How to Get Out of Debt as a Small Business Owner
Today’s guest, Sharlene Mohlman, is a published bestselling author who is very passionate about helping to empower professional women eliminate their debt and build successful financial portfolios so they can achieve financial freedom and create generational wealth. She’s created a community of like-minded women who wanna live life more deliberately, but more importantly, abundantly. Please welcome Sharlene Mohlman.
Sharlene is very passionate about helping professional women eliminate all their debt. She actually accumulated about 45,000, $55,000 worth of student loans and debt during her educational period. It was pretty limiting on her when she was only making like $20,000 a year in my dream career. She was working for the federal government and wasn’t allowed to have a secondary income. Everything she read on the internet about how to eliminate your debt was always saying get more money. That’s a wise and very important thing to do, but when you’re in a situation where you can’t, you have to get creative. She got creative and discovered a way to eliminate her debt on an income less than $50,000 in five years.
She created a system that gave her perks and fun times as well. What really motivates her is that women are frequently left behind in the financial world. As a financial coach, her goal is to empower women to the point that they can become financially successful. Many women out there are dependent on someone else for their income or the bulk of my income and want to empower themselves, whether it’s paying off debt or bringing themselves to the next level, but they don’t know how to do it.
When it comes to eliminating all your debt upfront or eliminating your debt while saving and investing your money? Should we do one before the other? Do we do both at the same time?
Sharlene’s advice is that you should do both at the same time. It’s important to grow your savings as you’re eliminating your debt. That could mean doing 50/ 50 for a while — 50% going on your debt and 50% going in your savings. If you’re a little bit more concerned with your debt you could do 60% towards it and 40% towards your savings.
When you’re in debt payoff mode, there are things that are gonna come up. If you don’t have anything put aside the likelihood is that you’re going to be tempted to put it on a credit card because you don’t have any other choice. Sharlene suggests having at least something in your bank account for an emergency fund.
Small business owners can easily get into debt. What is the first step for small businesses with extra from their businesses to invest in? We can get into a comfortable rhythm where we think that debt is not a big deal. We hear from a lot of really big businesses that debt is okay, if it’s for your business. It’s important that when you’re finally starting to make a little bit of extra money that you pay off your debt and put money aside so that you’re able to grow and scale your business. If you don’t have money set aside and something happens, you’re just going to keep getting further into debt. You never know what’s gonna happen. We don’t know the future and it’s such a gamble and a risk, and if we don’t have anything there to back us up, we’re just going to continue into that pattern of creating more debt.
When our small business gets to the point of making some money and we’re putting some aside, how do we create generational wealth? Generational wealth is anything that you can gift to your family when you’re gone or when you’re ready to be done with doing something. For example, when you retire and you want to give your business to your family. This is where it becomes important to talk with financial agents or managers so that you can get products that will suit you well so that you can have that generational wealth to give to your family. You want to make sure that that person has experience in what they’re talking about. They need to know your specific situation. It’s also important to find a financial agent or advisor that you trust, not one that’s solely based on sales. You want somebody that actually has your back so that you have the right products to create that wealth that you want.
One of the big pitfalls that Sharlene suggests to avoid is the expectation that your business debt is okay all the time. We hear from the big businesses that you need to get into debt to start a business, but that’s not necessarily the truth. That can be the truth to a degree, but we also have to have a plan in place to be able to eliminate that debt. You need to have people on your team that know how to do these sorts of things so that you’re creating the generational wealth that you desire.
Sharlene tells her clients to take at least six months worth of their expenses and to look at where they’ve spent their money. This way they can figure out where their money has gone and can see what they’ve done with it. Some of it could be really good and some of it could be not so great and that’s okay. The point isn’t to burden yourself with stress or guilt. The point is to see where it’s going so that you can have a clear picture as to where your money needs to go in the future.
There are so many people that are struggling in the financial area. We loved having Sharlene with us on the Scale Your Small Business podcast so that we could open this conversation up and take the shame away from it. Wherever you’re at, we’ve got to talk about it! Know that you’re not alone. This is manageable and you can definitely do it! You have the goal of entrepreneurship for a reason.
You can find Sharlene Mohlman here:
Facebook Group: Big Dreams on a Budget