Travis Hornsby of Student Loan Planner

    We Spoke to Travis Hornsby of Student Loan Planner on How to Navigate the World of Finance

    As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing Travis Hornsby.

    Travis Hornsby is a speaker and the founder of Student Loan Planner, which he launched after helping his physician wife navigate ridiculously complex student loan repayment decisions. To date, Student Loan Planner has consulted on over $865 million in student debt. Travis is a Chartered Financial Analyst and brings his background as a former bond trader trading billions of dollars. Trying to solve the student loan crisis brought him out of his first retirement at the age of 25.

    He brings that same intensity to analyzing the best repayment paths for graduate degree professionals with six figures of student debt. Travis and his team have helped over 3,400 clients save over $158 million dollars on their student loans, and he’s been featured in U.S. News, Business Insider, Forbes, Huffington Post, Rolling Stone, ChooseFi, Bigger Pockets Money, and more.

    Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

    I started my career as a bond trader and was incredibly diligent with my saving. In fact, I saved enough money to comfortably retire at the age of 25. From there, I spent a year traveling the world. When I returned home and met my now wife, her father told me he couldn’t give me his blessing to marry his daughter unless I found a “real job.” The inspiration for Student Loan Planner really came from helping my wife successfully tackle her 6-figure student loan debt from medical school. In helping her navigate the process I found out how confusing it was and realized there was an opportunity there to help simplify the process for those in need. So I came out of retirement in 2016 to launch Student Loan Planner and since then my team of consultants and I have consulted on over $865 million in student debt. I can honestly say I sign on to work every day with a passion for what I do.

    Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

    One thing I did that is funny in hindsight is I jumped at the opportunity to take a call with anyone, not realizing it was sacrificing valuable time I could have spent on my business. When I was first starting out, I would accept every single call request that came through my inbox. I would hop on the phone with anyone who wanted to connect, most of them being salespeople of course. Every day I would look at my calendar and it would be bogged down with these phone calls that at the end of the day weren’t doing anything to grow my business. I realized that what I initially thought was beneficial networking was really wasting a ton of valuable time for myself. A friend of mine told me to start telling salespeople that the cost of a conversation with me would cost them X amount of dollars and if they wanted to book an intro call with me it would come at a predetermined fee. Suddenly, when there was value associated with my time, I noticed a huge decrease in the amount of calls booked on my calendar! Funny how that works.

    Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?

    I love the Dentistry Uncensored Podcast with Howard Farran. No, I’m not a dentist, but he explains human psychology really well in his episodes. He’s taught me that people will buy anything that they truly value — that you have to sell people on the value if you’re going to get them to buy something. For example he talks about how the most popular truck in America is an F-150 which sells for an average cost of $27,000, whereas the average household income is $50K. People decide to take on the cost because they truly value that particular item. They will choose to finance it for a ten year loan term because they believe it is worth having. I find that he gives really good business nuggets like that and I’m constantly using his advice to understand the psychology of consumers.

    Are you working on any exciting new projects now at Student Loan Planner? How do you think that will help people?

    Currently, we’re working on getting out as many resources as possible to people — specifically student loan borrowers — whose finances have been affected by the COVID-19 pandemic. The goal is to help keep people’s finances intact so they can be psychologically well during the shutdown while dealing with all the other stressors around them right now. It’s a really tough time for our country right now, so our focus has really shifted to providing as many resources to our readers and followers as possible.

    Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?

    My goal was to relieve anxiety for individuals with up to 6 figures in student loans and allow them to live their best life. The 3 million people with more than $100,000 in student loan debt are the key group of people we’re looking to serve. That doesn’t mean we don’t want to help all the student loan borrowers out there, but that person with a “mortgage on their brain” — that’s the type of person we’re trying to liberate from the anxiety and “debt prison” they feel like they’re trapped in. Our unique approach to student loans and our knowledge of all the loopholes and ways they work is something that allows us to do just that.

    Do you have a “number one principle” that guides you through the ups and downs of running a business?

    “This too shall pass.” Experiencing the ups and downs of business means one day you may feel like things are the best they’ve ever been and then the next you feel as if nothing will ever work out, that your business is going to close its doors. I’ve been there! What I would say is that you have to look past what is going on today and realize that when it comes to that look back window that determines your decision making, you evaluate by looking at a few months of business, not a few days. In other words, if you have one unusually good month, you don’t plan the year ahead based on that unusually good month. If you have a really bad month, that month is not going to be the same as the next month necessarily. Instead of looking at your business as a roller coaster try looking at it like a choo choo train. That is, try to stay level throughout the ups and downs that come with growth.

    Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?

    For a lead generation, we’ve always taken the approach that if you create really good content that’s of value to your audience, they will appreciate it, remember your brand and trust you in other areas. Specifically for my team at Student Loan Planner, the way we do this is writing a lot of blog content, posting to our YouTube channel, delivering informational podcast episodes, getting in front of our audience with our weekly newsletter update and having an active social media presence. We basically want to be everywhere so that people see our valuable content and remember that we helped them — be it information on salary negotiation, or how to put their student loans in forbearance after losing their job — anything that helps them in the moment. Engaging, informative content builds trust and converts people into customers.

    If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?

    If you take VC money your business has an execution date. I like to call it an execution date because you know your business will either be sold to somebody or it will go public and be reborn into something else. When you take VC money, those investors want to get money out at some point by forcing a merger, acquisition, or by forcing you to go public. So when you take VC money you are essentially placing a countdown on the inevitable exit that will happen. By doing that you’re giving up control of your vision for growth. Growth is good, but growth at all costs can destroy your culture and destroy your company.

    There are a lot of companies out there that are run for exits. In the end, the founder may get rich, but in my opinion, it’s often at the expense of helping their customers and creating long-term enterprise value. My personal opinion is that if you’re having fun with what you’re doing then bootstrap. If you’re looking to be super aggressive and become a multi-millionaire as fast as possible then sure, take VC money. Just know that you’ll get fired really quickly if things don’t work out and you will no longer own what you built.

    What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?

    For me, I look at what are the margins in terms of the value of the company: how easy is something to sell and how consistent is it? So, for example, we get advertising revenue that’s a lot more volatile and is based on what’s currently going on in the economy. When the economy is doing really well like it was until recently, we saw a ton or revenue come in from that. Now that the economy is not doing well, we’ve lost a ton of that revenue. Our service based business is what is keeping us around right now.

    In terms of valuing your business, the value of a company is determined by what someone is willing to pay for it. So, for example, there was a business that was similar to Student Loan Planner that sold for 10x earnings and the reason was that the acquirer was looking for the biggest company in the student loan vertical. The acquiring company was valued at 30x earnings, so by buying a company at 10x earnings and putting it into their model, suddenly the public markets would pay 3x that theoretical money for those revenues.

    So in teams of getting an optimal evaluation of your business, I would say: what number would cause you to walk away and try something different? If you’re enjoying what you’re doing maybe that number is super high. Your evaluation should be specific to you in terms of how much you like what you’re doing. I’d suggest you figure out what that number is for you.

    What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?

    The thing about growth is it doesn’t have to be unlimited. If you’ve grown your business to the point of $10 million in revenue and its plateaued there, maybe that’s alright. Maybe you do it until you don’t enjoy it anymore and you try to sell it, bring in partners or give some equity up to those who may be interested in keeping the business going. Maybe the goal of looking for the next place of growth is you try something out and if it doesn’t work out or you don’t enjoy it you go back to what does work to maintain your profit margins. Growth isn’t everything. People are obsessed with growth but plenty of companies are doing fantastically well that have just maintained their role of business for a long time. There’s nothing wrong with that.

    What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?

    I think leverage is a really bad thing for a lot of companies right now. To avoid this, you want to have a target margin and if you have debt you want to include the debt costs in terms of that margin you need to hit. If you’re ever going below that margin then you probably need to avoid taking on tons of leverage. Businesses having too much debt and also businesses that don’t have enough cash on hand is another problem we are seeing right now because people are panicking and waiting on the Payment Protection Program loans to close, which are going to take weeks. Some businesses only have 14 days of cash on hand, which is a big problem.

    Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.

    1. You have to tell stories: People don’t want to hear about modern portfolio theory, optimal rebalancing or tax loss harvesting — they want to hear stories! Stories about someone like them who had a lot of success because of something that they did with a financial product or strategy. For example, someone who bought their first mutual fund that gave them dividends that allowed them to quit their job. Or, someone who bought term life insurance that saved their family. There has to be that emotional factor at play if you want something to click with your customer.
    2. Have plenty of cash savings: Modern finance is super volatile and highly regulated. In any business that’s highly regulated and has a lot of big competitors, you need cash in the bank to survive when things are not going well.
    3. Willingness to try something different than everybody else: For instance, if you’re trying to do financial advising, well join the queue of the million other people out there who want to do that as well. The main question to ask yourself and then try to implement is what makes you different? What is your niche that allows you to stand out from the crowd? I found my niche in student loan borrowers with 6 figures in student loan debt.
    4. What services can you offer someone regardless of where they live? The younger generation wants to have an app on their phone or a website they can visit that’s going to give them guidance on the best things to do for their finances. Be easily accessible to those who want to hear your message.
    5. Make the customer the star of the show. Focus on each customer’s individual anxieties and stressors and how financial tools and services can help relieve those problems for them. Make your services customized and personalized.

    Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

    Just remember it’s a long-term endurance race. If you have plenty of cash in the bank while you’re trying to figure out what your model is then that’s fine — you don’t have to figure it out tomorrow or next month, you can figure it out in the first few years. A tip for not burning out is to hire out the roles and tasks you do not enjoy doing yourself. Focus on taking the parts of your job you don’t enjoy and outsourcing them.

    You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

    My movement would be educating people on the importance of cash savings. A lot of people feel like they can’t do things they want to do with their lives. Something like 60% of people don’t have $5K saved in the bank. The people relying on unemployment may wait weeks to get their first paycheck, which is an incredibly stressful process. I believe cash = freedom. I’d like to encourage people to aim to save a year’s worth of income in the bank, regardless of what your income is. If you can’t afford that there are two things to do — 1) cut your expenses, and 2) look at ways to increase your earnings. For most Americans, finding ways to increase their earnings is a lot easier than cutting expenses, especially if you’re living on minimum wage. Particularly in times like we’re experiencing right now, having emergency cash savings in place is imperative.

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