Today's message at my church was about money. The speaker shared W.I.B.O., an acronym representing the four things money represents: worship, investment, benevolence and obligation. It will take me a few days to digest the entire message, but the “obligation” part speaks immediately to me in profound ways because I was once in a lot of debt.
According to numerous news reports, Americans are not only in debt, but they also seem to be at a loss as to how to get out of it. According to a report released by Risk Metrics, in December 2007, an average of 7.6% of all credit card loans were either at least 60 days delinquent or had gone into default, up from 6.4% a year earlier. More recently, Bloomberg reports that credit card defaults are poised to rise beyond 10 percent this year.
For small business owners who are in debt, I'm proof that you can get out, but it's a challenging process and you will have to sacrifice to make it happen.
For small business owners who are not in debt, especially those just starting out, don't let this happen to you. Keep personal credit card spending to a minimum. I even recommend eliminating credit card debt entirely if you can. I have done this by using using coupons, cutting back on eating out and leaving those new Jimmy Choo shoes on the rack until I can pay cash. It's a good habit to get into, especially since I'm also saving up for two college educations and trying to make sure I'm not on the cat food retirement plan.
If you're already in debt, start a plan to get out. Syndicated radio show host Dave Ramsey has some great resources to help you get started.
If you stay out of debt personally, you'll free yourself up to invest more money in your small business. You'll sleep better at night too.
Question: What do you think? Is it unrealistic for most people to cut up the plastic? I don't think so, but I want to hear from you.
* This article first appeared in the Bootstrap Babes blog on February 17, 2008. It has been updated slightly for context for this post.