Cash Confessional: Debt free by 30? This financial consultant doesn’t recommend it

Our Cash Confessional series, in partnership with Bank of America, takes a real and personal look inside the finances of different Charlotteans. No matter your situation, get helpful tips for a brighter financial future with Better Money Habits.

Interested in sharing your own personal finance story for our Cash Confessionals? Reach out to Katie Peralta at [email protected].

Thomas Johnson-Bean, 36, founder and president of L.I.F.E. Group in Charlotte, is a Philadelphia-area native who came down to Davidson for college on an academic scholarship. A political science major with plans to go into politics, Johnson-Bean ended up graduating early and getting a job in insurance instead. Immediately he was faced with paying off loans he’d taken out in school to pay for cost-of-living expenses and a study abroad trip. He paid off those loans by the time he was 30, and learned a few valuable lessons along the way.

In 2016, after years in insurance and as a financial advisor, Johnson-Bean launched L.I.F.E — which stands for Legacy, Insurance, and Financial Education — with the goal of holistically improving financial literacy for clients. The firm comprises consultants who have full-time professions outside L.I.F.E., such as an employment attorney and investment specialist. Johnson-Bean, an author of multiple books on money management, describes his role as a marketer connecting clients to his firm’s specialists.

(The following has been edited for clarity and brevity.)

What was your strategy for paying down all of your debt by 30?

Honestly, I️ wish I️ could say that I️ had a detailed budget, journaled about my grocery spending, sacrificed going out to eat, limited my avocado toast intake, and took copious notes of my debt-freedom journey but the truth is … it was a combination of being single, having a six-figure income from a young age through commission sales, and having no other major responsibilities to compete for my funds other than savings, fun, and debt.

What did you learn from that?

I️ wish I hadn’t. I wish instead that I had built more streams of income by investing in my businesses and adding more to my savings, and found greater financial security through outpacing the interest on my debt with a stronger revenue model to compound the growth of my wealth — rather than worrying about paying it all off.

What made you want to start your own company?

I realized that we’re coaching too many people about financial markets, and not enough about the basics. So many people who are invested in the stock market, their 401(k)s, are living check to check. Seventy-eight percent of Americans are living check-to-check. Sixty-four percent are at risk of retiring broke. What we have is a deficit in the fundamentals of peoples’ financial education.

How much of your own money did you have to invest in order to start it?

I invested my life savings. When I cashed out from being a supervisor at Bankers Life, I literally put everything that I had into building the L.I.F.E. Group, building the connections, and pushing that forward.

What is the most common money mistake you find your clients making?

Prioritizing debt. Right now, there are a lot of people who they wish they had more of the money that they had put toward their debt, their student loans, and credit cards back in their bank accounts, because they’re going through a crisis. A lot more people who are prioritizing debt over having money in the bank. And they can’t weather a storm, because what ultimately happens is they become debt free, but they have no savings.

What is your advice for clients who embarking on major financial decisions like buying a house or saving for a kids’ college?

I sometimes use an emergency room analogy. If you go into the emergency room, and you’re having heart palpitations, but you also have a cut on your ankle, is the doctor going to look at the cut on your ankle before they check your heart? No, they’re gonna look at your heart first. If something goes on with your heart, then doesn’t really matter about your ankle.

When people get to their 30s, they’re worried about the thing that’s hemorrhaging — debt, buying a home, getting married — and they’re not looking at just becoming financially organized. The number one thing is, are your priorities aligned the right way to manage the cuts and the emergencies that are happening in life?

How has the pandemic affected your business?

Everything shifted. Previously, we were doing public speaking engagements. We went into firms to talk about topics such as employee retention and 401(k) planning. All of that came to an abrupt halt. But our online business grew. We got a lot of hits from people who, for instance, were leaving their jobs and asked about whether they should roll over their 401(k) or cash it out.

If you could give one piece of advice to 22-year-old Thomas, what would it be?

I would learn how to grow multiple sources of income. Building one healthy income stream is enough for a great lifestyle. But when you have several different income streams, and when you maximize your opportunity, that can help you have the kind of freedom that 40-year careers and 60-hour-a-week jobs used to.

What is your No. 1 piece of financial advice?

Build your bank. I know that sounds cliche but if we can keep that top of mind instead of building a lifestyle or a facade that looks good on IG, I think everyone would be in a better place.

Want to read more about personal finance? Find our Cash Confessional series here.