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Debt and Debt Management for Small Businesses

• American Gutter Monkeys, LLC • Season 1 • Episode 2

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In Episode #2 of the American Gutter Monkey Radio Hour, Chris and Dennis dive into debt and debt management for personal and business finances. They discuss how understanding when to use debt strategically, and when to avoid it, is key to financial success. With 39% of Americans carrying credit card debt month-to-month, often with high-interest rates, the episode explores the consequences of poor debt management.

Chris and Dennis reflect on how debt has evolved, from home mortgages in previous generations to today’s wide variety of debts, including student loans and credit cards. They share how businesses can leverage debt for growth using options like SBA loans and lines of credit, based on their own experience scaling their business.

The episode concludes with advice on maintaining strong cash flow and savings. Their key message: sales are king, cash flow is the steering wheel, and debt should be the spare tire—a tool, not the driver of your business.

Chris:

Every once in a while someone comes along, shocks the establishment with a new innovation and a tired industry From the movie Moneyball. Here's how Boston Red Sox owner John Henry put it.

Dennis:

Really, what it's threatening is their livelihoods, their jobs. It's threatening the way they do things and every time that happens, whether it's the government, a way of doing business, or whatever the people who are holding the reins, they have their hands on the switch. A way of doing business, or whatever the people who are holding the reins, they have their hands on the switch. They go batshit crazy.

Chris:

Hello, I'm Chris Collins, your host. In this podcast. We dive into stories of innovation, resilience and what it takes to shake up an industry. Joining me is my co-host and resident small business expert, dennis Siggins, or, as he's known on the Cape and Islands, bobby Downspout. Dennis, along with his college roommate, andy Brennan, founded the Cape Cod Gutter Monkeys and transformed the humble task of gutter cleaning into a thriving, multi-million dollar business that redefined the game. Together, we'll uncover the strategies, lessons and inspirations behind building and growing a successful business. So, whether you're here for business insights, inspiration or just a great story, you're in the right place. Grab a cup of coffee, sit back, relax and welcome to Monkey Business Radio.

Chris:

Hello everyone, welcome to episode two the truth about debt and debt management. Hello Dennis, how are you doing tonight? Chris, doing good, doing good, good to be back. Yeah, important subject tonight debt, debt management, especially for small businesses. It's a great topic. Yeah, what do you start to me? I guess we're going to start. You have a story for us. I do, I do. I've heard this story many times the last couple of weeks here.

Dennis:

I love this story because as a kid I grew up cutting lawns. My brothers and I had a great little lawn business. My neighbors had lawn. We all cut lawns as kids. This story begins where an older gentleman is out for his morning walk and he noticed a young boy cutting a lawn. And then the man inquired and the young boy, james, explained a friend of mine just bought a new bike and I liked it so much I bugged my mom into buying me a new bike just like it, and now I have to cut lawns to earn money to pay her back. The man continued on his way and he saw another young boy cutting a lawn and the young boy, david, told him that all my friends are getting new bikes and now I have to cut lawns and earn enough money to buy my own bike. And the man continued walking and he came across a third boy cutting a lawn and he inquired and the third boy, whose name is Mark. He said I'm cutting my customer's lawn. And the man asked if he was saving up to buy a new bike. And Mark said no, no, I already have a nice bike. And the man continued if you already have a nice bike, then why are you cutting lawns? And the boy replied I cut lawns because it's what I do. I'm in the lawn cutting business.

Dennis:

The first boy, james, incurred some debt. He borrowed money from his mom, and as soon as he pays his mom back, he'll probably stop cutting lawns. The second boy, david he set a goal of purchasing a new bike, and the implication here is that he'll likely stop cutting lawns as soon as he has purchased that new bike. And the implication here is that he'll likely stop cutting lawns as soon as he has purchased that new bike. And the third boy, mark. He's in the lawn cutting business. Therefore, he has a nice bike, money in the bank and zero debt. While it may appear that the three boys are all doing the same thing cutting lawns, nothing could be further from the truth. James is trying to pay off debt, david is working to keep up with the Joneses and Mark is building a company. I love this story, chris. I grew up cutting lawns. My brothers and I we had a tremendous lawn cutting business as a kid. I think you did too right. That's right, yep.

Chris:

I had quite a few jobs, pretty much from the age of fourth grade, fifth grade. I had a steady business of cutting lawns all the way through pretty much my sophomore year in college. Yeah, yeah it was great money.

Dennis:

Yeah, it was great money.

Chris:

Schools were cheaper then, so it would pay for the pretty much for most of my education, but still, it was a good job, put money away every week and, yeah, I didn't have any boss. I don't think I ever had a boss until pretty much I was in my sophomore year in college.

Dennis:

Lawn cutting was a great financial tool for us. It taught us how to earn money. We in turn would turn around and bank that money and into the 70s, with hyperinflation, we were able to put that money into CDs. Take it from your normal passbook savings account, put it into CDs at a much higher rate. So we learned how to work, we learned how to save and we learned how to invest.

Chris:

Yeah, and that's when interest rates were pretty good too.

Dennis:

Yeah, exactly, all just from cutting lawns.

Chris:

Incredible. Yeah, so we pretty much paid for my college education cutting lawns, a few other side jobs, but it was always the cutting lawns. It was always the best part of it. Money's misunderstood.

Dennis:

It's a misunderstood commodity since ancient times. It's written about, it's talked about, especially today with e-banking, automatic withdrawal, direct deposits, credit cards, debit cards, venmo. There's a lot of tools out there, to the point where a lot of people are two or three steps removed from ever handling cash. You know, add online shopping, subscription-based buying, zero money down purchases it's easy to see how people can be dragged down into financial hell. Everyone needs money, but a lot of people don't know how money works. And it's not necessarily the things that we purchase, but the method and timing of purchases that will determine future financial status. I mean, let's face it, chris, wealthy Americans and poor Americans all have cell phones, flat screen TVs, internet access, two cars in the driveway, but one significant indicator of future financial status is how and when these items are purchased Right 80% of Americans have some form of debt on credit cards and 39% carry it month to month.

Dennis:

So 39%. 39% of Americans carry credit card debt into the fall.

Chris:

Wow, right, right. So an $8,000 per average right now, $8, dollars on a credit card. So for americans, brutal.

Dennis:

Financially skilled people buy things last. But I say that after the paycheck has cleared, the money's in the bank and his monthly allotted amount is dispersed into the savings account. That's when the financially skilled person considers purchasing an item that's not on the docket. And when he does make the purchase, it's only after consideration of the need he has for that item and what other items can satisfy that same need and the value that the item brings, and only then will he purchase that item and that item will be paid for with cash. A financially unskilled person is far more likely to make a purchase first that means before the paycheck clears, prior to building a savings account, prior to consideration of the need for the item, the value that it will bring and other items in the marketplace that can serve the same need.

Chris:

You see a lot of that in the marketplace today. You can get your what do they call it paycheck, prepaycheck payouts. Sure, you can go to a company. They'll actually give you the money before you actually get your paycheck.

Dennis:

And they take a little piece of the action, they take a big piece of your action.

Chris:

I don't know how much it is, but it's brutal.

Dennis:

Yep, but the financially unskilled person will just put it on a credit card and they can have that same item that the wealthy person purchased for cash after all, his financial needs were met. You know what I'm saying? It's just do you want it first or do you want it last? You see it all the time. I mean, two people can purchase the same thing, but the person who pays cash will pay less because he has more leverage.

Dennis:

He can consider many other options, whereas the person who wants it now, who doesn't do his homework, his due diligence, will purchase a similar or identical item and put it on a credit card. He's likely to end up paying a little bit more on the front end and then on the back end. He's likely to end up paying a little bit more on the front end and then on the back end. If he doesn't pay that off, that credit card off, right away, he's carrying debt into the next month and now he's paid a higher price up front and then subsequently until it's paid off. This is why I say early on in your financial life you can make decisions. Whether you buy it first or last. That will determine if you become wealthy or if you remain in the lower income bracket.

Chris:

Yeah.

Dennis:

A lot of traps out there. Yeah yeah, the credit card companies have found additional revenue streams 15% on.

Chris:

what is it? 15% on top of the prime rate, right? So that's pretty much what they're charging nowadays. So we had a 0% interest rate, so credit card companies were able to increase their margins while there was this very low prime. And now the prime's creeping back up, and so is the credit card rates.

Dennis:

I remember my dad in 1972, 73, got a credit card and well, he was probably 40 years old and credit cards were becoming a popular financial tool and back then the credit card companies made their money on the 3% fee that they charge every month for the use of the card. Today they found additional ways penalties, late fees and interest on the penalties and late fees. So the credit card companies have found a lot more revenue streams to be drawn from that credit card. It's become an industry.

Chris:

Yeah, and when you start adding on all those late fees and things like that, you're up about 30% interest, 29 point, something I think is the average right now.

Dennis:

Debt's a misunderstood financial tool. Debt let's define it it's money that is borrowed and it must be paid back over a time or at a later date, almost always with interest. Debt can be used by individuals or companies to make purchases that they normally couldn't make within the confines of normal cash flow. There's personal debt, there's business debt, and debt can come in the form of credit card debt, car loans, school loans, right Home mortgages. There's a lot of forms of debt out there today, more so than ever before In the business world. There are SBA loans. There were PPA loans during the whole COVID years. There's commercial loans, commercial construction loans. There's also commercial lines of credit. So there's a lot of debt that can be had by companies and businesses that can help them grow. Working capital loans, for example, or commercial mortgages, can help a business owner with major purchases that will allow the company to grow beyond its current infrastructure.

Chris:

So what sort of loans did you use to build this company? Basically, your choice of we bootstrapped.

Dennis:

There's a couple of ways to raise money, a couple of ways to start a business. Bootstrapping is when the business owner takes the money out of his own checking savings account, keeps it all in-house and he starts the company himself. I think I've started almost all my companies that way. I think I've started almost all my companies that way. Another way to generate revenue if you're an upstart business is with a traditional SBA small business loan, which is government-backed and somewhat government-regulated. There are second mortgages on your home. You can take out some debt that way. A third method of generating revenue for an upstart company or the upstart owner is selling stock in the company. He sells 20% of the company for X and he can use X as his cash to start the business.

Dennis:

The downside to selling stock right away is you don't own your company, you, the new owner. You don't own 100% of your company right out of the gate. You have a partner of some sort, whether it's a silent partner or he's a participant in the day-to-day business operations. Borrowing money from a bank or another lending institution has its upside and downside as well. The upside is it gives you a huge level of cash flow right away. So you're starting out, you hit the ground with both feet running.

Dennis:

Bootstrapping it can be tighter, it can be a little more difficult. The owner of a company that's been bootstrapped he really has to start producing sales right away because he's funded it with his own money. He doesn't have an endless supply of that, so he's far more likely to push sales, keep a real tight line on accounts receivables and effectively he's got to run that company in a very conservative and tight fashion. So a couple of different ways to finance a company. Business debt can really help the debtor, the business owner, in many ways. Business loans, sba loans they can be very helpful. Working capital loans are good for some upstart businesses. But debt it's like a finely sharpened chainsaw. A skilled woodsman can drop the biggest tree in the forest with that chainsaw and an unskilled woodsman can cut off his right hand with the same. Saw Right.

Chris:

So when did you start adding trucks, things like that, a couple of years in right To the gutter monkeys. Yeah, a couple of years in, you started adding some trucks. No, no, you know How'd you start adding them with the Andy and I were lifelong friends.

Dennis:

We were 54 years old when we first decided to step away from our previous lives and start the Gutter Monkeys. We had a 2005 Toyota Tacoma and that's it. We each kicked in $8,000, I think, or six grand a piece, and that funded the startup. We quickly bought a van. Two years later we bought an install truck and basically we add one or two trucks every year, depending on the growth. We've pretty much been growing at a one or two truck, two to four employees per year over the last several years. So as we need that new truck, we buy it. We've been able to pay cash for that. We haven't had to borrow money in that way. We did take out a line of credit on the business but we never used it. We didn't have to. That's a story for another time. So basically we bootstrapped the Cape Cod gutter monkeys, which then grew into American gutter monkeys, south Shore, south Coast gutter monkeys. It all grew out of that. But once the Cape Cod gutter monkeys, you know, grew and got up up over a million, 2 million in sales, we had plenty of cashflow to fund future growth.

Dennis:

But uh, yeah, yeah, chris, you and I are about the same age. Your mom and dad were depression babies like mine. Right yeah, that's right. Yeah, chris, you and I are about the same age. Your mom and dad were depression babies like mine. Right yeah, that's right. Yeah, I didn't take on debt in going to college. I'm certain my parents never carried credit card debt of any kind.

Dennis:

That whole generation generally took out one type of debt and it was a home mortgage. And when it was paid off, that was it my wife and I. In our early years we flipped a lot of houses. We bought, sold, owned and flipped more than 20 properties and we had a good system where we always had a big line of credit with one of our banks that we had established a good relationship with. So if we needed to purchase a property and we didn't have the money in-house, we had a line of credit through a local bank we could tap into and borrow 100 grand, purchase that property. We could go in and do a quick three to six-month renovation, flip the house, sell it and pay off what we used of the line of credit and take the profit and reinvest it, and that line of credit remained intact. So during those years we did have a home mortgage at one time, and then we also used lines of credit without creating long-term debt?

Chris:

Why don't you explain a little bit lines of credit, because a lot of people out there might not know what you're referring to.

Dennis:

There's a lot of ways to borrow. One of my favorite ways is an asset-based line of credit. The most simple example of that is if you own a home and you want to use the equity in that home to draw some money so you can get what is called a second mortgage or a home equity loan. That's an asset-based line of credit. The bank will look at the value of your house and they'll be willing to loan you up to, say, 70% of that. So if you have a house that's worth $400,000 and you only have a $200,000 mortgage, they might be willing to loan you $100,000 to bring you up to a $300,000 mortgage. That $100,000 can be used by you for anything you want home improvement, vacation, whatever you want to do with it. An asset-based line of credit is just like that. If you have an asset and you have a good relationship with your bank, they will be willing to loan you money based upon the value of that asset. So when we were building our new building, for example, we looked into a number of lines of credit and there was commercial construction loans, commercial business loans, a whole variety of traditional loans and I approached my banker my personal banker, erin from Rockland Trust. She's a wonderful branch manager, a good friend and a part of my inner circle. We were receiving many different loan packages from the different branches and different companies. Eventually, rockland Trust offered me a couple of different packages, but I talked to Aaron and I said I want an asset-based loan.

Dennis:

Our company had a lot of assets. We owned a building, we had a small fleet of trucks. We had a small fleet of trucks, myself and Andy. We each also had homes that didn't have debt. So our banker was willing to loan us or set up a line of credit for a significant amount of money based on the assets that we had. The beauty of that is there's no upfront fees at all for an asset-based loan like that, whereas a commercial construction loan, for the amount we were looking for was going to be about $35,000 or $38,000 in upfront fees. The SBA loan also had about $33,000 in upfront fees and those loans do come with some level of compliance and there's some hoops to jump through and so on and so forth, whereas an asset based loan doesn't have any of that.

Dennis:

So we set up a line of credit but then COVID came and it kind of kicked us in the ribs. We couldn't pull the permits on our land. It was taking longer because the local town offices were shut down Even when we pulled the permits. It took months and months to get permits. Even when we pulled those permits, we couldn't even build the building because product and material wasn't available. When we finally got clearance, we got product. A year, year and a half had gone by and we had banked enough money that we didn't need to tap into that line of credit. So we were able to complete our construction project without tapping into it. But let me ask you something how would you feel if you tied into a commercial construction loan and you paid the $35,000 in upfront fees and you found out a year and a half later you didn't need it? You just spent $35,000 on fees that you didn't need to.

Chris:

Yeah, and I'm shocked the SBA was so high. I would always think that the SBA is so small business friendly, but it's not.

Dennis:

They got to make money too. It's brutal. We were at a closing one time. I don't know if we were buying or selling, but our attorney who was doing the closing he had just finished a closing on a different property that involved an SBA loan and he was telling us about it before the banker and everybody gathered. We were just sitting around in the conference room at the bank and he said my gosh, you wouldn't believe the amount of compliance and the amount of costs that are associated with an SBA loan.

Dennis:

And it takes months and months because it's backed by the federal government. So this paperwork got to be done in triplicate. I mean, it's really a process, and he had mentioned at that time because he's done a number of closings with us. He said you guys don't know how fortunate you are that you have learned to expedite this process. You want to buy a property. You make an offer, you already have your line of credit in place. You can make a stronger offer on that property because you can close in 10 days, right, yep and Like buying a house with cash.

Chris:

It is it really is. And what about the COVID years? Did you use any of the PPE money?

Dennis:

No, no, I have an interesting story. Those loans were offered to us by my bank. My accountant one of our attorney friends mentioned it as well. I told my wife at the time. I said go to the bank and look into it. If it takes more than 30 minutes, we don't want to do it. And we didn't.

Dennis:

Instead, what I focused on at the very beginning of COVID was radio advertising. I happened to be over at Codcom Radio in Hyannis here on the Cape and I had just made a commercial. And I came down and Tim, who's the station manager, called me into a meeting and at the time John Hagopian was still the owner of those radio stations and they were having a little powwow and he invited me into it and we went in. We sat down and they were talking about this COVID thing. This was in March of 20. And they had just lost all their summer Cape Cod restaurant radio advertising, which is a significant part of their revenue. And another significant piece of the revenue is the auto industry and car dealerships were now finding out that the manufacturing plants of the automobiles were shutting down, so they stopped advertising.

Dennis:

So I was sitting in this meeting considering PPP loans and wondering what the heck this whole COVID thing. This is March of 2020. And it dawned on me there's a whole barn load of radio advertising that I could pick up for pennies on the dollar barn load of radio advertising that I could pick up for pennies on the dollar. So I started contacting all eight or 10 or 12 of the radio stations that I advertise on and I asked what kind of advertising do you have available that I could pick up? And I doubled my radio footprint for about 15 cents on the dollar.

Dennis:

Wow. And I signed two two and a half year contracts to take me through 2020, about the end of 22 or 23. I can't remember at this time, but I signed some long-term contracts and I was able to double my radio footprint for about 15 cents on the dollar cents on the dollar. So to me, that was a wise use of my money during COVID. It allowed us two or three tremendous growth years and then, when those contracts were done, we just renegotiated our normal radio contracts and it was business as usual.

Chris:

So you didn't take any additional debt on during COVID? No, no, we actually had a growth year there wasn't.

Dennis:

It was a little one, not a big growth year, but it was a little, a little growth year. But we also ended up shutting down five weeks that year for various covid things, right. But, um, one thing you see a lot of you watch a shark tank. Oh yeah, I love the shark tank.

Dennis:

One thing that that we often see now is some of these presenters on the Shark Tank talk more about revenue generating through either selling equity or taking on debt early on, and there's times that I wonder where are the sales? You know sales is what brings revenue into your company. Sales is how we reach profitability. Sales is how we reach profitability and so a lot of times you see companies taking on debt and or selling equity early on. With the PPP loans we didn't know what it was all about, but sooner or later there's implications and some businesses are still trying to pay that money off. Some businesses were financially skilled and they were able to become exempt from paying some of it off. I've talked to people from both sides of that fence. But yeah, we did well during COVID. It was hard work, it was different than normal, but I think we thrived, we grew, we grew, we grew.

Chris:

That's unusual because a lot of businesses didn't. I lost a lot of businesses in those days, especially down in the Cape.

Dennis:

Yeah, restaurants, the service industry down here Restaurants took a hit?

Chris:

Still not. I live up in Bretton Woods and it still is not back to where it was before. Hotels still closed, restaurants still closed, most of almost Littleton I don't know if you know, if you've been downtown, you used to live there but most of the downtown Littleton is only open Thursday, friday and Saturday.

Dennis:

That's what I've heard yeah, yeah, monday, tuesday don't even open the shops.

Chris:

Still, it's all based on, you know, still trying to recover from COVID.

Dennis:

Getting back to the topic of debt our generation we took on a home mortgage, maybe a little college loan debt, maybe a truck loan or a car loan or two. Credit cards were hard to get then. Credit cards are easy now. So a lot of millennials and Gen Xs, a lot of the younger kids today, incur some additional debt through credit cards because they're not financially prepared or educationally prepared to handle that, and so that's something that we want our kids and our younger generation to be aware of is that this credit card can be a good thing, but it also can be a bad, like the chainsaw. That's right Well.

Chris:

I think that first generation too had only. I think there was, say, in the 50s, like 7% of US adults owned a credit card at the time. So it's 7%. 60s, it was about 15. Ownership increased in the 80s to about 50%. Now it's 82%. So I think a lot of the times when I started thinking about it, I think our parents were aware didn't really warn us that much about credit cards, because I think the majority of adults at the time didn't really have them and understand themselves. So their kids got a hold of them. There was no real warning. My parents were scared to death of debt. So it's kind of drilled into us from an early age about running up debt in any sort, and particularly they did talk about credit cards. But I think that was kind of the problem back then.

Dennis:

One of the things we hear about is the credit score. It's an industry today, the credit score. That phrase didn't exist when we were in our 20s. It simply didn't exist.

Dennis:

And when you talk to a lot of the younger kids today, what I hear and we have a lot of younger employees, I've got kids with friends and you hear a lot about building up their credit score and they'll tell you they can put purchases on their credit card and then pay it off every month and that helps build their credit score.

Dennis:

But if you skip a month or two and you don't pay it off now, you have a spiraling debt issue that's hard to catch up, and so it's my belief that if a company has excellent sales, zero debt and disciplined ownership, then the company bank account will reflect this. A disciplined business plan with a strong bank account will carry the startup company a long way to maybe where they don't ever have to take on debt. But if they ever did, they would be a strong company three, four, five years out and they'd be ready to take on some big debt if that need ever arised. While borrowing small amounts of money can build your credit score, it may also tend to diminish your ability to save, and the savings account used to be our safety net. Using the credit card to build credit is almost like the tail's wagging the dog, speaking of which, barley's trying to get out of the studio.

Chris:

We have a dog in the studio, barley's trying to get out of the studio.

Dennis:

You know, the savings account, while it's not designed to earn high interest it isn't but it's a great tool that can help the owner of the business weather those tough times. You know that savings account has always been our safety net. There's some seasonality to almost every business and the savings account has always been our safety net. There's some seasonality to almost every business and the savings account is what has always served us in my whole lifetime to get through those difficult times. We've seen booms and crashes. There's Y2K, there was 9-11. Covid, the crash of 08. There was a crash of 96. The savings account has always served us very well during those times and that's where I highly recommend using the savings account as your safety net and the credit card as a financial tool for your company.

Dennis:

Right, chris, the personal needs of the business owner. Let's talk about that because we work with a lot of franchisees, a lot of small business startups in our group and I am oftentimes talking about the financial needs of the new business owner, the new franchisee, the manager of the startup, and how the personal financial needs of the owner of a startup, how that can impact the company. One major barrier to entry in the world of self-employment can be the financial needs of the owner. I mean, think about it. How many times do you talk to somebody who has a great idea for a business or a company or a product, but he just doesn't have the financial tools to do it? He just doesn't have the financial latitude. Yeah, we do it on a regular basis.

Chris:

We talk to people who are interested in our franchise American Gutta Monkey franchise but the vast majority of them that we talk to don't have any savings at all, and it's kind of striking. They're hard workers, they might have their own business. Don't have any savings at all, and it's kind of striking. They're hard workers, they might have their own business. A couple of them have their own businesses but they're just so financially strapped that they can't even consider some of the financial requirements of actually owning our franchise. So it's a shame.

Dennis:

It is. And savings and savings accounts is a process, it's a discipline and it doesn't reach out and grab you. It's not sexy, it's not exciting, it's actually kind of rather ordinary and boring. But think about it. Imagine a 28-year-old executive working in the corporate world with no debt, and maybe that person has a better than average savings account and she might be inclined to take advantage of a potential business opportunity. And imagine, alongside, let's say, there's a 30-year-old man who has a wife and two kids and another one on the way, and maybe he has some college debt and he's got two car loans parked out in the driveway. Which one of these two do you think stands a better chance of being successful in a startup? And it's kind of a rhetorical question, right? This is why good financial tools are important for everybody, not just business owners.

Chris:

It limits your ability to do things. It's not just even a debt thing in terms of money. It's actually limiting your ability to do things. It's really. It's not just even a debt thing in terms of money. It's actually limiting your ability to live your life, to take on opportunities and present to you and to get a franchise or buy your own business. It's limiting what you can accomplish in your life.

Dennis:

You know, it's so true, it's so true. And when you're ready to take on debt, it's so true, it's so true. And when you're ready to take on debt, if you and I've had some companies that I started, that I bootstrapped that a year or two in. I was looking for a big growth opportunity and I was able to tap into an equity line through my bank. It's happened to me on a couple of occasions.

Dennis:

It's kind of hard to imagine, or it's unusual, that a startup business owner would have enough money to get the company up and running and reach profitability and then all of a sudden, three years in, he would need some assistance financially.

Dennis:

And in each of these two or three circumstances that I can think of is is I wanted to put an addition on, or, in this case, I wanted to build a new building. You know, and with little to no debt and a really strong balance sheet, on each of these two or three occasions I was able to secure the money I need for that growth. I think we talked a little bit earlier here when Andy and I were, we had outgrown yet another building the Cape Cod Goddard Monkeys and we needed a line of credit, and I was able to secure that line of credit through Rockland Trust and because of COVID. It dragged out the construction process almost a year and a half to where we were able to save additional money through cash flow and we actually didn't need the line of credit, but it was there. It was there. If we did, it allowed me to sleep at night without worrying about that.

Chris:

What would have happened if you had taken out a construction load prior to COVID going off and you had to sit on it for to COVID?

Dennis:

going off and you had to sit on it for Well, I also. For each of the two other or three other options, there was about $33,000 to $38,000 in upfront fees. So I would have been out $35,000 and then I would have to sit on that loan and unfortunately found out I never needed it. Unfortunately found out I never needed it. But again, we were able to secure, in our case, a loan that didn't require any upfront fees and only interest, if we actually tapped into it and, as it turned out, we didn't need to. Funny thing too, we moved into this building two and a half years ago.

Dennis:

About a year and a half ago, my credit card company was bought out by a new company and it was my personal credit card, not my company card. But my personal credit card company was sold. A new company bought it and the very first month I didn't even know it, but I got a bill from a company I never heard of and when I opened it I realized that this particular company had purchased my credit card company and there were some extra charges on there. It was like late fees, penalties and then interest on the penalties and late fees. I didn't pay it, of course, because I didn't know what it was. I inquired about it, no one ever got back to me. I paid my bill and the next month there were hundreds of dollars on there because I didn't pay that amount. The last month I would come to find out that the new company changed the due date. So I always pay my bills on the 7th and my due date is the 15th and I have a five-day grace period. So even if it gets dragged out in the mail, it always gets there on time. Well, the new company changed the due date, I think, to the 12th. Anyway, they were charging me all these fees and after four or five months of fighting with them, the total of the fees was like $1,700. That didn't include purchases, just the late fees, the penalties and the interest on the penalties and the late fees.

Dennis:

It skyrocketed and so I cut the card up, threw it away and I went to get a new credit card. And of course I went to my good friend and partner, rockland Trust. And I went and I talked to my branch manager down here, erin Frost, and I said hey, erin, we need a couple of new credit cards and I explained the story. She said no problem, she called me a day or two later and I went down to meet with her and she said we kind of have a problem.

Dennis:

You don't have any credit. She said you don't have any credit. She says you don't have bad credit, you have no credit. You know what's going on. I guess, if you pay everything on time and you don't have any loans out and you don't have anything going on like that, you have no credit, not bad credit, not good credit. And she said I can only approve you for a $500 credit line.

Dennis:

And we laughed about it. My credit card would only have $500 worth of room on it. And we laughed and I said look, aaron, I know you'll take care of it. Just call me whenever you can. And within an hour or two she had pulled some strings and got me a credit card with, I mean, $10,000. It's just my personal one, I didn't need to too much. But the funny thing is this is the same bank that had floated me nearly a million dollar line of credit a year and a half earlier. Now it tells me that the credit card company that they use doesn't like my credit score. So I don't know what the answer here is. I think it was a funny story. I think it's kind of unusual.

Chris:

And we had a similar thing. I was working, just bought a house. My wife, sandy, takes care of most of the bills, pays the bills. Most of the credit cards that we had we only had a couple, but they were probably in her name, and I needed to go get one because I was traveling for business. Can't rent the car without one. So I applied for one. Came back Nope, can't get it, you don't have no credit. So we complain and complain. Same thing happened. They gave me a $500.

Chris:

Now here I am, I just bought a house, I'm working in the tech industry doing pretty well, and I can't get a credit card. So they gave me a credit card, the first one they sent us. I got $500 on mine. Of course, she's got $10,000 on her and she was laughing at the time because she worked from home. She stayed at home with the kids. Yeah, it was crazy, absolutely crazy. And that same thing happened to us with the changing of the due date, because that bank, that credit card company, did not take deposits directly from our bank, dcu, to pay the credit cards off. You had to mail them. So, since they were being mailed, they were mailed on the not enough time because the date was changed and we ended up missing a bunch of payments. You know, late payments and stuff like that took us a while. Same thing we cut up the card, got rid of it. Yeah, same experience.

Dennis:

You want to keep an eye on that. I remember when that situation occurred where the credit card company was charging me for things I didn't purchase One of my young coworkers at the time. He was riding with me, he was on my crew and we chatted a little bit about that and he said I think that my credit card company does that to me every month, but I'm afraid to look.

Chris:

Oh geez.

Dennis:

Yeah, and I explained to him bring it in and you and I will review it. He never did. He was so afraid of opening up that credit card bill. What he did was he just let them automatically withdraw out of his bank account.

Dennis:

And I hear a lot of this. A lot of these subscriptions now that some of the younger folks get onto are $9.99 or less, and a lot of companies gear their subscription models to $9.99 or less because it appears on your credit card every month, whether you use it or not. If you join one of these large gyms, these national chains of gyms. Sometimes they say you can join for $1 down and $10 a month. But I recently read a piece where I think like 82% of the subscription users of this particular chain of gyms don't ever show up. They show up three or four times and after a month or two they stop showing up. But the company still can take $9.99 off of your credit card every month. And some people have lots of these subscription models that they're using or maybe that they're not using but they're being charged for.

Chris:

Yeah, there's actually apps now that track your apps. I've seen that. So now you need an app to keep track of how much money you're spending on apps and you pay for that app.

Dennis:

Think about that though, if you get caught up in that cycle, that terrible spiral of not being able to keep up with your credit card debt and some of them are charging 20, 21, 22% on the unpaid balance if you carry a balance over to the next month, you may have just financed Burger King, a burger fries and a Coke at the highest rates available by law. I mean, that's a scary thought.

Chris:

Yeah, yeah. Yeah. It's too bad, it's too common. There is some hope, though, I think now with I don't know if you're familiar with Venmo, but Venmo I use quite a bit now.

Chris:

I know it, I don't use it yeah so the sort of indications that Gen Z is carrying the Gen Z generation. They're carrying a lot less debt than the millennials and I think some of it comes from some of these peer-to-peer payment plans that a lot of these people are on. I know my kids all use it. Actually. They use it to buy Christmas presents and things for each other. They swap money and they're using it all the time. I know my barber and different people are using it. I think it's kind of maybe starting to reinforce the idea of buying things and having cash, because when you use Venmo you can't buy something on credit. It's not a credit card. You have to have cash. Got to be money in the bank, got to be money in the bank. So I think there's some hope actually, because it looks like Gen Z is actually having less credit card debt. Unfortunately, gen Z is also carrying the highest tuition debt.

Dennis:

That's true too Double-edged sword. We're getting wise to it as a culture, but from the early 90s till the recent, you know, last six, seven years, the whole cost of of college education, the process of paying it back, has really gotten out of hand. Yeah, yeah, I mean an industry that didn't exist in the 80s, the 70s, is college debt management. Yeah, now it's a trillion-dollar industry, right, yeah.

Chris:

It didn't exist 10, 15 years ago, certainly not. When we were going to school. I went down to my bank I forget what it was, it was probably Shawmut Shawmut Bank Went down and got my $900 loan for my semester or my year Off. I went no, it's just completely different. And actually the ability to get these loans so easily, of course, has enhanced the ability of the colleges also to raise their tuitions.

Dennis:

Sure, yeah, because if the kid doesn't have to have any sort of credit or any sort of line or anybody backing this loan, they can kind of go in, they can kind of raise it as high as they want and most of the young folks don't realize the full gravity of what they signed on for at 18 until they're done with college and they realize there's a huge impact that they didn't know at 18 years old and now, at 22, 23, some of them have saddled themselves with six figures of debt without realizing it Right. For those who are financially literate and skilled in debt management, debt is a tool that should be taken out as needed, used for a specific purpose, and then just neatly put away back in the toolbox until it's needed again. What we want to do is we want to perfect the art of operating well within our means, while using debt to explore other opportunities that would maybe not be available to us. I highly recommend being on a first name basis with your banker, your accountant, your attorney and take this tool that we call debt, take it out when it's needed and then, just like every other tool, clean it up and put it back away until you need it again.

Dennis:

Don't make debt a lifestyle right In business. Debt a lifestyle Right. Right In business, sales is king. Cash flow is the steering wheel. Debt should be your spare tire.

Chris:

I'll leave you with that. Yep, it's a great way to go out, all right? Well, thank you for joining us on this episode. We look forward to producing another one for you next week, I hope.

Dennis:

No monkeys were harmed in the making of this podcast. All right, we'll see you guys later.

Chris:

Bye. Thank you for tuning in to Monkey Business Radio. If you enjoyed today's episode, please make sure to subscribe, like and follow us wherever you get your podcasts. It really helps us reach more aspiring entrepreneurs like you, and if you got a question or topic you'd like us to cover, leave a comment or reach out to us on social media. We'd love to hear your thoughts and keep the conversation going. Don't forget to leave us a five-star review if you found the episode valuable, and make sure to share it with anyone who might benefit from our tips and stories. We'll see you next time. This podcast is produced by American Gutter Monkeys LLC. Build real wealth through business ownership. For details, visit us at AmericanGutterMonkeyscom.