Being in debt as an individual is quite different to accruing debt as a business. For individuals, it is about achieving personal stability and clearing those debts. As an entrepreneur, you’ll need to consider your business first in whatever action you want to take, making the situation more complex.
Does that mean entrepreneurs don’t have personal debts? Far from it. In fact, many entrepreneurs owe far more than the average individual. So, how do you prevent your personal debts from interfering with your business?
It’s important for entrepreneurs to understand that business life is quite different from personal life. As such, it’s essential to exercise caution when handling anything concerning personal finances. In order for an entrepreneur to prevent personal debt from interfering with business, you’ll need to pay those debts off without dipping into your company’s financial reserves.
Drop expensive habits
Those with an entrepreneurial mindset probably don’t live a lavish lifestyle. But, if you notice you are consistently racking up debts, it’s a good idea check your spending habits. Clearing your personal debts without involving your business is an idea you should strongly consider.
You’ll also want to identify what your temptations are. For instance, if you love shopping, taking your credit card with you to the mall would probably be unwise. If this means stocking your fridge so you are not tempted to splurge mid-week, or even hiding your credit cards for the time being, then so be it.
Seek to renegotiate
Being an entrepreneur also means thinking outside the box. So when it comes to paying off your debts, you might need to find a friendlier way to do it. You’re restricted in terms of funding and, as such, you need to get creative. One of the most creative approaches you can adopt is debt renegotiation.
This involves renegotiating the terms of your debts with your creditors, and one of the most prominent renegotiation tools available is an IVA. It is a strategy that helps to help you better handle your debt. Check out the best IVA company UK here, and get started on a comfortable debt repayment system.
Use ‘found money’ to pay off balances
Sometimes you’ll receive money you’re not expecting, perhaps an inheritance or a raise on your annual payment, for example. As an entrepreneur, your first thought here should be to pay off your debt.
Getting money you haven’t accounted for can go a long way in helping you become debt free. Every time you get this type of money, use it to pay off a chunk of your debt. What’s more, consider using the snowball method, where you pay off your debts starting with the smallest ones. Once you have paid the smallest in full, you can proceed to the next debt and so forth.
Ask for lower rates on your credit cards and negotiate other bills
If you feel your credit card interest rates are becoming overwhelming, and it is almost impossible to make headway on your balance, you should consider calling your card issuer for negotiation. If you have a solid history of paying your bills on time, there is a high possibility they will lower your interest for you. With your interest reduced, paying off your debts will be that bit easier.
On top of credit card interest, you can also negotiate or eliminate the interests on your other bills. Even if your request is unsuccessful, you have nothing to lose from asking.
Sell everything you don’t need
This is a method you can use if you are looking to get some quick cash. Take stock of your belongings and decide what you can live without. Selling these personal items won’t interfere with your business and will help you to pay part of your debt.
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