Do you have business credit card debt?

Do you have business credit card debt? Maybe you needed to make some purchases using a credit card to be able to start your business. Maybe you needed to use your credit card to keep your business going through a slow time. Or maybe you have credit card debt that built up over time without realizing it? Debt can come in different ways and it can become a heavy weight if you managed properly.

walking_with_debt_ball_150_wht_10143At the end of the day debt is debt, no matter what the reason. It is something that you need to plan to get out of though, otherwise it will hold you back and be a weight like our little friend above!

So, to get out of debt you need to have a plan, one that is written down and that you can commit to. A plan is useless if you don't follow it! So, where do you start? I think it is important to stop and think about why you got into debt in the first place. You need to understand this so that you can try to avoid going into debt the next time. (If the debt was planned, e.g.. you needed to buy equipment for your business, then you can skip this step.) However, if the debt accumulated over time without you even realizing then you need to stop and think about how and why this happened and what you need to do to make sure that it doesn't happen again.

Next, you need to decide how much you can afford to pay off each month. You will have a minimum payment each month but it will take a very long time to pay down the debt if you only make the minimum payment each month. If you have more than one credit card start with the smallest balance first and pay as much as you can afford to off this card first while still making the minimum payments on the other credit card(s). When you have paid off the smallest balance, start doing the same with the next credit card and keep doing this until you have paid off all the credit cards! This is known as "Dave Ramsey's Debt Snowball" which makes so much sense. Click here for more info on his Debt Snowball plan. This works great for personal credit card debt as well.

Let's go back to the "Why" you got into debt in the first place. Why did this debt accumulate? Did your business expenses actually increase but you didn't realize it because you were not tracking your bookkeeping? Bookkeeping is a critical part to owning a business. It gives you the vital information that you need each month to determine how your business is performing. You may not always like the information that it gives you but at least you can make informed decisions based on this information and give your business the opportunity to succeed rather than fail.

If you have credit card debt, stop and take a moment today to plan as to how you are going to get out of the debt and then how you plan to stay out of debt – hint do your bookkeeping! If you don't have any debt, plan as well by keeping your bookkeeping up to date so that you can make sure you stay out of debt in the future.

10 Responses to Do you have business credit card debt?
  1. Jackie Harder
    August 15, 2013 | 8:19 am

    Thoughtful and excellent advice. Thanks, Kerry. I try to avoid debt as much as possible. 

  2. Edmund S. Lee
    August 15, 2013 | 8:28 am

    Absolutely spot on there Kerry. This is a very common issue in today's society. I love the fact that you mention Dave Ramsey's Debt Snowball. That concept alone makes a ton of sense.

  3. Beth Blacker
    August 15, 2013 | 9:12 am

    When I started my business I was willing to put all of the start up expenses on my business credit card but had a dollar amount of debt in mind that was acceptable to reach as well as pay back every month. I knew it was going to take at least 2-3 years and am happy to report I am sticking very much to my plan. 

    • Abacus Bookkeeping LLC
      September 13, 2013 | 7:07 am

      Having a plan is so important and if you can create a plan and stick to it then that is great. So many people cannot follow a plan and that is where they get into trouble!

  4. Marie Leslie
    August 15, 2013 | 9:51 am

    I am so thankful that I currently have no business debt at all (and no credit card debt, either) and I plan to keep it that way. I have learned to plan carefully and exercise patience to accomplish my goals. It's not always as quick as I would like, but it certainly is less stressful.

  5. Lorii Abela
    August 22, 2013 | 11:17 am

    Very practical post! Credit cards are very convenient indeed when used properly but can also create huge debts if used inappropriately. When do you think it is best to use credit cards?

    • Abacus Bookkeeping LLC
      September 13, 2013 | 7:05 am

      There is no perfect time to use a credit card. If you can avoid it then that is th best thing. If you need additional cash to make a business purchase then a loan would likely be the better option where you have fixed payments and you know how much it really truly cost you in interest. Credit cards can get out of control if not handled well.

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