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Being in debt didn't prevent me from starting my own business, but it did mean that I had to be financially savvy with the cash I had. I knew I couldn't take out any loans. I knew I couldn't open an outside office, and I knew I would have to be 100 percent on top of my finances at all times.
Eliminating As Much Debt As Possible
I started my self employment endeavor years before I started my own business, and my first task was to eliminate as much debt as possible. I knew it would be impossible for me to pay off my student loans, so I focused on credit card debt and medical bills. With $2,000 I paid off $4,000 worth of old debt. This amounted to two credit cards, two old phone bills, and two old doctor bills. This was enough to raise my credit score 100 points and put my name on the "good credit" list instead of the "horrible credit" list. I did this because if I needed to take out a small loan, I wanted to be able to do it. So far, I have not needed to take out any loans, and I am grateful.
Lower Bills
After I paid off my debt, I spent the next couple years preparing to move from the east coast back to Indiana. The move itself cost $1,200, but it lowered my bills by far more than $1,200 a year. I lowered my rent from $630 to $540 a month. My electric bill went from $130 to $80. My car insurance went from $105 to $65. I found a gym membership for $10 a month versus $45. I also lowered my internet bill from $45 to $35. The combined savings was $2,700 a year, and bills that amount to $801 a month including my cell phone. After food, gas, and miscellaneous supplies, my monthly bills run $1,200 a month.
Income Breakdown
Once I had my lowered my bills, I had a daily income breakdown that was possible to maintain even under the worst financial circumstances. At $1,200 a month, I needed to earn $42 a day. That's $5.25 an hour for an eight hour day. I figured if I couldn't earn that on my own, I didn't deserve to work for myself.
After 11 months, I haven't had to go back to go back to work at a traditional job, and it doesn't look like I'll have to any time soon.
Save
Between 2009 and 2011, I also saved $2,000. That amount of money is enough to pay my rent for 3.7 months. It also provides a 1.6 month buffer against zero income months, and I've had some $400 and $500 months. Luckily, I haven't seen a zero income months yet.
No Outside Office. No Employees.
The other thing I resigned myself to was working at home. I knew I wouldn't be able to afford a separate commercial office. I also knew I wouldn't be able to hire anyone, and some days I really wish I could afford a secretary, but right now that's not feasible. I need to be able to afford my own health insurance and pay my student loans before I hire anyone or rent an outside office. The only thing I can say is that outside of my student loans, I carry very little debt.
I won't say it was easy, but it is doable. I had to learn to live within my means no matter how low my income. I had to learn to save even if it was only $10, but I am self employed and working for myself.
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