kept questioning that, like if the banks are able to afford brand new $10 million buildings and it takes them years to be profitable, what is, who is paying for it? And the answer is us. And what did they know that we don’t? And if we start digging into that, Maybe we can flip the script and start acting like a bank, like our own bank, and creating the kind of wealth that most banks enjoy. So deep down, a simple answer to your question is the messages that we’re getting are not intended for us to be wealthy. They’re intended to keep us deeply mired in debt.
Dave Wolcott:
Yeah. Now, I really love the whole psychology of money. I think a lot of people just don’t really spend enough time kind of thinking about it. And then like you say, we get pulled in different directions, right? It becomes aspirational that we’ve got to go get that new car or whatever it is, that thing
Adam Carroll:
Yep.
Dave Wolcott:
that you’re looking for. So as part of our wealth strategy and part of our framework in the book, you know, we always talk about creating your vision first. You know, what does
Adam Carroll:
Yes.
Dave Wolcott:
that vision look like? for you, right? Because it could be, you know, having more time to spend with your loved ones, right? It might
Adam Carroll:
Right.
Dave Wolcott:
literally be that simple. And it doesn’t even
Adam Carroll:
Yeah.
Dave Wolcott:
really take much money to actually get there. But what
Adam Carroll:
Totally.
Dave Wolcott:
steps are you taking today, you know, to be able to put that into place. So I think that the
Adam Carroll:
Yeah.
Dave Wolcott:
vision and understanding your target is a really key place to start. And then there’s also this other aspect that I found that I kind of encapsulate in the book as well around that is You know, there’s, there’s elements, you know, you pointed out, right? Like limiting beliefs. I mean, I grew up as well where, you know, there’s starving children in Africa. You’re going to eat every scrap of things on your table. Uh,
Adam Carroll:
Yes.
Dave Wolcott:
we were vegetarian because we couldn’t afford to buy meat at the grocery store.
Adam Carroll:
Right?
Dave Wolcott:
Right. You know, all of these different things. Um, that just kind of get drilled into your head, right? So,
Adam Carroll:
Yep.
Dave Wolcott:
so it’s, you know, you’re now in this scarcity mindset, you know, versus an abundance mindset. And
Adam Carroll:
Yep.
Dave Wolcott:
it takes some time to be able to, to really kind of, you know, assimilate that and then figure out how can I, you know, how can I bridge right to the other side
Adam Carroll:
No doubt.
Dave Wolcott:
and, and see the right examples. And the other thing I’ll say as well, Adam, that’s just so important with all of this. It’s mindset. Right. I mean, what is the difference between certain people like, you know, Elon Musk, Steve jobs, I mean, you know, these, these big prolific entrepreneurs, right. Who are taking on the world and the people, let’s say you went to high school with who are in the same town, same circle of friends, same
Adam Carroll:
Yeah.
Dave Wolcott:
job for the past
Adam Carroll:
Yep.
Dave Wolcott:
20, 30 years, what is the difference?
Adam Carroll:
Right.
Dave Wolcott:
Right. I think it’s mindset.
Adam Carroll:
Absolutely. To that end, Dave, I want to add that a story that supports what you’re saying is that a friend of mine grew up in a household where the logic and the narrative was, well, we’ll never have a lot of money, so we might as well spend it now because we’re never going to have a lot of money, so we might as well spend it now. If you grew up hearing that, or in your case, if it was, we are vegetarians by need, not by desire. What happens is people will fill in whatever lack they’re experiencing, whether it’s, you know, there’s insecurity around housing, there could be insecurity around food, there could be insecurity around education. And so what they’ll do is they’ll fill that in first. And it’s an interesting kind of psychological experience or observation. When you see someone who is who is in poverty or trying to get out of poverty. But as soon as they have a little bit of money, they fill their pantry or they prepay their car payment for X number of months. And I always know what it is. It’s like, well, this was an insecurity you had at some point that you’re just filling in. The idea that mindset of what it is you’re after is an interesting one. And the vision, your comment about vision is 100% spot on. I believe that people underestimate, I’m sorry, they overestimate what can be done in one year. but they underestimate what could be done in three years because most of us could achieve some level of financial freedom or security within three years if we truly set our mind to it. And when you see other people do it, you go, oh, that’s possible. But when you’re surrounding yourself with people who are saying, well, we’ll never have a lot of money, might as well spend it now, it’s hard to fathom that kind of thing is even possible. And it’s, I mean, in all honesty, it’s why I love shows like yours. because it exposes people who are willing to listen to these stories. It exposes them to the fact that it is possible to change your state financially in short order, but you got to change your mindset first.
Dave Wolcott:
Yeah, 100%. So let’s jump into the shred method. Tell us what it is, how did you develop this, and let’s peel back the onion on this one.
Adam Carroll:
Yeah, this is one of the favorite, one of my favorite things to talk about because of the difference that it made in my life. And then as I started sharing the method with other people, just how many success stories we found. It goes back Dave a little bit to in 2009, it was one of the coldest winters on record in Iowa. And we just had snowfall after snowfall after snowfall. My wife and I were living in a home that was about 16 or 1700 square feet, but about 800 square feet of that was unusable because it was so frigid. It was a split foyer. So you’d go half upstairs, half downstairs. And the part downstairs was so cold. Literally, I’d have to have space heaters on in an office down there all day long to work. And it just wasn’t usable space. While we had three kids, we were just bursting at the seams. And I said to my wife, we have to find someplace else to live. And so I drove around through a neighborhood that I thought I’d never be able to afford, found a house that we loved and we made an offer. It was accepted and they allowed us to rent back because our home sold relatively quickly. So we moved into this house, had not closed on the mortgage yet and we’re settling in feeling very grateful that we’re in this house, plenty of room for the kids to play and spread out. And I was in a business where the income wasn’t I mean, I had a very creative tax person at the time, let’s put it that way. And so I was making money, but it didn’t look like all my taxes that I made that much. And the underwriters were having an issue with me getting approved on this loan. And my wife one night was crying in bed and she’s like, they’re going to make us move out Adam. They’re going to make us move out. And the next day I swallowed my pride, called my father-in-law and said, would you be willing to co-sign on a loan with us? And graciously, he did. Uh, we closed on the loan, but it was in his name and my wife’s name. I wasn’t even on it. And I vowed to myself in that moment, I would never be in this situation again. That number one, we would figure out how to verify income so we could get, uh, I could get qualified. And secondly, I never wanted to be in the situation where I was asking someone to either vouch for me or ask for money. And it was about six months later, I was introduced to the Shred Method, Dave. And essentially the model, the method itself is widely known. There are a lot of different versions of this, if you will, out in the public. What we’ve done is we have taken the software that powers the algorithm and made it very, very user friendly for people to just follow the prompts, do what the system tells you to do, and you’ll be out of debt. in serious equity and then leveraging that into other investments in no time. And so fast forward, nine months, I got qualified. My name was on the loan, my wife and I’s name on it. And that was in around late 2010. By 2012, September of 2012, on my birthday, I made the final payment on the mortgage of $260,000. So we had blasted away 260 grand in debt, saving about, I don’t know, it was close to $180,000 to $200,000 in interest over those years, right? Extrapolated over 30 years’ time. But that’s money that we weren’t sending to the bank. It was money that started accumulating in our accounts. And we were realizing the power of having an extra $2,000 a month, not making that mortgage payment and started figuring out what do we do with this now? How do we start creating? just massive passive permanent streams of income. So that’s a little bit about the origin. And since then we’ve shared it with thousands of people. We have hundreds of shredders using the system and we’ve probably had close to, well, dozens at this point, close to a hundred people that have either paid off their home or nearly paid off their home since they’ve started working with us.
Dave Wolcott:
That’s awesome. Can you give us an example of how that works?
Adam Carroll:
Yeah. So the best example is almost a metaphor. Um, so I asked this question of a lot of people, Dave, when we first started working with them. So play along with me, if you would, if, if you got up on a Saturday morning in Sarasota and you drove to the grocery store and you knew that you’re going to go home, take the groceries in, but you had to go back to the post office. It was probably going to be three, four or five hours before you went. Would you leave your car idling in your driveway during those four or five hours? You wouldn’t. Why would you not?
Dave Wolcott:
uh, to save on the environment, to save on energy. And then that probably goes back to, yeah, the way I was raised, you know, everything was about efficiency. Um, so.
Adam Carroll:
Exactly. So efficiency, we have care for the environment. It’s crazy to leave a car idling that long. Someone might steal it. In Iowa, someone would take it and get it washed and then bring it back and park it in your driveway. That’s how that works here. But what most people do with their paycheck, Dave, is the money gets deposited in checking and it sits there for days or weeks and sometimes months on end. Little by little, it’s drawn down with debit card transactions and ACH transactions. But nine times out of 10, when I talk to individuals, particularly high income individuals, and I say, do you have a significant amount of money just sitting idle in an account? And they’ll say, well, yeah, it’s my emergency fund or it’s this fund or that fund, sinking funds, vacation funds, whatever it may be. And I say, do you have amortized debt hanging out there? Well, yeah, of course I do. I’ll always have a mortgage or I’ll always have a car loan or whatever. And I’ll say, what if there were a way that you could create a maximum amount of efficiency where you could get rid of all those debts, not change your spending one IOTA, but leverage the system like a bank would to save yourself tens and most cases, hundreds of thousands of dollars in interest. And they go no brainer. It’s an absolute no brainer. The difference is. that we’re not taught to do this by the bank because number one, the bank wants us in debt. They want car loans,
Dave Wolcott:
Yeah,
Adam Carroll:
they
Dave Wolcott:
for
Adam Carroll:
want
Dave Wolcott:
sure.
Adam Carroll:
mortgages. We are their compound interest vehicle. Secondly, it is an asset for them to have that loan on the books and it’s a liability to have money in a checking account or a savings account for the lender. But know this, that the money that we put in checking savings money markets, That is what affords the bank the ability to go out and lend the way they do. So when you see a bank say, Hey, we’re increasing our CD rates or we’re increasing our money market rates. What they’re doing is saying we need more liquidity so that we can turn around and lend it out because we have a lot of loans coming in and we go, Ooh, yay. I’m making 4% on my money market account. And they’re saying, this is awesome. This person just put 50 grand in a money market account. and we’re going to turn around and loan out $500,000 on that 50 grand. It’s called fractional reserve banking. And so when you understand that, you realize that having money just sitting idle in an account is incredibly inefficient. And what we actually want is available or accessible money, but it doesn’t need to be money sitting there insured by NCUA or FDIC, right? That’s their benefit. That’s not necessarily to our benefit. And so we teach people how to alter their cash flow where the income comes in. It goes into a simple line of credit. The software calculates how much is coming in, how much is going out. And then it says, based on these interest rates, send a lump sum of, I’ll create a number, $7,258.36 to your mortgage on this month. And when you do this month after month after month, you’re actually accelerating the amortization table of your mortgage by years, decades. And so the average American today could be out of their mortgage within three to seven years depending on the level of their debt and the level of their discretionary income.
Dave Wolcott:
Hmm. But so let’s say you’ve got this predetermined amount that you’re going to pay towards the mortgage, a car loan or whatever it is. But
Adam Carroll:
Mm-hmm.
Dave Wolcott:
let’s say if it was sitting in your checking account, it might have been allocated for something. You know, you knew you had, let’s say a vacation or medical expenses
Adam Carroll:
Yes.
Dave Wolcott:
coming up within the next 90 days. Let’s call it a quarterly basis. And so you’re kind of trying to manage cash flow. So is that reducing? you know, your flexibility to have that liquidity for cash flow or how does that work?
Adam Carroll:
Yeah, great question. And what I heard in your question is what if you are earmarking funds for future travel or car repairs or what have you, right? The reality in our world from our perspective with Shred is that line of credit that you’re taking out in our case, we tend to direct people, excuse me, to a HELOC, a home equity line of credit, it’s usually the easiest to get. But it could be a personal line of credit, a PLOC, could be a BLOC, a business line of credit. or it could be a cash value line of credit that is taken against whatever the cash value and a life insurance policy is. And so we’re deciding what that might be based on the lowest interest rate available. And in many cases, it’s going to be a HELOC or a CVLOC, a cash value line of credit. The way we look at the line of credit, Dave, is it is a liquidity pool. So it would be no different than $5,000 sitting in a… money market account waiting to be spent on a Hawaiian vacation and $5,000 that’s put against your mortgage but available in that line of credit when you need it. And candidly, the five grand sitting in a money market account might make you, I mean, call it three and a half or 4% on the high end, right, on an annual basis. But if you dropped five grand on your $400,000 mortgage, what it’s going to do is it’s going to shave five or six months of payments. off of your mortgage and five or six months of payments might equate to thousands or tens of thousands of dollars in interest that you would have otherwise paid against your mortgage.
Dave Wolcott:
Yep.
Adam Carroll:
So we tend to say, this is another metaphor analogy question we’ll ask. If you wanted to borrow a hundred dollars from me and it would cost you five dollars, but you knew it would save you $2,000 on the backend, would you do that? Would you pay five dollars in simple interest to borrow a hundred? If you knew it, it’d save you 2000. And most people would say all day, every day.
Dave Wolcott:
Yeah, so here’s another question for you. Right. So our audience is very sophisticated, right? A high net worth, ultra high net worth investors. We understand that debt, I mean, debt can be a double edged sword, right? It
Adam Carroll:
Yep.
Dave Wolcott:
can actually accelerate failure, right? And, and real estate or certain things that people get over leverage. And
Adam Carroll:
Indeed.
Dave Wolcott:
then, you know, to your point, right, you know, it can kind of reduce. your liabilities, right? And you can shorten those times, freeing up cash flow and such. But
Adam Carroll:
correct.
Dave Wolcott:
let’s compare that to an investment, right? So let’s say you can make 15 to 20% on a particular investment. And my deployment cost is whatever the rates are, 6, 7%. You know, so
Adam Carroll:
Yep.
Dave Wolcott:
does it completely make sense to allocate towards, you know, reducing that mortgage when
Adam Carroll:
Right.
Dave Wolcott:
on the other side, right, I might be able to make 20% on
Adam Carroll:
Yes.
Dave Wolcott:
that money.
Adam Carroll:
It is not an either or in my opinion. It’s a both and situation
Dave Wolcott:
Okay.
Adam Carroll:
And and the reason for that dave is I don’t disagree at all that some people who say Yeah, but I could make more if I deployed that money elsewhere And I and I would say wholeheartedly. I agree with that However, there is some amount of discretionary income that’s still flowing through your household
Dave Wolcott:
Mm-hmm.
Adam Carroll:
that for most people particularly the affluent right that are or a high income earning family. If you’re a six figure or high six figure earner, it’s not like you’re living right up to the line. Hopefully you’re not living right up to the line every month.
Dave Wolcott:
Right.
Adam Carroll:
There’s some amount of money that’s going somewhere and it’s probably just being like, there’s always 10 or 20 or 30 grand sitting in an account somewhere.
Dave Wolcott:
Yeah.
Adam Carroll:
That is the money that if I said, well, let’s flip a switch on efficiency and just begin shredding some of these loans that you have.
Dave Wolcott:
Yeah.
Adam Carroll:
What we’ll do is in this moment right now where we’re at in 2023, we’ll take a six or six and a half percent interest rate mortgage down to about a point and a half as the effective APR. And when people tell me, you know, even a three percent mortgage rate, when they go, this is the cheapest money I’ll ever have, why would I ever pay this off? What I often will tell them is because the effective APR that we can give you in a matter of 24 months in most cases is like 0.6. on 3% because of how fast we’re paying
Dave Wolcott:
Yeah.
Adam Carroll:
it down or off. And then this is a secret and this is one of the, I hesitate to even share it because it’s one of our secret sauce in our system. But we give people a strategy of, okay, so you’ve bought a, and let’s take an extreme example, you’ve bought a million dollar home. You’ve got a mortgage payment on that million dollar home that Maybe at this point in time, it’s $8,000 a month or 8,500 a month, nine grand, whatever it may be. Let’s say it’s 8,000. And not that it’s a stretch necessarily, but it’s a burden. I mean, eight grand a month, eight grand a month, right? And over the course of a year, out of that 8,000, 6,000 of it a month’s going to interest. So that’s $72,000 a year that you’re sending to your banker, not keeping for yourself or building equity with. So there’s a little bit of a misnomer when we go, oh, well, the interest rate’s 3%. That’s super cheap money. Well, it is, but on a million dollars, it’s not like that’s $30,000. It’s all of that upfront amortized on the front end of that mortgage. You know this
Dave Wolcott:
Yeah.
Adam Carroll:
as a finance guy, when you look at a 30-year fixed mortgage, the first 10 years are like the red light in a traffic stoplight. And the next 10 years are yellow, and the third 10 are green. And that reflects how much principal you’re paying down. So if in 18 to 24 months, we could go from red to green on your mortgage. And you went from a million to let’s say 600,000 or 500,000. And at that point you recast the mortgage, not refinanced, but recast it. In which case you would say, Hey, I owed a million over 30 years. Now I only owe 500,000 on 28 years. What would my payment be? And the lender will say, oh, based on that, your payment’s going to be $3,685. And you go, oh, well, that’s way easier than eight grand a month. And now I can afford to go buy a rental property or my second home or whatever. So, and you’ve got the equity in that property that you can leverage however you see fit with that line of credit. So if you want to borrow it six or 7% and deploy it at 15 or 20, by all means, do that.
Dave Wolcott:
Yeah.
Adam Carroll:
because the majority of your payments going to principal anyway on your primary mortgage. Does
Dave Wolcott:
Yeah, love it.
Adam Carroll:
that make sense?
Dave Wolcott:
So yeah, totally. So we’re basically what you’re talking about. It’s, it’s really efficiency and velocity, right?
Adam Carroll:
Yes.
Dave Wolcott:
With your existing capital. And, um, I mean, I think this is such an important, uh, point for people, not only in your personal economy, uh, but also in businesses, right? As, uh, as a business owner, right? You’re always keeping cash on hand for operational expenses, certain things that you have. Um, but you know, there’s a lot of lazy cash, right? That’s sitting
Adam Carroll:
Yes.
Dave Wolcott:
in there. You’re
Adam Carroll:
Totally.
Dave Wolcott:
paying for that liquidity. So if you could, I’m assuming you can do this in the same example of the business. Let’s say you have, you’ve purchased equipment or you purchased vehicles, right?
Adam Carroll:
Yeah.
Dave Wolcott:
But
Adam Carroll:
Right. Okay.
Dave Wolcott:
you’re keeping 90 days on hand for capital
Adam Carroll:
So, we’re
Dave Wolcott:
and
Adam Carroll:
going
Dave Wolcott:
maybe
Adam Carroll:
to
Dave Wolcott:
you only need 30 to 45.
Adam Carroll:
go ahead and
Dave Wolcott:
You
Adam Carroll:
start
Dave Wolcott:
could
Adam Carroll:
the next one.
Dave Wolcott:
much more efficiently manage that. Is that fair?
Adam Carroll:
You are absolutely correct in that. And we work with business owners all the time where we are trying to help them manage and strategize their equity and their debt, because many of them will be sitting on, you know, again, three months, six months, whatever the proclivity of the owner is all the while they are at the early stages of amortized debt or paying off
Dave Wolcott:
Right.
Adam Carroll:
equipment or whatever it might be. And we can show them. you know, in a matter of months, you could knock that down and not really have any threat of liquidity in the grand scheme of things. So there is a question we often ask, which is, you know, let’s look at your accounts receivable. What’s the aging report look like? Are your clients paying on time? Then do you really need X amount when you’ve got six months in accounts receivable coming in six months worth of expenses? You’ve got three to six months in the bank. And then you’ve got all this debt that you’re trying to pay down. What if we just re-engineered that a little bit and you chomp through the debt in no time, how much extra cashflow could you create? And, um, most business owners are shocked by the numbers they see.
Dave Wolcott:
Yeah, I’m sure. You know, it’s interesting. I mean, having run four different businesses now over the past 15 plus years, you know, I’ve always struggled with, you know, how do you manage cashflow, right? And then that
Adam Carroll:
Yep.
Dave Wolcott:
ties into your personal economy as well. And it does come into efficiency, and that’s what always drives me crazy. Now, You know, we’ve been a big proponent. We have a lot of investors using the infinite banking, cash
Adam Carroll:
Yes.
Dave Wolcott:
value, whole life insurance, which is a great way to get a multiplier on your capital. So you can,
Adam Carroll:
Confirm.
Dave Wolcott:
you can get some of that efficiency going. You still have the liquidity.
Adam Carroll:
Indeed.
Dave Wolcott:
It’s compounding tax free and everything. Um,
Adam Carroll:
Yep.
Dave Wolcott:
but it looks, if I’m understanding what you’re saying is that You know, this can be a complete amplifier. So you could use your cash value life insurance policy as the store of capital,
Adam Carroll:
Yep.
Dave Wolcott:
but then you just start making allocation decisions towards some of your debt payments, you know, based upon some of the algorithms, um, to really reduce that debt quickly and free up cash flow.
Adam Carroll:
You nailed it. You nailed it. And furthermore, for most people that are being pitched, and I say pitched loosely, being presented an insurance product, there are a lot of agencies out there that will say, well, it’s only $3,000 or $5,000 a month to put into this premium, or they’ll do a quarterly premium or semi-year premium. I prefer, and we tend to coach our clients on, it’s a once a year premium. 25, 50 grand, 100 grand at a time, because it’s coming out of your HELOC anyway, or your line of credit. And because of the cashflow tool that we’re creating, your income cycling through that line of credit. So though we ramp up the balance right away, over time, it’s just trending down. So the interest expense on it is negligible. It doesn’t feel like a big burden. And automatically in your policy, you’re creating a compound interest effect quickly,
Dave Wolcott:
Yeah.
Adam Carroll:
because the key, as you know, um, in infinite banking is we want to get to compound interest velocity as quickly as humanly possible. And so that means if you’re making four and a half, five and a half percent on a hundred grand, 200 grand, 500 grand, a million, the faster we can do that, the better. And with shred, what happens is folks who normally would say, well, 50 grand is kind of a stretch. They use shred for six months, 12 months, 18 months. They go, this is a no brainer. I would put 50 grand in here. every six months if I could.
Dave Wolcott:
Yeah.
Adam Carroll:
And then you realize really the power of that, and I’m sure you share this with your clients, but when you begin to realize you have buckets of money that are available to you to put into investments that can make way higher than the S&P 500 index averages, we’re talking 12, 15, 20, some cases 30% returns, and you have no payment on the money you’re putting in there. because you’re borrowing against a policy that doesn’t require a payment. To your point, we’re just stacking
Dave Wolcott:
Yeah.
Adam Carroll:
efficiency and productivity
Dave Wolcott:
It’s
Adam Carroll:
and
Dave Wolcott:
a
Adam Carroll:
it’s
Dave Wolcott:
complete
Adam Carroll:
like
Dave Wolcott:
snowball
Adam Carroll:
putting nitrous
Dave Wolcott:
effect,
Adam Carroll:
oxide in your
Dave Wolcott:
Adam. Yeah, absolutely.
Adam Carroll:
gas tank. Yeah,
Dave Wolcott:
And
Adam Carroll:
you just
Dave Wolcott:
we,
Adam Carroll:
put nitrous oxide in your gas tank.
Dave Wolcott:
yeah, we, we’ve helped clients. We, we built some calculators out and we’ve actually, we’re developing a software product right now, uh, which is a wealth strategy dashboard. But when you start to look at it as like a CFO would, and you’re looking at your financial view, and then you start looking at these things, you know, over time, over a 20 year period. And as you like to buy, I love that multiple permanent streams of income,
Adam Carroll:
Yeah.
Dave Wolcott:
while you’re reducing, you know, your debt, right, that you burden that you have, that yeah, the snowball effect is absolutely exponential. And I think I heard you on another show give out a quote around Warren Buffett, which was, which was really fascinating. I hadn’t heard that before. The, his 5 billion. Can
Adam Carroll:
Yeah.
Dave Wolcott:
you remember that?
Adam Carroll:
He at 65 Warren Buffett was worth $5 billion. And at 85, he’s worth something like 85 or $100 billion. So the majority of his wealth, 12 times what he was at 65, he’s now at 85. And the idea and this I think this is a Warren Buffettism, but the idea is to get to compound interest velocity as fast as possible.
Dave Wolcott:
Yeah.
Adam Carroll:
And and what that means for Again, this goes back to mindset a little bit, Dave, is that if our goal in making money and being mass affluent is like, I want all the stuff, you’re missing the point. The idea is have the stuff, but have plenty of money left over to begin to get to this point where the money makes far more than you do. I used to going back in time, I read a book, I’m sure you’ve read it or have it on your bookshelf, The Four Hour Workweek by Tim
Dave Wolcott:
sure.
Adam Carroll:
Ferriss. When I read that book, The question that I kept asking myself was, how do I make as much money in an hour as most people make in a month or a year? The answer that kept coming back was public speaking because if I can go present and make 2,500, five grand, 10 grand, 15, 20 grand in an hour, I’m going to do that. Over time, things have continually tracked higher and higher in terms of income on that front. I still have to travel. I still have to be away from my family and go do that. So what would it take to make that kind of money without any work at all? What would it require? How much either would I need to invest? What kind of deals am I finding to get there? And I encourage your listeners to think through that. Not, oh, how much less could I work to make this? But what would it take for you to not work at all and still be able to live at a lifestyle that you want to live at? Is it 10 grand a month, 20 grand a month? And now you just have to put the machine in place, if you will,
Dave Wolcott:
to get
Adam Carroll:
to
Dave Wolcott:
there.
Adam Carroll:
churn that money
Dave Wolcott:
Yeah.
Adam Carroll:
out. And we, you know, going back to the vacation conversation earlier, we spent two weeks in Italy and a couple of weeks in Hawaii recently. And as I was there, I’m listening to podcasts and reading books and just, again, disconnecting, but thinking at a high level of what I want. And I saw this video and someone said, pretty comfortably anywhere in the world on 10 grand a month. And 10 grand a month, wherever you’re coming from at this angle, it’s not that difficult to create $10,000 in recurring passive income. There are methods and ways of doing that. And if that’s what you’re focused on, you could have it in no time.
Dave Wolcott:
Yeah.
Adam Carroll:
So this is where our mindset is today and where we’re trying to. kind of bring people to is, you know, what’s the vision, how much does it cost? Let’s get to creating it and get you to that lifestyle as fast as possible.
Dave Wolcott:
Yeah, totally agree, Adam. And one thing that I really love about this, and I think all the listeners can really take advantage of this is this is low hanging fruit, right? Even if you’re not an accredited investor, wherever you are, you know, our kids in our twenties, wherever you are on your trajectory, this is completely
Adam Carroll:
Yeah.
Dave Wolcott:
low hanging fruit that you can take advantage of and reposition. right, to drive
Adam Carroll:
Yes.
Dave Wolcott:
greater efficiency, right, to really kind of accelerate your wealth. So I think that’s awesome. And, you know, my mind is really lighting up with use cases here. Like there’s so many good use cases for our audience. So one, folks out there who’ve got short term rentals, Airbnb, single family rentals, right, you could apply this to them, right? So you’re
Adam Carroll:
All the way.
Dave Wolcott:
reducing, you know, the… to debt on those. You can do it with obviously your own home, as we talked about, the mortgage or any of those kinds of liabilities,
Adam Carroll:
Yeah.
Dave Wolcott:
potential college payments, any of those kinds of things that you can do. And
Adam Carroll:
End
Dave Wolcott:
then
Adam Carroll:
of the.
Dave Wolcott:
in your business, like we talked about, having more efficiency and managing that liquidity. And then also just this way to really magnify the results of your cash value life insurance policy and kind of put it on steroids, I would think,
Adam Carroll:
Yeah.
Dave Wolcott:
by doing this. So really, really fantastic ideas here.
Adam Carroll:
I want to touch on one of those you said, and that’s the short term rental and somebody who has some properties. What we find when we work with real estate investors is they’ll say, well, I’m just stockpiling cash waiting for the next opportunity. And if you think about this, what they’re doing in stockpiling cash is they’re creating this liquid but non-efficient pool of money. And you would still have access to the funds if you’re paying down that debt over time using shred as you wait for the next deal. But then you’d have access to the capital, the equity that you’re creating in that property by having a line of credit on it. So to your point, this is low hanging fruit, no matter what you’re doing, even doing it for three to six months, 12 months, you are going to be years ahead of where you would be otherwise. And so when folks start to see the And they go, Oh, I don’t have to lock into this for seven years. I need to do it for a period of time to achieve the goal I’m after. Um, though I will tell you that for my wife and I, this is a lifestyle. We will never not use a shred method technique where money’s going into a line of credit because there is always money being deployed about every two to three months, there’ll be tens of thousands of dollars that goes out somewhere. because some is always coming back in. And I know you know this, you teach your clients this, but if you’re in a syndication and it’s a three or four year syndication, that money’s coming back in. It needs to have somewhere to go
Dave Wolcott:
Yeah,
Adam Carroll:
when it comes back in.
Dave Wolcott:
yeah, exactly.
Adam Carroll:
And with Shred, you start to do that. This flywheel is just like always, always moving. And I don’t mean to make this seem simpler than it is. but it becomes like a video game that you can’t lose.
Dave Wolcott:
Right.
Adam Carroll:
You remember playing Nintendo and
Dave Wolcott:
Yeah.
Adam Carroll:
the cheat codes on Nintendo?
Dave Wolcott:
No,
Adam Carroll:
This
Dave Wolcott:
it’s
Adam Carroll:
is the
Dave Wolcott:
a
Adam Carroll:
cheat
Dave Wolcott:
rinse
Adam Carroll:
code.
Dave Wolcott:
and repeat strategy for sure. Right. I mean, once you get your head around some of these things, it’s, it’s not really that complex. You just need to take action, right. And actually get involved. You start to see the results for yourself. It’s the same with, you know, investing in alternatives and real estate, right. You start to see the
Adam Carroll:
Right.
Dave Wolcott:
results and then you say, wow, you know, let me now extrapolate this. And I think we could do a lot better than. than we were doing.
Adam Carroll:
Indeed.
Dave Wolcott:
Yeah. Awesome stuff, Adam. If you could give listeners just one piece of advice about how they could accelerate their wealth trajectory, what would that be?
Adam Carroll:
I’m going to go ahead and turn it off. If I were to give one piece of advice about how to accelerate your wealth trajectory, it would be, and this is, this is proven true in my life. It is the very first thing you invest in is yourself. So take the courses, uh, buy the class, go to, you know, go grab the book and study it intently. Um, and I say that with a bit of an example, I, I was a huge fan. I’m still, I am a fan. of Phil Town who wrote rule one investing and payback time. And I opted to go to Phil Town’s program and watched him sort of dissect what he was doing in the market. And obviously he’s an equities guy. So there’s a portion of our wealth building plan that is in equities, but in watching him do what he did, he was dissecting Chipotle Mexican Grill at the time. And he said, this is a six or $700 a share company. And it was about $300 a share at the time. And I’m sitting here going, this is a burrito company, dude. How is this six or $700 a share? And he said, all of the metrics, you know, meet this out that this should be a six or $700. His whole mentality is that if you can buy a dollar for 50 cents, you’ll never ever lose money. And so he’s looking for those deals. How do you buy a dollar for 50 cents? And today, if you look at CMG, Chipotle Mexican Grill, it’s at 13 or $1,400 a share. And that day, he bought 10,000 shares of Chipotle Mexican Grill at $300 a share. And we are all watching him do it, kind of like, this is a huge bet. And it clearly paid off. Now this is a guy I followed and studied. And I think that is the piece of advice simply stated, is find the experts. that you want to either live by or live like, or that you appreciate their model and their methodology, track them, follow them, do what they do, because the people who have gotten to that level, they know of which they speak. I mean, success leaves clues. So invest in yourself by following the people that you wanna live like.
Dave Wolcott:
Awesome. Appreciate that Adam. Um, and really appreciate your time today and coming on the show, really sharing your wisdom and your sage advice with the audience. I think that’s definitely something worth, uh, you know, investigating further. If people want to learn more about you, the shred method, uh, what is the best place that they can reach out?
Adam Carroll:
Yeah, thank you for asking the shred method comm is our website our domain and on that domain We have a master class that you can watch that will teach you everything you need to know about it We have the ability to schedule a 20-minute call with folks who are interested in just having their numbers run, seeing what kind of savings they could experience or what’s a potential opportunity for them. So theshredmethod.com is the place to go for that. If you want to know more about me, Google my name. I’m everywhere on the internet. And what you’ll probably find right up front is a TED talk that I delivered at the London Business School that went viral. And I would encourage people to watch that as sort of a primer into who I am. It’s all about a game of Monopoly. I played with my kids with real cash. So we had a $10,000 game of Monopoly and the lessons learned were very profound.
Dave Wolcott:
Very cool. Love it. All right, guys. Thanks so much for listening today. Hope you enjoyed the show. Do us a favor if you’re really getting value from the show, please give us a rating and review really helps us out. Bring in stellar guests like Adam bringing on. So would be grateful for your participation there. Thanks again and we’ll talk to you next week.