Prosperity Credit – Episode 537      

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, we’re going to be talking about credit. Yes, personal credit scores, how that will affect you. And we’re going to be talking about prosperity credit. Two cliffhangers there, Kim. What comes to your mind first when you think of credit and prosperity credit? Well, I have to admit that the first thing that comes to mind is our book, Busting the Budgeting Lies, that is coming out this fall. And I’m so excited and it will have some very specific guidelines around credit scores. So when you think of regular credit, that’s what I think of. Now, when I think of prosperity credit, that’s a whole different ball game of one that you and I are creating literally as we go.

[00:45] And so I would love to turn that question over to our listeners. Please email me. Hello at ProsperityThinkers.com. What you think prosperity credit means. You’re going to get some ideas from Spencer and I today to get your juices flowing. But I would love to hear what each of you think prosperity credit is. Oh, I love it. Okay, so as all good platforms go in conversation, I think having a story really helps cement. So I’m going to use something that was recent. It’s a conversation I had with my friend, Vic. He is a real estate investor, does a high volume amount of real estate. To give context in the real estate investing world, there’s a call it a tool that we use, which is called hard money lending.

[01:38] And I’ll just explain this so that our listeners that maybe aren’t familiar have context. Essentially, it’s different than a mortgage. What you’re doing is when you’re purchasing a property to fix and flip, or if you’re purchasing it to fix it up and then refinance, you may use other people’s money, the hard money there. Now, in order to use their money, you’re going to have to pay a premium, typically a higher interest rate. And then you may have to pay what they call points. So call it a overall percentage to originate the loan and to have it serviced. So I explained it pretty clear. Very well done. Yes, we’ve talked about hard money. There’s a few blog posts that we have on it, etc. And it’s a valuable thing for people to know about.

[02:24] Thank you for the explanation on it. Yep, super helpful. Okay, in one caveat of that, for any of you listeners that are not wanting to be involved in the day-to-day of a real estate investment, you’ve accumulated wealth and you’re more in the legacy phase of things and you want to simplify, then there aren’t alternative investments to be able to put your money into where you could work with a fund, a group, or whatever that looks like. If that is something you want to do, send an email for our podcast listeners to hello at prosperitythinkers.com. Kim, you can answer those questions. You can make connections and do all of that. But I just want to throw that out there in case someone is saying,

[03:05] well, how does that work and what would that look for me? So let’s go back to my friend Vic. Is that cool? Is that help out? You can help them with that? Yes, absolutely. And just so everybody’s clear, we’re not involved with them on a basis that would enable us to be directly connected, but I have lots of wisdom in the space and I’m always happy to share it with you. Okay, cool. So what happened was here’s with my friend Vic. He’s been flipping a lot of houses and his personal credit wasn’t the best. Even though he’s been doing repeated deals, he still has to pay those points higher interest rate. Well, he all of a sudden had a giant jump in his credit score. And so now he’s got a healthier credit score.

[03:48] I guess some bad things in the past fell off, which is great. So he goes to his existing relationships. And now his fees have dropped by 75%. Massive, massive. So like, again, instead of him having to use his own cash, it’s now better opportunity. He can scale more, et cetera. There’s an example of personal credit affecting the business. I look at it and say, take that, but I also have the prosperity credit, meaning he has been putting in the effort, the work, the relationship with that person. And the person still says, yes, I trust you. But now the personal credit is in place. Let’s look at prosperity credit. How did those two worlds match up in your head, Kim? Well, to me, prosperity credit starts with mindset

[04:40] because that’s where everything starts with. And this is absolutely an overused space these days. And I think with good reason, because it is something that absolutely everybody can get involved with, begin at zero or whatever level you feel you’re at and grow from there. And really, that’s what credit is about, is growing. So it starts with mindset. Second of all, it is absolutely elbow grease, right? It’s time in the game. It’s skin in the game. It’s paying a fee. It’s doing some work. It’s creating the opportunities by maintaining relationships. Importantly, I’ll tell a quick story. My son, Robbie, is a master at generating relationships. Somebody asked him, hey, do you know about any restaurant broker in Kansas City?

[05:33] He doesn’t live in Kansas City. He’s not in the restaurant field. He could have easily said, no, sorry, I don’t. Instead, he used his relationship credit and his legwork credit, all of which are aspects of prosperity credit, to do a few emails, a few phone calls and find a person that he could then find another person from, to then refer back to the original request and solve that need that that person had. Think about the credit that Robbie now has with that person that he, you could say, went out of his way to help with, but it was in his way because he made it in his way. He didn’t treat it as an out-of-the-way obligation. He treated it as an opportunity. And so this is the aspect of prosperity credit that I want us to all be thinking of,

[06:30] What obstacles and obligations can we flip so that there are opportunities with positive possibilities, many of which are long-term, so prosperity credit, very, very long-term, literally lifetime, many of which we may never see the actual results. Yet, in our realm of faith, we can be confident that good is happening. 100%, yes. So let’s take the inverse and let’s say, okay, if I wanted to have really bad prosperity credit, what are the things that I would have to do? So Dan Sullivan, my mentor forever, has four great referability. You would do the opposite of each of them. You would not show up on time. You would be late. And is it Vince Lombardi that says if you’re not 10 minutes early, you’re late.

[07:36] I’m going to hold you there for one second because we’re going to take each one of these and say this. So let’s go over to credit. So if you wanted to have a bad credit score, you wouldn’t pay your bills on time. You wouldn’t pay your bills on time. You wouldn’t show up to meetings on time, etc. Good. So we got the first one on prosperity credit to have bad credit. You wouldn’t do what you’re supposed to do. You wouldn’t show up on time and on personal credit. You wouldn’t pay your bills on time. So let’s go to number two. Got it. So that’s the show up on time part. The second one is the do what you say you’re going to do. So in prosperity credit, you would commit to something either verbally or in writing and not do it.

[08:20] In personal credit, you would not do whatever it relates to in your finances that you know is best, which might be saving first. It might be getting a 30 year mortgage instead of 15 year mortgage and then not paying it on time. So there’s a distinction there that small yet important and that is the in the credit in the personal credit space. It’s to pay your bills on time versus doing what, you know, will get you good results financially. And then the opposite of course is not doing what, you know, nobody needs the new information around handling your personal credit properly. We just don’t do it. Okay, so I’m going to throw in one more on the personal credit side to take that which would be focusing and only paying the minimum payment.

[09:15] If you do that, you’re going to destroy yourself because one, your utilization is high to you’re now the perfect candidate and customer for the credit card company because they make money off of you and you’re focusing on the lowest common denominator. Okay, so we’ve got the two right there. Let’s go to number three. Love it. Finish what you start. So again, a nuance between the do what you say you’re going to do in the finish what you start. Here’s the important part. Sometimes you can’t finish something or you need somebody else to finish something. So if you can’t finish it on the prosperity credit side, you absolutely must go to the people that are relying on you and tell them that you cannot finish it or you must hire

[10:06] or already have somebody on your team the who that can finish it for you. So that’s the prosperity credit side of finish what you start. Okay, so on the personal credit side, this one’s a little harder. I’m trying to figure that out. I’m not going to use the word budget because budget in my mind is a reactionary thing. And hey, as prosperity thinkers, we’re not reactionary, but I think of gravy stack and I think of currents, which means setting up the right situation and paying yourself first saving first investing first doing those things. Am I in the right ballpark? You are and finish what you start brings us into the time element, which is so difficult for people to understand sometimes as it relates to personal finances and credit.

[10:59] And that is because we are going to be on earth for a hundred plus years and we need to be handling our personal finances for basically a hundred years because most of us in the good health space will probably be 120. So if you figure you got to start dealing with finances about age five, you’ve got at least to age 105 and we don’t finish what we start in life as it relates to our work around the longevity of money, the time value of money, the opportunity cost of money. We are too much of a fast food society as it relates to our personal credit. And so we don’t finish 30 year mortgages. We don’t look at the long-term perspective on life insurance, disability insurance, deductibles on our car and home insurance.

[11:45] All of those play a space in the personal credit realm. They do. Absolutely. Are there any other comparisons that we can take these principles and lump them together with prosperity and personal? Any more that you see in these categories? Well, yes, I have the fourth element, which is say please and thank you. So let’s see if we can stretch that one into this analogy when in actuality, it’s not a stretch at all. Yeah, absolutely. I wrote down a long, long time ago, the importance of saying please and thank you as it relates to money coming into and out of my life. So on the prosperity credit side, what that looks like are physical thank you notes to people and emails as well sometimes, but a lot of value in a physical thank you note.

[12:45] That’s the please and thank you part, right? Listening carefully and asking for guidance as to what it is that our dollars should be doing, that our time should be spent on. That’s please and thank you in the prosperity credit realm. Having some aspect of inspiration or faith or spirituality that is connected to money, which is an interesting thing to think about. That is part of the prosperity credit realm. And now what can we do with personal credit as it relates to please and thank you? So I have a couple of thoughts. They might be stretching a little bit, but if we look at the overall weighting of personal credit, the type of credit itself is valuable, meaning a mortgage car loan. That’s going to be more valuable than your $200,

[13:47] would it be Best Buy Card or whatever that looks like. Like that type of credit, very important. The age of your credit, very important. Meaning how long you have it and prosperity works again with relationships. How long are you maturing those relationships? Those are a couple of pieces that I often think about. And for yourself, what about you? Well, very specifically in the credit space, a credit card that has been open and being paid off monthly for a long, long, long, long, long time is a very valuable asset. And we don’t tend to think of it that way. And so it is very important that we do not close old cards. It is very important that we take the time to go to annualcreditreport.com or even just directly to the credit spaces

[14:44] like Experian or the various places where you can pull direct credit. Make sure we know what our credit scores are and do whatever cleanup is necessary around them. We have a fabulous resource in this space called UQAL. It’s the letter U and then the letter Q and then the letter U-A-L-UQAL.com. I’ve worked with that organization in the United States for years and years and years as it relates to cleaning up and improving and optimizing personal credit. Or you can bury your head in the sand, waste a massive amount of money and opportunity because you don’t treat this area seriously. Yes, absolutely. I’m throwing in one wrench in the system at the very end of this and here it is. If you have thrown your head in the sand

[15:39] and you say, I can’t get ahead or my future looks bleak or whatever that is, don’t. Don’t do it. There’s something you can do right now. And if you feel that way or a family member feels that way, send an email to helloatprosperitythinkers.com and we will absolutely destroy that thought. You’ll have to take the effort, but we’ll do our best. But in reality, if you have done something financially where you had to have a bankruptcy, something like that doesn’t mean the end of the world. Makes things harder. I’m taking the comparison of bankruptcy and I’m gonna go into the prosperity world. Meaning for one of the financial tools that you use often is whole life insurance through a mutual company.

[16:27] If you have had a bankruptcy of your health, it’s gonna be a lot harder to turn things around. So if your prosperity credit is good now, now is the time to say, I need to get on track and it will get better in the future. And the wonderful thing about that space is that it’s so easy to take a baby step in it. While whole life does require a little extra cash every month, convertible term insurance doesn’t. I mean, yes, it has a premium, but it’s so small and such a fabulous baby step to then start to treat your life with the importance that it has. And ensuring your life and the income that you earn is one of the most valuable things that you can do because it’s the most valuable thing that you have.

[17:17] Perfect. So well put together. You now have had a stronger insight on personal and prosperity credit. As Kim mentioned at the top of this, send an email to helloatprosperitythinkers.com. Let us know what you think about prosperity credit. We’ll take that feedback. We’ll put it into another episode. May even turn into newsletter content, whatever that looks like. But we are here to find the very best things that will help you move forward when a world thinks that things are shutting down. We realize there are doors opening. That’s what it looks like. So thank you for spending time with us today. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you,

[18:03] visit prosperitythinkers.com.