What do you do when you want to pay off your debt but you calculate it will take 25 years to do so on your current income?
Well, if you're Adrienne Dorison, you start a side business and start shoveling yourself out of debt faster!
Another reason to get out of debt
Before her income grew, though, she still had a large student loan when she started dating The One. She explains that he was a Dave Ramsey fan and, consequently, good with money. The thought of bringing debt into their marriage (now that they're engaged!) embarrassed her.
But her fiancé was supportive. When she told him of her debt, he said, “We can deal with that.”
Since Adrienne wanted the satisfaction of knowing she could eliminate her debt all by herself, how did he help her deal with it? He didn't pay her debt for her, but he made sure that outings together with friends and the like were scaled back enough to include her but not overstretch her budget. He was her accountability partner and cheerleader. He was a reminder and a support system to her.
How she paid off her student loans
At 29 years, Adrienne was starting out with a good income as a supply chain analyst for a large paper manufacturing corporation. However, she couldn't accept that it would take 25 years to repay her $45,000 student loan debt — so she started looking for alternatives.
To accelerate her loan repayment, she cut her expenses and increased her income. She was able to save close to 85 percent of her income and pour it into reducing her debt.
It wasn't easy, but she began to realize something:
“Your expenses reflect what you value — this realization makes your spending intentional.”
Once she got clear on what she valued, it fueled her: “I didn't eat out, and I didn't buy unnecessary things (clothes, knick knacks, and coffee) like I had previously. I switched my phone provider. I didn't have cable. I didn't travel.”
To increase her income — even though she still had debt — she decided to start a side business.
By using her experience and skills in business, leadership, technology/social media, networking, and communication, she started a leadership and personal development blog. This blog led organically into a coaching business. For seven months, she worked her day job and her side job at the same time. After seven months? It was time to say goodbye to the day job.
Bootstrapping a new business
Starting a business while in debt seems challenging, maybe even ill-advised. How did she find the extra money to get started when she was still trying to pay down her student loan?
Adrienne explains …
“I was bootstrapping in the beginning and, since it was a business that didn't need much capital, I got creative and did a lot of the work on my own. I created my own website on SquareSpace at first and sold some pieces of furniture and a TV to create the funds for some of the other systems I needed in place.”
Running a side business in addition to working a full-time day job requires careful planning and scheduling. To meet all her commitments, Adrienne started waking up at 4:30 am and moved her workouts to the morning. She did a little work before heading off to her day job. She also worked during her lunch break, after work, and on the weekends. “I worked a lot so that I could get out of the day job faster.”
Overcoming the challenges of starting a side business
Although working so much is not sustainable in the long term, Adrienne has some tips to keep focused on your goals:
- Focus on the most important things
- Take it day by day to prevent getting overwhelmed
- Create a schedule that supports your energy — if you are exhausted when you get home at night, you may need to do your business work in the mornings, etc.
The benefits of a side job?
All her hard work paid off. Her student loan was gone in just six months. In seven months, she was able to quit her day job.
Would she recommend that others start a business (preferably without debt) to accelerate debt repayments? Yes!
Adrienne wants to help people become successful entrepreneurs. While entrepreneurship isn't for everyone, in some ways, it can supercharge your financial efforts. As she puts it …
“You can diversify your income, have a plan (you never know when a company is going to change/downsize, etc., and not need you anymore), learn to monetize your skills and VALUE your skills!”
Managing money as an entrepreneur
Adrienne's savings account is her emergency fund. While she was in debt-repayment mode, she kept about $1,000 on reserve.
But now that she is self-employed, her income varies wildly. To cushion her income uncertainty (now that she is out of debt), she is working to build up her emergency fund to six months' worth of expenses.
Her money management also extends beyond savings. She prioritizes her spending too. Her first priority is giving. Next, she meets her survival expenses, such as, shelter, food, and health insurance. Then, she saves money. Her fourth priority is business expenses. Making up the final expense is luxuries or extras.
While your spending priorities may be in a different order, having priorities (and sticking to them) can make a difference financially.
You can get out of debt too
Paying off her student loan so quickly was not easy and it required sacrifice. But her advice is to believe in yourself. You can do this!
Another thing that worked for Adrienne:
“Take some quiet time to really imagine how it feels to be out of debt and envision how it would feel not to have to make that payment. Try to step into the feeling of why and how it feels to do it. You don't have to live with debt forever.”
How would starting a business affect your financial situation? What kind of sacrifices would you consider making to improve your financial situation?
Lisa Aberle is a college professor by day and a freelance writer by night. Always an aspiring writer with an interest in money, she once ironically misspelled “mortgage” during a spelling bee. Most of her current adventures take place on the four-acre mini-farm she shares with her husband in the rural Midwest (where she writes with gel pens whenever possible).