Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host Britt Seva, and we have a really exciting episode this week. We’re going to talk about all about that green, about that money.
I received four amazing questions from some stylists I’ve been coaching for a while, and I’m actually going to read their questions to you, but I’m also just going to share some financial management relief strategies and how to get organized and how to stay profitable and all of that good stuff.
We’ll take some questions and then we’re just going to share some super solid financial advice.
So, you guys, if you’ve been following me for a while, or if you’re in Thrivers Society or have taken my course The Financial Reset or came to Thrivers Live, you know I’m a huge Mike Michalowicz fan. The book Profit First is how I choose to run my business.
If you’re like, “Hmm, I wonder how Britt manages her money,” you can just check out the book Profit First, because that’s exactly how we do it and how we’ve done it for many years.
It’s a game changer and I’m not the only one. There are thousands of businesses who run Profit First and it’s completely transformational in the way that you run your business. At first it seems a little bit counterintuitive because most of us, what we do is the money comes into the business. We make sure that we pay ourselves. We try and pay the bills with whatever’s leftover and when it can’t be paid with whatever’s leftover, we rack up the D word, which is debt. We start putting things on the credit card. We start making minimum payments. We start to panic about money.
Sound familiar? I’ve been there. I totally understand.
And with Profit First, we run really differently. So I will say my business now is healthy and runs Profit First.
When Mike took the stage at Thrivers Live, there were several questions that were like, “Well, this sounds great. I definitely want to do Profit First. However, I am $50,000 in debt. So I am profit less, and I would love to have Profit First, but I literally have nothing. So where do I start?”
My favorite person to go to for debt management is the one and only Dave Ramsey. So he uses a technique called the snowball method for paying down debt. I’m going to share that with you today and then we’re going to dive into a few of the questions that were submitted and start to coach through some of those challenges.
I first want to start with breaking down Dave’s seven baby steps. If you haven’t heard of Dave Ramsey, he has helped tens of thousands, if not hundreds of thousands of people become financially free, meaning they’re no longer drowning in their debt. They’re likely homeowners they’re saving for the future, they have financial peace of mind, which to me is the idea of wealth.
Wealth doesn’t mean that you’re rich, like you have bills on bills on bills. It means that you don’t have to worry about money. You don’t panic that you can’t buy groceries at the grocery store. You don’t worry about overdraft. Okay?
So I want to cover for you, Dave Ramsey’s seven baby steps so you see a full financial picture of where he’s headed with this and then we’re going to break down one specifically.
Baby step number one is save a thousand dollars for your starter emergency fund. I love that. What most of us do is we’re so caught up in paying down debt that we don’t create a safety net for ourselves, which in turn creates more debt.
Have you ever thought about that when you don’t have some kind of security fund? He calls it his starter emergency fund. What happens when you blow a tire? It goes on the credit card. Well, what if instead of creating debt and interest and all of those kinds of things, you had an emergency starter fund to withdraw from that you could then replenish as you pull from it.
He, like many financial advisors says, actually instead of trying to get out of debt first, you create the emergency starter fund first, because that is how you break the debt cycle. The cycle will never end until you have some cash on hand to pull from, right?
Baby step number two, pay off all debt except the house. And we’re going to get to that in a second, using the debt snowball. I’m going to get to the debt snowball in a second.
Baby step number three, once you’re fully out of debt is to save three to six months of expenses in a fully-funded emergency fund. Well, if you have an emergency fund, it’s no big. You’re going to be totally fine. If you don’t have an emergency fund, you start to panic. How do we pay the mortgage? How do we keep the lights on? How do we buy groceries?
So step number three is going to be to create a three to six month expense, fully-funded emergency fund.
Baby step number four, invest 15% of your household income into retirement. Is anybody else nervous about retirement? The latest statistics say we each need $3 million in order to retire successfully. I live in California. If I want to stay in California, I’m going to need way more than 3 million to retire and I’m married. So that means we need at least 6 million and we still might not be able to stay in California if that’s all that we get.
Saving for retirement is something that we often think about. “Well, I’ll just do it later.” It’s not fun to think about, especially when you’re in your teens, twenties, thirties, but you know when it’s really not fun to think about it? In your forties when it’s looming and you haven’t planned for it. That’s really not fun. Versus if you start saving early, it’s not so overwhelming, right?
Baby step number five, save for your children’s college fund. I actually had mixed feelings about college funds, but this plan is not mine. It’s Dave Ramsey. So that’s his baby step number five.
Baby step number six, pay off your home early. That’s step number six.
Step number seven, and I love this one: build your wealth and give. Oh my gosh. There’s no greater feeling than being able to donate and support organizations that your heart feels for. So baby step number seven is to continue to build wealth and give.
And we all know building wealth doesn’t come just from working your butt off. It’s from investing wisely, right? Those are Dave Ramsey’s seven steps.
I want to answer a few emails and then we’re going to touch back on these as we go through.
This first message comes from a stylist and just going to call her S. She says, “My husband and I have such great communication with every single thing, except for finances.”
Can anybody relate? Finances are tough. Talking about money is a really difficult topic. There’s some statistic and I’m gonna butcher it so I’m not even going to try, but that divorce rates increase when you start bringing money troubles into the equation, right? Because talking about money and having money stress is just one of the most difficult things any of us go through in our lifetime, but having that open line of communication about financial management is something that’s a challenge for most of us.
She says, “We can definitely work on that. We’re one in the same when it comes to our goals. We want to pay off our house and we have seven more years to do so. We honestly live with nothing in our account because we put every single thing towards paying down the principal of our home. He decided to start doing this a few years ago and seeing how soon we’ll pay off our house amazes me. But we literally live with nothing in there. It’s stressful.”
So they’re living in an empty house is what she’s saying, because they want to pay it off so badly and get out from that debt.
So what I tend to think, and I’m projecting is that decisions like that are fear-based, there’s likely, and I’m projecting. She did not share this with me. You’re probably thinking like, “What if we don’t pay this home off? What if something happens and we’re not able to pay our mortgage?” Kind of like what I talked about, right?
If you can pay down that house, well, at least you’ll have a roof over your head. You’ll never have to worry about losing your home.
I grew up in a family where my parents did not own a home. I lived in, I don’t know, nine different houses in my childhood. Even in my twenties, my daughter’s lived in several different houses, right. So I understand the fear of what if we don’t have a roof over our head. I totally get it.
It’s very tempting to want to pay your house off early. So we got into that too. We were like, “Oh, you know what we’ll do? We’ll pay off our house early.” And my financial advisor was like, “Well, that would be a tremendous mistake.” I was like, what? And he was like, “Yeah, you can do so many other more productive things with that money than pay off your home.”
Your home is a secured investment that you’ve made for yourself, right? The interest rate is locked in. There’s a plan for paying it off and it’s a different kind of debt because it’s towards an asset. Your home is an asset. It’s not like the pair of shoes you bought that you can’t do anything with. This is a thing of value.
Carrying that debt is very different then having debt from other things, debt from past purchases, debt, that’s just sitting on a credit. It’s not the same as home mortgage debt. When we go back to Dave Ramsey’s method and what my financial advisor coached me too, as well, remember that baby step number two is pay off all the debt except the house.
I’ve now heard that from three financial advisors. And it’s because for a lot of you, your home was purchased for what? $80,000, $200,000, $600,000, a million, $2 million. I don’t know what your situation is. That’s a lot and when you look, like, “Oh my gosh, I owe that amount.” It becomes very tempting to get rid of that debt because it can be very overwhelming.
However, financially, it’s not the move. It’s actually capping you like you’re already feeling. I’m going to read the rest of her email in a second, but paying off that mortgage is holding them back from doing all of these other wonderful things.
Here’s the deal: If you’re putting every penny you have into paying off that mortgage, how are you investing for retirement? And remember retirement is only possible with what compound interest. So if you’re not investing money now, the compound interest will not build. You can’t wait seven years to start planning for that. The money has to go in there.
Now you can pay off the home over the seven years or whatever. That’s fine, but building the compound interest has to happen over time. You can’t just phone that in later; it’s got to happen.
Now, baby, step number six for Dave is pay off your home early after your debt is paid. You have three to six months of expenses in a fully-funded emergency fund. You are already investing 15% of your household income into retirement and baby step number five, which for me, I don’t know if I agree with, but he does say save for your children’s college fund. Then you can start paying off your home early.
And if you’re like, “Dave who? I don’t believe him,” he’s the third financial advisor I’ve spoken–actually fourth that I’ve spoken to who says more or less the same thing.
Your home is actually a different kind of debt than everything else and it’s more important to pay down other things, invest in other ways, before you focus on paying off that mortgage.
She goes on to say, “What I don’t think he realizes is I have to invest in my business in order to make gains. I understand that I need to tell him, but I’m wondering, are there other options out there to have to do it myself and to not have to even say anything to him? I didn’t know anything about interest rates and it’s biting me in the butt that I have so much credit card debt.”
Now she doesn’t say how much is on the credit card, but what she’s basically saying, I want to sum it all up is that they, as a couple, had decided to pay off their home. Meanwhile, she’s racking up a ton of credit card debt, and she can’t even tell him, like she can’t even bear to tell him that she’s making these minimum payments. And it sounds like a lot of the credit card debt is from her business, right?
I’ll make a confession to you guys. When I started my coaching business, I racked up $30,000 in credit card debt. Imagine trying to tell my husband that. That was a scary conversation, but I had to do it. I knew I had to invest that in myself if I was ever going to get anywhere. It doesn’t mean it was easy and that it was well, but it had to happen, right?
What she’s saying is every month she pays $2,000 towards this credit card and all that’s doing is making the monthly payment. It’s not getting her any closer to debt relief. She’s continuing to pay interest on it. It’s not getting her any closer to where she needs to be.
So what she’s saying is how do I have the conversation with my partner that I’m investing into my business, but I’m buried in debt in order to make these investments. But I feel like I have no choice because in order to move my business forward, this is what has to happen.
I’m actually in the middle of a very similar conversation with my husband. I want to make a financial investment that I believe is necessary to grow my business and he does not agree. Old me would be like too bad, I’m doing it anyway. That was me who racked up $30,000 in credit card debt and then had to tuck her tail and explain it later. It wasn’t cute and I wouldn’t recommend it. Instead we have very different conversations about our finances now.
I explained what I wanted to do. I said how much it would cost and his initial response was “No, we’re not doing that.” I just took it for what it was and I said, “Okay, I get it.” But I had planted the seed. Now he knows what I’m thinking. So I came back again and I brought it up again, and I said, “I understand why you’re hesitant about this decision. It is a lot of money.”
So I honored the position that he’s in and how he feels about it. I said, “What would make you feel comfortable with me moving forward with this thing?” He said, “If it was half the price.”
Well, the thing I want to do is not half the price. The price is the price. It’s not a negotiation. I’m not like bartering in a thrift store. This is what it is. I said, “Okay, well, so that’s not an option for me, so let me figure out how I could do this so that we recoup half the cost of this investment. I want to make before the investment’s even made.” He was like, “Okay.”
I haven’t done this yet, but what I’m going to do is to create a financial plan to show him that yes, this is essentially the debt I want to incur, and if for us, it’s not going to be debt. We’re able to do it without putting it on a credit card. However, it’s going to cause us to take a major financial hit. So I’m going to show him what that looks like, but I’m going to show him how I’m going to turn that investment into profit.
So to this stylist who is asking me, that’s what I would do. I would say, listen, I’ve looked into some financial advisors and listen, I’m not your financial advisor. I am your friendly hair stylist business coach. I’m just pointing you in the direction of resources that have been helpful to me. You say, “I’ve looked into some financial advisors,” which I suggest that you do, “and they suggest we actually slow our roll on paying down this house and instead to save more effectively and create some more revenue streams so we can pay down the house faster.”
What? Say, “Yes, if we’re able to increase our revenue,”—which is accurate. If you’re able to increase your revenue, you’ll be able to save for retirement, pay off the home, save the three to six months of savings. You’ll be able to do all the things.
But right now in the rat race where you’re running on the hamster wheel, you can’t get ahead, which is why it feels impossible. Instead I would say, “Here’s my plan. What I would like to do is pay down this credit card, and I’m going to be honest with you. There is $25,000 in debt on it or whatever.”
And trust me, I’ve had to have this conversation. It’s painful, but say, “Listen, I know that number is scary and I’m sorry, I didn’t bring this up earlier.” Own your piece and then say, “But this is my plan to get out of it and this is what it looks like.” Break down the plan and then allow your partner to have time to have a reaction to that. It might be an angry reaction. It might be sad. It might be supportive. It might be confused. There might be six other conversations that have to happen after that.
But what I have found is when I present a plan versus just sharing information, it makes for a better conversation. I don’t always get my way. I might not get this thing that I want to invest in. That’s very possible, but I’ve created opportunities to have healthy conversation around our debt, our financial choices, making sure that we’re both comfortable in what we decide to do.
It would be really smart decision for you and your partner to sit down with some kind of financial advisor to talk about your goals for paying off your house, your existing debt, and what it looks like to get there. That’s what my husband and I do. We work with a financial advisor who coaches us as a couple objectively. This person actually doesn’t care what kind of cars we drive or what I invest in; all he wants is for us to be financially stable. When we work with this coach, it’s not about my opinion or my husband’s opinion. It’s great financial advice.
Can you guys find somebody to mentor you? But first step one is to come to him with a plan, let him know you’ve been working on this. You both have the same goals and this is how you see yourself getting there. But I encourage you to share your debt with him, let him know what’s going on, but come with a plan to get out of it.
Now we have a salon owner who messaged me and said, “I’ve been in the business for 12 years and this year, we racked up $50,000 in debt because we invested time, money, and training into people that did not work out.”
She goes on to share that three of her stylists have left and she says, “So this has put us into a very fragile state as a business. I’m working hard to implement Profit First, but it’s hard because we have no money and plenty of debt. 2019 was supposed to be the year that we did a total salon renovation and instead we racked up debt just trying to run our business. I’m just wondering if you have any advice on how to pay down this debt when our company sales have gone sideways and it has been so hard to find and train the right people to put on. Our team culture is everything to us and we have seen a lot of frogs this year. We totally need to do the salon renovation to stay current and relevant for our target market and attract our target team members as well. But I’m freaking out about spending another $150,000 to do this transformation and go further into debt.”
My salon was in this position. We weren’t $50,000 in debt, but we were feeling pressured to do a major remodel because we thought it would set us apart. And listen, I wanted to remodel, the salon wanted to remodel. That was not our biggest problem at the time and I expressed to salon leadership—so I was part of the leadership team, right?
Our salon had two owners and then I was a salon director, so it was mostly the three of us having conversations. But at the end of the day, I didn’t own the business. I was able to share my opinion, but I wasn’t a final decision maker by any means. We planned out this beautiful remodel and I said, “This is beautiful, but I think we have bigger fish to fry. I think we have cultural issues. I think that we need to work on I’ll just say a few other things before we dive into this remodel.”
When somebody on the leadership team decided, nope, if we just get new stations and new chairs and new mirrors and new paint, and this place just shines at the top of the Chrysler Building, it’s going to be great and it’s going to solve all of our problems.
Did it? Nope, not at all. We lost a couple of stylists through the process and we did rack up over a hundred thousand dollars in debt and a fat payment every single month to pay for that remodel. We had this beautiful space to work in and all of the existing problems lived there. It was like lipstick on a pig.
The real issue was we needed to change the way that some of the leadership team showed up. We needed to change the salon structure. We needed to change the culture and had we fixed those things in our super dated style. Like the salon did look dated, we did need to do a remodel, but it wasn’t bad. We were thriving and we were doing multiple seven figures in revenue in our salon that needed to be remodeled.
The issues were actually culture related and had we focused on those things instead, it would have been time and money better spent, and we would have actually probably been able to do the remodel debt-free two or three years later.
My advice is your path to get out of debt is not the remodel. I hope that allows you to breathe a sigh of relief as the person who lived it. The remodel will not fix your problems. It will make them worse. I promise, promise, promise, promise.
You need to shift your culture in your space right now and if you’re like, “We’re trying, we can’t find the right people,” it’s because the culture doesn’t exist yet. They’re not going to sit there and wait for you to build the culture. It either exists now or it doesn’t. And if it doesn’t, I’m not going to work there. You need to shift the existing team in order to attract what you want and if you’re like, “If we shift our existing team, we’re going to have a walkout,” okay, then you’re going to have a walkout.
I just helped a salon rebuild from nothing after a walkout by instilling culture. Will it take time? Yes. Will there be tears? Yes. Will it be hard? Yes. Will you come out the other side better than you are today? Yes. There is no other way. You’re going to have to walk through the fire on this one.
I want you to unapologetically build the culture, create structure, create rules, create guidelines. This is how we do it. This is how we market ourselves. You can change the way you market the salon. You can change the website. You can change the social media. You can change the ambience for way less than $150,000 remodel. Change all those things first.
That’s truly what most stylists are looking for. Culture, not pretty throw pillows and a beautiful retail display. All of that is nice. It’s icing on the cake, but culture can’t be beat. There is nothing that beats that focus on the culture.
Focus on creating an environment that stylists want to be working in. Gorgeous social media presence, gorgeous web presence, great energy in the salon. The remodel will pay for itself 18 months down the road. You can quote me on that.
If you follow the rest of this plan, if you do the rest of the work to build up the team, you need to get you there. Table the remodel, focus on the rest.
Okay, now we have another stylist. Let’s just call her Jane. She says, “How do I get my partner to step into the 21st century and leave the paper books and spreadsheets in the past? This person is my partner in life and does the business, is incredibly smart, does all the bookkeeping, however, it’s like we’re living in 1991. I try to suggest new simplified ways of doing things. She’s super stuck in her ways. It makes me a little crazy. Any ideas?”
Confession. Don’t tell him I said this. My husband is also a little bit stuck in 1991. My poor daughter and I make fun of him all the time. So he’s old school, very much, so he is definitely like the solidity in our family. He is very much traditional and loves a good spreadsheet, same disease. However, I have found that once I include him in my education, it helps when he sees what other options are out there.
He’s like, “Oh my gosh, maybe there is a better way to do this.” What does not work is when I try to shove that information down his throat, or if I’m not like, “Babe, this is what I want to do.” He’ll be like, “Babe. No.”
That doesn’t work, especially for us. For some people that might. It does not work for us. What does work is if I’m like, “Hey, I found this really cool training. Can we do it together and see if this is a good option for the two of us?” He’ll roll his eyes and sometimes it takes a while to coax him to get there. But if he can sit in on somebody else sharing the system and realize like, oh, okay, maybe this will work, it’s beneficial.
My question to you is can you get your partner involved in some kind of training that you both do together that allows her to see what other options are out there? ‘Cause listen, her method works, so that’s the thing. It’s like, “If it’s not broke, don’t fix it.”
It sounds like she’s doing a tremendous job. For her, it’s like my Excel spreadsheets are fine. Why would I do it differently? She doesn’t realize that if she ditched Excel and did it in a more modern way, it would take a quarter of the time, be more accurate, and she’d be freed up to do other things, but she doesn’t realize that yet.
What I would suggest is you guys do some trainings together, whether they be online or in-person instead of having this be a you against her thing. Choose to educate yourselves together and see if it can be more of a fun experience that you do as a partnership versus your idea and you’re trying to get her to accept it and be patient with the process.
I’ve had to learn that to be very patient with the process and see what comes together. There were some really great programs out there that can help to support you guys. But see if you guys can do a little bit of co-education. I think that’ll make a huge difference.
Last, we have D who says, “I am in debt due to my ex and something he did that I’m still tied to in a bad scam I foolishly invested in. I need to get out of debt so badly. How do I find a good financial planner and CPA? Also, should I sit up for an LLC? I don’t know what I need to do. I feel like I’m financially drowning. I’m lost in these finances.”
I totally understand that, D. So for me, I found both my financial advisor and CPA by asking around. The woman I worked with years ago was great. I found her through my own research. I had to let her go many years ago because she wasn’t a good fit for my goals.
For me, I now have a financial advisor and a CPA who only works with people who educate like I do, who educate digitally on a large scale. So he understands my goals, my objectives, my problems, my challenges, my company structure. He understands everything.
What I would suggest that you do is you find somebody who understands your specific working method. It might not be the person who’s the most experienced. It’s the person who’s most knowledgeable on what you do and what’s exciting is everybody loves to talk crap about millennials.
I love me a millennial because they think differently. They think bigger. They see a different way of viewing the world than people from 50 years ago and so they have different ideas of how to make wise investments. It might not be the most experienced person, although it should be somebody who’s experienced, certified, knows what they’re doing. But you need to find somebody who can speak your language, who understands what you do, where your money comes from, what your problems are, where you’re going, and can create a realistic plan for you to get there.
I speak with my financial advisor monthly. We have a recurring meeting. It shows up on my calendar every month and I don’t skip it. They’re not always fun. Sometimes they’re painful, but if I’m not talking about my money every month, then I’m blind to it. Having those conversations for me has been incredibly important.
My financial advisor and my CPA are not the same people. They’re different people and sometimes they don’t agree with each other. My CPA will advise one thing. My financial advisor will suggest another and I have to choose what I want to do. How do you know you’re choosing the right thing? I don’t, but like I’ve shared before, I don’t let the fear take over. I make the best choice I can in the moment and if it doesn’t work out, then I’ll course correct. It’s no big. But having advisors and teams to support you really, really, really helps.
Then as far as how to get out of that debt, I would recommend looking into Dave Ramsey’s snowball method. It’s really effective. It’s very tangible. The way that it works is actually a little bit counterintuitive. You create a spreadsheet of all of your debt and you pay off the smallest debts first, because most of us are like, I want to pay off the home. I want to pay off my $50,000 credit card debt. Start with your gas station credit card, the one with $700 on it. Pay that off and close it or cut it up and don’t use it. Then work your way up, because you’ll get to a point where it’s like, “Oh, I don’t have six looming debts. I just have one.” You don’t get there until you start with the small one and work towards the bigger one, which is why he calls it snowball, right? A snowball starts off tiny and builds over time.
Look into his method. I truly believe in it. I’ve seen it work for a lot of people. It certainly worked for me.
You guys, I hope this has been mind blowing. I hope this financial conversation has allowed you to think about money in a bigger, healthier way, and to open the door to have some really great communications with your partners.
You guys so much love, happy business building, and I’ll see you on the next one.
