Growth

5 nifty ways to manage your personal debt while building your business

Effie Zahos
Smarter Writer

Effie Zahos is editor of <i>Money </i>magazine and has over 22 years' experience in the finance industry.

Effie Zahos
Smarter Writer

Effie Zahos is editor of <i>Money </i>magazine and has over 22 years' experience in the finance industry.

A lot of business owners don't have the luxury of a regular payday. Here are nifty moves to manage your personal debt while you build your business.

Businesses are taking longer to pay each other — 54 days according to data from credit bureau Dun & Bradstreet. As a small business owner how do you juggle your personal debts when it can take up to 54 days before you can pay yourself? Jane Slack-Smith, who set up award-winning Investors Choice Mortgages eight years ago, says it all comes down to planning.“

In business, cash flow is king, but it’s not always possible from day one and if you’ve been in business for a while then you know there are some quieter months that you also need to plan for.”

As a small business owner you probably also have a home loan and maybe a couple of credit cards that you’re personally liable for.Juggling personal debts comes down to improving your business cash flow so you can pay yourself on time and/or making sure you’re on the best possible personal finance deals so as to reduce the amount you have to pay.

There are plenty of strategies you can use to improve your business cash flow, from offering early bird discounts to encourage prompt payment to re-arranging annual payments such as business insurance into monthly instalments. But even so, cash flow can be a continuing problem. With this in mind, it may be easier to tackle your personal debts first.

Here are four ways you could put some serious cash back in your pocket:

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1. Consolidate Your Loans

It’s a quick fix solution that’s sure to reduce your monthly repayments, but it comes at a price. Refinancing short-term debt like a credit card or personal loan into, say, your home loan, means you will pay more in interest and fees in the long run.That’s the bad news, but here’s the good news! It can potentially reduce your repayments by a couple of hundred dollars per month. For example, refinancing a $5000 credit card at 18.5%, and say a $10,000 personal loan at 13% into a home loan at say 5.9% would save you $250 per month in repayments.

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