2010 New Year’s Business Resolution – Debt Free

I hate debt. I hate it, hate it, hate it, hate it. I don’t think anyone who hasn’t been in massive, overwhelming, crippling debt has any clue what it’s like. It’s worse than just having a monkey on your back (sidenote: I held one on my arm once and within 10 seconds he peed all over my arm–I’ve been very careful around monkeys ever since then). It’s worse than dragging around a ball and chain. At least with a ball and chain you can sit still and not notice it much. Debt is with you every second of the day, no matter what you’re doing, and it spoils everything. As an entrepreneur in debt, you feel as though no matter what you do, you haven’t really “made it” or succeeded as long as you’re in debt, because…well, you haven’t. If you’re in debt, you’re admitting your company can’t run on it’s own two feet, or at least can’t yet, or at least used to not be able to.

Most of the debt I racked up happened between 2003-2005. I can’t even say it was fun spending the money. It wasn’t like that. I just did what I thought would work for my business, it didn’t, and suddenly I owed all sorts of people (mostly employees) a lot of money and I didn’t have enough revenue to make it work, so I borrowed money to break even. It didn’t take very long before I had a few hundred grand in debt. You might say “Well, a couple hundred grand to you is probably like $20K to a normal person, because you’ve got a business.” True, I have a business, and yes, the business is paying it off faster than it would get paid off if I were working a normal salaried job making $80K per year. But I don’t think it’s just like owing $20K. Maybe more like a normal person owing $100K and trying to figure out how to pay it off on a $60K/year salary is more accurate. But as far as how it feels, I have felt every single penny of that debt for seven years as though each cent were one-hundred dollars. It has been one of the worst experiences of my life. And for years it was compounded as I didn’t pay myself at all, but still had to figure out how to manage this mountain of debt. Imagine having $100K of debt on whatever your salary is, but not knowing if you’re going to get paid next month, and never knowing for several years, but not being able to take a job where you know you’ll get paid. That’s a little bit of what I’ve been through. But enough talk about pain and suffering, because things have been going pretty well the past few years, ever since people stopped bailing me out.

As soon as the money supply dried up, I had to figure out how to make my business work on its own, and surprise, surprise, I did. I went from accruing a couple grand in debt every month to paying off a couple grand in debt every month within about a two month period. This year, I finally have a pretty good shot at getting out of debt. Well, sort of. I have a shot at getting rid of all my “institutional” debt. That is, credit cards, bank loans, money owed to corporations, etc. Actually I don’t owe any money to any corporations other than banks and credit cards, but the point is I have “official” debt and “non-official” debt. Official debt is the stuff I owe to organizations, non-official debt is what I owe to people whose faces I know. You might think I’d want to pay the people off first, after all, shouldn’t I care about people before companies? Yes, and that’s why I’m paying off the institutional debt first, because that debt is dangerous. Ignoring it and paying the people first would put at risk my ability to pay anyone. But as soon as I get rid of the institutional debt then I’ll have overcome a huge obstacle that will make the business safer and ensure that I will be able to pay off all the people. Not that the business isn’t safe–especially because I should be able to accomplish this goal of paying off the institutional debt this year, but you get the idea.

How much is it? Just under $50K at this point, in case you’re wondering. $5-6K per month for the rest of the year should do it, and then I can start paying off the debts I have been looking to paying off for years. Maybe I’ll buy a pet monkey as a symbol of my achievement. Nah, he’d probably just pee all over everything.