Should you ever fund your business with a credit card? (guest post on Millo.co)

(This was a guest blog post for Millo, a fantastic resource and community for people who are working on building a creative business. You can catch the full post on millo.co)

credit-card-pile

We were at the closing table, finalizing our first home purchase, when we found out.

We were doing a complete gut renovation on this house, which means we couldn’t live in it for at least 6 months. Our mortgage lender told us about the option to defer the mortgage for 6 months while the renovations were going on and of course we said yes.

When we didn’t see it in the paperwork at the closing table, we called him and he said, “Oh, you never confirmed that with me, so it’s not in the loan.”

Crap. This meant we’d be stuck paying two rents and a mortgage for at least half a year.

The first thing I thought was, well, I guess we’ll be living on credit cards for a while.

Every financial planning bone in my body recoiled. What did I just say to myself? That I would be okay knowingly running up a credit card balance for months on end?

Think of the interest charges! Won’t someone please think of the interest charges!

The truth about credit cards

Honestly, I feel like credit cards get a bad rap sometimes.

We hear stats like the average credit card debt of a US household is $15,000 and we vow to never use our credit cards again, or at the very least to pay them off as quickly as possible and pretend they don’t exist.

Here’s the thing though.

Credit cards aren’t good or bad. They’re just credit cards.

But more importantly, they can be used as tools to help you reach your goals and dreams, especially if you are mindful about how you use them.

So how about those interest charges? We’ve all been taught that interest is bad, that you’re throwing your money away.

But what if instead, we thought about interest as you buying time?

Here’s the deal: I needed at least 6 months’ worth of supplemental money to fund my dream home renovation. Every interest payment I made was me buying one more month until the house was move-in ready.

When to grow your business with credit cards

When you’re first starting a business or taking on freelancing full-time, your most precious asset is time.

If you can get something done today that will grow your business instead of waiting until next week or next month, you should probably do it (in my professional opinion).

Usually, though, these kinds of things take money and if you’re just starting out or you’re strapped for cash, you more often than not feel like you have to choose the path that costs the least.

Sometimes this makes sense.

A huge part of being a freelancer and entrepreneur is bootstrapping it, paying with sweat equity.

But what about when you hit a point where you really just have to spend a good chunk of money on something to take your business to the next level, even if you don’t have the funds to do it right now?

That’s when you pull out your calculator and run the numbers. Here’s how:

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