You feel stuck because you are not sure what to do – pay down the debt or invest in your biz? If you rack up more debt, you will just dig a bigger hole for yourself. If you make the minimum payment on your debt, you won’t chip away at reducing it. Total deer in the headlights moment.
Everyone’s financial situation is different and what I’m about to tell you is general advice, not personalized. If you had me in a headlock and gave me a noogie and said, “Justin, help! What should I do? Pay down debt or invest in my business?” My answer would be… drumroll please… to do both!
Paying down debt or investing within your business means you will have some extra cash and you have a choice. If you don’t have the extra cash, then you will need to review all of your expenses, both business and personal, and see where you can cut back without it affecting you big time.
But if the only way to pay down debt is to grow the sales of your company and not cut your expenses, then you have no choice but to make smart bets and invest in your business. Smart bets are where you have a pretty good shot at making a 3x return on your money within 3 to 12 months.
A smart bet is also investing a small amount of money that won’t break the bank. Once you test and you see if the investment pays off, then you can go bigger. And what do you do with the profits? Take the cash and pay off that debt.
Here’s what you need to know and understand:
Justin Krane, CFP®, CIMA® President/Principal
Justin Krane, is a Certified Financial PlannerTM professional and the President of Krane Financial Solutions. His savvy, holistic approach to financial planning allows clients to unite their money with their lives and businesses with sound financial decisions. Using a unique system developed from his studies of financial psychology, Justin partners with entrepreneurs to create a bigger vision for their business with education and financial modeling. Follow Justin on Twitter @justinkrane.
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