DEBUNKED: DEBT AND CREDIT CARD MYTHS IN SMALL BUSINESS OWNERSHIP
/Kelsey Kelley and I are coming to you from the ‘Cranberry Bog’ to share a counter cultural vision for your small creative business. Our desire in penning these words is to support creative entrepreneurs in running highly successful and profitable small businesses that give them freedom, choices, and bring them great joy to thrive. But before you hear the six debunked myths of debt and credit cards in small business, we want you to know WHY this mission is so important to each of us.
ASHLEY MARGARET CRAFT
My name is Ashley Margaret Craft, and I am the owner and calligrapher behind ‘Ashley Margaret’! I pen and preserve intentional stories through bespoke calligraphy and design.
My husband and I were 8 months into marriage when we first realized we had over $150,000 in debt: student loans (over $100,000), cars, credit cards, and medical bills. In that moment, we saw every dream we ever had disappear right before our eyes. We had chains and we were truly enslaved by our debt. But instead of being paralyzed by our situation, we DID something about it. To date, we have paid off over $115,000 since February 17, 2017, and 2019 is the year we will finally be completely DEBT FREE!
I started this creative small business as a way to hustle HARD at something I loved to bring in extra income for our debt free journey. At the time, I had no idea just how special this business would become. As we get closer to the finish line of our debt free journey, we feel the chains coming off, and we can see all of the freedoms that we will have once debt no longer has a hold on our lives.
It was a JOY to partner with Kelsey because she is living on the other side of our debt free journey, and she is FLOURISHING as she stewards well her business financially!
KELSEY KELLEY
I’m Kelsey Kelley with ‘K. Kelley Designs’!
I create custom wedding invitations and watercolor portraits for clients all over the U.S. and teach workshops in my home state of Tennessee.
This small business started out as a ‘side hustle’ to help free up our income while paying down debt and in July of 2018, we became completely DEBT FREE! Having zero debt has allowed us SO many freedoms, one of which was the easy transition of leaving my job of 8 years in the corporate world to pursue my art business full time. I am living proof that with hard work and small daily sacrifices, ANYONE can experience the countless joys and endless opportunities that running a debt free life (and business) brings.
Consider this a ‘hers & hers’ tale as we each share our perspective on why it is so important to run a debt free and credit card free small business.
6 MYTHS DEBUNKED
I- MYTH: Small business debt is business debt. DEBUNKED: Small business debt is PERSONAL debt.
Ashley: Small business debt is signed to your name and it is personal debt. If your business went upside down tomorrow, and you signed those loans, you would owe them, and you would very quickly learn that small business debt IS personal debt. For some reason, when business is attached to debt, people feel a different distance from the debt. I want to bring that distance back closer to you, because if something happened to you tomorrow, and you could no longer work your business, what debt would you have? If your business has $50,000 of debt, that is a debt you personally owe.
Kelsey: YOU are your business. YOU are your brand! Especially as a creative small business owner. Your clients are buying from you and it’s a personal transaction. So, let’s keep that in mind in every facet of our business…From your client experience, to your website, your social media, and yes- your finances. So if you take on debt, it’s personal.
II- MYTH: You get credit cards points when you use a credit card. DEBUNKED: You spend more when you use a credit card. (Upwards of 20-50% more)
Ashley: McDonalds was one of the FIRST companies to accept credit cards in the fast food industry. Do you know why? Because what they found was that when people buy with a credit card, they spend anywhere from 20-50% more than if they would have purchased with cash or a debit card. Points are a false reality. And then of course, WHY would you want to play with snakes? Credit Card companies are EXPERTS on behavior, and if there is one thing they know, it is YOU and your spending habits. They are ‘giving away’ points because they know they made money. Why not keep that extra 20-50% you spend in your own pocket?
Kelsey: The average credit card user pays at least $900 a year in interest. Does that $900 justify your cash back “benefits”? Odds are… Probably not. (Article on Interest)
III- MYTH: You have freedom with when you use a credit card and it gives you an advantage. DEBUNKED: There is freedom spending with cash and running a debt free small business that gives you an untouchable advantage in business.
Ashley: What you don’t know is that credit card companies have done SUCH an exceptional job at marketing, that they have made YOU feel like YOU are GAINING freedoms by using a credit card, but in reality, they are just chains in disguise. When you have no debt in your business, YOU have ALL the control.
Kelsey: CASH IS KING! The power of cash is real y’all! Big companies (think furniture stores, car dealerships) will be more willing to negotiate on prices once they know that you have the cash on hand for that big purchase. So not only are you buying SMARTER but you could also save money. Win, Win!
IV- MYTH: You cannot be as creative. DEBUNKED: Spending with cash and ‘doing business at the speed of cash’ only pushes you to be even more creative and resourceful.
Ashley: As I look back on my business over the past 2 years as I have run it debt free and credit card free, there were times when I did not have the cash flow to do something I wanted. So, like a grown adult, I had to wait, have patience, and save up the cash to purchase what I wanted for my business (Yes, in an Amazon prime culture, it is ok to WAIT for something.). And you know what? Time after time, I was FORCED to be even more creative, think outside the box, and make magic happen with my creativity, instead of a line of credit from a credit card.
Kelsey: False. Just false. Not to go all sappy on you, but creativity truly comes from within!! It’s not something you can purchase.
“I don’t have enough time/money/people/experience. Stop Whining. Less is a good thing. Constraints are advantages in disguise. Limited resources force you to make do with what you’ve got. There’s no room for waste. And that forces you to be creative.”
V- MYTH: You are limited in your decisions and you set higher goals with debt and a credit card. DEBUNKED: Spending with cash makes you think harder, make wiser decisions, set bigger, longer term goals, and be held accountable.
Ashley: As a business owner, there is ALWAYS something vying for our money: new office furniture, new tools, new educational courses, new product lines..the list could go on and on. But when you spend your money at the ‘speed of cash’ you have in your pocket, you actually FEEL the money you spend. What that means is that you will take an extra night or week to think about the purchase because you actually realize you are spending money. Or maybe, you will set a goal to purchase something after you have hit a specific business goal. Or, maybe instead of just charging it, you take time to talk to a business mentor or trusted friend to make sure the purchase you are about to make is wise, intentional, and important for your business.
Kelsey: Studies show that credit card debt is the only debt where you actually take on MORE debt than you had originally planned. This makes planning and goal achieving very unstable. The best way to achieve goals in your business is to dedicate time to work towards them and stay disciplined in achieving them! Debt does not magically equal more time and definitely doesn’t encourage discipline. (Trust me, it takes a LOT of discipline to get out of debt!)
VI- MYTH: You gain more choices when using a credit card and debt. DEBUNKED: You never know what will happen in your life. Debt is slavery. You have more choice when you choose to run your business without credit cards and debt free.
Ashley: When Josh and I first realized we had $150,000 in debt, every single choice we had went out the window. “Adults devise a plan and follow it, and children do what feels good” (Dave Ramsey) To think that you gain more choice by having a credit card is a childish way of thinking, and in fact, having a plan, following it, and choosing the debt free/credit card free life with always give you more choice. You never know what could happen in life, and as I mentioned earlier, if your business has debt, and it stopped tomorrow because you could no longer work, you would instantly gain all of that debt as personal debt, and your choices would then be limited in so many ways.
Kelsey: Debt binds you. It actually restricts your freedom of choice because now you have payments and if those payment aren’t made- you’re in trouble.. It limits your freedom to choose how you spend your money.
FINAL TRUTH- Debt and credit cards in business are JUST PLAIN DUMB. I want to take a moment to remind you of where both Kelsey and I started; getting out of debt has changed both of our lives, and we both run successful, thriving small businesses that run at the speed of cash, and that are flourishing. Our desire is to support entrepreneurs to run highly successful and profitable small businesses that give them freedom, choices, and bring them great joy as they flourish doing what they love.
FINAL WORDS FROM KELSEY: Getting out of debt has changed my life. I’m a Christian and hear me when I say the Lord will honor your obedience and your sacrifice to make this happen. He will make a way for you…I promise! When we paid off our credit cards, then our student loans, and finally our car- I am telling you there is nothing more empowering than taking control of your life like that! In the past year, my net income has TRIPLED and I absolutely would not have been able to make that happen if we weren’t able to operate my business and life debt free. I’m so passionate about running my business this way and I want every other small business owner to experience the immeasurable joy and benefits having zero debt brings… Not only to your business, but your mental health, your marriage, your relationships- it seriously improves every aspect of your life!
SMALL BUSINESS CREATIVES WHO RUN THEIR LIFE DEBT FREE AND CREDIT CARD FREE
Jenna Kutcher of Jenna Kutcher
Nancy Ray of Nancy Ray Photography
Ashlyn Carter of Ashlyn Writes
Christy Wright of Business Boutique
Ashley Margaret Craft of Ashley Margaret
Kelsey Kelley of K.Kelley Designs
“The rich rule over the poor, and the borrower is slave to the lender.”
TAKE ACTION FRIEND: I don’t know what ‘action’ looks like for you right now, but below are three actions that could make sense for you to do today:
I- Cut up your credit cards. Be done with them FOREVER. They are not your friend. They are not life-giving. They will only give you chains.
II- Pay off your debt, personal and business. Start small, and keep snowballing.
III- Pay for your next purchase with cold hard cash…actually take money out of the bank and see your hard earned cash pay for something you save up for. I promise it will feel different and you will be more empowered .
“The best is today AND to come.”
Sweet blessings,
