Secret #34: Payoff Your House First…

SECRET #34: PAYOFF YOUR HOUSE FIRST…

On this episode Russell talks about why he believes in paying your house off quickly. Here’s some tips you’ll hear today:

  • The counter-intuitive investment strategy Russell learned from his dad
  • Why Russell thinks the popular investment advice doesn’t work well for entrepreneurs
  • Why every entrepreneur needs stability if they’re going to change the world

So listen here to today’s special entrepreneur-centered investment advice episode.

Full Episode Transcript Expand Transcript

What’s up everybody, this is Russell Brunson. Welcome to a late night, in the wrestling room edition of Marketing Secrets podcast.

Alright, alright everybody. I spent almost 5 or 6 hours today with the kids in my little piece of heaven cleaning today. This is an external garage at our house that I decided to turn into a wrestling room, for those who have never seen it before. It’s awesome. I got wrestling mats, gladiator walls, Bulgarian bags, paintings of my favorite wrestlers back here, throwing dummies, the girl stuff here for the girls. These are actually the wrestling mats I used to wrestle on in high school, they were on my back deck growing up. So there’s a little nostalgia for you, that’s cool.

This is the weight room side of it, so this where we do what we do and it’s awesome. And as I was working today, we’re out in the middle of nowhere so there’s lots of spiders and bugs and stuff, so we got all these bugs trappers and stuff. So probably every three or four months I come and do a deep clean where I have to get the vacuum out and throw away all the dead spiders and re-clean it, and it’s kind of a nightmare. But it’s really fun that now it’s clean. It’s so clean right now, I love it. It makes me want to work out.

So during all this craziness today of cleaning and having fun like that, I was checking my phone a couple of times throughout and I saw a post from Julie Stoian, and I thought it was interesting because she asked, “Should I pay off my house or should I pull the money out and use that for other investments and things like that.” It’s funny because I gave my answer and it was like, the exact opposite of what I think a lot of people thought I would think. I think it’s good, so I’m going to give you my advice right now.

Because I know when I was a little kid, my dad, who is an entrepreneur and has a couple of businesses and is someone who first got me all excited by this whole thing. He used to always tell me, “You gotta pay off your house, you gotta pay off your house. Pay off your house as quick as you can.” I remember because I was like, that’s good advice and then when I got older I remember reading Rich Dad, Poor Dad, and other investment books and they always talk about how a house is a bad investment and you need to keep the money as low as possible and use that to pay off….you know keep your house just down in the minimum. Pay your monthly payments and then keep that money and go and invest in other things that can produce more money.

And logically, that makes sense. If I was an investment dude, teaching people investment I’d be like, “Yes, you should not pay off your house, keep the equity in there as low as possible, strip the cash out because you can use that in other investment vehicles.” So it makes sense as an investor. But I don’t consider myself an investor. Now I am dabbling into crypto currencies, Todd Dickerson, my partner in Clickfunnels is making insane amounts of money so he’s showing me the ways of the crypto world. But I still don’t consider myself an investor. I consider myself an entrepreneur.

It’s funny because when I first started reading those books, I started believing that and believing that. And then I talked to my dad and I was like, “Dad why don’t you pull all your money out.” Because my dad’s like, buys house pays them off, cash flow. Buys houses, pays them off, cash flow. And he has his own house. I was like, “Dad, what are you thinking? You’re crazy.” And I remember one night he kept telling me, “Russell, you have to understand, there’s something about knowing your house is paid off, knowing that worst case scenario, your house is there and that gives you the ability as an entrepreneur to go and risk.”

And I was like, huh. I don’t think I really got it. You know, I heard him and I’m like, young son thinking he knows everything, but I don’t think I got it at first. I was just like, okay whatever. Then the next decade of my life started happening after that, and in that decade I’ve seen some really big ups and some really big downs, and some really bigger ups and some big downs. And right now I’m on an up cycle. And there may be a time where I go back down and that sucks. That’s scary, and I have a lot of fear and anxiety around that, just because I’ve cycled twice and I know that feeling. I know the fear and all those things. I have a constant, I think part of what drives me so hard, and people always ask “Why don’t you slow down dude, you’re doing pretty well.” And it’s because I have this internal fear. I remember what that was like to cycle and I’m trying to protect myself through the hustle or I don’t know whatever that is. So I think that’s a big driving force for me.

But during these cycles, and luckily we recovered from them. But a couple of things that I noted. Things got really bad a couple of times, but at the same time, I never, this is probably wrong, but I never told my wife about a lot that was happening, and she found out later. Actually, she was at the last Funnel Hacking Live where I did the presentation on all my failures, as you guys saw a few episodes back. And she was like, “What? I didn’t realize it was that bad.” I was like, “Well, I didn’t really tell you. I’m supposed to be the man.”

But for her, I knew that I had to have security. So I knew how much, there was an amount of money every single month that she got that would cover our house payments and our bills, stuff like that. I just knew that as long as I could make at least that, I was okay risking and trying and doing things. As long as, worst case scenario, my stability, my foundation was set. That was it.

During those rocky, scary times, I knew that worst case scenario, I could always produce enough money so that nothing at home was effected. It gave me the ability to risk, to roll the dice and try things. So for entrepreneurs I think sucking the cash out of your house and investing it in other places is the worst advice ever. Because then you’re on this unstable foundation. Sure you have more money to invest and in theory you can make more money and all these sorts of things. But it takes away your ability to risk.

Risk is what makes an entrepreneur great. We have to go out there and risk and jump off cliffs all the time. But risk is scary. The only way for us to be able to increase the level of risk tolerance we have, I think is also increase the stability tolerance on the other side. Paying off your house is smart because worst case scenario, if everything, all the crap hits the fan and everything falls apart, if you’ve done that and paid off your house, worst case scenario, you still have the stability of a home for your wife and kids and whatever.

That is the key. That gives you the ability to go and do the crazier things. So that’s my advice for all you guys. Pay off your house. Pay it off fast. Pay it off as quick as you can, because as you do that, as the stability, the anchor gets stronger and stronger and stronger on this side, your ability to risk over here, without the fear of losing that, it gives you the ability to risk more and do what you need to do. Because entrepreneurship is a lot of literally rolling the dice.

This viral video we’re doing, I keep telling everyone, typically my investments in our business are very strategic, we create a funnel, invest some money, get it converting, then ramp it up really fast. I’m not risking a ton. This is the biggest one, where it’s like, to create the video we had to write a $500,000 check. There’s half a million dollars, right. Put it all in black. With the launch party, with everything we’ve done it’s probably another 3 or 4… I mean it’s close to, when all is said and done, it’ll be close to a million bucks. All on black, okay let’s go and hopefully it will work.

But the nice thing is because of the stability on other things we’ve set up, I can take that risk and it’s okay. Because worst case scenario, it’ll be okay. I’ve talked about this on other episodes of the podcast. The thing that so often keeps entrepreneurs from success is the fear of the worst case scenario. You have to be able to look at the worst case scenario and be okay with that. And if you are, then you can jump forward. Some entrepreneurs may never look at the worst case scenario. They’re just always, we don’t want to look at the thing that we’re scared of.

So we see the thing we want and we’re kind of going forward, but there’s this nagging thing in the back of your head. Worst case scenario, what if I go bankrupt, what if my wife leaves me, what if my kids think I’m a bad dad. All these fears that are happening and we try to ignore them, but because we’re ignoring them, they’re still buzzing in our ear, in our subconscious mind. So because of that they keep coming and keep coming.

I always tell entrepreneurs, if you want to be free and able to risk you have to stop, look back and be like, “What’s the worst case scenario back there? If everything goes to crap, what happens?” and until you’re okay with that, it’s so hard to move forward. So a lot of us we have to stop and say, okay, what’s the worst case scenario?

And I remember that. A lot of times I’ve had a couple times the worst case scenario was bankruptcy, worst case scenario was losing my house, and those are scary. At the beginning you have to have that initial risk and you have to be okay. If I lose my house, it’s okay. If I go bankrupt, it’s going to be okay. But as you start rolling up into bigger opportunities, bigger risks, bigger things like that, it’s nice to look back and say worst case scenario, I lose my money on this deal. I still got my house, got my wife, got my kids. That security gives you the ability to risk big.

So pay off your house, there’s my advice. It goes against all the famous investing dudes, but I think they’re wrong. I think most of those aren’t entrepreneurs like us. That’s what we do. We’re entrepreneurs, we’re risking, we’re making the world a better place. I mentioned this on the entrepreneurial scholars podcast, the episode a few back. If entrepreneurs don’t risk, the whole world comes to a screeching halt. The government put in bankruptcy and all these laws and things to protect us so we can risk. So that’s why it’s vitally important. It’s awesome.

So there you go, here’s the mirror. What? Here you guys are, we’re all talking together. How cool does that look? If you’re listening, you have no idea what I’m doing, but if you’re watching the video at marketingsecrets.com this is what you see. Alright you guys, appreciate you all. I’m going to go back in and put my kids to bed, it’s been a fun day. Doesn’t it look good? It looks clean. Ready for some workout, ready for some people to bleed out of our muscles. It really hurts sometimes. Anyway, appreciate you guys. Pay off your house, it’ll give you the financial stability you need to risk everything and change the world. Thanks everybody, talk to you soon.



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The beginning of my journey from

$0 - $100,000,000

in revenue WITHOUT any venture captial

Who is Russell Brunson?

Over the past 10 years, Russell has built a following of over a million entrepreneurs, sold hundreds of thousands of copies of his books, popularized the concept of sales funnels, and co-founded a software company called ClickFunnels that helps tens of thousands of entrepreneurs quickly get their message out to the marketplace.