It was the summer of 2012 when I decided to try my hand at selling products through Fulfillment by Amazon, the online retailer’s program that allows entrepreneurs to hawk many different types of wares – hopefully for a profit. The process worked well, however, taking children in tow to various Wal-Mart and Target stores on a daily basis – combined with my lack of spending discipline – to find products to resell proved a bit too tempting for this small business owner.
Not only did I charge a bunch of business expenditures on my gold and green American Express cards, but I also piled on groceries and toys for my family and myself as well. Before I knew it, the balance on my American Express and Chase Business Ink cards had swollen into the mid-five figures. When I couldn’t make the minimum payments to AmEx, it was time to put a debt management program in action.
Getting out of $40,555.66 in debt as a small business owner
I just totaled the exact amount of debt currently owed on my American Express and Chase Business Ink credit cards, and it is down to $40,555.66 thus far.
Here are the tips that have helped me over the past year to repay my debt:
#1 - Work out a plan with the company you owe
It’s better to deal with the original creditor than some fly-by-night debt collector. I begged, prayed and pleaded with AmEx during all those collection calls, sending them what I could by letting them debit monies out of my checking account when it was there, no matter how small. Eventually, I was allowed to set up an auto-pay plan whereby they deduct $420 monthly for my green card and $490 each month to pay off my gold card, with a really low 1% interest rate.
#2 - Reduce your fixed costs
Getting this far in debt made me take a good look at the places I could cut monthly expenditures that represented leaking money. I cut back on things like website hosting and personal pampering costs that could be funneled to my debt balance instead.
#3 - Increase your current income
The desire to see my credit card balances go down – and thus gain the freedom to do the things I really wanted to do – encouraged me to go after new sources of income with a newfound voracity. I found freelance writing clients on websites like Elance that paid me good money to help pay off my debt and fund my current business needs.
#4 - Sell your assets
I surveyed the things I owned as a business owner that could be sold for quick cash, such as a profitable website that went for $3,800 – and even electronics around my home, or quirky items like unused shoes and purses in my closet. Pretty much anything I didn’t love too much that folks were willing to give me money for on eBay went up for sale.
#5 - Refuse to take on new debt
I’ve got to be totally honest here: The only reason I’m not taking on new debt on my American Express cards is because I can’t. The cards were cancelled. And seriously, my Chase Business Ink card is at its max. Basically, I’m not taking on new debt because I forced myself into this position, but it’s good, because it’s beneficial to live on nearly a 100% cash basis.
Therefore, until a big payday comes whereby a new income stream brings us a six-figure sum that helps us pay off our existing debts in one fell swoop, it helps to put a practical plan in action.
Although in some ways I feel like a fraud talking about debt reduction – after all, my business credit cards and personal credit card debt totals of more than $40,000 prove I’m not the best when it comes to money management – on the other hand I am the perfect person to talk about reducing debt because I am in the process of actually doing so, and not simply pontificating about something I don’t have direct experience with.
I’m a living, breathing example that you can mess up your finances a bit as an entrepreneur, but still dig out of debt in the end.
Not only did I charge a bunch of business expenditures on my gold and green American Express cards, but I also piled on groceries and toys for my family and myself as well. Before I knew it, the balance on my American Express and Chase Business Ink cards had swollen into the mid-five figures. When I couldn’t make the minimum payments to AmEx, it was time to put a debt management program in action.
Getting out of $40,555.66 in debt as a small business owner
I just totaled the exact amount of debt currently owed on my American Express and Chase Business Ink credit cards, and it is down to $40,555.66 thus far.
Here are the tips that have helped me over the past year to repay my debt:
#1 - Work out a plan with the company you owe
It’s better to deal with the original creditor than some fly-by-night debt collector. I begged, prayed and pleaded with AmEx during all those collection calls, sending them what I could by letting them debit monies out of my checking account when it was there, no matter how small. Eventually, I was allowed to set up an auto-pay plan whereby they deduct $420 monthly for my green card and $490 each month to pay off my gold card, with a really low 1% interest rate.
#2 - Reduce your fixed costs
Getting this far in debt made me take a good look at the places I could cut monthly expenditures that represented leaking money. I cut back on things like website hosting and personal pampering costs that could be funneled to my debt balance instead.
#3 - Increase your current income
The desire to see my credit card balances go down – and thus gain the freedom to do the things I really wanted to do – encouraged me to go after new sources of income with a newfound voracity. I found freelance writing clients on websites like Elance that paid me good money to help pay off my debt and fund my current business needs.
#4 - Sell your assets
I surveyed the things I owned as a business owner that could be sold for quick cash, such as a profitable website that went for $3,800 – and even electronics around my home, or quirky items like unused shoes and purses in my closet. Pretty much anything I didn’t love too much that folks were willing to give me money for on eBay went up for sale.
#5 - Refuse to take on new debt
I’ve got to be totally honest here: The only reason I’m not taking on new debt on my American Express cards is because I can’t. The cards were cancelled. And seriously, my Chase Business Ink card is at its max. Basically, I’m not taking on new debt because I forced myself into this position, but it’s good, because it’s beneficial to live on nearly a 100% cash basis.
Therefore, until a big payday comes whereby a new income stream brings us a six-figure sum that helps us pay off our existing debts in one fell swoop, it helps to put a practical plan in action.
Although in some ways I feel like a fraud talking about debt reduction – after all, my business credit cards and personal credit card debt totals of more than $40,000 prove I’m not the best when it comes to money management – on the other hand I am the perfect person to talk about reducing debt because I am in the process of actually doing so, and not simply pontificating about something I don’t have direct experience with.
I’m a living, breathing example that you can mess up your finances a bit as an entrepreneur, but still dig out of debt in the end.