Rule #31 Finances
Salespeople are motivated by two things: recognition and money. Sales
is an occupation measured by money. If you won the Rep of the Year
award but made less than most of your peers, something would seem
wrong. Make the most money of all the sales reps in the company and not
win Rep of the Year, and it would also seem wrong. The two go together.
In many other walks of life, it is common for promotions to equal higher
income levels. But in executive-level sales, it tends to be just the opposite.
Every time I get a promotion, my overall compensation actually goes down
because, in a pay-for-performance uncapped sales compensation plan, it is
routine for top performers to hit 200%–300% to quota and blow out the
earnings potential. It was not uncommon for the top few reps to make
more in a given year than the vice president of sales.
I want you to hit those kinds of numbers in the months and years ahead. If
you do, you should have a clear plan on what to do with your earnings. So
let’s talk a moment about finances. There are financial swings in every
salesperson’s career. There are great years, and there are forgettable years.
It’s important to be good and to know what you are doing. If we are honest,
however, then we have to admit timing (i.e., being in the right place at
the right time) and a host of other factors that are out of our control play
a part in our prosperity.
The best job I ever had came out of nowhere with a call from a recruiter I
had never spoken to about a company I had never heard of. At the time I
was working for major medical device company that announced a decision
that led to a dramatic change in our compensation and made us all contractors,
which led to a 50% reduction in pay overnight. Product recalls,
government intervention and legislation, and changes to the compensation
program happen.
I can’t tell you how or where to invest, but I can tell you to save for a rainy
day. I can tell you to make the only sure investment: pay off debt. I can’t
tell you that land, stocks, or bonds will be worth more in the future. But I
can tell you that the interest on your loan will have to be paid. You might
118 | J A SON ELMORE
lose on an investment, but the bank holding your note won’t. If you let
your mortgage go to term, you will pay more than double the amount you
borrowed.
Let’s run some numbers:
Mortgage: $300,000
Term: 30 years
Interest Rate: 3%
Property Tax: 1.25%
PMI: .5%
360 Payments: $1,577
Total Repayment: $567,832
Total Interest Paid: $142,582
I know you need a home. My home is one of my most valuable and enjoyable
assets. It’s emotional hold on me is unlike anything else I own. But do
you really want to pay $142,582 for the privilege of borrowing $300,000?
I can’t tell you that your other investments will do well. But I can tell you
that you can’t get ahead very fast giving away $142,582. When we take on
debt, we presume upon the future.
Let me say that again: Entering into debt is presuming upon the future.
We are telling ourselves that the future will be better than today for us
financially. But we are also enslaving ourselves to others. Do what you can
to get completely out of debt because of the freedom it will provide you.
Several years ago, my wife and I determined to get completely out of debt
based on the religious conviction and inspiration we received from Jim
Sammons and Dave Ramsey. Like most Americans in the early 2000s, my
wife and I had bought into “the plan”:
• buy as much home as you can (because it will accrue in value),
rather than throw money away on rent;
EL ITE EXECUTION | 119
• invest in a 401K (because company match will make it grow no
matter what, and the stock market has gone up on average for the
last sixty years); and
• utilize 0% credit cards to get what you want and find a better use
of your capital by investing to get ahead.
As most of you know, in the 2007–2008 downturn, “the plan” (i.e., “the
smart money”) came crashing down around us. Homes suddenly lost value,
leaving many upside down on their mortgages and trapped in their homes.
Many homeowners unethically walked away, sticking the bank with the
house. The value of most stocks in the market tanked, leaving retirees with
a big hole in their retirement plans—and the rest of us questioning the
merits of the system. Low- or no-interest credit cards offered by banks
without discretion created a credit fiasco as people mentally and monetarily
disconnected from reality in their buying habits, racking up $10,000–
$100,000 in credit card debt.
All of this “easy money” in the form of debt overheated our economy. As
a group, we Americans collectively mortgaged the future of the economy.
As salespeople we have seen and should understand this economic lesson
from an example in our own field: The company (looking for a short-term
boost) runs a special offer to manipulate the market and customers (hospitals,
for example) into buying larger quantities of a product. But then the
company has to work through that inventory without the benefit of running
a special for the end user (patients who don’t get sick or injured at a
higher rate) in order to drive increased volume. So you don’t see an order
for a while. Worse yet, your company has a little success with the first offer
and decides to do it several more times that year. Now your customers get
trained to wait for the end-of-the-quarter deal or year-end special, which
screws up the order cycle and blows your ability to forecast. And then the
perfect storm hits you: The company realizes their manipulation has led to
an unsustainable situation, and they pull the programs that “juiced” the
sales but not the high quotas built on last year’s numbers based upon those
very programs …
With a concentrated effort, my wife and I did pay off our mortgage, celebrating
every step of the way as a family by using a thermometer chart that
hung in our house. I think you will understand when I say God was good
in allowing us to do so in just four years. I realize that will not be possible
120 | J A SON ELMORE
for most of my readers. But as I said earlier, a third-party story is a powerful
inspiration and motivator! Take this one to heart for yourself. With
God’s help, it can be done. You can be sure it won’t happen if you don’t
try.
Because our home was paid off, we were able to take a voluntary transfer
to another state without selling our home. It was a tremendous opportunity
for me, and it allowed us to put our children in a private school we
wanted them to experience. A year later, I was able to accept a promotion
and move across the country from the East Coast to the northwest Rocky
Mountains area. It was another tremendous opportunity for me, and it
allowed us to live in a city we had dreamed of visiting and to put our children
in another private school we wanted them to experience. A year later,
I was able to accept another promotion and move again.
We did finally move back to our home state. Each promotion was very
critical to building my resume and gaining valuable experience leading up
to what became the best job I ever had. Each move was an adventure for
our family, which we thoroughly enjoyed. As mentioned before, because of
my unusual success as a salesperson, the promotions unfortunately came
with a pay cut. While my job satisfaction and skill set was improving, my
income was not. But because I was out of debt, I had the freedom to accept
these promotions and give my family an amazing adventure. The house
did not sell until year two of our adventure, but that did not hold us back.
My debts and obligations didn’t dictate or inhibit my opportunities. Get
that freedom! Get out of debt!
I am not convinced that the pain of the economic bubble-bursting crash
was dealt with in 2008. Do some reading, think critically, and talk to people
who know. Use your success and your high income to put yourself and
your family in a strong position to weather another storm by being free
from debt. And relieve yourself and your family from the stress that
accompanies debt—future crash or not.
A true salesperson will be motivated by money. We equate success with
wealth. But a salesperson struggling with debt who is stressed by payments
is more likely to make a poor choice to address near-term financial problems.
There is a reason why those we entrust with national security secrets
have their finances monitored, and even managed, by others during their
tenure, lest they be tempted toward corruption under duress—or fall prey
to blackmail. Debt-free living will not make you less money-motivated. It
will, however, ensure that you are properly money-motivated and free to
EL ITE EXECUTION | 121
make great career choices. It will make you better salesperson.
In his book David and Goliath: Underdogs, Misfits, and the Art of Battling
Giants (Little, Brown and Company, 2013), Malcolm Gladwell notes that
when researchers asked some of the most wealthy people about feeling
wealthy, it was pretty straightforward. Interestingly, when asked, many
wealthy people reported that they don’t feel like a success. Success is a measure
of how we feel, which is harder to quantify than wealth.
Here’s my point: What would you do if you won the lottery? You would
immediately break free from debts hanging over your head and have
enough money for all your needs and wants going forward. And you would
then do things you can’t do now. You want to get rich? You need to feel
rich. Take your big commissions and pay down your debt, eliminate stress,
and create mobility and opportunity. Feel what it’s like to be debt-free.
Feel success.
For what it’s worth, I don’t know anyone who ever took this advice to
heart until after a severe financial crisis impacted them personally. It may
be that some lessons can only be learned the hard way.
Elite execution demands that you master your money to provide mobility,
create opportunity, and achieve contentment.
Owner of Pest Patrol | Podcast Co-Host | Text me @ 503-985-6607
2yThis is good stuff Jason Elmore... Buying this book now.