It actually does not matter if you are an entrepreneur, college graduate or even a full time employee, you have to accumulate debt at one time. While stressing out on debt isn’t a fun-filled experience, you can easily add hectic life of entrepreneur to top it all. The end result is nothing but a complete chaos. Unlike someone with a 9 to 5 job routine, entrepreneur cannot rely on any consistent paycheck. It is hard to get hands on a steady paycheck on the first place. Entrepreneurs end up taking their personal resources in putting up a new business venture. You have to work on this step as there’s no second option out. In other words, you are actually putting money into business and not towards any form of debt you have acquired as a result.
So, it is not hard to state that you have to stay out of debt first. Now you must be wondering how on earth you can do so. Well, following some simple strategies, which proven track record, can help you big time in this regard.
Start focusing on your homework:
Even before you apply for any loan, ensure that you have put all you weight on other options. According to some of the experienced entrepreneurs in market, you have to consider whether you can repay the loan on time or not. Even if you have this question n mind like if you can repay the loan, it is better to look for some other options like startup incubators or crowd funding.
There are times, when you have to do some research and find the right loan for your business. Before getting hands on any loan, start asking some questions to your mind first.
- Is the loan you are procuring from bank is the right one for covering your purpose?
- Does this loan need any kind of substantial collateral?
- What about your loan and how will it affect the current budget and cash flow?
After you are through with the research and have come across an acceptable loan with the true confidence to pay the amount back, it is then time to head towards making a budget.
For the best budget plans:
Developing proper strategy on ways to pay your loan back is quite important. It will help you to figure out the amount you are liable to spend on monthly basis, without hampering the repayment structure. It is during such time when you will get to learn about budget. You can seek out an expert to offer some advices or go through the debt settlement reviews available online. But, no matter whatever step you are planning to take, you have to follow it wholeheartedly.
- For the prime step, you have to tally income sources. You need to figure out the money you bring in every month.
- Later, it is time to determine fixed costs. You have to know about the recurring bills you have to pay monthly and mark those down.
- Now you have to include some variable expenses. Do not forget to add items, which might fluctuate every month.
- You need to predict a single time spend amount. There are some expenses which will hit you unexpectedly, like repairing a busted laptop and more. To get help in this regard, you have to set money aside for a single time expense. It will cover such unexpected expenses with ease.
Once you have these points covered, you can easily create a proper budget you want. However, creating a budget is not the end of story. It will not be of any use if you fail to stick to your plan. So, you need to follow these plans really well.
Ty avoiding credit cards and other added debts as much as possible:
If you are desperately trying to remove the debt tag from your name, you have to avoid adding more to the list. An example will clear out the point even more. Being in a business, you have to organize event almost all the time. As a promotional event, you need to print some T-shirts or promotional gift items for your invitees. Set a budget for that and stick to it. Avoid going overboard with the promotional items, as that might hamper your future financial goals a lot. These are known as additional expenses, for which you don’t have the liberty to invest money.
- On the other hand, using credit card becomes an absolute no-no in this regard. You at least have to try avoiding using it as much as possible.
- It is rather tempting to use this plastic cash to pay bill or even for purchasing new gadget, but this is going to added debt with higher interest rates.
- Yes, it is true that credit card helps in establishing proper credit score and earn some perks, but you should try using it only during emergencies. Not only that, but try using credit cards in small doses so you don’t have heavy extra debt on your shoulder.
Try consolidating and prioritize your bills:
If you have graduated recently, you will know the power of consolidating loans. Here, instead of paying 3 to 4 different companies, you can consolidate loans into one monthly payment, and within a lower interest rate. However, this isn’t always the best route to follow.
Sometimes, you can try going for debt snowball method. It means trying to pay the small debt first, which in turn, helps in freeing up money to pay the next debt, and follow this same method. Through this snowball method, you can pay everything relatively quicker if you are responsible and diligent.
Prioritize monthly payments:
If things are getting a bit way too tight and you cannot afford to pay all the bills, then it is time to make a decision. You need to know the bills which are important and have to be paid now. Payroll and taxes should always be on top of the list. The one, right at the bottom has to be credit card listings.