Success Story: Focusing on debt helped boost a business
After a marriage, a move, an adoption and a subsequent divorce, Christopher Laird Simmons was left with damaged credit and more than $30,000 in personal and business debt.
And he had less than $2,000 in the bank.
It was enough to make Simmons realize he needed to make a change. As it turns out, working on his finances forced him to improve his business.
Simmons, 51, the CEO of Neotrope, a brand identity and marketing company in Torrance, Calif., had been through many professional transformations over the years.
While he’d dabbled in everything from search engine optimization to press release distribution and Web hosting services, he realized some of his business offerings weren't worth it because they didn't provide him with ongoing, sustainable income.
"I was making money, but I wasn’t making a lot of money," Simmons says.
"I was still in debt and had loans. It got to the point where anything I had to do for my business, I had to borrow money. And it had to stop."
Simmons realized that if he wanted to earn more money to pay off his debts, he had to pare down his business interests to only the most lucrative offerings.
He spent time identifying the parts of his business that consistently produced steady revenue and eliminated the ones that were more seasonal or reliant on market fluctuations.
Once Simmons began concentrating more exclusively on brand identities, he was able to work longer hours — and earn more income.
"I started to make more than I was spending," Simmons says. "I was no longer borrowing to promote my business."
When things started to settle into a comfortable work flow, Simmons decided to take a serious look at his monthly debt.
He pared down all spending, eliminating thousands of dollars from his budget — a move that is perhaps too austere for most.
But it worked.
"I got rid of my health insurance, went on a strict budget for food. I didn’t eat out," Simmons says. "I didn’t go to movies anymore. When you spend $50 a week doing something mindless, you suddenly realize that’s $200 a month that I could be using smarter."
Ditching his health insurance alone saved about $4,000 annually, a risky bet that paid off.
With the extra cash, Simmons took a methodical approach to eliminating debt.
"I decided that my priority was to pay off my credit card bills," Simmons said. "I went for the card with highest interest first. Then I paid off my line of credit.”
Simmons had five credit cards carrying a balance, with the highest interest rate at more than 20%.
It took Simmons three years to pay off everything.
He describes it as a combination of austerity and tenacity: "Keeping the old couch and not buying a new TV. Not buying new clothes all the time. Not buying toys of any kind."
"And if I had a couple of extra bucks, I paid a little extra on my car or cards that month. Nothing drastic, maybe paying $379 instead of the $349 that was due," Simmons says. "And paying a little more than the bare minimum on everything meant that I saved on interest payments."
Simmons' tips for building income while paying down debt:
- Don’t just work longer hours, work smarter hours. If you feel overwhelmed by all your professional commitments, try to analyze the ones that provide you with the steadiest and most painless revenue streams instead of taking on smaller, lower-paying side jobs.
- Be proud of being out of debt, not out of work. "I basically took the approach that I’ll take any work large or small," Simmons says. "If I had the time, I’ll take any work to fill the time." Simmons created his "A Track and B Track" work rates, dividing his urgent, well-paying clients from the projects he could work on during his off hours. "A lot of people were willing to do that because they’d save money on it. I learned it from the old days in printing — done well, done cheap or done fast."
- Be aggressive about pursuing work. So committed was Simmons to emerging from debt that he became much more aggressive with clients. "I basically made sure that I always had work. More than that, I have zero debt. I pay all my money at the end of the month." So while business has slowed recently, Simmons still keeps to his commitment to remain debt-free and busy enough to pay his bills.