Having too much personal debt is one of the most common hurdles stopping individuals from starting their own businesses. It’s also one of the most difficult problems for would-be entrepreneurs to deal with.
Continuing to pay down debts has a huge impact on a new business. It means there’s less start-up capital available to the business, and it creates an undue amount of stress on the owner. Some new business owners who are in debt may have to significantly downgrade their lifestyles to make ends meet. Others may choose to take on part-time jobs, limiting the amount of time they can contribute to business growth.
For these reasons, experts suggest that aspiring entrepreneurs get out of debt before they start their businesses. But as most people know, getting out of debt is no easy task. For some, it takes years of budgeting and saving.
When you’re eager to get your business off the ground, there are ways to expedite the process so that you can be debt-free in just a few months or years.
Start with simple steps. If you have a mortgage or auto loan, try refinancing to receive lower interest rates. If you have credit card debt, call the customer service departments of your credit card companies. They are often willing to negotiate with you directly to reduce interest rates. While lower interest rates may not get you out of debt on their own, they will help you save money over time. More of your payments will go toward lowering the principal, getting you out of debt faster.
If you have several different debts and have trouble managing them, consider debt consolidation. This option allows you to combine multiple debts into one, typically with a lower interest rate and more lenient repayment terms.
For some individuals, these measures just aren’t enough. If you’re unable to meet the monthly demands of your debts, consider debt settlement. A successful debt settlement will actually reduce your loan’s principal, leaving you responsible to pay only a portion of your total debt. This is best done with the help of an experienced debt settlement firm.
If you’re in worse financial shape, you may not be able to repay even a small portion of your debts, ruling out debt settlement as a viable option. In the worst-case scenario, consider bankruptcy. This can wipe out all or most of your debts, leaving you with a clean slate from which to launch your business.
In most cases, however, your financial problems can be fixed with much less drastic measures that rely on persistence and hard work. Depending on your unique situation, you could be out of debt and on your way to owning a small business in just a few months or years.
