Season 1, Episode 6

Overcoming Personal Credit Issues With Business

Join Joseph Smith and Lyle Leads as they discuss Joseph’s story and how personal credit issues are not fully damaging to your success and how to win at life.

In this episode we will cover:

Can you get through 2 foreclosures and build your credit?

– What can you do when the right things happen and still fail?

– How to start a business while working full time

– How to start business credit without using personal credit

Lyle: Hello, this is Lyle with Optimize Profitability Podcast. Today we’re with Joseph Smith! He’s a co-founder of Wise Guys and Ties. He’s written two books. He has four children. Three of them are boys and one is a girl. And he specializes in helping people start, build, and grow their business, and achieve their God given purpose. So Joseph, I wanted you to join us today, because I really want to hear you story and how you became an entrepreneur. So, Joseph, take it away.

Joseph: Lyle, thank you so much for having me on your podcast today. Thanks for being here. So you asked me to tell my story and my story starts about seven years ago when I had been through two foreclosures, back during the 2007 collapse of the financial market, I’d been through two foreclosures. And I’ve been trying to just stay ahead as much as I can. But about seven years ago, which would put us at 2013-2014, I just couldn’t keep couldn’t keep juggling all those bills.

And so I was headed into bankruptcy because of those foreclosures. And I’m the kind of person where my wife and I, we decided early on that we wanted her to be a stay at home mom, and really make our kids the number one priority. So we’re home schoolers. And that meant we had to live off of my income. And I went to college. I got good grades. I did what I was supposed to do. And I got a job in social work which was my degree.

And I was a CPS case manager. I actually worked all the way up to the top of the pay scale. And I was bringing home after taxes, $30,000, a year for a family of four. And, you know, another thing that people asked me about is, well, how did you get into foreclosures if you can’t even afford one? Well, one of those wonderful things is where I had my own house, and then I had a relative that wanted to get into a house, and they didn’t have good credit at the time.

So I gave the personal guarantee right then. 2007 led and in 2008, we both went into foreclosure and I got stuck with two foreclosures on my record. 

Lyle: Ouch!

Joseph: Yeah.I’m a man of faith, and I’m somebody who is like, I really thought I did everything right. I mean, what did I do? I went to school, I got good grades. I played college football. I mean, I practiced, studied hard.

I got a scholarship to Boise State University. And this was a big deal. This was you know, these are things that I attributed to my hard work and success. And I eventually got my degree. And I’d worked all the way up to the top of the pay scale, right. They were saying they were paying me like $50,000 a year. But when you’re a government employee and you’ve got to take out all these dues for union and whatever, I mean, where’s all my money going?

Mandatory pension and all the benefits. All these things. My annual take home was thirty one thousand, which, you know, that was pretty crazy. But you know, it’s nice to have the benefits of course. But I mean with the two foreclosures and headed into bankruptcy in my profession as a social worker, having a bankruptcy was going to lead to me losing my job. Because you can’t be in many government positions.

If you’re compromised by finances then and people are entrusting you, in my profession with children, say I was a child. I was a CPS case manager. They weren’t going to be able to allow me to keep my position. So I was sitting here watching my finances just build up, and build up. And because, you know, you try to take one credit card to pay off another, you float one bill and hope that you can make it up the next time.

But I mean, my finances were a car accident in slow motion and I just headed over the cliff. And so I reached this point where I was like, God, I don’t know what to do. I feel like I’ve been doing everything right. Everything everybody told me to my parents. I’ve been doing everything the bank told me to. And some reason I am like, I’m going to go into bankruptcy, I’m going to lose my job.

And I don’t know where my wife and our kids, where we’re going to live, what we’re going to do. I mean, this was like a serious tale of woe. I mean, it’s like a really bad country music song, you know? 

Lyle: Yeah.

Joseph: So I’m sitting here, and then I’m listening to the radio, and I don’t normally listen to the radio, but I have a case that was taking me across the state to deliver a kid to a home and so I was listening to the radio on a long trip.

I turned to the AM dial in and this was kind of spinning it around like one of those things. Have you ever, like, opened up the Bible and you’re like, God, just let me find the right scripture, and you point your finger in some random page, and then you’re like, hopefully that’s going to be something inspirational. Well, I just kind of spun the dial and I was like, Lord, help me find some financial programs, some religious programs, something that inspires me, and tell me what to do next with my life.

And it landed on a Christian station. And I was listening to a guy named Gary Lawrence and he was telling me about how he had lost everything and the financial crash. And he was 64 years old at the time, and how he had learned how to become a real estate investor, and in like 3 years was making $200,000 a year through his real estate investments. And he attributed it to his faith in God, and his willingness to not give up.

And so he’s speaking to people out over the radio saying, you know, if you’re going through the same thing, that you’re full of the power of success, you can do the same thing. And I was like, wow, this is great.

This would be good for Emily, my wife, to try.

I didn’t even think of myself doing it. But it’s like, yeah, because it was all this whole work from home thing. It’s like, well, Emily could do that while I’m trying to go out and find the next job. And anyway, they have different local meetings, networking events. I went out there and I met a man named Anne Gleason, who is a successful business owner, not a business owner. Sorry, he was a successful businessman.

He was an auditor for one of the top credit card companies that are out there. But he had just started a business and was getting into real estate investing. And he had gotten educated through a program called Renatus. It was an excellent program. I ended up getting educated at that, too. But I didn’t have any money to pay for an education. So that wasn’t anything on my radar when I went down there. But here’s this guy and he’s really a Christian.

Him and his wife instantly just took us under their wing. Emily and I took us both under their wing. And, you know, it was difficult for us at that time. They actually chipped in and paid for our gas so that we could come down to their networking meeting. And, you know, here’s this guy who I met with him, like for over the course of like three or four weeks, we’d met maybe three or four times.

We got some lunch together, and we had stuff, and they were showing me their program, and how they got educated, and how they also got their money together. And the deals that they were currently looking at working on. It was all really fascinating. But, you know, I was like, you know, that felt like way over at levels, way over my head. I mean, I couldn’t imagine doing that. I’m just a CPS’s case manager.

And so after sharing all this, they started encouraging me. You know what? You should get educated. You should become an entrepreneur. You should start a real estate investing business. And I was like, have you not been paying attention to my story? I have 2 foreclosures on my record, but all I know how to do is fail so far, right? I mean, I don’t know anything about investing in real estate.

I don’t know anything about owning a business. But they just continued to believe in us. And, you know, that was so inspiring. You know, when you have somebody that believes in you, you know, a coach, a mentor, a teacher, somebody who believes that you can be more than what you are, and just continues to encourage and inspire, you can pray for you, and hold you accountable. And a lot of ways that’s really what Dan and Lori Gleason did for us.

That’s what they would like for us. And they kept coming back to my pain point, which was, well, what are you going to do if you’re going to lose your job at the end of the year? What are you going to do? And so, I mean, it’s like I had no answer. I was like, what jobs can I apply for that I can get with the bankruptcy on my record that would still allow me to make enough money to pay all my bills.

And when you’re looking at the time, we were in the middle of a recession at that time, so there wasn’t like a whole lot of job availability out there. So I was convinced to now dip my toe into this education program. You know, let me buy the first ten classes, not not all seventy five. I’m not ready for the whole thing, but just show me the class on how I can get out of debt, and how I can get some money together, and start a business and all that.

You know, just give me that. Let me see if I can do that. So I started taking the classes and I was able to make a shift in KPS where I could move to a desk job where I wasn’t working with kids. I was actually working on the hotline where we take the inbound phone numbers, and maybe from a police officer, or hospital, and then we dispatch the case manager. So that bought me some time so that I wasn’t necessarily at risk of losing my job right away, but it was definitely still on the horizon.

They weren’t guaranteeing I could keep my job forever. But, you know, because of my financial situation, you know, if we put you here on this desk job, they could keep me around a little longer. So I was working, and the only shift that was available was nights, so I work overnights, but you don’t take very many calls and have a lot of time. So I just took all my classes.

I mean, it was an online education. So I was able to just put it on my phone and listen to it in between phone calls. And man, I just was just devoured. It took me about…Well, I mean, some people do it faster, but I took about 18 months to really master each of these classes. I mean, I took some of them over a couple of times. But I mean, this is talking about how to establish a business, how to set up your legal structure, how to take advantage of tax write-offs, how to raise capital, all these things.

This was great stuff. I was learning how to invest in real estate. All of this was amazing. But, you know, I was still swimming in debt. And so they had this at the time I started. They didn’t have this class. But 18 months into it, they added a class called at the time, sweep strategies, and then they later changed it to velocity banking. But that’s when I was totally blown away, because then I was like, oh, my goodness.

I could actually use my situation. I could use lines of credit to get rid of my debt. And so, I mean, that was very powerful. But at that time, I didn’t really go to any of those networking meetings. I’ve kind of fallen off of the radar. But, you know, Dan and Laurie, they never gave up on Emily. So they kept coming around. They kept coming around, giving us a call, checking in on us maybe once a month.

And there was this guest speaker that was coming into town, and he was a really big entrepreneur out in Chicago, a big marketer, big real estate investor. His name was Scott Rowe. And they were like, oh, man, you have to come see this guy because he will help you figure out how to make some money. And I was like, well, yeah, I need to make some money. So I went out and I learned about myself. I had never once thought of myself as a businessman, a salesman, a marketer.

But I’ve learned that that’s what every entrepreneur businessman is. You are a salesman. You’ve got to sell your idea, your, whatever your concept is, your product. But this guy told me he showed me, not just me, but this whole seminar, how to take your marketing business, and break it down into a machine, into several steps, and to create sales funnels. And he gave sample pitches, and how to have phone conversations.

I mean, it was a whole practical Hands-On seminar. I mean, and I just left that, and I was like, I went to Dan and I was like, I can do this. And I wanted to get the full Renatus education at that point. It’s like twenty thousand, twenty five thousand, something like that. And I knew that I could do it because I knew that I could make money marketing, and making sales, and getting into building up capital for real estate investing.

So all of these things were exciting to me. And so this is where I was seven years ago. And I didn’t have a business yet, but I had a little bit of education on how to start a business. And I had gone to a seminar with somebody who told me how I could make money in business, marketing, marketing for other businesses, marketing for my business, just all kinds of network marketing, all kinds of ways to do referral based marketing.

And it just totally intrigued me. And so all I had to do, and that’s a specific situation, was to come up with like twenty five thousand dollars, you know, no big deal. Everybody’s got an extra twenty five thousand dollars laying around right under the mattress, right?

But you know what? This guy named Scott Rowe also taught me how to go out and get the money. And what opened my eyes that day was that a real entrepreneur, a real business owner, doesn’t beg for money, doesn’t borrow money. You know, they give people investment opportunities to work with them and their business. So what I did was I put together my business model, and I showed people what I was going to do, and I just had conversations.

He encouraged me to come up with a list of two hundred people that I knew, and I thought I knew about like five people. So it’s like two hundred people. Are you kidding me? But we worked through some memory joggers. Emily and I were able to put a list together of 173 people, and we just started calling them, and showing people our business model, and asking them about their opinion. What do they think we asked people for that most everybody just completely rejected it.

Like now. Now that’s ridiculous. And, you know, for those who are interested, we showed them a little more information, some videos, or we invited them to come to a local meeting if it was somebody local, because I was calling people that I knew that were spread out over the country. But if it’s somebody local to where I lived, I could take them down to meet Dan Gleason and the group of investors that they were working with there.

And so what happened for me was, I was just like, Lord, if this is what you want me to do, you’re going to help me find twenty five thousand dollars on these phone calls. And so for four days straight, I just called people all day long just saying, hey, I’m super excited about Emily. We’re going to start a business. This is what we’re going to do. Here’s our business plan and our model.

And I was just curious. I mean, I really respect you. What’s your opinion? What do you think? And a lot of I mean, I heard a lot of no’s. In fact, I heard sixty two no’s in a row. In fact, I heard a few, hell no’s. I heard a few, Are you kidding me? You as a real estate investor and people would laugh like, oh, you know, things that didn’t hurt.

But, you know, you’re calling a lot of family and friends. So it’s really you’re starting to learn what they really think of you. But I didn’t argue with any of them. That wasn’t the goal. I was just processing interest. And so when somebody said no, or somebody was a little bit insulting, all I would do is to say, you know what, you’re probably right, and just change the subject, and move on. But the 63rd person I called was my brother in law.

And what was amazing was I didn’t know this about him, but he was already a real estate investor himself, had a couple of rental properties, and he thought the idea, and the plan was great. And he ended up not lending me the full money because I wasn’t asking to borrow anything. But I gave him a chance to invest 20 percent of what I needed, because I could get 80 percent of it financed. And then as long as I was making money, marketing and stuff like that, I knew I could pay the monthly financing fees.

And so that’s how I got started. So he helped me put the seed capital. I think it was about four thousand dollars right around. There may be a little bit more down into helping me get my business. Know you have to get your business started up off the ground. It takes money to make money. And by that I mean, I just started my marketing business. I started marketing for Renatus. I marketed for other people’s real estate.

And I just started to, you know, if anybody needs it. What do you need? Everybody needs people, property and money. And so it’s like, OK, I’m going to find you what you need. And that always would turn into some kind of payday for me. Well in seven months through doing referral base business, I was able to generate forty one thousand dollars of total profit. Keep in mind, what do I make annually at that time?

Thirty one thousand. So bringing in forty one thousand was pretty cool. And so every business is a little 20 hour a week side hustle that I’m working here just trying to connect buyers to sellers, and find people that are interested in getting educated and learning about doing real estate investing. So this was really amazing and I was super excited and I was like, not only so. So with my brother in law, we we went ahead and paid back his investment plus twenty five percent interest, but let me tell you, that was it was a blessing to to get the seed money and to be able to know that the system that I was using worked and that I was able to pay him back.

And I had the confidence to move forward. I mean, at that point, that was my first year. That was six years ago. Each year after that, I made about sixty thousand dollars alone in my marketing business. So that was great until I got a bill, a letter from the IRS. Did you know that when you make money as an entrepreneur, they don’t dare not point out FICA, anything like that? So I had this bill off of the forty one thousand from that first year, not a bill.

A letter from the IRS came and said that you owe us eight thousand dollars. You know, it was more like congratulations on your new business here. Here’s an eight thousand dollar bill, but I told you about how I really spent a lot of time on those overnights work and taking those classes. So, man, I was prepared. I had all my ducks in a row. I had my itemized business expenses all out.

How much do you think I ended up owing for that eight thousand once I submitted all my write offs?

Lyle: No clue.

Joseph: I ended up getting two thousand dollars back and it was money into our next transition

Lyle: So we’re going to kind of parse your story for a minute. We’re going to go into a whole another segment. So if you guys are listening to the podcast, he’s going to be talking about personal credit and how it impacts your business. 

You want to stay tuned and know how to do those kinds of things in your own business, your own personal credit. So what we learned from him is you have to be dragged into the business of somebody who believes in you, but then you’ve got to believe in yourself.

That’s what I heard there. You believed in yourself and you started taking action on what you believe and that’s what made the difference. You finally get that point. Somebody else pushed you until you were able to take on your own self. And I am honored to know you. I think you’re a successful person. I see the things you’ve done with your life, and the way you’ve impacted people. And to me, that’s more important than the money you’ve made.

Before we go to our next session, join us on for our next section, where he’s going to talk more about personal credit, how it impacts your business, and how you can utilize that to help your life and your business. Thanks for being with us today, Joseph. And we’ll jump on the next section in a moment.

Joseph: Thank you, Lyle.

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