If anxiety about losing your steady paycheck and benefits is keeping you from starting up your dream business, then believe me, you’re not alone. You may worry that you have too much debt to become an entrepreneur. These are valid fears which need to be addressed before you quit your day job. Here are three things you can do to financially prepare for entrepreneurship while still in your corporate job.
Pay down debt
Lynnette Khalfani, author of the New York Times bestseller “Zero Debt: The Ultimate Guide to Financial Freedom,” stresses cleaning up your finances in preparation for entrepreneurship. Of primary concern is a large load of debt, which will make it difficult to get through the first lean months of your startup, and challenging to get the cash you need to fund your business. Khalfani’s tips for paying down debt:
- Call creditors and negotiate a lower interest rate: “Most people don’t realize they have leverage in negotiations with creditors. There are 5 billion credit card offers sent each year. The environment is incredibly competitive and you should use this to your advantage.”
- Don’t close those $0 balance accounts: Closing out paid-off accounts may actually hurt your credit score more than helping it, so think twice before you cut up those cards. Instead, Khalfani says, “Learn to control your impulses and better manage your credit and debt.”
- Use windfalls properly: A windfall could be a year-end bonus, tax refund, insurance settlement.
Author: Pamela Slim
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