Herman School of Business
Let's talk about debt again.
The year is fifteen days old…the economy is shaky at best, your employer is experiencing troubled waters, the business you want to start or buy is waiting for you, and you don’t know what to do just yet.
Well, I do. Get a totally realistic look at your debt, or the debt you are about to incur with a car, house, or business purchase. To be sure, not many people can always pay cash for the big ticket items. And when you want the new car, the new house, or the business you finally decided you were ready for, one thing will cause you to make the wrong decision. Too much debt. Can you really afford the purchase?
Take stock of last year and where you finished on 12/31. Are your credit card bills higher than they were a year ago? Did you buy a house at the peak of the market in the last eighteen months, and maximize the debt on that purchase? Did you drive off the lot in a new car with less than 5% down payment, and a monthly payment figure that is the highest you have ever owed on a car? If the answers aren’t good for you then you have some work to do. Start by cutting up those credit cards, except for one for emergency purchases. Get on the phone and negotiate a lower interest rate on your card or tell the lender you are transferring the balances to a lower interest rate carrier; they will work with you rather than lose you. The car and the house are another matter, you may be stuck with them for now.
Stop incurring more debt. Right now. I spoke today with an administrator with the Small Business Development Corporation who said many clients come in looking for a loan to offset losses without first understanding their costs and how to cut them rather than spend more money and go further backwards. Geez, it was like she was reading right out of HERMANISMS. I challenge you to look at your business operation, or your family household management ways, and learn some important aspects of making 2008 a better year for you. Vow to lower personal debt on “stuff.” No more new clothes, curtains for the house, trips to “unwind from the stress”, and pass up that motorcycle your mid-life crisis is screaming for, even though you think you owe it to yourself because you have worked so hard up to this point in your life. Stop kidding yourself OK.
In 35 years rarely have I seen any business I bought or started from scratch be able to give me positive cash flow right away. So putting yourself in debt buying one or starting one better mean you have some way to live until cash flow does come, if at all. Listen, I have launched operations and bought companies and invested in real estate when I pushed myself to the very edge at times, but I had the stomach for it, and was willing to endure the pain to get where I wanted to go. If you can’t even stand the pain of passing up a shopping trip to the mall, or a new Lexus or toy for your ego, then you have almost no chance of paying the prices for success. I joined a gym a week ago and those machines aren’t going to march over to my house four times a week and exercise for me until I lose this gut…I will have to pay the price to lose it…and I am willing to do that.
You can get out of debt. You can find a way to start or buy a business. You can achieve success. But you have to be willing to pay the price for it. If you need help, or want an opinion on your personal situation, just email me at herman@hermanisms.com and let me know.
- Posted: 15 January 2008
- Comments: 0
- Category: Business success
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