Should You Start a Business or Pay Off Debt?

​If you’re someone who is passionate about paying off all student and consumer debt, you might be wondering if starting a business would be a good idea. On one hand it could help you pay off debt sooner, but on the other hand the start-up costs of business don't exactly fit with the “gazelle intense” mindset. What to do? As someone who paid off her student loans and started a business, I’ve got some thoughts to share on what you might consider when you’re weighing the decision. 

This post may include affiliate links in which we earn a small commission without any additional cost to you. All opinions are our own. ​

#1 Starting a Business Doesn't Have To Be Expensive

​I never recommend a new entrepreneur to start their business using debt, especially if that new entrepreneur already has consumer or personal debt. So for many it simply feels impossible to start right now. But it’s not impossible. Starting a business from scratch doesn’t have to be expensive. There are certain business types and models that are really expensive to do. Then there are less expensive routes to starting a business. Even if these less expensive routes aren’t your dream business, take heart that you’ll be taking steps toward your dream business by growing your client base and gaining new business skills while making money. Rarely does an entrepreneur's first business become their smashing success. Give yourself permission to start small and try out new things before thinking you have to go all in. And if you’re going “gazelle intense” paying off debt, you might be wondering how to justify even a small start-up cost. While we were paying off our student debt, I started my first business of reselling on Poshmark. I started with just $20 and reinvested my sales into my business and over time, I had earned six figures on Poshmark. But the only money that was withdrawn from my personal budget was $20. I’m guessing you can figure out how to squeeze $20, or more, out of your budget. Whatever the amount, discipline and the right mentality is key.  Keep your business and personal finances separate from the very beginning and equate any money that you invest into your business from your personal finances the same as spending on dinner, a hobby, or putting into a casino. Can you afford to lose it? Can you say goodbye to it without getting a return? Can you save up and put that money aside while still making your debt payments? If the answer is yes, you can afford to start small. 

#2 The Better You Are About Personal Financial Management, the Better You'll Run Your Business

​Why do you have debt? Was it a one time dumb decision or is it a sign of on-going poor money practices. Although I still think taking on debt should be avoided whenever possible, I’m actually thankful that we had student debt. The money management skills I learned because I was dedicated to paying it off quickly have served me well in business again and again. Are you able to stick to your budget month after month? Are you able to avoid creating new debt? Do you better understand money management? If the answer is yes, even if you have debt, you may be responsible enough to handle your business finances. 

Speaking of personal financial management, YNAB was the tool that helped us learn how to manage a budget and pay off $30k of student debt! Get a free month of YNAB! Seven years later, I'm still using YNAB for both my personal and business budgets! Read more about using this tool for business here. 

#3 Your Business Can Help You Pay Off Debt

​If you’re diligent about not letting your business cost you money and you have the skills to manage your business finances, and you’re okay with starting small, your business can be a blessing to your personal finances and help you pay off debt. I started reselling clothes, shoes, and purses on Poshmark to help pay off our student debt. And even though the sales from my early days didn’t add up to extra debt payments straight away, every little bit did help and it gave me a fun hobby that paid for itself, plus gave me invaluable business skills that are still paying off today. 

I think one of the hardest things I mentioned in this blog post is knowing how to take your dream business and distill that down into a small affordable business that you can start today. This is one of my strengths and something I love helping clients with. If you’re stumped on how to get started today, I’d love to talk with you! 

​Hey! I’m Christine. I’m a small business coach who helps women who are new to business turn their passion into profit. Your first coaching call with me is completely free, and it’s not a sales pitch. Let me help you sift through the mental clutter and come up with a plan that’ll help you turn your passion into a profitable business.

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