Billy Hofacker – Tony Gentilcore

5 Things Fitness Professionals Need to Consider When It Comes to Taxes

There was time in my blogging career where I’d be more apt to dedicate writing energy toward topics like “Top 5 Carrie Bradshaw Breakups” than anything related to business, let alone taxes.

However, a major mishap I made back in 2007 when I transitioned to being self-employed made me change my tune quickly.

Let’s just say I needed a new pair of pants when I realized I owed the IRS a lot of money because I didn’t properly prepare for things beforehand.

I get it. It’s not lost on me that most fitness pros reading would rather me write about assessment or how to turn people into deadlifting T-1000’s. I do plenty of that. Today’s post, though – courtesy of fitness business expert Billy Hofacker – is what most fitness professionals NEED to be ingesting.

I hope it helps (it totally will).

5 Things Fitness Professionals Need to Consider When It Comes to Taxes

Most fit pros are afraid of taxes. They can be scary, especially if you don’t understand some basics. Not keeping up with and paying your taxes can get you into trouble.

Here is some good news.

With some basic information and planning, you can avoid some pretty unpleasant traps. Also, while nobody likes paying them, owing for taxes means you are making money! Besides, if you work independently as a coach, you get to dress more comfortably for work than many of your peers!

If you have employees, you need to deposit a certain amount withheld from them for taxes or you could be in trouble. If you have products you sell and use the sales tax money for other things, you won’t make it.

via GIPHY

As a general rule, you’ll want to set aside a percentage of your profit into a separate savings account so you can pay quarterly estimates to the IRS. Without getting too sophisticated and if you don’t have historical data from your business to look at, 25% is a good place to start.

For example, if you are going to pay yourself $1,000 from your business, take $250 and deposit it into your tax savings account and the remaining $750 would go to you.

In my early days as an independent trainer I neglected to do this. I accumulated a six thousand dollar liability with the IRS and had to pay it off over the following 2 years while building my career. That was over a decade ago. Since then, by incorporating this strategy of withholding taxes on myself, I have not had the tax man after me since!

*To Discover the Tool I Used to Pay Down That Debt and Much More, Download the Debt Destroyer Tool.

Note From TG: I’m a huge proponent of the Profit First approach to running your business. When I left Cressey Sports Performance in 2015 to begin my own venture in Boston I immediately adopted this system and have been thriving off it since. Having a set plan to know where your money is going at the end of each month to plan for things like taxes, business expenses, and PAYING YOURSELF is crucial. I can’t recommend the book enough. I’m also way more jacked now than I was then. Coincidence?

The above scenario applies to you if you are taxed as a Schedule C or partnership. You will have to pay quarterly estimates to the IRS for income tax. If you are taxed as an S-corp, you pay payroll taxes on any salaries paid to employees, including you.

As an S-corp, you can pay the amount of taxes needed through the payroll taxes in order to cover any tax liability. This helps ensure you are always up to speed with your tax payments and hopefully it’s an example of “out of sight, out of mind.”

I personally use that method and it has taken away my tax stress.

Finally, when you have some actual historical data, like previous personal and business tax returns, you can work with your accountant to determine the percentage of revenue that goes to taxes. You can also determine, with your accountant¹, what the estimated tax responsibility for your business will be and turn that into a percentage of revenue.

You can then transfer that amount into a tax savings account every two weeks or so and use those funds to either pay your estimates (e.g. Schedule C) or reimburse yourself for the taxes the business paid (e.g. S-Corp).

The important thing to remember is that regardless of how your business is structured, you pay taxes on profit and not profit distributions.

For that reason, you will want to be sure to…

1. Keep Good Records

Hopefully, you’re not just handing your accountant a shoe box full of receipts at the end of the year. I used to know someone who did that.:)

In all seriousness, paper receipts for deductible items are fine but you may want to keep digital copies as well just to be safe. Taking pictures, scanning them, or using one of the many receipt/expense apps works. Other than that you’ll want to keep good records of what’s coming in (income) and what’s going out (expenses).

Other than staying organized for taxes, this will help you stay focused on how much you’re making.

2. Bookkeeping

Do you know the difference between credits and debits? Assets vs. liabilities? While it’s probably not why you got into a fitness career, some bookkeeping basics will serve you well.

Even if you’re not ready to take a college level accounting course, you might want to look into accounting software. Besides helping you prepare for taxes, you can keep track of invoices and billing, as well as run financial reports to help guide you.

Then when tax time comes, you’ll have things organized and an efficient way to access your income and expense history.

Finally, as you grow in your career, it’s wise to evaluate the best uses of your time. While in the beginning, it may make sense to do everything yourself, at some point it may make more sense to hire a professional bookkeeper so you know things are done correctly and you can focus on your highest value priorities.

Just like any area, there are good bookkeepers and not so good ones. I know from experience. If you go that route, be sure to hire someone who understands at least basic accounting and how financial statements flow together.

3. Know What You Can Deduct

A smart and wealthy client advised me early on to take any ethical deduction possible. Some of the bigger potential items to look at are travel, home office (Schedule C and Partnerships), and health insurance. Self-employed individuals can take some deductions “above the line.”

This means they can still take the standard deduction while also writing off some more items.

It’s important to know here that you can take a standard (flat) deduction or itemize all your deductions based on your expenses. Most Fit Pros will take the standard deduction route since it’s easiest but if you have a lot of expenses it may make more sense to itemize.

Do your homework and know what’s best for you.

4. Take Care of Your Future Self

People who work for big companies generally have an employer who sets up a retirement plan for them. Oftentimes, they get a company match. Since you may not have either of these luxuries, you’ll need to develop the discipline to take a portion of your income and set it aside for your big, beautiful future.

With that said, there are some benefits here when it comes to tax season.

A self-employed individual can contribute up to 25 percent of net earnings, to a max of $61,000 in 2022, to a Simplified Employee Pension (SEP) IRA. Additionally, up to $14,000 can be contributed to a SIMPLE IRA. Those IRA contributions, which are above the line, may be tax deductable.

5. Where’s All My Money?

Fit pros are often confused when the end of the year comes and they owe taxes but don’t have the money to show for it. I hear comments like, “How can I be taxed?” I don’t have any money.

They simply don’t know what they don’t know.

There is a major difference between profit and net cash. I highly encourage you to track your profit but be equally diligent about tracking your “net cash.”

Net cash is used to see how much cash is left after expenses and owner’s distributions. Since owner’s distributions don’t count as “expenses,” they can cause a Fit pro to think they are doing better than they are. This is one of the biggest misunderstood things for fitness business owners

The #1 rule in business is not to run out of cash! With a plan for preparing for taxes and an understanding of cash flow, you’ll be on your way to making a massive impact AND creating a career you love.

About the Author

Billy Hofacker has been a personal trainer for over 20 years and is owner and CEO of Total Body Boot Camp and Performance Center in the hyper competitive market of Long Island, NY.

Billy is now passionate about helping fitness professionals become financially fit.

He is the author of Fitness Profits as well the host of the leading financial podcast for fit pros, Your Fitness Money Coach Podcast.

You can book a free 15 minute Q&A call with him here. During that call, you can discuss and financial challenges to see if a personalized plan might be a good fit.

November 17, 2022 Tony

Uncategorized

Standing Out From the Crowd: Appearance On the Your Fitness Money Coach Podcast

I was recently invited onto the Your Fitness Money Coach Podcast hosted by Billy Hofacker. Some of you may recognize the name because Billy has penned several informative guest posts on this site surrounding financial literacy in the past year.

HERE, HERE, HERE, and HERE.

I was thrilled to post his content here because he has expertise in a topic that many fitness professionals need dire help with. To speak candidly, I wish I had access to this kind of content earlier in my career.

Nevertheless, Billy invited me onto his show to discuss what ended up being a bevy of topics. He ended up titling it “Standing Out From the Crowd,” and I think it was the right call. I mean, I personally would have gone with something like “Tony is the Wind Beneath All of Our Wings,” or “Tony’s Pecs Had me at Hello,” but whatever.

I’m not here to split straws.

Standing Out From the Crowd

Billy is an excellent conversationalist and I enjoyed going back in time to discuss how I went about differentiating myself from the masses creating content and building my own brand from scratch.

I hope you give the episode a listen and be sure to check out more of Billy’s stuff. I’m not kidding: He’s an abyss of information and practical knowledge around business and finances.

Listen HERE (direct link) or HERE (iTunes)

July 18, 2022 Tony

business

Get Rid of Money Stress For Good

Fitness professionals are notorious for myriad of things:

Wearing sweatpants to work everyday. It’s definitely one of the perks of the job.
Always forgetting about the protein shake shaker in their gym bag (or in their car) that invariably, three weeks later, ends up melting someone’s face off once it’s opened.
Their affinity for smedium t-shirts.
Never talking about financial literacy (I.e., planning for retirement, investing, and/or general business savviness).

The latter is just something we never discuss and is our version of an unspoken rule; kinda like talking to a pitcher during a no-hitter.

My friend and colleague, Billy Hofacker, is back with another fantastic post geared toward helping fitness professionals better wrap their brains around money. This time around, specifically, centered around the stress of seemingly never having any.

What’s more, he even includes a special (and FREE) “master class” video for my readers that I feel everyone should check out.

Enjoy!

Get Rid of Money Stress For Good

Note From Author: Since finance can be an overwhelming topic, I also recorded a video diving deeper and providing more support with these topics.

You can access the video HERE.

I remember starting out in business. I was fortunate enough to have a free session with a guy named John, a CFO of a huge company. I’m talking about a company that was doing hundreds of million in revenue.

You see, I have my own personal journey with money that included being suffocated by 130K in non-mortgage debt and working my way out.

Now I was going to use some of the principles I was learning from my personal journey and apply them to business.

Needless to say I was excited for my free session. I remember standing behind him as he was showing me how a business budget worked. He would mention “budgeting” certain amounts for certain categories. The curious person that I am, I asked him where that money actually was. I said something like, “If I have $500 allocated towards equipment, where does that money actually go? It seems to me like it’s just sitting in the account like all the other money. What’s to stop it from being spent?”

His response didn’t make sense to me.

He said, “You just know.”

via GIPHY

One of the most common reasons Fit Pros hire me as their financial coach is because they want a plan for their money.

Not having a plan is painful.

It results in a lack of confidence and results. Many people think that businesses fail due to a lack of profit but are surprised to learn that in fact, 82% of businesses fail because they lack an understanding of cash flow.

The good news is that there is hope. A solid cash flow system can do a lot for your business. Clients who have developed a system report that:

Decisions Become Much Easier – They know when and how much to invest in marketing, hiring, and marketing
The Path Becomes Clear – They are able to focus like a laser as they know what the next step towards their goal is
Confidence Increases – Sure, Fit Pros want to do better financially. They want to earn more but what’s perhaps more important is the person they become in the process

There are a few common mistakes or myths when it comes to cash flow plans.

I will relate all three to fitness.

The First Mistake: People Don’t Stick With It Long Enough

Just like some fitness clients, if they aren’t completely transformed after a couple of months, they throw in the towel.

Just like fitness, financial improvement takes time. You don’t erase 20 years of poor financial habits in five minutes with a spreadsheet. This boils down to behavior change which we know takes time.

The work precedes the results.

The Second Mistake: Thinking There Is a One Size Fits All Program

Should everyone become a competitive endurance athlete? Not necessarily. Some people have other interests within fitness and/or aren’t suited for it. Some trainers (e.g. the kettlebell guy or gal) make the mistake of forcing the program they like on the client when the modality might not be most effective for the client.

They neglect the concept of bio-individuality.

Some financial coaches do the same thing while they would be better off working with the client to develop the best plan for them.

While certain principles may apply, the exact how-to’s may differ from person to person.

The Final Mistake: Thinking That the Cash Flow System Will Be Boring Or Restricting

Author and leadership consultant Jocko Willink says that discipline equals freedom. When you are disciplined with your fitness or your finances, the result is more freedom, not less. If you aren’t fit, you’ll have less options in what you can do physically.

If you aren’t financially fit, you will also be restricted in what you can do.

Click HERE To Get Access to the full video training.

The Problem

One of the reasons it’s hard for people to create and stay on a financial plan is the chaotic nature of how money comes in and goes out.

Depending on your situation, you may:

Not pay yourself at all
Not pay yourself consistently
Be on salary
Pay yourself monthly
Pay yourself bi-weekly
Pay yourself bonuses
Have a side hustle
Have recurring revenue
Have various programs

There are so many situations people find themselves in and that’s just the income.

Let’s talk about expenses.

You most likely have automatic monthly expenses. These would occur the same day every month and for the same amount. A prime example would be your rent or mortgage.

You most likely have daily expenses. These are things like food, coffee, toiletries, etc.²

We all have random expenses. These are the ones that really throw people off. An example is that car insurance payment that’s due every six months. You can have a plan for everything else but if you don’t have a plan for these, your budget could be busted.

The good news is that we have a plan to account for all of these and then some. While it’s beyond the scope of this post to cover every detail, I’ll provide an overview as well as a next step.

Of course, I’m a huge proponent of “paying yourself first” so if you’re not doing that, I’d make that a priority.

Now let’s cover a plan for the three types of expenses I mentioned.

Check out my video HERE where I explain everything.

Monthly Automatic – These are probably the easiest since you know the dates and amounts. You would just coordinate the dates they are due with when your income comes in.

These are automatically paid from your main checking account.

Daily – Call me old school but I like to use cash for daily expenses. If I can’t use cash, I’ll set up a separate debit account at my main bank so I can at least keep things separate. I recommend people do the same for daily expenses, at least for a period of time so they can really see what’s going on.

Random – As I mentioned, these are the ones that throw people off the most. For that reason, it’s essential to have a plan for these infrequent expenses. You’ll want to open up a bank account at a separate bank (an online account is perfect) and save the breakdown that you will need each month. For example, if you’ll need $1200 to buy Christmas gifts, set up an auto transfer for $100 each month to that account.

In a Nutshell

That’s the simple plan you can follow to get rid of money stress for good. I realize this can be overwhelming if it’s new to you and that you also may have unique circumstances.

For that reason, I recorded an exclusive video for TG’s list (i.e. YOU) which dives more into the details and should help more with the how.

Of course, I’m available if you have any questions.

Watch the full video HERE

About the Author

Many fitness professionals get stuck in the day to day and have little to show for their hard work. Billy Hofacker helps them get on a plan to achieve financial freedom. You can learn more by listening to the Your Fitness Money Coach podcast or visiting www.yourfitnessmoneycoach.com.

You can also opt in to get a digital copy of his book Fitness Profits HERE.

June 21, 2022 Tony

business fitness business

Coach and Grow Rich: Building Wealth

This is the third and final installment of fitness financial expert Billy Hofacker‘s Coach and Grow Rich series on TonyGentilcore.com. However, unlike most trilogies (ahem The Matrix Reloaded & Revolutions) this doesn’t suck.

Financial literacy is a topic that’s not emphasized (much less taught) to fitness professionals. What’s your plan for retirement? Do you have short or long-term disability? How about a 401k? SEP IRA? How do you handle debt?

The gist is: If you have a better handle on your rolodex of Russian weight training manuals or keto recipes than you do your budget, you may want to consider readjusting your priorities.

Here’s the first two installments in case you missed them:

Coach and Grow Rich

Coach and Grow Rich: A Simple Plan for Debt Destruction

I hope you enjoy the third.

Coach and Grow Rich: Building Wealth

Just like our clients need to learn proper squatting technique before we throw a heavy bar on their back, we need to have some foundational principles in place for building wealth.

Before we dive into part 3, here’s a quick re-cap of the first two installments.

Part 1 of Coach and Grow Rich was all about developing a money mindset. Since we’ll never outperform our self image, it’s crucial to pay attention to what we’re thinking about. Most people wind up where they expect financially, which isn’t far. By improving your mindset, you can set and achieve greater goals than you thought were possible.

Part 2 dealt with a sometimes uncomfortable topic, debt.

It’s an area I know all too well as my wife and I scraped our way out of a massive amount (more than 100K) of debt 10 years ago. I know firsthand how debt can cripple the future. I’m on a mission to help fit pros destroy debt so they can live the life they’re destined for.

The topic for this final post in the series is wealth building.

Accumulating wealth can sound like a scary thing. I know I’ve had to shift my mindset from one of scarcity to one of abundance. Just over a decade ago I wasn’t sure if we’d be able to keep our house and now I have a grandeur vision.

Hopefully this post will help it seem a little less daunting for you. If a guy like me can get to the other side, with some hard work and discipline, you can too!

I hope you’re convinced of the importance of taking your finances seriously.

If so, here are the 7 habits of highly effective finances (and wealth building).

1. Do a Spending Plan

Think of your spending plan like your training program.

You create your plan before the month starts with your end goal in mind. It then serves as a guide for you to follow. We never follow it perfectly but we do much better than if we had no plan at all.

You can get started with a spending plan HERE.

2. Live Below Your Means

One of my favorite personal finance books is The Millionaire Next Door by Thomas Stanley. While income level can be a big lever when it comes to building wealth, it’s not true that a high income is needed to get ahead financially.

Additionally, high consumption isn’t correlated with high net worth.

The next time you’re at a stoplight, you may see a brand new Mercedes on one side and a three year old Toyota Corolla on the other. While there’s a chance the person driving the Mercedes is wealthy, there is a greater chance the owner of the Toyota is.

You may be surprised to find out that even among people who make 250K or more, only 39% drive luxury cars. It’s also not surprising that 8% of people who earn less than 100K drive luxury models. That’s keeping up with the Jones’ at its finest!

3. Stay Out of Debt

One of the most common traits of millionaires is they get and stay out of consumer debt. Even with a higher income, if a large percentage of it is going towards debt, the lost opportunity to build wealth is tremendous.

4. Save Your Pennies

Another trait of financially successful people is that they’re organized and prepared. They know that life happens and aren’t caught off guard when the water heater breaks, they have a flat tire, or when it’s December 25^th.

They save a little each month and build up an unexpected event or sinking fund so when things happen, stress is minimized and they can keep moving in the right direction.

5. Invest

Money sitting in the bank can have its purpose (as mentioned in the point above) but keep in mind that over time that money will be worth less.

This is due to inflation, the decline of purchasing power over time.

One of the key principles of investing is that the higher the risk the higher the potential return. For example, you can invest in individual stocks or cryptocurrency. You may get lucky and choose the right one, like a guy I know of who invested in Apple at 9 years old and became a multimillionaire by age 13.

However, there is a much greater chance you will lose your money since there are so many unknowns. For this reason, most financially successful people have most of their investments in assets that have greater stability like mutual funds, index funds (a close cousin of mutual funds), and real estate. You have to determine how much risk you’re willing to take based on your situation (e.g. age, goals, etc.).

6. Get Money Smart

Some people say to stick your money in an investment, let it grow, and don’t worry about it. Or, hire a financial planner and let them handle it so you can focus on what you do best.

I agree and disagree with both of these strategies.

The main thing for me is that nobody is going to watch your money like you do.

Nobody.

I don’t believe you should take your finger completely off the pulse. You shouldn’t do that with your personal money or the money flowing through your business. I’m not saying you need to check your net worth three times a day, but spending a few hours a month on things like organizing your finances, thinking through different purchases, setting goals, etc. can go a long way.

Life is not all about money but when this part of things is organized the rest of life will work better.

7. Be Generous

Counter to what many think, the wealthiest people are the most generous.

And you don’t have to be wealthy to start giving.

Did the wealthy people become generous by getting rich? Or did being generous make them rich? Even with very little, you can cultivate a generous spirit. It might be with a few dollars, a higher tip, or even a compliment.

Being generous can become addictive. It feels so good to give that you want to earn more just to give more. It becomes a positive cycle of doing good, earning more, and creating a greater impact.

As That’s That

As you can see, building wealth doesn’t have to be complicated.

It can be rather simple.

It’s not easy.

It’ll take years of hard work, discipline, and courage. It’s not all that different from setting a goal in any important area like fitness or relational. I challenge you to do all or most of the seven things mentioned here for the next 30 days. You’ll see that you can win with money and hopefully be on your path to achieving financial freedom!

About the Author

June 8, 2021 Tony

coaching fitness business

Coach and Grow Rich: A Simple Plan For Debt Destruction

Most people – but especially fitness professionals – are boneheads (or dare I say: dumbbells) when it comes to financial savviness and literacy.

It’s just a topic we’re never taught.

Ever.

Most fit pros have more knowledge in how to transcribe their latest Reels video into Klingon than understanding the difference between a SEP and Roth IRA.

More to the point, when it comes to debt (specifically: how to get and stay out of it), many people prefer to treat it like a toddler having a temper tantrum.

(puts fingers into ears)

La-la-la-la-la-la…I can’t hear you.

It’s intimidating, scary, and sometimes can be a real asshole (to put it lightly)

Today, in PART TWO of fitness financial expert Billy Hofacker‘s THREE part series, he provides some helpful insight on debt and how to approach it responsibly and within reason.

Enjoy!

Copyright: olivier26 / 123RF Stock Photo

Coach & Grow: Part 2: A Simple Plan For Debt Destruction

Part 1 of Coach and Grow Rich was all about developing a money mindset. This post will deal with a topic that may be uncomfortable for some, debt.

It’s an area that I know all too well as my wife and I scraped our way out of a massive amount (more than 100K) of debt 10 years ago. I’ve since helped hundreds of Fit Pros get on a plan to destroy their own debt. I’m not going to lie to you and tell you it’s easy but neither is losing weight, getting stronger, or building a business.

It takes time.

It takes hard work.

Mostly, it takes being consistent with a simple plan.

You’ll hear financial “experts” talk about good debt vs. bad debt. An example of “good debt” would be a business loan because you can potentially earn more as a result. “Bad debt” would be something that goes down in value, like a car.

My opinion is that all debt carries a risk and for that reason I consider myself a “no debt” guy.

If there is anything the pandemic has made clear to us, it’s the importance of having our financial house in order. Does the debt you have (personal or business) make you feel as though you are stuck in the middle of the sea with no life preserver?

That’s exactly how I felt.

Then I started learning more about finances.

What’s worse than being in debt is working exceptionally hard to get out of it only to fall back into it. It’s like someone gaining and losing the same 50 pounds repeatedly.

One of the ways to avoid staying in debt is to understand why it happened in the first place. Of course, we can agree that it’s the result of poor money management. That’s the first step – taking personal responsibility.

However, it goes deeper.

Like I described in Part 1, we all have root beliefs about money that stem from our upbringing and experiences. Here are some examples of beliefs that will keep us stuck.

“Debt is normal. How else would I buy things?”
“I don’t even know how much debt I have so I guess a little more won’t hurt.”
“This is just the way it is for me. Getting out of debt isn’t a reality for me so I might as well embrace it.”
“I have so much debt already so an extra $100 wouldn’t really matter, would it?

via GIPHY

These distorted beliefs are similar to the ones our clients have about their fitness. We need to uncover them and label them for what they are, false!

If you have debt, there is no reason to be ashamed.

The average person carries a credit card balance of $6200.

If you’re like me, you’ve looked at people with big problems and wondered how they got there. The solutions seem so obvious: “Stop eating gallons of ice cream at a time” or “Get out of that unhealthy relationship.” When it comes to our own problems, the solution doesn’t seem so clear. That was the case with me. It all started with one bad decision, putting a household item on a credit card and not paying the bill.

From there it snowballed into a massive problem.

With that said, people who are financially successful know that one of the keys to building wealth is to get and stay out of debt. The good news is that there is a way out regardless of your current situation.

Hopefully, you already understand the value of moving towards financial freedom by becoming debt free. Just in case you’re not convinced, let me ask you a few questions:

❓ If you didn’t have to make any debt payments, how much money could you save every month?

❓ If you weren’t strapped with debt, how much better could you live with the same income?

❓ How quickly could you become wealthy?

❓ How much would you be able to impact others?

The Top 2 Methods

There are generally two schools of thought when it comes to paying down debt.

The first is known as the higher interest or avalanche method.

The second is known as the debt snowball.

With the avalanche method, or the higher interest method, the debts would be paid down in order from highest to lowest interest.

via GIPHY

This method makes mathematical sense.

With the debt snowball, the debts would be paid in order from lowest to highest balance.

So which is better?

At some level, comparing debt elimination plans is like comparing nutrition plans. The one that works best is the one you follow.

With that said, the debt snowball allows you to rack up wins quickly, which helps create positive momentum. This is a huge advantage for someone who may already feel a little discouraged by their financial predicament.

Here are the steps to applying the debt snowball.

1️⃣ Stop Borrowing Money

If you continue to borrow money while trying to eliminate your debt, you’ll be fighting an uphill battle.

This is where a spending plan is crucial.

2️⃣ List Your Debts From Lowest to Highest Balance

Pay special attention to this step. Don’t leave any debts out and let them slip between the cracks. Arrange your debts in ascending order with the smallest remaining balance first and the largest last.

You would ignore the interest rate.

3️⃣ Pay All of the Minimum Payments on Each Debt Listed

4️⃣ Throw Any Extra Money Above Toward the Minimum Payments at the Next Lowest Balance

Ideally you would have a timeline for when each debt will be paid off. Accelerate you debt elimination plan by looking for any extra money to pay towards your focus debt (i.e. the one with the lowest balance). If you can’t find extra money, think of ways to increase your income.

5️⃣ Set Your Debt Elimination Date

Write down the date you will be debt free (other than a possible mortgage).

Visualize it.

Keep moving towards your goal no matter what.

Many people who use this method get excited as a result of the early wins and end up finding additional ways to put more money towards their snowball. The key is using the minimum payment you had for an eliminated debt and adding it to the next one, thus creating your debt snowball.

Regardless of the method you choose, the first step is to get clear about your reality. It’s astonishing how many people have no idea how much debt they have.

I created this Debt Destruction tool for you to create your plan.

If you want to throw up, visit bankrate.com/brm/calc/minpayment.asp and see how much of your minimum credit card payment actually goes toward the balance and how long it will take to pay off.

What’s cool is you can adjust the numbers and see what a difference lower APRs (interest %) and higher monthly payments can make.

In some cases you can save years of payments and thousands in interest.

Business Considerations

Many people who agree that personal debt is destructive believe that business debt is different. The truth is, business debt can be just as harmful and the same rules should apply.

Don’t fall into the lie that you need to carry a credit card balance or borrow money to grow your business. Having a debt free business allows you to designate some of your cash for future growth, take advantage of opportunities that present themselves, and be more generous.

You may think that it’s better to prioritize paying down your business debt if you have both business and personal debt.

Actually, one of the best things you can do for your business is to improve your personal finances. Many businesses suffer or even go out of business because an owner’s personal financial house was not in order.

The bottom line is that you need a plan to eradicate both personal and business debt.

One consideration with business debt is you’ll want to make sure you pay attention to your cash flow. Covid-19 has reminded us of the importance of having “cash on hand.”

I would recommend saving at least one month of business reserves before aggressively paying down business debt. Once you have your one month of reserves, you can allocate a percentage of extra income (after paying yourself) to debt elimination and the rest toward building the reserves further.

You’ll need a lot; think 3-6 months.

Wrapping Up

While it may sound unsophisticated or outdated, personal finance and business are much simpler than people make them out to be. If you do the basics with focus and consistency, over time you’ll be amazed by what you can achieve.

*A helpful tool – One of the keys to achieving financial success is tying your debt destruction plan to your entire Financial Freedom Plan. Whether or not you have debt, the Power Spending Plan makes the whole process less stressful.

About the Author

December 14, 2020 Tony

fitness business

Coach and Grow Rich

Fitness professionals are reticent to talk about money.

Part of this is because it’s a topic we’re not taught.

Ever.

I don’t recall the “Financial Savviness” or “SEP IRA” chapter in my NSCA textbook.

Too, partly, I think we’ve been programmed to think that we’re “selling out” if we bring up money or that we’d like to make more of it. Fit pros are just supposed to shut-up, work long hours, and take pride in the grind.

That and apparently create the facade of wealth by posting lots of shirtless or arms crossed pictures next to sports cars on Instagram…😉

Nevertheless, finances is a dearth topic in the fitness industry and something that should garner more of our attention. To that end, I’ll hand things over to fitness financial expert, Billy Hofacker, who chimes in today with the first of THREE installments of a series I believe will help a lot of people.

Enjoy!

Coach and Grow Rich

If you’re like me, you got into the fitness industry because you had a passion for fitness and/or helping people. You probably realized you needed an understanding of anatomy as well as how to relate with different kinds of people.

However, what often catches us off guard and derails us is managing money. In my case, the realization wasn’t subtle. I was surprised to hear a knock on the door at the crack of dawn one spring morning about 10 years ago. I opened the door to see a guy standing there with no shortage of tattoos, muscles, and piercings.

Confused, I looked past him and saw my new white Honda Accord hooked up to his tow truck.

My car had been repossessed.

The craziest thing about this is that I was actually surprised. In other words, I was so far behind on payments that the repo man had to come and I didn’t even see it coming. That’s how off track I was.

This was a major wake up call for me to say the least. Thankfully, it has a happy ending.

My wife and I went on to pay down over 130K in non-mortgage debt in 5 years. Yes, we had that much debt. We owed money to everybody!

Not only did we pay off all the debt but we went on to create a nice life for ourselves. More importantly, I discovered my mission for helping fit pros achieve financial freedom .

As fitness professionals, we’re some of the hardest working people I know and unfortunately many have little to nothing to show for it.

As Tony says, “It’s just not a topic we’re taught, ever.”

The good news is that regardless of your situation, there is hope. You can absolutely get to the next level. To make this happen, three of the most important areas we need to address are:

Money Mindset
Destroying Debt
Building Wealth

In the first of this three-part series. I’ll be diving into Money Mindset.

Marching orders will be included as knowledge is useless until it’s applied.

Money Mindset

This is a broad area and a topic that comes up a lot in my Fitness Profit Coaching Group.

One thing I’m certain of after being on this journey for 10+ years, is that we are affected by our upbringing and experiences.

All of our actions are based on emotions which stem from thoughts which are completely shaped by our backgrounds.

This is why we can learn all of the techniques but still find success to be elusive. We are limited by our own beliefs which aren’t necessarily true. They are simply what we learned and don’t have to define us.

After countless hours of study, I’ve come to realize that financially successful people and those who struggle think completely differently.

There are many examples of this.

Some are obvious.

For instance, most of us agree that financially successful people are more likely to take control of their destiny. They don’t simply hope for the best. They make it happen.

Additionally, you’ll rarely hear a financially successful individual complain about their circumstances. Those who struggle often play the blame game. They seem to always have a reason for where they are in life. Whether it’s the economy, their age, their boss, their spouse, their kids, or most commonly their parents, they find something or someone to justify their lack of success. It provides some short term benefit. If the reason for their position is outside their control, they don’t have to take responsibility or change.

Change is uncomfortable.

Here is a common but not as often recognized self defeating belief. It’s one that I believe has affected me negatively. It’s the belief that money isn’t important.

Perhaps someone told you that there are more important things than money – things like relationships or time to enjoy life. This belief is commonly taught in religious circles. It’s almost as if having money makes you less spiritual.

Here’s what I now know to be true:

👉 None of those things I mentioned are mutually exclusive. It doesn’t make any sense to compare them. My relationships are extremely important but so is money. The fact that my relationships are important doesn’t negate the fact that money is too.

👉 Whoever says money isn’t important doesn’t have any. The belief that money isn’t important causes people to do things that are destructive to their financial health. They don’t pay attention to it. When you don’t pay attention to it you wind up in trouble.

👉 They don’t talk about it. When you don’t talk about it to those close to you, relationships are strained. We know it’s the biggest cause for marital problems.

👉 It doesn’t make anyone less spiritual. People can’t be fed and religious buildings can’t be built without money.

Money really magnifies character or lack thereof. When a generous person becomes wealthy, they become more generous and make the world a better place. When a greedy or dishonest person gets money, it magnifies these traits.

It wasn’t caused by the money.

The key is uncovering these beliefs, recognizing them for what they are, and working hard to develop new and more productive beliefs. This is hard work but one of the most valuable things you can do for your finances and your life.

Here are your action steps:

1️⃣ Think about an emotional experience you had around money when you were young.

2️⃣ Write down all of the thoughts, statements, and feelings you had around money, rich people, wealth, etc. when you were young.

3️⃣ Write down the habits and thoughts around money that your parents or caregivers had.

4️⃣ Write down the effect all these things had on your finances and life thus far.

Hopefully after spending some time in this area, you can acknowledge that not all of those things are necessarily true. They just represent your experience. Someone with a different background and experiences would have a completely different set of beliefs and values. Now it’s time to decide that moving forward you will adopt a new set of beliefs.

About the Author

October 29, 2020 Tony