This one is strictly for those of you that plan on having a music career and you are expecting an income tax check.
Don’t blow it!
I know those new Jordans look nice or those new Kobes would make a nice addition to your collection but before you start splurging on those ACCESSORIES you might want to stop and look at the NECESSITIES.
Aside from you paying in bulk for household expenses and catching up on a few bills and paying of some loans… lets look at a few options that you could do with that money.
I used to run the Credit Doc LLC. It was a credit repair business; probably the only LEGAL one in Georgia by law. One of the tactics I would counsel clients on would be the importance of hard assets and the usage of credit.
Now I’m not expecting you to buy a house, that will come later but you still need to have a different perspective than what you currently have.
There are a LOT of ways to pay for stuff and in Hip Hop, cash seems to be the default but what if you could take that $3,000 check and turn it into $5-10k in 6-9 months?
You see the $$$ and you look at the now instead of planning ahead and working with the system instead of the system taking from you of what you have.
Here is one strategy to flip, build and establish credit using only a portion of your check.
Take $1,200 of that check and get a $1,000 CD (certificate of deposit) from your bank. Your bank MUST report CDs to the credit bureau, if they do not, this will only help in flipping and building your relationship with your bank and not go all in with your credit, but it is a start. All banks report loans to the bureaus.
After you purchase the CD, get a loan against the CD at the same bank. The CD can be on variable increments, anywhere from 30-90 days is an option; it is your choice. I recommend a 30-45 day CD. The loan will determine how fast you pay it off and it needs to be concurrent with the maturity of the CD. You are not looking at maximum gain from the interest accrued from the CD, you are looking at the loan relationship with the bank. When you get the money for the loan, DO NOT SPEND IT. Put it in a savings account or you could continue to flip the process with smaller CDs under it. It will all be based on the minimum amount your bank allows for the LOAN. Most banks start at $1,000 but in the past I have seen them start at $500.
After doing this at least twice and based on the new history that you just created with the bank and the credit bureau for having positive reports for consecutive months, you bank SHOULD allow you to open up a line of credit WITHOUT the CD as collateral. Now you have the CD to continue to flip as well as the money the bank is about to allow you to use. You have still YET to come out of pocket because the loan amount plus fees is STILL lower than the amount of the matured CD. In fact, after the maturity, they should give you money back.
*warning: Once you begin using the line of credit be prepared for fluctuating rates and variable interest based on usage but in the end you now have some extra $$ to use for your CAREER and you help improve on that messed up credit that you have been ignoring for years.
So what will you do now?
You have hard cash, you have CDs as assets and you have a line of credit, you should be set for a small influx of funding to help you along the way.
Where is your budget and business plan?
You do have a plan right?
You have been keeping track of all expenses right?
Producers for beats, engineers for mixing and mastering, graphic artist for flyers, t-shirts and posters, printers for CDs and other promotional material…where is the book keeping?
You do realize that this is a BIZ-NESS and you need to treat it as such right?
Just because you can rap or humm a few notes does not mean that everything else come easy, because that is a lie.
You need to start budgetizing everything around you.
It is imperative that you use the tools around in order for you to get ahead because it is guaranteed that the industry will use you on an hourly basis and if you are not ready, you will not survive.
Get a plan.
Get a solid business foundation.
Find a budget and start operating your brand like a business instead of acting like a bunch of uneducated star-struck money hungry ninjas; because that is exactly how the industry sees you.
Prove them wrong.