My $20K Mistake
Last summer I paid off $20K worth of debt.
As an entrepreneur, sometimes it’s your job to do the impossible. Sometimes you can raise $100K in Kickstarter in 30 days and other times that firebrand attitude can leave you drowning in debt and totally delusional.
Two years ago I was the latter. The film had been out for a year, and I was desperate to start a new project, keep my team full-time, and pivot our financial model. But every day the financial weight of the business was getting heavier and heavier.
To keep my production company alive I invested in film idea after film idea, but each one crashed and burned on the runway and I ended up racking up more and more debt.
Cut to me about to buy three plane tickets for my team to West Africa to film a documentary when I finally broke down. In that moment I saw how much personal debt I had already acquired trying to start over and how irresponsible it was to take on something new. I was officially spinning financially out of control.
It took canceling that trip and backing out of the project I was producing to finally realize that I needed to make some serious financial changes in my business and in my life. Here is what I did to get out of $20k worth of debt:
I took responsibility for my finances & stopped blaming everyone else. At first I blamed the people I owed money to. Then I blamed time on the fact I was too busy to raise more money. Then I blamed the patriarchy (always a good one) for not valuing women’s work more. The list went on and on. In order to tackle and clear my debt I had to come clean and be honest with myself. This wasn’t anyone’s fault or problem but mine and I’d have to stop the blame game to get serious and pay it off.
Make a plan & check-in with it. I’m a big fan of the white board and I put that baby to good use when I was making this game plan. Each post-it had a number on it of how much I owed and to whom it was for. Then under each amount I had a plan for how I would pay it off monthly and for how many months. So for example: I borrowed $2,000 to my husband. To pay him back I’d pay $100/month for 20 months. Every month I’d set time aside in my calendar to check in on that board and see the decrease in numbers. This gave me an incentive to keep going because I could see I was making slow but steady progress.
Pay it off little by little. This is the most frustrating part. You have to sit with the discomfort of the big numbers and chip away at it slowly. Your instinct is to write a big check, but if you want to keep your everyday finances from sinking you have to go at it little by little. Of course if you have the funds to pay your debt all off, of course do so but most of us have to do the “hard yards” as RuPaul says and put in the time to get it cleared.
Pay Yourself. I can’t tell you how many times I’ve skipped a paycheck and dipped into my savings to pay my rent. However, after a while you won’t have any savings to dip into and studies show that not paying yourself for your work causes you to have resentment towards your business. I actually polled a group of female entrepreneur friends I have and a lot of them did this, which makes sense- we are running these companies by any means necessary. However, I knew if I wanted to get my company out of debt I’d need to get out personally as well. Making my paycheck mandatory was first on the list.
Stop working for free & giving discounts. This was a big one. I once gave a billion dollar corporation a discount on their screening and felt sick to my stomach for a week. I needed to get serious about my business if it was going to stay in business. So because I’m a serial overachiever I didn’t just make a commitment to myself on a post-it note, I wrote a 70-page e-book called Creative Money. This become my financial blueprint. I wrote down all the mistakes I made and created a guide to push myself and my business to the next level.
Finances are tough to talk about, especially as women. But if we are going to continue to make cultural waves in our economy we gotta get our bank accounts right. I hope my story inspires you to take a look, and create time to get yourself in a place of financial freedom. And if you are struggling with debt right now to know you are not alone. It happens to the best of us.
So let me know what you think! Did I miss any tips on clearing debt? What’s your best money move? Comment below and share your story.
Written by Erin Bagwell
Copy edited by Diana Matthews