In 2021, Adam Carroll founded The Shred Method, a financial course and software that helps people achieve financial freedom in their lives in record time. He is on a mission to help others build a bigger life, not a bigger lifestyle. He is fascinated by quantum physics and the power of the subconscious. Adam spent the majority of his adult life reading non-fiction and biographies, as well as taking courses on how to maximize effectiveness in the most important areas of life.
Join us in learning how to blast away debt, build equity, and create real wealth as quickly as possible, and it’s not magic. It’s math, and it’s math that most people just don’t learn in school.
Adam presents several clear and objective situations that help us understand how to deal with our money, particularly our monthly salary, and how to use it to build one of the things we all want: wealth. We hope you get a broader, clearer, and totally realistic vision, without counting on something magical, of how to improve and expand your way of dealing with money.
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Welcome to the show where we have the absolute pleasure of learning from thought leaders in business, franchising, and high-performance personal development. My guest most certainly goes without exception. I’m excited for this conversation. We have the Founder of The Shred Method, Adam Carroll, on the show. Welcome, my friend.
Thank you, Nick. It’s great to be with you. I’m super excited about the show and to see where the conversation takes us.
No kidding. Talking before the show, this is going to be an absolute fire episode. You’re somebody who has done so many different speaking engagements. You’re an author. You’ve done a ton of TED Talks, and these engagements have picked up quite a bit of views, like millions of views. I could speak so highly of you for most of this show, but I won’t embarrass you from that perspective. I want to give the audience some context around your talent and commitment to your craft, not only as an entrepreneur but also in your industry, and it shows in the business you built. Can you share a little bit about The Shred Method? What is it and how did you start it? Tell us about it.
The Shred Method comprised three things. It’s education, coaching, and a software program. At The Shred Method, we help people blast away debt, build equity, and create real wealth in record time. It all sounds like a magic pill, but it’s not magic. It’s math. It’s math that most people don’t learn in school. We’re teaching them how to leverage their most powerful resource, which is their income, but do it as efficiently and effectively as possible. For most of your audience and the majority of consumers out there, our income isn’t that efficient. We make money, but we don’t utilize it in the best way possible. That’s what we do at The Shred Method.
What do you mean by it’s not used efficiently?
There’s a metaphor that I use to describe this that I think people get because we tend to think in images and metaphors. If you were to leave the house in the morning to go to the grocery store and you knew that you had to go to the post office later in the afternoon, but you finished grocery shopping and went home, would you leave your car idling in the driveway all day knowing that you were going to go to the post office at 3:00 or 4:00 in the afternoon?
I wouldn’t because my neighbors would text me and I don’t want to hear that I left my car running from my neighbors. That’s why I wouldn’t leave it running.
They would say you’re ruining the environment, it’s a waste of gas, it’s hard on your engine, or whatever. It’s largely inefficient. People don’t do it because it’s inefficient. If I said to your audience, “Your car is running in your driveway right now,” they’d go look and check. If it was, they’d turn it off because it’s inefficient. What most people do with their paycheck is they leave it idle in their “driveway or parking lot,” which is their checking account. For the majority of folks out there, some amount of money is sitting in checking or savings for days, weeks, or months on end. Would you say that on a regular basis, there would be surplus funds sitting either in checking or savings?
Yeah, absolutely.
We do it because it feels good to have money sitting in that account. We look at it and we go, “I feel better when I have a couple of thousand, $10,000, or whatever someone’s number is. It’s $200 for some people. Whatever the number in checking or savings feels good. We look at it and we’re like, “I’m good because I have that money there.” All the while they’re paying amortized interest on large debts like their mortgage, commercial loans, SBA loans that they started a business with, etc.
What we do at The Shred Method is, first of all, we teach people that lazy idle money or money that’s sitting around in accounts can often be dangerous money. If you had extra money in checking or savings, or let’s say your spouse does, maybe you’re not a shopper but she might be, what happens with “extra money?”
I think it turns into bags and shoes. Maybe a dress. I’m kidding. In our house, it all turns into the children. Kids stuff. My wife is not much of a shopper. I have to convince her to shop and I may even hire somebody to shop for her. That’s my dynamic. She has no problem taking care of the kiddos. That’s where our money is going.
Candidly, this is a sidebar comment on that, but the USDA does this report every year and they tell you how much it will cost to raise a child from 0 to 18. The number they’ve come up with is north of $280,000. With your pack of four kids, you guys will be blowing $1.2 million, according to the USDA, to raise them from 0 to 18.
Does that include college?
That does not include college.
Does that include weddings?
I don’t know about that.
Does that include the ongoing entertainment to keep them in your life?
Probably not.
I’m kidding, but not kidding.
All of those are extra expenses. The way that we look at people’s finances if they’re a Shred client is, number one, we’re going to say there’s a difference between available funds and accessible funds. Our society and the Dave Ramseys and Suze Ormans of the world have taught us that we all need 6 to 12 months’ worth of living expenses in the bank. For a long time, I believe that to be true. I realized there’s a slight distinction between available money and accessible money.
The available money might be money that you could go to the bank and you could pull out and you could count and you could swim around in it on your bed or whatever you want to do with it. That’s available funds. Accessible money might be money that if you got in a pinch, you could access that money. It doesn’t necessarily have to be there all the time waiting for you, particularly in times when the amount of interest that it’s making is very negligible.
We went through five years almost which people were making 1/10th of a percent or 25 basis points on their money. Nowadays, yield savings accounts could get you 4% or 4.5%. That’s a decent return. Decent enough, but there may be a more efficient and effective way to use that money or a place to put that money that would save you tens and hundreds of thousands of dollars in interest while still keeping that money accessible.
That becomes a great opportunity for an entrepreneur. That’s the reward of being an entrepreneur, accumulating cash.
The deal is that most entrepreneurs start a business. I’m going to borrow something from a book called The E-Myth Revisited by Michael Gerber. He used to say that most small business owners are not entrepreneurs. Most of them are technicians who suffer from an entrepreneurial seizure. People go, “I’m a good painter. I’m going to open my own painting business.” It’s this entrepreneurial seizure they have where they go do it, but they make one fatal assumption. That is, “Because I know how to do the technical work, I know how to run a business that does the technical work.”
This is the power of franchising because the franchisees build all the systems for you. They teach you how to run a business that does the technical work. We strive to build a business that helps support our life or our lifestyle. In my mind and from my perspective for our clients, our goal is to build wealth outside of the business, as well as inside of the business. If we can build a valuable practice, all the while, we’re building wealth outside of the business. Building wealth outside the business means you don’t necessarily have to sell the business to retire. It’s gravy on gravy when you do, but we should be building wealth outside at the same time.
There are so many inefficiencies with the cash along the way while you own the business or the asset. The ultimate goal is to grow that asset and exit and have a liquidity event there as well. Along the way, how are you being efficient with your cash? I would assume that, in most situations, that cash is just idling there.
For most people, it does. Typically, what happens is they’ll say, “I didn’t know what to do with it. I wasn’t sure. It felt safe and secure where it was sitting,” which is great. We all want that safety and security. In fact, one of the first questions we ask is, “How much money do you need in savings to feel safe and secure at any given point in time?” I would encourage entrepreneurs to have that conversation with their spouses because your number and their number are probably radically different. When we know what that number is and we can begin to figure out how much of that needs to be available and how much of it needs to be accessible, that’s when we start to hone in on how can The Shred Method help someone blast away their debt, minimize their expenses, and increase their free cashflow.
What are some practical examples of where to place money so that it may not be cash on hand but is pretty easily accessible?
The two simplest answers to that question are if you’re a business owner, it’s a BLOC or a Business Line of Credit. If you are an individual and you own a home, it would be a Home Equity Line of Credit. For most people, when they think of a HELOC, a Home Equity Line of Credit, they think of that tool that the bank is going to sell you when you want to buy a four-wheeler or an RV, put a new roof on the house, or a three-season porch on the back.
The challenge with that is when we use that tool or the way the bank intends us to use it, what it does is we borrow a big chunk of money and then it creates another monthly payment for us that we pay month after month. The way we use those tools, either the BLOC or the HELOC, and you could include in that category the PLOC, a Personal Line of Credit, which is basically like a signature loan or a signature line of credit.
The way we use those is we use them effectively like a checking account. Your money will get deposited in the home equity line or the business line and our software tool that powers The Shred Method will say, “Based on how much is coming in and how much is going out, it looks like you have this extra amount left over. Let’s apply that in the most efficient way possible.” We start blasting away the debts that we’re carrying as a business or as an individual.
We start with high-interest credit card debts. We’re going to knock those out right away. We go to car loans because we want to free up the $400, $500, or $700 a month that people are paying on their cars, trucks, or what have you. We go after either commercial loans, SBA loans, or the mortgage. When we start going after that, what happens is you’re already feeling pretty abundant because your cashflow is increased on a monthly basis.
You’re starting to see your debts be paid down substantially over time. Now it’s like, “I have all this equity. I’ve got all this discretionary income and now I can make some profound choices for my business,” which could mean capital investment, marketing, or hiring an extra person. Those kinds of things are what take the business to the next level.
You’re saying a great place to put that is reinvesting it in the business. Ultimately, prioritizing debts and creating ROI is the asset you’re growing and dictating the ROI of. That’s a great place to put that excess cash beyond what you need to break even on everything else, including paying down debts.
That’s exactly right. In doing so, what we’re ultimately doing is the main distinction that I help people make in entrepreneurship. There is a difference between taking a calculated risk and being risky. As someone who is levered up, you have an SBA loan, you have two vehicles you’re paying on, and you have a property that you’re paying a lease or rent payment on every month. You have to pay salaries to people. Someone says, “You need to grow, so why don’t you go get another loan and another truck?”
Now you have more payments. Some of that could be perceived as risky. Whereas what we’re trying to do with folks is show them how to take a calculated risk, which looks like that extra money that’s coming in, let’s deleverage a bit, free up your monthly income because then when you go take a risk, it’s calculated. It’s not just risky.
I go back to Michael Gerber and his book The E-Myth Revisited. He talked about the number one killer of businesses is the fact that they’re undercapitalized. You get to a point where you have a big cash crunch, debts go up, or your income goes down, and then they’re like, “I’m underwater on all these things. I’m going to not make payments,” which then kills your credit score and all of that. Our goal is to help people derisk or mitigate the risk of the business by beginning to deleverage some of the debts that they’re carrying.
Do you think that there are good debts and bad debts?
A hundred percent. I maintain that if you have debt, it is making you money. If you have debt on a truck and that truck is what you use to go out and provide your service every day, that’s probably a good debt. That debt could be good for the business. That being said, there may be a way to transition that debt in our system where the payment becomes much less. It frees up the monthly cashflow, which will de-risk the situation for you.
The short answer is yes, there is good debt. I’m not like an absolutist about not paying everything off to zero because it can take a long time to do that for most people. In our system, the average person could be completely out of debt including their mortgage in 3 to 7 years, which seems like magic to some people, but it’s pure math.
The way we prove that out is we’ll tell folks, “Look at your last mortgage statement, commercial loan statement, and SBA statement. Of your payment, how much was going to the principal, and how much was going to interest?” You’ll know in the first 1 to 5 years, the majority of your payment is interest.” It’s how amortization schedules work. What we do is accelerate the amortization table by blasting that debt away much faster. In the end, we help people save tens or hundreds of thousands of dollars in interest that they would normally spend.
That’s so simple to do. It takes that disciplined approach. Number one, know where to look, but then the disciplined mentality that commits to being more efficient from that standpoint. Clearly, this is powerful information. I told you at the beginning of the show we’re going to have some good content, and I think you see why. I want to hear more from you about why it is so important for you to share this message with the people.
Going back in the way back machine a bit, I was a mortgage broker for a number of years. I can’t tell you how many refinances I did of people who would say, “I racked up some credit card debt and want to consolidate. Can we do a consolidation or cash-out refinance on my mortgage?” I would do them. I would try and counsel and coach people on what to do to blast away the debt, not spend as much, and create extra cashflow every month. Our number one cardinal rule is you have to have more money at the end of the month. You can’t have more months at the end of your money. That doesn’t work.
Financial freedom should come relatively easily if we’re diligent about always having more money left over at the end of our month. For most people, for whatever reason, it becomes a challenge to do so. This is so important for me because I would encounter person after person who would refinance, and they do it every year or two years. They just reset the clock back to zero for them. They’d go right back to paying the most amount of interest they possibly could and the least amount of principal they could.
Some of them would come back 3 or 4 years later selling their home and they’re getting a loan on the next property. They would expect a big check at the closing table because they’re selling their home and have been paying their mortgage for four years. They get to the closing table and they’re like, “I have $1,000 or a couple of thousand dollars. It wasn’t nearly what I thought it was going to be.”
From my perspective, this is so important because we show people and educate people how to do The Shred Method not so that they’re debt-free but so that they can write a check for their kids’ braces when the time comes. They can pay for college tuition when the time comes because most people are sweating that, “How am I going to pay for braces? How am I going to pay for vacations? How am I going to pay for college? What will retirement look like? How will I ever afford healthcare in the future?”
What we’re doing with The Shred Method is saying, “If you do for two years what most people won’t do, you can do for the rest of your life what most people can’t do.” That is write a check for braces, write a check for a new car, or take a 30-day vacation with your family and not sweat the bills afterward.” That’s why we do what we do so that people can actually live the life they want. The slightest distinction we make is that we’re going to pull money back from what you’re sending to your banker and instead, put it in your pocket. In doing that, it literally changes people’s financial futures forever.
It’s life-changing. It’s a matter of being disciplined once you have the knowledge. Why do you think most people find themselves on the other side of the fence, being so inefficient?
I could probably point to a number of reasons. The top 2 or 3 that come to mind, one is they probably have had horrible programming from the time they were young. A good friend of mine’s financial script that she runs in her mind all the time is, “We’ll never have a lot of money so we might as well spend it now.” If you follow that logic, it’s very circular. “We’ll never have a lot of money so we might as well spend it now. Because we’ll never have a lot of money, we might as well spend it now.” Anytime it’s like, “I want to have some savings.” You can’t because the script that you’ve been running from the time you were a kid necessitates that you have no money for the script to be true. Number one is people’s scripting has to change.
This goes into money psychology and some of the coaching that we do with clients. When we can fix someone’s relationship with money and the way they handle and look at money, all manner of things change for them. The second reason it’s hard is we get in a rut. I would call them habits but a habit is a rut that we get in for a very long time. The habit or the rut we’re in might be that we don’t pay attention to money because it’s not fun. It has caused problems in our past, “I don’t want to deal with it. I do what I do like I’ve always done.” If you do what you’ve always done, then you’ll get what you’ve always got.” That’s the logic. What we tell people is your life is perfectly engineered for the results you’re currently getting.
That could mean your marriage, relationship with your kids, finances, and business. Everything is perfectly engineered for the results you’re currently getting. Right now, the business is perfectly engineered for the results the business is getting. Your finances are perfectly engineered for the results your finances are getting. When we begin to re-engineer it, people see, “I’ve been sending $20,000 or $30,000 or $50,000 a year in interest payments to my banker while keeping $10,000 or $20,000 in savings. If I begin to reorient my cashflow a little bit, I could eliminate $20,000 or $30,000 that’s going to my banker and keep that for myself every year.” The question I would ask you, Nick, is this. Would $20,000 or $30,000 a year make a big difference to you and your family?
Absolutely.
That’s college tuition, particularly when kids are as young as yours. Put $20,000 away a year for four years and you’ll have a kid covered through college by the time they’re ready to go at 18 or 19. The distinction that we’re trying to make is to look critically at how much we’re paying in taxes or interest and then begin to reorient and re-engineer our system so that we get to keep that instead of sending it to our banker.
Where could I go to learn more about these strategies? As we’re talking, I’m thinking so much about the tactical side. If I’m going to reorientate the way that I look at how I pay principal and interest or the way that I am intentional about my lifestyle and I make those commitments to start spending less, be more frugal, and look at opportunities to invest or create smart debt, those are all nuances there around the approach to the system. From a tactical standpoint, I love the mortgage and perspective around principal and interest, but how can I keep learning more?
First and foremost, we are an education company. I love this question because it is about learning more and putting into practice what you learn. If anyone is interested in finding out more about this, TheShredMethod.com is our website. On the site, there’s a 30-minute masterclass. You can watch it at about 1.5 times speed and you’ll get through it in about 17 minutes or so. That’s a powerful look at how the system works from a logistics standpoint.
We have a free calculator on the site as well where you can go in and plug in your raw numbers, your income numbers, expenses, what your mortgage payment is, and interest on your mortgage. It will show how fast could you be out of debt and how much will you save over the long run or how much will you not spend on interest. The powerful number that you’ll see there is a PDF document you can print out and put on your refrigerator. For us, that has been a motivator, to look at that number and say we could save $260,000 in interest by following this thing for 38 months or 42 months or whatever it might be. If somebody is interested, TheShredMethod.com is probably the best place to go first.
That’s what it’s all about. It’s about education, a lifestyle, and a commitment to being financially efficient and smart with your money. As an entrepreneur, that is ultimately the reward of winning the scoreboard. All your data points, business planning, KPIs, and leading indicators translate to the ultimate scoreboard, which is your P&L.
The most important number there is the bottom line. That translates to cashflow. As you grow and mature as an entrepreneur and begin building more and more cashflow and exceeding your expenses, building assets, hopefully, multiple businesses, multiple cashflow streams there, this financial literacy lays the foundation to create an entrepreneurial empire. That’s why this information is so critical to professionals in business and franchising. Clearly, you need to be a high performer to have this disciplined approach toward money.
You commented on something that I want to touch on quickly. That is multiple streams of income from the business. I would be remiss if I didn’t tell your audience that what we’ve covered here and what we’ve talked about in terms of The Shred Method is step one. I like to call what we do a ten-year freedom plan. It’s very similar to what you do, Nick, in terms of helping people who are into franchises and are growing their businesses.
How do we perform at a high level? High performance is the key word there for people. What we do over a ten-year period is show them step one in Shred. It might take you from 0 to 36 months, let’s call it. In the middle of there, somewhere around the 24th month to maybe the 60th month, we’re bulking. When we bulk, we’re literally stockpiling cash in accounts that allow us to grow and invest. In that, maybe 48th month to the 120th-month window, we’re heavily investing in things that create massive, passive, and permanent streams of income.
Our goal at the end of the day or the end of certainly a ten-year period is to have more money coming in in passive income than we have in expenses. We do that and do it at a grand scale. This is a ridiculous example, but if your expenses are $1,000 and we can create $10,000 a month in discretionary income passively that’s coming in, life is grand.
Go wherever you want and do whatever you want. Most people can live comfortably on $10,000 a month. That’s what we’re trying to help people do without changing their spending patterns all that much. We’re changing logistically how their money flows and strategically where they put it to create that passive income stream, allowing them to never work for anyone if that’s their choice.
I would liken financial literacy to oxygen for an entrepreneur.
That is such a great example. Such a great analogy.
We talked about exceeding expenses and reorientating disciplines to minimize expenses. That’s a discipline. That’s a choice. It’s a dollar-for-dollar choice. Every dollar has a choice to be efficiently used and that’s through the lens of expenses and surpluses and being smart with money. As an entrepreneur, it starts with those granular dollar-for-dollar decisions that are made. Ultimately, that leads to excess, which creates working capital. That’s what allows you to reinvest in the business and scale the business further. Financial literacy is oxygen for an entrepreneur. You can’t be a successful entrepreneur if you don’t have good financial literacy.
One other thing that I’ll mention is, and you mentioned it, having liquidity or being able to grow with your business and being able to invest in the business. There is this idea that we share with folks that most people don’t have an income problem. They have a liquidity problem. What we mean by that is the bankers will underwrite what we can afford based on our income or our revenues in the business. Yet, if someone came to most business owners or certainly individuals, consumers, and society and said, “I have this opportunity. It will return somewhere between 15% and 20%. Risk is largely mitigated. Very little risk in the deal and all, but you have to write a check for $50,000 or $100,000,” most people would be like, “Where on earth am I going to come up with that money?”
When using The Shred Method, within somewhere between 12 and 18 months, 80% to 90% of our clients could come up with $50,000 if they needed to. We’re reorientating where their money goes, creating equity, having access to the equity, and then going, “When an opportunity comes around that is largely risk mitigated, why wouldn’t we take advantage of it?” For your audience, if you find yourself from time to time seeing opportunities but not having the liquidity to participate in them, this is the answer to that situation.
Thank you for your commitment to this message. It’s so critical for entrepreneurs and the success of entrepreneurs. The American dream is entrepreneurship. The majority of our commerce is small businesses. Either you are an employee or you are an employer, professionally. This message is so critical to success in the marketplace. It bewilders me that money isn’t spoken about more often. In fact, it’s the opposite. It’s not spoken about.
You don’t talk about how to save money and what you are doing with all your extra money. How do you make extra money? It’s not spoken about enough in society. Thank you for demystifying this subject of money and creating practical solutions to reorientate and break these barriers that have been putting blinders on folks for so much of their life.
Frankly, it’s like the frog that boils over time. They don’t even know. That’s the product of their environment. As a result, all these folks in the marketplace are bringing baggage. It’s so important for us to be humble and servant-minded and have empathy but have a heart toward educating others on the scoreboard and providing easy ways for them to change their life.
Thank you for your incredible work and your commitment to this incredible space. It’s so important for entrepreneurs to be successful and it is so much of our culture, the American dream. It is such important work. Thank you. I hope that more folks become comfortable thinking about and talking about money.
I appreciate that more than you know, Nick. This has been a lifelong pursuit for me certainly over the last 25 years where I’ve been trying to teach people financial literacy. You made a comment that could be a T-shirt or maybe the title of this show or something. We should all be asking each other, “What do you do with all your extra money?” I think it’s a running joke of like, “What extra money?”
In reality, shouldn’t that be our norm? What do you do with the extra money to make sure it’s as efficient as possible? That should be a normal question that we could ask each other as opposed to being super secretive. “He is a successful investor. I don’t know what he does with it.” Let’s share that stuff because the rising tide raises all ships. If we’re all doing better, wouldn’t we all do better? I don’t know. Maybe I’m naive to think that, but I like the question, “What are you going to do with all your extra money?”
Knowledge is powerful and the more money can be demystified, the less people will hide from it and not talk about it. They’ll step into it, own it, be fully confident in it, and recognize that if making money is a skill, it doesn’t mean I have to serve it. Ultimately, I can use it as a tool. I make money as a skill. I don’t serve it. I use it as a tool. The more knowledge and confidence that folks can have in making money, they realize the simple truth, which is that money is a tool. For some, though, it’s not.
For some, they serve it and such is life. The more all of these things can be talked about, the less mysterious it is and the more people can change their lives. Remind me what the website is because I’m going to go check it out. I’m going to share it with folks that I know and talk about it. I believe it’s TheShredMethod.com.
Folks can go to TheShredMethod.com. The savings calculator or watch the masterclass are your two main options. I would also offer a team of coaches who are happy to spend twenty minutes on the phone with folks, going through your numbers in detail, and telling you exactly what’s possible. Literally, they can tell you the month and year you’ll be out of debt completely if that’s your goal.
What an incredible conversation. I can keep talking with you all day. I could tell before this show that this was going to be a powerful message. Thank you so much for your commitment to this space. Go onto the website and check it out. Adam, you’ve built an incredible business. Thank you so much. As always, please subscribe to the channel. It’s how we’re able to continue growing. Like the video and contribute to the conversation here. Drop a comment. Adam Carroll, it has been a pleasure. Thank you so much. As always, level up.
I’ve spent the last twenty years delivering keynotes on personal finance, personal leadership and high performance. With over 1,000 paid engagements under my belt, I feel I’m just getting started on my path to mastery.
In 2021, I founded The Shred Method, a financial course and software that helps people achieve financial freedom in their lives in record time. My mission in life is to help people build a bigger life, not a bigger lifestyle.
The “interesting” bits are — I’m fascinated by quantum physics, the power of the subconscious, and how people are wired. As such, I’ve spent the majority of my adult life reading non-fiction, and biographies, and taking courses on how to maximize effectiveness in the most important areas of life.