If it feels like your debt might be taking over your life, you are not alone. From credit cards to student loans, you might have to pay money toward any number of debts. But even if it feels like your debt is drowning you, it is still possible to begin your business.
You might be surprised by the number of new companies that are started each year. According to official data, 543,000 new companies are founded each month. Clearly, many regular people start businesses. Some of them are even laden with debt.
Even if you have a lot of debt, you can still follow your dreams. And if it is a success, then your business might help you pay off your debt and eventually break free. Although it is best to pay off your debt, the Attorneys of Scura Law want to remind you that filing for bankruptcy is not shameful.
1. Try to Pay Off Debt
First, you should try to control your debt payments. It might feel like you do not have enough cash flow to start your business. And if you miss some payments, then you will not have anything left over to begin your company. Luckily, there are a few strategies for reducing the amount of money you have to pay each month. You might want to use a system like the debt snowball method to reduce your liabilities more quickly.
2. Try to Cut Back on Costs
Once you have gotten your payments under control, find other methods of paying off debt. If it’s possible, consider moving to an area that has a lower cost of living. If you have an online business, it’s an even better idea to move somewhere cheaper. Plus, living in a new area can help spark your creativity.
Some people decide not to get a car, so they don’t have to pay for maintenance, registration and other costs. If you live in a city, you may be able to ride a bike or take public transportation. Look for areas to reduce spending, such as transportation, entertainment and groceries. Consider eliminating subscriptions and not going out to eat. All the money that you save can go into paying off your debt or growing your business. This is one thing that you need to consider when coming up with a budget.
3. Look for Alternative Streams of Income
Your company will not be successful all at once. Sometimes, it might be a good idea to try out several ideas. Of course, only cutting down on costs will not always leave you with enough when you need money to live on. Look for alternative streams of income, so you have more to work with.
There are many smaller opportunities for earning money. For example, if you have an extra space in your home, consider listing it on a vacation rental website. Or try driving for a ride-sharing service. Look into freelancing, where you can pick up as much or as little work as you want.
You don’t have to grow your income and cut costs at the same time, but many people find that combining the two can help them grow their business faster. That can help your company do well enough that you can start getting a regular salary from it.
4. Refinance Your Student Loans
If your credit is still good, you may be able to refinance both federal and private student loans. That might give you longer terms and lower interest rates, freeing up a bit more cash for your company each month.
Remember that the interest on student loans can be deducted from your taxes, so that is another way you can lower your payments. Plus, you can get a break on your taxes. Refinancing federal loans might mean that you lose some of their protections. That’s why it’s important to run the numbers and do some research first. If you have both private and federal loans, you might want to consolidate the federal ones and refinance the private ones. It’s up to you to determine the best method for your personal situation.
5. Income-Driven Repayment
Using a repayment plan from the Department of Education lets you cap your student loan payments at a percent of your extra income. That frees up money for your business. Later, you can put more money toward paying the debt off. Just remember this tactic might cost you more in interest.
6. Manage Credit Card Debt
The interest on your credit card debt can be problematic when it comes to starting a business. Calculate how much interest you pay each year based on the balance to see why. Consolidating your debt is one way to manage it. By using a balance transfer, you can save money on interest. Even taking out a personal loan might give you a lower interest rate.
It’s a good idea to spring into your business right away instead of waiting until you are out of debt. If you try to wait until you have paid down your debt, you might never start your company. If you wait, you might not have that entrepreneurial desire to make your company succeed. Don’t be afraid to take a risk and start your journey, even if you feel that your debt is taking over your life. Just take it one step at a time.
Get Your Debt Under Control to Achieve Your Entrepreneurial Dreams
You don’t have to let massive debt get in the way of running your business. You can find a lot of great ways to pay your debt off, which will make starting a business easier.