The next few months are going to be critical.
My business is stable, but still not producing enough profit to either A.) invest in new projects B.) payoff any existing creditors or C.) pay myself a higher wage
The Past
It’s so frustrating to think of how I wasted capital a few years ago. Not only on trading, but just on stupid business expenses. I was a fresh out of college kid with a decent chunk of change (50K+) in the bank, and I didn’t even have a clue as to how to budget.
I had no concept of savings, or earning interest, or predicting future cash flows. Blah.
My businesses did a total of $7500 in revenue in January. I set my salary at 35K a year to start in January. Much higher than I had been paying myself, but I thought maybe I could stretch it. Also, I actually want to be paying myself as much as possible in the event (unlikely, but could still happen) I have to BK the business. @ 35K I can pay my mother, my rent, my student loans, food, all expenses, and even save $400 a month.
Well, this month I think I may have to drop my salary down.
My Project “A” plan is moving along nicely. Very nicely in fact. The problem is….it’s not really generating the levels of cash I was hoping yet. We have a new customer this month finally paying, but that will bring revenue to around $1500 net for Feb. up from $1000 in Jan. A nice boost, but $500 ain’t paying down 300K anytime soon.
I talked with another decent size company interested (very much so) in my Project “A” business as well. I forgot how well I do with people on the phone. I really enjoy people, and am good with them, I just forget that strength of mine ALL THE TIME LATELY.
My situation is so out of whack for anyone my age. I know all the right answers on how to save money, how to invest, how to be frugal etc….and I’m for the most part following them very well. (more on investing again maybe next week)
Here’s my real issues:
#1. I can resign to the fact that I will be in debt for 10+ years and try and pay back my mother and all other creditors over a long period of time. I will have to learn to deal with my debt as a long-term issue in my life.
or
#2. I can continue to work and build my business in the hopes that it might get bought out for a significant amount, or at least start generating 10K+ in profit a month.
Now, I’m already somewhat used to living with this huge amount of debt. But I don’t like it. Just because I’ve learned how to deal with it, doesn’t mean I don’t want it gone with all of my heart. Do you know what it’s like to send a measly $400 to your mother each month on the $145K you still owe her? No? Well, it blows.
It sucks and it makes me feel so small. It really does. I’ve pretty much come to terms with the fact that I cannot date until I’ve got more of this situation worked out. Now, I know I’ve had some good comments about being open, and that my debt shouldn’t matter to a woman….and those are all good points. But the reality is that I can barely look at a girl right now without feeling like a fraud. And until I can either get over that, or be not such a fraud….well, no dates for me. No dates, no love, no whatever. And that’s OK, it really is (ok, maybe it’s not….but I’m trying to be positive here). I really have gotten very used to being single.
I’ve gotten very much hurt in my last few relationships. Partially my own fault, but not completely.
Now I’m just rambling.
Let’s bring it back.
Short Term To-Do’s
- File Business Tax Return for 2007
- File Personal Taxes for 2007
- Make Specific Business Goals for End of Quarter (March 31)
{ 4 comments… read them below or add one }
I don’t think there is an “or” here between #1 and #2. You should try for #2 and in the meantime #1 applies.
eventually, you’ll forgive yourself and realize that you’re only struggling with loving yourself. so, forgive yourself and love yourself and heaven will open up to you!
OK, Debtkid. Been reading for awhile and rarely respond.
You are doing great, and I and the rest of your blog world is rooting for you. I won’t go into details, but I’ve gone from less to $100 to my name to significant savings. I did this primarily by living below my means. The basic spend less than you earn.
From your blogging it sounds like you are getting into the habits that support spending less. To me it is about mindset and values, as well as what you become accustomed to. I drive a 10 year old inexpensive domestic car. When I was younger, I might eat out once a quarter, then once a month, then weekly. Now I do so whenever I want, but that is almost my only financial “vice.” I don’t shop much, and don’t buy too many gadgets. When I do buy something, I make a project out of it, researching for the best deal and the best reviews. The stuff I buy lasts. These are all VERY long term habits. I don’t have any thoughts of my life being on hold, or denying myself. It is just the way I live. Part of this is finding friends who share similar values, including those about money.
I will admit to focusing often on my net worth, so I can identify with your focus on your debt. However, it does not need to define you.
The question is are you frugal only because you have the debt, or, with what you know now about money, would you have a frugal lifestyle no matter what? If it is the latter, then the only thing that should change if you suddenly come into some money is the debt, not your lifestyle and not your decisions about how you spend money.
I am guessing you are saying to yourself I don’t mind being frugal, just not as frugal as I am forced to be. Possibly. But it is also possible you just need some more getting used to the frugal lifestyle. I don’t know all the details about your budget, but if you are expending most of a $35k annual income, your net available after taxes and after $4800/year to your mom is probably fairly close to what I end up actually living off of.
What I am trying to say is you need to get to a comfortable level with your spending, and let that level of spending become your lifestyle regardless of your income.
Then the second part of this is your income. I am guessing that if you went out and got a W2 job somewhere, you could earn FAR more than $35k/year. Probably almost double – lets say you could earn $60k starting. Thus your opportunity costs are $25k/year of paydown of debt (remember under my theory spending does not increase with income)
Owning and operating a business is a great idea, and there are tons of potential advantages and opportunities. How long you are willing to bear the opportunity costs of $25k year to keep operating your business? Only you can answer this based on your knowledge of the business.
Keep up the progress ( and yes you have made a TON of progress in the last year) and I’ll be interested in learning your thoughts on the above.
@justme – Wow. Thanks for the encouragement. I was outside in the cold last night (waiting to see hillary clinton speak here in Seattle. I’m undecided, but am a political junkie) when I read this comment and it really cheered me up.
To answer one of your questions, with what I know now, I do intend to have a frugal lifestyle no matter what. If God willing I am able to get back to zero, or sell one of my businesses, my extra income will be invested or invested into causes I would like to support in the non-profit world. As long as I can eat, have a bed, and catch a movie once in a while, I will be set.
You are right about me being able to earn more if I took a traditional job. It’s likely that is a decision I will be making this year: to keep trying for a big payoff, and pay down my debt within a year, or get a higher paying job, and work my businesses on the side. We will see.