- From 2010 when I graduated college until 2014,
I managed to pay off all of my debt, all $117,000 worth.
And so for the first time in a long time,
I could consider myself worthless.
I mean, at least as it related to my personal finances.
And so in this video,
I wanna share the three steps that I took to get there
and break down some of the important details
like my income during those years.
This video is brought to you by my friends at Squarespace,
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So at 22 years old and just fresh out of college,
I had over $97,000 in student loans.
And then I made the brilliant decision
to buy a brand new car.
So let's add another $18,165 onto the total,
not including change.
So at my lowest point, I had $117,000 worth of debt.
And while student loans are increasing every year,
most people don't graduate with the kind of debt that I do
unless you get into a medical field.
Now, I don't know why a filmmaker
would need $117,000 in debt to start their career,
but mistakes were made, blame it on the system,
blame it on myself and my stupidity at 18 years old,
the problem was now mine to deal with.
And at first I wasn't going to deal with it at all.
I was resigned to just paying
the minimum payments every month for 30 years
until I finally paid it all off.
But then I started to get interested in self-development.
I started to read stories of people
who had paid off their debts in two years,
five years or 10 years.
It started to inspire me to chase that kind of freedom
and that kind of financial independence,
and so that's when I got started.
And for me, there were really three core steps
that helped me get through it as quickly as I did.
Step one, intentionally cut back on your spending.
Now it really doesn't matter how much money you make,
if you continue to spend every last cent of your paycheck.
And so you need to get really intentional with
where you're spending your money and how you're spending it.
I know lots of people who make 150, 200K,
who still have tens of thousands of dollars
worth of student debt.
A lot of times we convince ourselves
that we deserve these nice things
because we work so freaking hard.
But what you really deserve after all that hard work
is to be debt-free.
And so if we can begin to reframe our spending habits,
if we don't increase our lifestyle
with each increase in pay,
then we can begin to make a dent on our debt.
One of the most difficult decisions that I made early on,
which ended up being the best one that I could have made,
was to move back home to live with my parents.
Hi, my name is Matt D'Avella,
and you are inside of the Black Box.
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Dinner time!
That's embarrassing.
Noodles with soup.
Yeah, I'll have some noodles with soup.
(soft music)
It was a difficult decision
because all of my friends were going off
and they were living on their own.
They were partying in the city
and dating and doing all the things I wanted to do.
And I was at home watching late night television reruns
in my parents' basement.
And it was really, truly difficult.
Like I wanted to do all those things,
but I also knew that this wasn't the time.
That right now I had to save, I had to be patient.
I had to look towards the long-term vision of my life
and take this short-term sacrifice now.
I ended up saving thousands of dollars every month
on rent and utilities,
and everything else that is associated
with living on your own.
It was around this time that I discovered minimalism.
And that really was a practice
that helped me understand my values
and change the way that I spent money.
Even though I had decided to move home with my parents,
I was still spending pretty recklessly.
I was spending thousands of dollars on clothes,
a flat screen TV,
I already mentioned,
I put $18,000 of loans into a brand new car.
And so when I discovered minimalism,
it helped me to redefine my idea of success.
I questioned what are the things
that are really gonna make me happy
at the end of the day?
Why am I making these purchases in the first place?
And when I started to ask these questions,
I realized that I didn't need to prove to anybody else
that I was successful.
Minimalism really helped me
to gain a better alignment with my spending
and the kind of future that I wanted to build for myself.
And that was a radical shift
that didn't just change the immediate future,
but it changed every decision I made from that point on
when it came to my spending.
One common misconception about minimalism
is that it means you have to live a frugal lifestyle.
And I don't think that that's true.
I don't think that
just because you're intentional with your purchases means,
that you will never buy nice things,
and you won't let yourself enjoy things
while you're also paying off your debt.
I love what Ramit Sethi teaches,
he's a personal finance expert.
He talks about not sacrificing the daily lattes.
And lattes as is metaphor
for anything that you might spend regularly,
that gives you a little bit of joy each day.
So if you cut out a $5 latte every day,
you're gonna save about $1,800 over the course of the year.
Now one, most people can't do that or won't do that,
or they will try and then give up and fail
and say, ah, you know what?
This frugal lifestyle thing,
this counting every last dollar,
it's just not gonna work for me.
Because it doesn't work for most people.
Instead what you can do is focus on the big items.
So the areas where you're spending
thousands of dollars every year,
whether it's clothes or eating out.
What are those areas
that are the biggest problem sources for you
when it comes to money disappearing out of bank account?
And how can you get more intentional with those purchases?
Again, I'm not saying that you can't buy nice things.
I don't think you need to deprive yourself
of things that will bring value and joy to your life.
But I do think we need to get really thoughtful about
which ones are essential right now,
when we're paying off our debt.
If you're making really big sacrifices,
like moving into your parents' house,
to live for a couple of years as you pay off your loans,
I think it also means that you need to get intentional
with those other decisions,
and you can make sacrifices for the first couple of years
as you begin to build momentum.
But no, you do not need to sacrifice your daily latte.
Step number two, focus on making more money.
So this is really personal finance 101.
If you wanna save more money and pay off your debts,
you need to spend less money and make more money.
I don't think that you need to over-complicate it
any more than that, it really is that simple.
But of course there are some nuances in here,
especially when it comes to making more money.
And so that's what I wanna talk about right now
and share some of the experience that I had
in increasing my income over just a four year period.
So I've never actually held a traditional job
apart from the grocery store that I worked at in high school
and was promptly fired from and sued for $7 million
for making a parody rap video.
But that's a story for another day.
♪ The fresh beats baby you know what I mean. ♪
I have run my own video production business
ever since college.
In around 2009 was the first year
that I started to make an income as a freelance filmmaker
and a videographer, whatever you wanna call it.
I made videos for clients and they paid me money for it.
Now running your own business is definitely
one of the quickest ways
to increase your income rapidly over time.
Over a short period of time I should say.
Now it's not guaranteed.
There are definitely a lot of risks involved,
and there are a lot of people
that start their own businesses
that never get it off the ground.
But if you're good enough,
if you invest in your skills
and if you invest in providing real value
to clients and customers,
a hundred percent, that's the fastest way
that you're gonna be able to increase your income.
So in 2009 was the very first year
that I made money running my own business.
And I made about $10,000 in profit.
In 2010, I nearly tripled my revenue,
my profit that year was about $28,000.
So in 2011, my revenue increased to around $53,000,
but my profit was actually pretty low
and pretty similar to the year before at $33,000.
Now 2011 was really a turning point for me and my business
while I did make around the same bit of profit.
Those first couple of years helped me to build momentum
and increase my overall revenue
and the amount of clients that I had,
which would eventually bring in more money down the road.
And so this was really that turning point that I needed
to give me the confidence to keep going with my business.
To make over $50,000, even if it wasn't profit in one year
was a huge win for me, and it showed me the potential
of where I could go with this.
2012 was a massive year for me
and was one that definitely helped me
to get the ball rolling on my debt
in a way that no other year did.
So my net profit was $94,000.
In 2013 again I had another big year,
more expenses this year as I hired more people
and invested more in my gear.
My profit was $65,000 for the year.
And in 2014, my profit, $84,000 for the year.
And so if you average it out over these four years
from the moment I started paying off my loans in 2011,
I made around $69,000 per year,
that's net profit after all my expenses.
Keep in mind that this does not include
my personal expenses,
like my rent, utilities and all that fun stuff.
Although I was able to write some of that off
because some of that was used for my business,
like the internet,
as well a very small part of my at home office.
So how was I able to steadily increase my income
over these six years?
Now the first thing which I already mentioned is,
I had to get really freaking good at what I did.
I had to make sure that I deliver
for every single client that I worked with.
Because every client that I delivered for
and I made an amazing video for,
they shared that work with other people.
They said, oh, if you need a video person,
you gotta go hire Matt, he's amazing.
That helped to build out my network
and the kind of people that came to me for more work.
Now, if you burn a bridge, if you screw up a project,
then that's where that relationship ends.
They don't recommend you,
they don't come back for more work.
And so that's why every project is vital.
It doesn't matter what you're working on,
you have to deliver the best possible product that you can
at the end of the day.
The second thing that I did was,
I increased my rates every single year, so important.
And I increase them pretty dramatically each year.
So if you look at my max project,
that was like the biggest project I did for the year,
it increased year after year.
In 2011, my biggest project was just over $3,000.
2012, it was over 6,000.
In 2013, it was over $12,000,
and in 2014, it was over $30,000 for one project.
So you have to get into a position where you say no to work.
Where a client comes to you and say,
"Hey, I've only got $500, can you make this work?"
And you just say, no I'm sorry, I can't make that work.
Or every year if a client comes back to you,
you have to have that conversation with them and be like,
yup, like, we'd love to work with you again,
just to let you know, our rates did increase.
Like we're investing more into this kind of production,
we're hiring more crew.
You have to obviously justify
why you're increasing this rate
and why they will be paying more money.
Making sure that you take that risk,
that you're willing to potentially lose a client
to increase your rate,
is gonna make your life so much easier.
Because I went from doing one project that was $3,000,
that would take me X amount of time,
to a project that was worth $30,000
that took me the same amount of time.
And so now I'm making way more money for way less effort.
And so raising your rates
is just a part of running your own business.
And even if you have a nine to five job, you wanna make sure
that you continue to increase your rate and your salary,
and you negotiate that over time.
Another thing that I did at this time
was to invest back into my business.
So I made purchases to gear
that would increase the value of my productions.
I hired talent amazing filmmakers,
that would also increase the value of my production.
Always trying to make the best possible product that I can,
that way I can charge more for what I'm offering,
I can create a better service and a better product
at the end of the day.
And so always making those investments
back into your business, back into yourself,
whether it's through self-growth
or it's through business growth,
are really important values to have.
On a more practical level,
getting retainer clients and recurring clients
is one of the most effective ways
that you can increase your revenue.
It's way easier to get past clients to work with you again,
than it is to get new clients that have never met you before
that you have to sell your services to.
And so I got a couple of retained clients
that were bringing me anywhere from 30 to $50,000 every year
that really made a substantial amount of my income.
I would say that reoccurring clients accounted for about
80% of all of my revenue.
And so you really wanna make sure,
you wanna continue to deliver
for those clients that you have,
because then they will come back for more and more work.
Now, I want you to keep in mind that,
all of this is from a period in my life
where I did not have a YouTube channel.
I did not have an audience.
I did not have any online courses.
You don't need to do any of that stuff
to generate revenue, income and to pay off your debts.
If you wanna run your own business
and if that's really where
the stars are aligning for your future,
you don't need to have an audience to be able to do that.
To service clients start as a freelance business,
whether you're a photographer, a filmmaker or an artist,
is a really great way to make a business.
You just need to focus again
on providing that value to your clients.
Don't worry about growing a massive audience,
or think that that's what you need
to be able to make a lot of money.
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Okay, and now moving along to the third and final step
that helped me pay off my debt in just four years,
and a step that might help you on your pursuit as well.
Stay committed to your vision.
So it's unlikely
that you're gonna be able to pay off your debt
in just a couple years.
It may take you longer than four years,
maybe even up to 10 years to pay off your debt.
And so you really need to think long-term
and you need to put together a plan
that will help you to achieve your goals
and stay committed to those goals for the long run.
So one of the biggest things that you can do
is track your progress.
Whether you're trying to build a habit
or you're trying to pay off your debt,
it's really important to track things along the way.
And so what I suggest you do
is simply start a Google spreadsheet
and bring all your accounts into them.
So whether you have student loans, a car payment,
credit card, statements,
bring all those into one document
and calculate the total amounts, the interest rates,
as well as your monthly payments.
Having that document to go back to
a couple of times a month,
just to see where my progress was at
and to also play around and kind of like,
get together a vision of what things might be like
in three months time or four months time
was invaluable for me.
Another thing that helped me back at this time,
and that will certainly help you is to curate your feeds.
And so I'm specifically talking about social media,
but you could also expand this to your actual relationships,
in the social circles
and the people that are influencing you in a negative way.
So when you look at your feeds...
And we know that the people that we follow
and the media that we consume and listen to,
affects our behavior and how we show up in the world
and our thoughts and our mindsets and all that.
So when we know that happens, we need to curate our feeds
to make sure that we're following people
that are instilling the values that we aspire to,
and that we want to have.
And so follow boring, personal finance experts.
Follow personal finance experts
that have an interesting angle and interesting content.
When you have that showing up in your feed,
when you understand,
and you're reminded frequently of why you're on this path,
it can make it so much easier for you
to stick through year after year.
If all you're seeing are people that
are flaunting the things that they just bought,
the new iPhone, the new tech gadgets,
the new car, the new Tesla, whatever it is,
you're gonna feel this need
and this urge to wanna get that thing.
And then you might end up
breaking on those really important values
that you set out to,
and those really important goals
when it comes to paying off your debt.
So one small psychological thing that I did was
something I call chunking.
I don't even know if it's a thing.
I haven't seen anybody talk about it
in any personal finance books anywhere.
But essentially instead of just every single month,
taking whatever leftover money I had
and then putting it into my debt,
what I did, especially 'cause I ran a business
and my income wasn't always certain,
I would save up about $20,000,
and then I would take $10,000 a chunk of my savings,
and I would throw that at my debt,
and I would do that consistently.
'Cause I knew, and I trusted myself
to not spend that money in other areas.
If you don't trust yourself,
then maybe this method won't work for you.
But for me being able to have that security net there,
to see my money rise in my checking account
and to take that $10,000 and throw it at my debt,
was a really powerful, psychological motivator,
and it was a great win.
It felt really great,
every time I was able to make a significant dent in my debt,
versus chipping away at it,
500 to a thousand dollars at a time.
One final thing that I'll leave you with is that
just because you're paying off your debt,
just because you're spending less money
and you're working on making more money
and you're working your butt off,
doesn't mean that life needs to be miserable for yourself.
And so look at your debt, look at the amount you have,
whether it's 30,000 or 117,000,
and figure out the different milestones along the way,
where you're gonna celebrate the wins.
Where you're gonna reward yourself
for the hard work that you've put into this
very incredibly difficult process of becoming debt-free.
And for me, when I got to about
half of my student loans paid off, I did something big.
I decided to move out of my parents' house.
So it was around I think November, 2012,
after two years of living at home with my parents,
after paying off a significant amount of my debt,
I decided that it was time to move out
and to make an investment in my mental health.
Now this was about a thousand dollars plus
all those additional expenses I would now have to pay for,
like food and groceries and all that stuff.
I was taking on a lot more in terms of my expenses
and it was gonna slow down my debt repayment plan.
But it was something I needed to do
because I wanted to enjoy my life, I wanted to live.
I'd made enough of a sacrifice
and I had made enough progress
that I was ready to make that jump.
And so I urge you to think about those things.
Whether you're celebrating in small ways,
like going out for a drink or having a really fancy dinner,
or you're moving out of your parents' basement,
think about the ways that you can enjoy this process
and really celebrate all the wins along the way.
So I really hope that these three tips and steps
help you on your journey to paying off your debt.
I know that it's not easy,
I know it can be daunting and frustrating
and it can drive you crazy with anxiety,
to be looking at the bills that keep coming in.
But if you work towards it,
if you put in the time and the energy and the effort,
you will be rewarded.
Good luck.
(upbeat music)
Testing one, two, testicles, testicles.
Hi, my name is Matt D'Avella,
and you're inside the Black Box.