Pay Off Debt First or Follow Your Passion?

As a Licensed Insolvency Trustee, I’ll always advise that you prioritize debt repayment. Why is it important to pay off debt first? So that you are no longer burdened by it. While that is the most prudent course of action, not everyone wants to wait until they are debt free before pursuing their dreams. For example, if you are a recent graduate, you might not want to delay starting a business until you’ve paid off all your debt.

This is exactly the decision that my guest, Alex Grodnik, made. Still owing $75,000 in student loan debt, he left a stable job to follow his passion. But, should you follow in his footsteps? Alex says it depends on the kind of person you are and if you’re willing to take risks.

Alex had a prestigious job, earning a six-figure salary at an investment banking firm but he soon realized that he could be doing more with his time. Rather than spending 100 hour weeks at work, he chose entrepreneurship:

I really went on this, I guess you could call it journey, self actualization of kind of thing distinguishing between what makes other people happy versus what makes me happy.

Alex decided to quit his job and go to business school at UCLA. And while he still had a significant amount of student debt already, he took the chance because he wanted to have a more fulfilling life. His efforts paid off, as Alex now runs two business ventures – a payments app called Payclub, as well as, his own podcast.

Being an entrepreneur might be your desired lifestyle too. It’s a much more common endeavour than it used to be. But you may also be uncertain of your exact venture, even if you know for certain that you don’t want to work for someone else for the rest of your life.

Finding your passion

So, how do you follow your passion if you don’t know what your passion is?

Alex suggests a couple of steps you need to take:

  1. Start your career off by working for someone. In other words, get your experience, make connections, and see where you career takes you. Moreover, even if you don’t know what you’re doing right now, as long as you’re a do-er, and have confidence in yourself, you’re more likely to make things happen.
  2. Get to know yourself better and see if you can find a problem to solve:

    So you go work for a company kind of like what I did, maybe a little bit less strenuous than something like what I did, but you are at that company. You’re doing three things really. You’re developing networking connections, you’re gaining a skillset and maybe you’re seeing an inefficiency or something that’s not quite done or being done correctly that maybe you could fix or solve.

Should you prioritize debt repayment?

Alex recognizes that everyone has a different risk tolerance level. You may or may not be afraid of investing more money into a new business, or leaving secured employment. You may worry about the debt you already carry, and the new debt you may incur. It all depends on your mindset, as well as, your personal circumstances:

I have debt service and I have to figure out how to pay this off and so you balance the start-up life and how long you’re going to pursue that versus paying off debt.

According to Alex, even though it is a risk to take on more debt to follow your dreams, instead of paying it off, it’s more likely you’ll make things happen if you’re a do-er:

And so I would say, you know, just have confidence, trust in yourself.

At the end of the day, the main point to consider is where you are in your life and if it makes financial sense for you to invest in a venture before you pay off debt.

For a more detailed look at Alex’s story and tips for how you should approach entrepreneurship, listen to today’s podcast or read the complete transcript below.

Resources Mentioned in the Show

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FULL TRANSCRIPT – SHOW 191 Pay Off Debt or Follow Your Passion?

pay off debt or pursue your passion?

Doug Hoyes:    This podcast is called “Debt Free in 30” because every week we take approximately 30 minutes and talk about ways to deal with debt. Obviously, as a licensed insolvency trustee, I believe that it’s important to get out of debt so you can get on with your life. But what if you have other goals in your life that are more important than dealing with debt? What if you graduated from school a year or two or three ago and you have student loan debt, but you are an entrepreneur and you want to start your own company or become self-employed? Should you stay at your job until you pay off your student loan or should you strike out on your own while you still have debt? It’s a difficult decision.

The prudent course of action is to pay off your debt first and then start to invest in a new enterprise. But the longer you wait to go out on your own, the longer it will be before you achieve your goals. So, what should you do? Pay off your student loans and other debts or keep making the minimum payments on your debts and strike out on your own?

My guest today is a guy who went to university, got a good job on Wall Street and then decided that even though he still owed $75,000.00 on his student loan he was going to follow his passion and go from making big bucks to making nothing. Why? How did it turn out? Let’s find out and meet my guest. Who are you and what do you do?

Alex Grodnik:  Well, first of all, thanks for having me. My name is Alex Grodnik. I live in beautiful, sunny Los Angeles, California, and my life now has kind of taken I guess what you could call a pivot. I’m 31 years old. The first, I don’t know, 25 or six years of my life I was pretty singularly focused on working on Wall Street and getting – working in investment banking and, you know, being at a high powered, prestigious job with a bunch of people who go to Harvard and Wharton. And I did that and you work these 100 hour weeks and you learn a tremendous amount and you get yelled at all day long and it’s a fantastic place to begin your career, but once I had this job for a little while, not even that long, something funny kind of happens. It’s, you know, your whole entire life has led up to getting something. You get it and then you realize, you know, maybe this isn’t quite right for me. And Doug, that’s a really hard realization to come to because like I said, I’ve worked for my entire life to get this and then you get it and everyone is, you know, so congratulatory towards you.

These are prestigious jobs. You’re making lots of money. So like there’s a lot of validation that you’re doing the right thing. But then, you know, when you look inside and you’re trying to think, you know, is this really what I was put on this earth to do, is this really what I feel like I’m supposed to be doing and I didn’t – I couldn’t say yes to that question and that was difficult. And so I really went on this I guess you could call it journey, self actualization of kind of distinguishing between what makes other people happy versus what makes me happy.

And so, you know, these prestigious jobs, they look great on the outside, they are sexy, other people put a high amount of importance on them. So you know, you have this ego built up from them but that, you know, sense of what makes other people happy or interested isn’t necessarily what fulfills you and that wasn’t what fulfilled me. And so I recognized when I was working, you know, these 100 hour work weeks, 80, 90, 100 hour weeks, that this wasn’t quite right but I didn’t know what was. And so I thought okay, maybe business school would be a good place to figure it out and so I went to UCLA and got my MBA. And, you know, we can talk about how I managed the debt and, you know, giving up a job that paid me lots of money and then going and paying about $100,000.00 and making no salary for two years, but business school is a pretty incredible time. You get a tremendous amount of connections and you have great experiences and you travel and really, it’s just a mind opening two years.

And I can tell you, Doug, that the most impactful point of business school was it was actually in a class. For most people it’s not – business school is kind of like least about classroom learning and much more about outside of the classroom learning and networking and experiences. But anyways, I was in this leadership type class and the professor had us write down when we felt like we were being our most authentic selves. And he defined authentic self as feeling like you’re firing on all cylinders, using all of your facilities, really, you know, being yourself. And so fine, I wrote down some times in my life when I felt like that and okay, great. So now I had three or four times.

So I’m looking at this piece of paper and every single one of these times that I wrote down I was doing something entrepreneurial. I was starting a business. I was – you know, growing up I was like the car wash, lemonade stand kid going door to door selling stuff. And so I wrote down some of those times, but then sometimes also in my more adult life when I was, you know, selling tickets to a concert or something like that. And I realized wow, this entrepreneurship thing, you know, I kind of thought that was what I always wanted to do. It’s what my parents do. It’s what their parents, my aunts and uncles. Everyone in my family’s entrepreneurs but for some reason like as a kid I always had this, you know, goal inside of me to go get a prestigious job and then go back to entrepreneurship. But I guess, you know, that goal of going back it gets tough. You know, you’re at this job, you’re working a lot, you’re getting paid a lot and like you’re not getting paid to think entrepreneurially, especially in these very, very structured roles like investment banking.

So that spirit kind of gets, you know, I guess you could say, beaten out of you, but business school rekindled it. And so I graduated last May and I have my hands in two different entrepreneurial ventures. A podcast is one of them and then I’ve built a payments app as another one. And you know, Doug, I am literally making hundreds of dollars per week right now. But besides the money, I’m finding fulfilment in ways I never even thought possible. So you know, I think I’m on the correct path for me now and I’m confident that money will eventually follow. I actually had some cool deals come through this week, but money will follow. But I’m doing what I feel like I’m supposed to be doing now which is a cool feeling.

Doug Hoyes:    So you’ve raised a bunch of issues here. I’d kind of like to unpack them. So the first one is – and I think very common amongst people who are, I don’t know, you know, teenagers and in their early 20s, it’s like well, I don’t really know what I want to do because I’m still a kid so I’m going to pursue postsecondary education. I’m going to go to college. I’m going to go to university, that sort of thing. Makes sense, right? And I get it. You’re young. How do you decide what you want to be doing when you’re 50 when you’re 17 years old? That’s kind of hard.

What advice would you give to people in that situation then? And I guess, you know, more specifically in your case what was the event that kind of flipped the switch to say well, I was going down this path but I should have gone down that path? So I guess let’s do the first question first. What advice would you give to people who are really young or maybe parents of people who are at that age as to how to make the decision about what to be doing for the next 50 years of your life?

Alex Grodnik:  Sure. You know, it’s very popular to be an entrepreneur these days. That’s what’s cool in my generation and younger generations. In older generations, it was cool to have a stable, dependable job and go to that job every day and be in the same job for your entire career and then get a gold watch and retire and that’s not really what people want to do anymore. People want to have many careers. They want to follow their passions. But you know, Doug, your question how do you follow your passion if you don’t know what your passion is? And you know, this is a funny thing in business school.

You know, I went to business school with some people and there were 350 – about 350 people in my class and some of them were there and said, “Oh, I want to be an entrepreneur.” And I said, “Well, what does that mean? Like you just – you want to be an entrepreneur for entrepreneur sake. That’s not quite how it works.” I think the ideal path to becoming an entrepreneur is you take a job at a company.

So say you’re graduating from college, from undergrad right now and you know you want to become an entrepreneur but you don’t know what that is. So you go work for a company kind of like what I did, maybe a little bit less strenuous than something like what I did, but you are at that company. You’re doing three things really. You’re developing networking connections, you’re gaining a skillset and maybe you’re seeing an inefficiency or something that’s not quite done or being done correctly that maybe you could fix or solve. So you’re identifying a problem. You know, if you don’t identify a problem you’re still gaining connections and gaining knowledge and experience. And so I think it’s a – like we talk about this on my podcast a lot that it’s easier to go from a big company to a small company. You can always go from Goldman Sachs to a start-up. It’s tough, much tougher to do it the other way around, from going to start-up to Goldman Sachs.

So it’s a great place to start your career at a big company. It’s not – I mean big companies, you know, have bureaucracy and red tape and so there’s definitely a downside, but it’s a great place to begin your career. And so if you’re not sure what you want to do or you aren’t quite sure what you want to do, start your career off working for someone. As my parents would also say, learn to shave on someone else’s beard which is – I don’t know why that thought is so ingrained in my mind. My mom must have said it 100 times growing up. But go do that and then make connections, get experience and then, you know, see where your career takes you.

The other – Doug, if I can just say one more point here. The other main takeaway from my podcast is when I was speaking with these, you know, incredible leaders and people that have sold their companies for hundreds of millions of dollars is that really when they’re starting out or even more current in their career, no one really has any clue what they’re doing. No one has any idea. But if you’re a doer then when you wake up in the morning, you put one foot in front of the other and you just go out and accomplish. You accomplish stuff every day. You send emails, you make calls, you get in front of people, you take meetings, you do research. And doers, even though they don’t know quite, you know, what they’re doing or how they’re doing it or how they’re going to make it happen, they go out and do it versus someone who’s – you know, I like to call them a don’t-er. They say oh, well, I’d like to start a business but I don’t know how to code so I’m just – I’m not going to do that. Or I’d like to leave my job but, you know, I’m comfortable here so I’m not going to do that. You just – you make excuses for yourself to not do things.

And so I would say, you know, just have confidence, trust in yourself. If you’re not going to trust yourself who are you going to put trust in? And just go out and make things happen.

Doug Hoyes:    So and I’m going to get into the whole debt angle because you mentioned about student loans, but one final question then on that point is do you really think it’s necessary to follow your passion to use your term? So I mean your parents gave you the advice that well, start at a big company which, you know, probably isn’t your passion. I mean maybe working for Goldman Sachs is your passion but start at a big company and then kind of, you know, grow up, learn how to shave and decide where to go from there.

Is it good advice for young people to say follow your passion or is it better advice to say, you know, be a bit realistic here and find a job or a career that can actually put some food on the table and, you know, worry about the passion later?

Alex Grodnik:  So I had a business school professor that had a few sayings and one of them was that passion is pay off. And if you’re truly, truly passionate about something and you care about it deeply and you’re working at it and you’re putting all of your energy and effort behind it, then I believe that you eventually will be successful. And like I’ve had so many people on my podcast who have come on and they’ve had success but they’ve left a job or like they didn’t – you know, in the beginning no one knows whether you’re going to be successful and it’s the risk takers that put themselves out there that find, you know, whether it’s going to work or not and so you hear about people going to business school as, you know, kind of a fallback plan. They come out of business school, they start a business and, you know, because they have an MBA then they – if their business fails they can go get another job. I’ve probably talked with 20 people that have had that strategy and not a single one of them has gone back to go get another job. They’ve all found some way to get traction in what they’re doing.

And so in following a passion, yeah, I believe, you know, that they’re – that passion can be pay off. That being said, you don’t necessarily – it doesn’t necessarily have to be a passion when you start out on it. So now I have built a payments app. I’ve been, you know, all involved in the way money moves around in the world for the past 13 months and I, Doug, could have cared less about payments before I’m doing this and now I’m very, very, very interested in it and I’m becoming more interested in it every day. So I don’t think that you necessarily have to have it before you start it, but you have to just have a drive. By that when I talked about putting one foot in front of the other, you have to just be willing to go forward every day.

Doug Hoyes:    Yeah. And I guess you’re kind of answering my question then that yeah, I found my passion. You know, there’s very few 12 year old kids who say to themselves boy, I’ve got a passion for payments and payment systems. I mean it’s not a thing. But once you, you know, realize you want to be an entrepreneur or whatever and you kind of gravitate to where the opportunities are so okay, now you – there’s another bigger issue here and that is so I’m a young person or I’m a parent or a grandparent of a young person who’s considering going to college or university and it costs money, it costs a lot of money. And so should I be spending the money on that or not?

Well, obviously that’s – you know. I guess how would you make that decision then? So I’m 17, 18, 19 years old and I’m trying to decide do I commit the 100,000 bucks to use your example to go to college or university – and it can easily cost more than that when you factor in living expenses if you’ve got to be away from home and everything. How do you make the decision whether that’s a good investment or whether I would be better off jumping into a job right away?

I mean I’ve always thought that the best job in the world would be to be like an electrician or a plumber or something because you make really good money and you don’t have to go to university for four years. Obviously there’s still a lot of learning and an apprenticeship period and all the rest of it but, you know, by the time you’re 20 or 21, assuming you start when you’re 18, you’re making really good money while all your buddies from high school still have two more years of university left before – you know what? They’re still incurring debt.

So how would you think through that process for somebody who’s really young as to whether I should be committing those resources to follow a path that I don’t know is really what I want to do yet as opposed to getting a job and making some money right away?

Alex Grodnik:  Yeah. And Doug, I think that’s a fantastic question. For me, undergrad and, you know, I’ve got a graduate degree, but undergrad was never even a question whether I was going to do it or not. It was just my family – this was just how it was done in my network, in my circle. And you know, as I said, I was – growing up I was on this entrepreneurial path. I was basically lighting the world on fire. I was making all sorts of money before I went to college in a myriad of different start-ups and then I went to college and I got this oh, I need to go work for a big, prestigious company and I need to make a lot of money. And so I would say college kind of derailed my trajectory and it’s taken me ten years now to get back on this entrepreneurial path of where I should have been.

If I didn’t go to college, you know, I think I’m – I was put on this earth just to create and make start-ups and be an entrepreneur and, you know, I could have made a dirt farm and sold worms or you know, whatever it was that you didn’t necessarily need a college degree but college definitely changes the way that you think. Graduate school also changes the way you think. In thinking about the risk return of do I want to pay $100,000.00 to go get a job that’s after college. I mean the earnings potential of your lifetime, like the data says that it’s greatly enhanced after you have an under – after you have a college degree, right?            I mean you’re talking about being a plumber or, you know, even a – I heard a garbage man can make, you know, $80,000.00 now. So those jobs don’t require college degrees.

So I think it’s a deeply personal question and you need to look at what do you want to do. Are you going to be able – are you going to be okay being a plumber for your life and if the answer’s yes then that’s fine. I’ve got tons of friends who work in the ski industry. I grew up in Park City, Utah. And they work outdoors. They don’t make very much money but like in the summer they guide on river rafting trips and stuff and fly fishing. They are immensely, deeply happy people. I think, you know, they could be happier than I’ll ever be making very little money and they live a simple, outdoor life and if that’s what you want fantastic, don’t go to college. If you want to get a job that requires a college degree, being a lawyer, a banker, doctor, whatever it is, then yeah, like you got to go to college. The same thing is true with getting an MBA, going to business school, getting a master’s degree.

So fine, I left a job that paid me $100,000.00 a year and I paid $100,000.00. So I left 200 – two years, $200,000.00, plus $100,000.00 in business school. So there’s $300,000.00. When you look at the return of that if I’m trying to have like an investment, have a quick payback period, then you can go to business school, leave a job that pays you $100,000.00, get a job that pays you $200,000.00 and your – it’s only a three year payback period before you’ve made back that extra incremental $300,000.00. For me, I left a high paying job and now I have a job that pays me no money so it’s a much, much longer payback period for me, but I look at it at a much longer time horizon, I guess you could say, like a Warren Buffet type investment horizon, not three, five, ten years but maybe 20, 30 years and that going to business school is going to be a decision that’s going – for me will be tough for me to regret. I have made incredible connections. I had cool experiences. I think I’m on the correct path and trajectory for myself now. But yeah, now I have debt service and I have to figure out how to pay this off and so you balance the start-up life and how long you’re going to pursue that versus paying off debt.

Doug Hoyes:    Yeah. And it’s a very difficult thought process because of course when you’re 18 years old you have no idea what life is going to look like when you’re 31 let alone 51. So okay. So you’ve raised the debt issue so let’s talk about that then.

So let’s assume that someone is listening today and they followed a similar path to what you did and they went to college, university and they, you know, ended up graduating. So they’ve got a piece of paper. So that’s good. But they also have a bunch of debt and it’s very common certainly here in Canada, I assume it’s very common in the US as well, that you graduate with student loan debt unless your parents were really well off.

So here I am now. I’m in my, let’s say, mid 20s and maybe I’ve started working at a job making some money. I’ve got a lot of student loan debt and I’m thinking hmm, I would kind of like to make the jump to, you know, doing my own thing, being self employed, being an entrepreneur, joining a start-up, and so really the decision I’m trying to make is should I continue to work and pay off my student loan debt or should I take whatever extra money I’ve got and invest that into a new venture, a start-up. Maybe it’s not even a case of investing, it’s a case of kind of doing what you’re doing is starting from ground zero again. I don’t have much money coming in so I’m still having to – you know, I don’t have a huge amount of money to be putting on debt service and paying down student loans and everything.

So how do you decide whether I should be paying off my student loan or whether I should be using whatever money I’ve got to invest in a future company or career?

Alex Grodnik:  Yeah. Again, good question and again a very individual, specific answer to that question. Right now, I’m chasing the big dream. I’m swinging for the fences. There is never big return without big sacrifice, right? So you have to, you know, eat pasta for dinner every night and sleep on couches and – I mean if you want to have an outsized type life-changing liquidity event you’re not going to get that by, you know, working at Proctor & Gamble every day. You’re going to live a very comfortable life where you’ve paid off your debt and you can have a nice home and a nice family and take two vacations a year and that can be fantastic. That wasn’t what I feel like I was put on this earth to do and so I’m betting on myself because I don’t know who else I would rather bet on to go out and take on the world. And I also – this gets back into paying for education too.

I place a very, very high amount of importance on learning and especially early on in your career I would always tell you to take the job where you’re going to learn more versus the job that’s going to pay you more because that learning is something that will always pay dividends for you throughout your entire life. I mean if you make money and you invest it and you have that that can also pay dividends. That’s just how I’ve based my career on is learning as much as I possibly can and right now while I’m making very little money I’m learning as much if not more as I did when I worked those 100 hour weeks in investment banking and the skillsets and connections and ways of doing business and ways to start business that I’m acquiring right now are going to be super beneficial for me whether – you know, the odds are that this start-up will not work, right?

The odds are that like, you know when you’re trying to take over the world and have everyone using our app to make payments, the odds that that actually succeeds are very, very, very low, right? But I’m getting the skillset and necessary knowledge that when I have my next idea or the following idea that one of these will work. And without doing this now, without taking this risk now, I wouldn’t be setting myself up to do that later. And so fine, when you think of okay, I’ve got $75,000.00 of student debt, I’m paying off $500.00 of it a month, do I just want to keep doing that for the next 15 years or do I want to take some kind of risk, roll the dice, better myself, learn a lot of money and put it all on the line? That’s definitely not the right way for everyone, right? Everyone has a different risk tolerance level.

I happen to love extreme sports and action and adventure and so yeah, I’m a risk taker. My wife is not. Her family is not. They think some of the things I do are a little nutty, but I’m the one who has to live with myself, right? I decided a few years ago that I was going to stop living to please other people. I’m only living to please myself now. So this is the path, Doug, and I have no regrets.

Doug Hoyes:    And I guess that’s what it comes down to. It comes down to your mindset and I guess it comes down to your personal circumstances as well. Do you have any kids?

Alex Grodnik:  I have a kid on the way. My wife …

Doug Hoyes:    Ah, so we should do a follow up interview in three years to see how having a kid or two changes the risk profile and it sounds to me perfectly logical what you’re doing at this stage because, you know, for the last year or two, okay, you know, I’ve been married, my wife’s got some income coming in as well, we’ve got no kids, we don’t have to worry about it, so it’s an excellent time of life to be taking high risks. It may be that two or three years from now when you got, you know, the twins and the third kid and all the rest of it that hmm, maybe it has to be a little bit different. So it may have a lot to do with life circumstances as well.

Alex Grodnik:  It totally does. So yeah, let’s check back in a couple years and see if I’m either homeless, working at a big company, or a multimillionaire.

Doug Hoyes:    Well, we’ll hope my prediction of twins doesn’t come true for you and your wife’s sake. So, well, that’s excellent. I think that’s a great way to end it and it gives people some things to think about. I mean I’m an accountant by – a CPA by background and so I am a, you know, risk averse person except I did start my own company and left a big firm and all the stuff you did too and I did it, you know, basically the same age you’re at. I didn’t have kids at the time so it was a much less risky thing, but it’s certainly something you’ve got to, I think, take a step back and look at the big picture.

So how can people track you down? You talked about the podcast you’ve got. Why don’t you tell us where they can find that podcast and for people who are interested how they can find out more about you?

Alex Grodnik:  Sure. So the podcast is called “Moving Up” and it’s by Wall Street Oasis which is a forum for people early in their careers to ask questions, figure stuff out. But really, the podcast is we speak with business leaders about their careers, the ups, the downs, their lives, how they got to where they are. You know, no one’s career is straight up as kind of mine is evidenced by and so you just talk about immensely successful people and some of the tips and tricks that they have to finding that success. So you can find it on wallstreetoasis.com or on wherever you get podcasts

Doug Hoyes:    Excellent. Fantastic. Well, we will put a link to that in the show notes over at hoyes.com so people can track you down. Alex, thanks very much.

Alex Grodnik:  Thanks, Doug.

Doug Hoyes:    Thanks, Alex. That’s our show for today. As I mentioned, we’ll have a full transcript and links to Alex’s podcast and website in the show notes over at hoyes.com. That’s h-o-y-e-s dot com. Thanks for listening. Until next week, I’m Doug Hoyes. That was “Debt Free in 30”.

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