Debt confessions of a Personal Finance Blogger – A set back
I have another confession to make, as one of my hero’s Dave Grohl said. I have messed up my cash flow and it has impacted my progression with my debt repayment. The worlds of personal and business finance entwine.
Back in May/June time I was cash rich. I received more money that I needed to draw a salary and I was building up a nice balance in my business bank account. This was taken advantage of a chunk of the debt was repaid, which was when I wrote this debt story update. I managed to get my £15.5k down to £13.5k.
Investing in the Business, The Good and the Bad
I also invested a chunk of money into things to create value for Mrs Mummypenny. I can now reflect back and see that some of that spending helped and some didn’t. What has worked is investing money into an assistant to help make technical changes to my site to increase traffic and to help with admin work that I put off. I also invested in two courses which gave me direction, focus, networking and a release. This was £900 well spent and I can already see the benefits of time being freed up enabling me to generate more work and a new focus on more lucrative work.
The there was the money spent not so wisely, I spent £150 on an affiliate marketing course that I haven’t even started, £350 on a camera that I don’t use enough as my phone is far easier. I spent £400 on 2 tickets to the London Federation of small business awards which I was nominated for and didn’t win (this picture is me pretending the award is mine!). This is £900 spent on things that I don’t think have added any value and I am not sure will? Eek £1800 spent in a few months on business expenses.
July and August happened
Then July and August happened. Two months of lower than normal turnover. I was only just making enough money to pay out a salary and cover the bills. We had our holiday in July and then five weeks of summer holidays with the boys. Money was spent entertaining the boys, extra food was being bought as we were at home for 5 weeks. The credit card bill hit on September 4th and hit us hard at £2000 more than it normally is. This credit card is paid in full every month.
The card was paid in full and I was taken into overdraft by £1500. I am annoyed at myself for not banking the excess money in May and June for a rainy day (ie now). And for not paying enough attention to the fact that July and August are well known to be poor month in the world of advertising and media.
The Light at the end of the Tunnel
Despite July and August being poor cash months, August was great for agreeing work to go live in September and Q4. After the shock realisation of a big overdraft to contend with in September I went to work hard. Big jobs were completed and invoiced all within one week. So I am now in the position where I am owed £4000 with several thousand in work agreed and planned for Q4. I am aiming to build up a reserve of an extra £3000 in September/October, as in cash received to my bank account. Which will mean the overdraft is paid off completely before the end of October.
Diversification of Income
I have realised over the past few weeks and months that diversification is key in my business and you cannot rely on one income stream alone to keep you afloat. A new skill has bee added to the Mrs Mummypenny repertoire and I have added marketing consultancy to my suite of skills I can offer to clients. I can offer Marketing strategy design, social media management and strategy and blogger outreach campaigns. All a combination of my corporate and small company work over the past 7 years. I have one client agreed and three more that I am in negotiations with. I am keen to explore opportunities that give me regular flows of income not just one off hits.
The impact on my total debt.
Unfortunately this means that including the £1500 overdraft into our consolidated debt position means that we have slipped backwards. That nice sum that was heading towards £13,000 debt remaining is now £14,500. But I know this will be resolved by the end of October at the latest when those invoices clear.
September as a no spend month
To add to the positive impact of extra income I am having a low or no spend month in September. The only money allowed to be spent is on groceries, business travel, petrol to football for boys. This means no lunches out, no night outs, no Amazon spending, no takeaways. Oh my gosh its tough, but we have done a lot of baking!. I have managed to get through to 12th Sept spending very little. I have had one day in London which has cost £30 in travel and coffee costs. £80 has been spent on groceries.
This should mean that we have a double impact in October credit card bill of a small credit card bill and higher income.
Excess Money will be separated off
From November onwards once I am straight, any excess money earned will be moved off to a separate savings account. This money will be used to pay the tax bill and to dip into in the quieter months. And I must start watching my business expenses. So from now on everything is written down at the end of each week and analysed.
Its tough running your own business and managing the cash flow is key.