Ep #344: Business Debt

Welcome to the Make Money as a Life Coach® podcast where sales expert and Master Coach Stacey Boehman teaches you how to make your first $2K, $20K, and $200K using her proven formula.

Hi coaches, welcome to episode 344. Today we’re going to talk about business debt and all the different types of debt that can come with a business.

The reason why I wanted to have this episode is as I, I just finished my Entrepreneur Series, ROI. We did a lot of coaching on a lot of things. And one of the things that came up was investment debt and what I found is there are coaches, a lot of coaches, who have either an aversion to any sort of business debt or a lot of shame about having any sort of debt, whether it’s credit card debt or actual line of credit and not having really positive thoughts or useful thoughts to either get the debt paid down, not get in the debt, or in any way manage the debt.

And so I wanted to do an episode about this because I think I have some really positive thoughts about it, not like, oh, debt is great, but I just think my thoughts are very useful. And I also think I have a more wide perspective when it comes to entrepreneurship that I think could be helpful too. So, you want to dive in? Let’s do it.

There’s a couple of distinctions when it comes to debt that I want to make. So the first one is, there is a difference between investment debt and business debt. And that is really important when you are contemplating debt or are trying to manage debt. It’s really important that you, just in general for financial literacy and for financial confidence and believing you are financially responsible, I think the more neutral that you can be, I think the more aware you can be, and educated you can be, I think the better it goes.

So, investment debt is not quite the same as business debt. There are different things. And you could have both at the same time. But business debt comes from things like paying yourself, employees, software expenses, marketing expenses. Basically, what I would consider for coaches, I’m just talking about coaches, anything non-coaching related. So anything that you are not… masterminds, one-on-one coaching, programs, anything you would buy to get coached or to learn something, any type of investment you would make into your brain or your skill set.

Business debt is everything that’s not that. So, for example, let’s say you’re making $100,000, but you have $140,000 of expenses, and those expenses are because you have software expenses and marketing expenses, and employees, and you’re also paying yourself. Like all of those things factor into more money going out than is coming in, and then a requirement to take on debt to pay those bills. So that’s what I would consider business debt.

Then investment debt is coaching, programs, certifications, mentorships, things like that. Now, we’re going to talk about this in a second, but where it gets really tricky is when you have both of those things happening at the same time. What I’ve noticed is that coaches don’t typically give credit to overspending in expenses, and they will blame all of the debt on the coaching programs and certifications and mentorships.

But if I start talking to them about it, turns out they’re paying themselves, they’re paying a VA, they have some, you know, random software expenses, they have other things they’re spending their money on in their business that aren’t just the investment. So then it becomes a little bit tricky. We’ll talk about that in a second.

But then, when you think about debt, I think it’s also important to talk about consumer debt. Consumer debt is buying things for personal use. And in this conversation, I want to point out that buying a house, I consider consumer debt.

A lot of people consider buying a house investment debt, like this is an investment. But unless you’re actually investing in real estate to sell for a profit, if you are just buying a home to live in, then it’s not really an investment because or unless you pay cash for it, and or you can pay it off so quickly that it can then appreciate and then you sell and you get the profit of it. But if you’re going to live in this house and you’re going to pay on it for thirty years, typically what you will find is you will pay double for the house than you actually bought, and it would require you living in the house probably way beyond thirty years for it to finally appreciate more than the double that you paid for, right?

So if you paid a million dollars for a house and then you actually, you finance it, so it ends up costing two million over thirty years, then that house has to then be worth more than two million in order to be any sort of actual investment.

Now, you could say it’s investment in quality of life, you could say it’s investment in having a roof over our heads, but I consider it consumer debt simply because we decide the size, the location, we decide all of the things about the house that make the house cost what it costs and require us to take on the amount of debt that we take on. And those are all consumer decisions. Unless again, you’re like actually investing in real estate, you’re typically making consumer decisions for a house that you want to live in.

I think this is very important because in society, we have created a norm, a normality of high consumer debt when it comes to housing. It’s like, yeah, this is just a normal thing. We have $700,000 of debt or, you know, even more. Like whatever it is, it’s like it becomes this normal thing to have hundreds of thousands of dollars of consumer debt because of the choices of where we want to live and how many rooms we want to have and the type of square footage we want and the type of land that we want with it and how many the fancy things come with it or what do we want it to look like? All of those things factor in, and we’re totally fine with them, and we have typically very little thoughts about them. We’re like, yeah, this is just what you do. This is actually a sign of success that I have this debt.

It’s very fascinating, but it’s something to notice because when you are an entrepreneur, you really are living outside of the societal norm in how you think in a lot of the ways that you will have to decision-make. And so one of the things that I would always suggest to people when they start a business is you want to get your consumer spending down as much as possible.

I’m not saying sell your house. I’m just saying you want to get consumer spending down as much as possible because there will need to be investments in your business. And I’ve seen a lot of people have a really high consumer lifestyle that then requires the business to pay for that consumer lifestyle.

So then they get in business debt, and then they blame the debt instead of taking responsibility and ownership for their consumer spending. Right? Like if you are making $100,000 or $200,000 and you get your nails done and your hair did and you, you know, have like you a certain wardrobe style that you have to wear and you only like to take certain vacations and you like to go out to certain restaurants and you have like this lifestyle that you’re paying for. Well, that’s not really on the business. That’s not the business isn’t performing to match your lifestyle. It’s that your lifestyle isn’t matching the performance of the business. And that’s a really important thing to know.

Okay? So, knowing that, the way that I think about investment debt, I hold two things true at the same time. I now grow a business that it is debt-free. I build a very lean business that is built on the profit, reinvesting the profit of the business. So after we pay all of our expenses, the profit we have, then some of that goes to me, and some of that gets reinvested in the business for future success. And that’s how I fund the growth of my business. And that is one of my biggest values in my business is having a cash flow positive business and being very lean in how I grow so that I don’t have to take on big amounts of business debt in order to grow.

However, when I started, I had no personal startup capital to truly invest in order to get my business off the ground. So I did have to take on debt in order to grow my business. And in the beginning, it was consumer debt in the sense that it was on my personal credit card. Then I got a business credit card, and it went on the business credit card, but, and it was still, I was still writing it off as a business expense, but in the end, I still had to use debt to grow my business. And so it’s really tricky for me to tell people not to have ever go into debt. Don’t take out a, you know, a PayPal loan, or don’t get a new credit card, or don’t ask for a credit line extension.

It’s hard for me to be an integrity to say that and to say it’s bad and that you should build a cash flow positive business from the very beginning and never take on debt, and debt is bad, because I had to leverage debt in order to grow my business. That is my story. And I leveraged debt, not a ton, but I did leverage at least ten grand at a time of debt, if not a little bit more, to grow my business all the way up until I think $100,000. Maybe it was like $100,000… the year I made $150,000, I just remember still having about twelve-ish thousand dollars of debt and then I just remember that next year around $300k is when I feel like maybe I stopped having to do that.

However, I will say, there were other times where I had to get really tricky when we bought our house. I used the money that I knew I was going to need to pay taxes to put the down payment on our house. And it was very risky. It was very risky. And also, I really trusted myself. I have a high risk tolerance. I wanted to be in this house, and I trusted myself to come up with the, it was like $60k. And I trusted myself to come up with that extra money to pay the taxes. I was willing to make payments on the taxes. I loved all my reasons. We got in here and then, you know what? I ended up paying off this house in three years.

So, I’m just not ever going to be the coach that’s going to tell you debt’s going to ruin your life and it’s horrible and it’s terrible. The way that I think about debt is that it’s buying money. And that’s true for consumer debt, investment debt, business debt. All debt is buying money. To get something that you wouldn’t have been able to get in the moment that you needed or wanted. And when it comes to business debt or investment debt, to help your business grow or survive.

So I’m buying money to have opportunities, to be able to get things in the moment that I need to help my business grow or survive. And I think so many of you need to hear that second thing. Sometimes we understand we need to invest to grow, and we’re willing to take on debt to grow, but we have a really hard time if we have to take on debt in order for the business to survive.

And so we’re going to talk about that on this episode, a little bit more in debt, in depth. I just said debt too many times. In depth. But here’s another thing that I want you to think about before we do. Consumer debt depreciates. Everything that you’re going to typically buy with consumer debt is going to depreciate. Your house obviously will appreciate. However, it may never appreciate beyond what you end up paying for it if you have a thirty-year loan. So that’s something to consider.

And business debt really doesn’t appreciate either. So if you’re like paying employees, maybe employees could appreciate, but software expenses, maybe marketing expenses, could also appreciate. So those things could, there’s some things in business that could appreciate and some that won’t. But one of the things I feel really strongly about is investment debt definitely appreciates. Like that is the goal for it. Now, it could also not appreciate, but the goal is that it does appreciate, and that’s the way that I personally think about it.

Again, there’s no guarantees, but I like to think about when I’m considering debt, or when I’m the way I think about debt is, is the debt I’m taking on something that will appreciate. So maybe it is that I have to bring on employees to grow, but I will say I’ve had the opposite experience where I was like, oh, I’ve got to bring on fourteen new employees to handle this explosive growth that’s about to happen. And then it was a disaster. And so I’m more of a big, I know a lot of business people will teach you like, oh, you got to add employees so that you can grow, and that will appreciate. But for me, the philosophy I have now, building a cash flow positive business, is I hire the employees as we need them, as the business actually grows, when the business can afford it, not before the business can afford it.

And that’s how you stay out of that type of business debt is you just don’t buy things that the business can’t afford when it comes to expenses. So you don’t spend more in your marketing than your business can afford. You don’t spend more on software than your business can afford. You don’t have websites that your business can’t afford. You don’t have VAs that your business can’t afford. And even if it could afford them at some point, and it can’t anymore, the moment it can’t, you have to let them go. Like that is the way that I think about it. It’s like there’s just not really any business debt that I’m going to be willing to do in the beginning, or at all, ever. And even in the beginning, I wasn’t pulling business debt. I was only accruing investment debt.

Meaning, I ran a really lean business that was just myself, no VAs, I didn’t have a website, I didn’t have professional photos, I didn’t have Kajabi or whatever. I didn’t have things that were holding up modules. I didn’t have any of that. I used Facebook for free, I used my cell phone that I was already paying monthly for, and Wi-Fi that basically that I was already paying for and would have whether I had a business or not.

Like I had no real business expenses, so there was no reason to take on business debt. And I kept my business that way permanently. I’ve never had to take on debt to buy money to pay for business expenses, whether it’s employees, software, marketing, anything. If I’m going to be spending money on Facebook ads, it’s going to be a percentage of the profit that I’m making in my business from selling organically first. Right? That’s the way I think about it.

But investment debt, I do think has been a huge part of my ability in the beginning to grow my business. And, you know, for example, my first, I think I paid mostly, I was able to pay cash mostly for hiring my first coach. It was really hard, but I think I don’t remember taking on so much debt there, but when I went to coach training, when I started my first mastermind, those were things that I did ahead of signing clients that helped me later sign clients that then required because I didn’t have the cash to pay them out of pocket, required me to put them on a credit card.

And because I believe in creating returns and getting everything I came for in every container, I did eventually pay those off. Like that, I remember I had $10k of credit card debt, and I signed like three clients in the same week that all paid in full, and I made $36,000 cash. And then I went on a road trip, and I was at the Paris hotel in Las Vegas, and I was sitting at the pool with my coach, and I, in one click, paid off all $10,000 of my credit card debt. And it was the greatest feeling ever in my whole life. And then I went on to sign sixteen clients back to back right after that.

Again, there’s no guarantees, but if I was going to buy money for something that I needed in the moment to help my business grow, investment debt would really be the only thing I’d be willing to take on. And I think it’s important to know that entrepreneurship may require either debt or use of personal funds to get started and or sustain at some point in your business. And you really have to decide if you’re willing to take that on in order to have the potential for a greater return from your business or if you want to stay at a steady job with a steady paycheck.

It will be very… potentially very difficult for you to build a business that never requires an investment from your personal cash flow or from debt. Like if you don’t want to spend any of your personal, invest any of your personal money and you don’t want to invest any, you don’t want to take on any debt. If you don’t want to do either of those avenues, it will be very hard for you to be successful in business. That is my opinion. That is my experience. Because you have to learn things in entrepreneurship that you don’t know, right? If you want to become a coach, you have to learn how to coach. You have to, it’s not just giving advice to people.

I recently had someone on one of my live streams that was like, oh, I want to learn how to coach. I’m not trying to make any coaching investments. And I was like, okay, well, so you’re going to sell something that you don’t actively participate in. Like you’re going to sell something that you don’t actually believe in. Like, she said, I have, you know, loads of lifetime experience. And I’m like, but coaching, actual like true good coaching, is not advice. That’s mentorship. If you’ve become so successful that you can pass on your experience and your methods. That’s part of what I do in my programs now is mentorship. But coaching is never advice, right?

There’s actual ways that you coach people. There are tools, there are methods for doing so. And if you’ve never been coached and you don’t have a desire to be coached, then you don’t know the value of coaching. It’s going to be really hard to explain to other people the value of coaching. Because they’re not going to find your advice valuable. They could get that from their friends and family.

So it just would be really difficult to build a business, a coaching business, if you’re not willing to use any of your personal funds or any, take on any debt, you’re not willing to spend any money in order to learn how to coach, experience coaching and know what it’s like, and learn how to market and sell your business. Unless you inherently know all of those things somehow on your own, randomly, you’re going to need to spend some money.

And I think there’s a lot of people that have been taught by society to have a really strong aversion to that. A lot of people have spouses telling them, well should just be able to do it on your own. You should just be able to figure it out. A lot of people are telling themselves that I should just be able to figure it out. But if you have the thought I should just be able to figure it out, who are you going to attract? People who also think they should just be able to figure it out. They’re not going to buy from you.

But if you see the value of someone else helping you figure it out, if you see the value in investing in a program or a mastermind that helps you figure it out, then you’re going to be able to explain that value to other people and then they will understand the value and they will pay you. So there will be some amount of money required to come up with somehow in order to build your coaching business. That is my strongest belief. 

And I just want to say, I Googled this because I was curious what the AI answer would be, because I was just telling my 200k Mastermind, we’re in Mastermind Week and I was just telling them that I think as coaches, because we get into the industry through coaching, because we get into entrepreneurship through coaching, we’re not usually very strong on the understanding of entrepreneurship in general.

So a lot of coaches believe that success should be linear, that every year they should just be making more and more money, that if there’s a plateau for one year, two years, three years, if they’re at the same level of income, something has gone wrong. If they ever have a year that declines, something has gone wrong. And that comes from just inexperience with the business world and entrepreneurship. And I was telling them like, start paying attention.

You’re going to see big public companies, they have to release their financials. They have to release what happened the last few quarters. They have to release what they expect in the future. And many times they are going to be down. And they have to explain to their shareholders what’s happening, or maybe big debt that they’re going to take on to buy additional companies to include in their companies. Like two of the best books that helped me like that weren’t even about this, but really like taught me this mentality was Onward by Howard Schultz, the creator of Starbucks, and The Ride of a Lifetime by Bob Iger, who was the CEO of Walt Disney World for like fifteen years.

There’s many stories of him having to go to shareholders and explain why they’re about to take on like, I think billions of dollars of debt, maybe hundreds of millions, like really big numbers of debt so that they could buy Pixar and Marvel and all the things that you now see under the Disney brand. ESPN, I think, is like all the things underneath their brand. He had to go tell shareholders, we’re going to take on a lot of debt in order to do this. Like a massive amount in order to do this. And I think even for like the Disney Plus app, they weren’t going to show a profit for like five years.

And I just think that we forget these things, or we think I’m too small for this to matter for me. Like, oh, big companies do that. But how do big companies get the way they got? Like, they don’t just suddenly like, oh, I never made a risky decision. I never used personal assets or took on debt, and suddenly I became Walt Disney and or Walt Disney World, and suddenly now I’m taking on debt to buy Marvel. Like that’s not how it happens. But we have these kind of delusional fantasies of the way entrepreneurship should be coming in from the coaching perspective because we don’t have a lot of entrepreneurship experience.

So I Googled how many businesses take on debt. Like, what’s the percentage of businesses that have debt? And you could probably ask it a million different types of questions, and I think the more angles you asked it, the more information you would get that could maybe be useful for you. But it was something like 70% of businesses right now are currently carrying some form of debt.

70%. Whether that is to start up or to sustain, 70% of businesses. I happen to think that coaching businesses because they don’t require, they’re not brick and mortar, and because they don’t require as many startup things. It’s like the two easiest businesses that would require the least amount of debt. Like, seriously, are you kidding me? I created a forty-four million dollar business on like $20,000, probably, total of debt. Like ever having to take on debt, twenty grand to create a forty-plus million dollar company. That’s pretty crazy, right? Like if you really look at it in the scheme of things, it’s a little insane.

Even if you took on $20k of debt to create a $200k business, it’s pretty insane. Like if you’re able to do that for the rest of your life, it’s a lot of money that you make in exchange for the little amount you put forth. So I do believe we have it very easy. We and network marketers, people who sign up for multi-level marketing companies or like nutrition businesses. Like anything in the kind of coaching education space, I do think we’re spoiled. It doesn’t require as much as we think. But I do think we look at that $10k or that $20k and we look at it like it’s a $100k or $200k or a million or two million compared to our like, comparatively to our like risk tolerance. And that I think is what has to change. There has to be a little bit more awareness.

So that’s taking on debt to start your business or to keep it going. But what if you have it? This is some of the coaching that I was doing in ROI, or I’ve done for my clients in the past. When they have debt, typically, they come to me, and they don’t know where it’s coming from. And so I want you all, if you have it, to start labeling it, figuring out where it’s coming from. It’s tricky if you have multiple things happening at the same time, but I do think you could go through your credit card statement and figure out, is it business debt? Is it investment debt? Is it consumer debt? Or is it business expenses, investment expenses, consumer expenses?

If you have all of them, this is really important, you have to factor in that all of them are creating the more going out than is coming in. You can’t just blame one. You can’t be like, oh, I’m, it’s a lot of consumer debt, or it’s a lot of investment debt, or it’s a lot of business debt.

Again, you can’t just say it’s because I joined this coaching program and didn’t get a return if you’re also spending money in your business, and also paying yourself, and there are more than one factors contributing to it. It will make you a very scared investor if you blame investing every single time. So it’s not all investment debt if you’re mixing in business debt or using your business money to pay expenses in the beginning or to live off of in the beginning. This is really important to know. I’ve said this so many times to my clients and on this podcast, but in the beginning of your business should not be paying for your lifestyle.

It’s a baby business. So up until $100k, for sure, I would not be relying on your business to pay anything of your bills. Now, if you live in an extraordinary circumstance, some people do, where they really do have to have their business paying their bills, just know then like be more aware of I’m asking my business to do something it’s not ready for, and I’ve got to have a level head about it. I’ve got to have emotional regulation around it. And I can’t just blame investments for the reason I’m in debt, because the business needs the investments in order to grow. It needs fuel going into it, and I’m taking the fuel for myself instead. And you just really need to know that.

And if you need more money from your business because you spend too much consuming, that’s also something to be aware of. Like I’ve had so many people come to me and say, well, my lifestyle just requires this much money a month. No. Your choices, you choose to need that much money a month. You could be super, super lean and cut things out if you wanted to make space and room to pay for your business expenses and not take on debt, or to get your business to a healthy place that it could then eventually pay your expenses.

But I have people, like $100k businesses which I would still consider a newer, baby business, not in the sense of diminishing it, but in the sense that it I believe now with this day and age with the cost of living and what it requires to grow a business and to keep investing to grow a business, I believe you’ve got to be making close to $200k before you start really relying on your business to pay a lot of your bills if you’re wanting it to grow.

Like $100k, I’ve seen people suddenly like their family starts relying on most of their income to pay the bills. But by the time you pay expenses and yourself and then taxes, it’s not like you could live a $100,000 lifestyle on a $100,000 business. Do you see what I’m saying? And I see that people try to do that a lot. They’re like, well, our living expenses are like $60k a year. And I’m like, okay, well, if you have a $100,000 business and you’re expecting the business to pay that, it’s a big lift. It’s a really big lift.

So if you are starting a business or you’re building this business, like I would have a conversation with your partner like, hey, this business is going to maybe not be able to pay for our family’s lifestyle for years. Like it could be the first five years, the first three years. But you have to have a bigger vision if you’re wanting to grow it beyond.

Now, you could keep your business at $100,000 and not invest in it and keep using the money. Lots of people do that too. But it’s hard to grow a business if you’re going to be like spending a lot of your money and using the business to pay for your lifestyle, especially a bigger lifestyle, it’s going to be a lot.

Now, I have clients that are making $75k that contribute $5000 a month to their mortgage or things like that. That’s not what I’m saying. I’m not saying your business can’t produce anything. I’m just saying be careful that suddenly I’ve seen so many people tell me, I’m not going to invest in my business for a while because I need to give my family the money and I need to, you know, my family is relying on this money and, you know, if the business dips then it’s a problem because my family needs this money.

And I always wonder like, how we get into those situations, because you’ve got to be careful. Like, your business may not be able to do that all of the time. And the more you rely on it, the less you’re fueling it, so the less fast it grows. So the more money you leave on the table, and I just want you to be aware of that. It’s not this is right and this is wrong, and this is wrong. It’s just like be aware of that.

So if you have the debt, you want to know where it’s coming from, and you want to have a full picture. It’s not just from buying coaching, it’s not just from one thing or the other, or is it? And if it is, let’s say it is just from investments. You have no business expenses, you’re not using your business in the early days to pay for your lifestyle. So you just have investment debt, and you know that it’s investment debt.

Then you get to choose, well, always, this is true for all situations, but I’m going to use this example of investment debt. You get to choose what you want to think about it. Even if it’s business debt, you get to choose what you want to think about it. And what I recently asked a client is, are you willing to take on debt to create an asset, or in this case, I was asking her, to maintain an asset for the entirety of her future income?

Like are you willing to be uncomfortable with debt in order to maintain this asset for the entirety of your future revenue coming in? And if you haven’t invested money or you have just investment debt in the beginning of your business, are you willing to take on debt to create the asset that will then become the entirety of your future income? Because that’s what entrepreneurship is. It’s taking on risk for the potential of major reward.

And so the way that I think about this is if I have to take on debt, I’m doing that so that I can create an asset that will pay me for years to come. And I haven’t ever taken on debt to maintain my business, but I absolutely would if it would keep me in business for years and years to come. And I think that’s a really mature decision. A lot of people would not be able to handle that risk tolerance and would just go out of business. I’m not willing to risk this amount of debt, so I’m just going to close shop. But then you lose the money that business could be building over years and years. And I think that’s worth exploring.

So when I restructured my business, one of the things that I chose is that as I restructure, I won’t take a profit from the business. I do pay myself because I’m required to. You have to pay as a CEO, you have to pay yourself a certain amount more than your top employee to be like legit with the IRS. And so I pay myself right at the like what’s legit based on my highest-paid employee. But it’s not enough to pay my current lifestyle.

And so we decided we’re going to live off of our savings for up to a year or eighteen months, whatever it takes, but we want to make sure that the business can restructure in a healthy way and we’re not putting tons of pressure on me to perform and be selling while I’m also restructuring. Like I wanted to do it right.

And I noticed that my brain like started fighting it. Like, oh, I’m working for free basically, or oh, I’m working for way less than I used to be working for. And the I’m working for free came up a lot, and it was a very painful thought. But what I would answer my brain when it said that is, no, you’re right now, you’re working to create an asset that is going to create future millions of dollars for years and years to come.

So if you can bear twelve months, eighteen months of financial discomfort, of not having the, you know, just money just pouring in, can you do that in order to have an asset that’s going to make you a hundred million dollars in the next ten years? And suddenly I’m like, oh, yeah, I can do that. And now we’ve already taken, our profit is up, I think to 65% right now is our last reporting, 65% profit, and money’s pouring in again. So imagine if I had been unwilling to do that, if I had been unwilling to have a couple of years where my business wasn’t just, you know, taking us to the Four Seasons.

Now, I save really well, which is why my past business was able to take us to the Four Seasons during this entire time, but we also didn’t go to the Four Seasons as many times as we normally do. But like that’s the way I think about it, is this is an asset. So the decisions I make in regards to not taking a profit or debt, those decisions are made thinking of my business as an asset that I’m either creating or maintaining for the future of my business. And choosing to think of it that way is huge.

Deciding I’m going to invest in coach training, right? For the very first time, like I wanted to invest in that so I was the best coach I could possibly be and have the best skill, and give my clients the best outcome because I saw it as an asset. I saw the tools, like learning tools of coach training, as an asset. I saw learning how to sell and learning how to market as an asset to my future income. So thinking of it that way, I think could change everything for any of you that have debt or are thinking of taking it on.

The next thing you can ask yourself is, how can I allow this in my experience? This is a huge one. Most people have such a strong aversion to debt that once they get into it, they cannot manage their brain and their emotions around it, and they truly spin out in dysregulation and fight or flight. And this is something I learned before I ever became a coach.

I did a debt management program. I had twelve… it’s so weird. I always carried about $10,000 to $12,000 debt. Like that was the like kind of like my number. But I had $12,000 of consumer debt, and I did a debt management program. And what they did is they, at the tim,e I had like all of my credit cards were, I was in right after college. All my credit cards were like 30% interest rates.

And the debt management program says, hey, you’re going to pay me this amount of money every month. I’m going to go negotiate for I’m going to take a fee, but then I’m going to go negotiate down all of your interest rates to either like 9%, 4%, or 0%. Like many of them went down to 4% or 0%, like 5% or 0%, 4.99%. And they said because we’re going to negotiate with these creditors and tell them that you can’t afford to make these payments with the interest, but that I’m going to help you make the payment, me the debt management program, is going to help you make the payment, then you can’t pay the money off early.

Otherwise, it will look like you did have the money and you didn’t need the interest rate cut, and then they might come back and try to charge you all of the interest that they cut from you. So they were like, even if you have extra money, do not pay on it extra. So you’re going to pay $300 a month on this $12,000 payment and it… $12,000 and it’s going to take you four years. And you cannot pay it off.

And when that happened, I realized I have to be comfortable having debt for the next four years. And how do I want to live my life if I know for the next four years I’m going to be carrying debt? I have to change the experience of it. And one of the things I loved is the money came out automatically, the $300 a month. And so I never thought other than having the $300 in my account, I never thought about the debt again. And I lived my four years during that time completely free. I didn’t stress about the debt. I didn’t feel heavy about the debt. I didn’t feel unworthy about the debt.

In fact, I went out and got a better job than I had paying me tons more money. I had the time of my life. I traveled the country. I met so many amazing people. And by the end of when I paid off the debt, I had $10,000 in savings. And I was so proud of myself. And I realized in that moment that you could carry debt and not carry shame with it. You could carry debt and not carry regret. You could carry debt and still live your best life.

You can carry debt and still grow your business. You can carry debt, and you can sell and market very powerfully. You can carry debt and still be an amazing coach. But it depends on what you’re going to allow, if you’re going to allow the experience of debt, or if you’re going to resist it.

Here’s what happens. When you resist it, you change your money-making behavior. You get into get-in energy, you get into insufficiency, you’re in fight or flight, everything becomes about the sale. You start thinking about strategies over everything else, and quick strategies versus what’s best long-term for my business. You stop showing up as the person who creates… could create money or did create money in the first place, versus if you didn’t have the debt, how would you be showing up? If you had money flowing in, if you had money in the bank, how would you be selling? How would you be marketing? How would you be coaching? It sucks your energy to have shame or regret or any form of resistance to debt every day that you think about it, every moment you think about it, it’s sucking your energy.

You have to get to a place where you are like, I’m not thinking about it. I allow this in my experience. I’m not thinking about it. I’m just going to go out and sell. Like, you don’t want there to be pressure to pay it off. The moment there’s pressure to pay it off, your money-making behavior changes, versus if there doesn’t have to be pressure. You just decide, it’s going to based on my interest rate and the monthly payments and the cash that I have now, this is how long it’s going to take me to pay it. And if you can’t get on top of it, get a debt management program.

Now, the only thing with those is they don’t let you take on additional debt while you’re in that, and so it might take you a few years to pay it off. But even if you’re just doing it on your own and you’re like, it’s going to take me two years to pay this off, and I’m going to it’s going to be this much a month, and that’s all I have to be responsible for. Then you get that aligned and then you start focusing on making money.

And I promise you if you do that, you will pay it off much faster than you think. It will become like, it can’t be the thing that drives you to relieve the, like you’re driven to relieve the pressure. You have to be driven to create value. There is a difference. And even when my bank account was negative and I had debt, I knew the difference of being driven by pressure to relieve that discomfort or being driven to create value and serve. And the reason I was able to get out of that situation so quickly is because I was focused on being driven by service and creating value.

Now, something else that you could think about is how would you treat business debt if it were, let’s say you have it, how would you treat it if it were a stock portfolio in a down market? Something really important to think about. Are you the person that if the market was down, you’re pulling out all of your money? Or are you the person that’s like, ooh, it’s going to be down for a year. It’s going to be a little uncomfortable to see how much money I lost for my portfolio. But I’ve got to stick it out because it will come back up. And then I’m just going to live my life because it’s supposed to be in there for twenty years minimum anyways.

So I’m just going to live my life and go about doing the things, and I’m not going to check it every day, and I’m not going to obsess over it every day. And I’m just going to know that having a stock portfolio means that there will be years that are up and that there will be years that it’s down. There’s going to be months that are up, months that are down. And I know it’s going to be this back and forth. But in the end, it’s an asset that will pay me for years to come.

You could choose to think of your debt, your investment debt, your business debt, any debt, you could, even my consumer debt, I chose to, you know, I did this with consumer debt, but you could choose this with any type of debt. You could choose to think of it like a stock portfolio that’s down, especially when it comes from your business, right? My debt is up, like the portfolio is down. My debt is up, but there will be years where it will not be, and the goal is that the entirety of the business pays me for a lifetime. Like, I could live off of this one day. Consistently, over and over. Like again, I put $20k in and got forty million out in the long run over ten years. If you put in $200k and got forty million out, if you put in two million and got forty million out, you could put in a lot of money, and that’s still be a really good deal. But you have to think of it in the long term.

Something else you could ask yourself is, what have I learned from this debt so I don’t repeat it? I did have a client that I coached recently who had a multimillion-dollar business, like an eight-figure, ten-million-dollar business. And she got into business debt towards the end of the business, and then fell out of love with the business.

She ended up paying off the debt, but then closed the business, and then she became a coach. And as she became a coach and she’s building up her business, a bank offered her a line of credit. And she took it. And we were exploring the reasons why she took it, but essentially, what we learned is that she, in the first debt, it was because she wouldn’t let employees go. She felt responsible for them. And so she went into debt herself, being responsible for other people. And then the second time, she realized, I take on the debt and I use the line of credit instead of figuring out how to sell more because it’s more comfortable.

So as long as I have the ability to take the debt on, I will, and I won’t force myself to do the uncomfortable thing, or I won’t coach myself to do the uncomfortable thing, to not need to take on the debt, to just create the money. And I do think a lot of us do that. Like one of the things we talked about in Return On Investment is a lot of people leave returns on the table because they’re just unwilling to do the uncomfortable thing that they would need to do, or feel the uncomfortable thing, or think the uncomfortable thing while they’re in an investment container. They don’t do it. They don’t show up. They don’t participate. They don’t lean in. They don’t belong. Right? They don’t choose to get the return to extract the value because it’s more uncomfortable.

They’re actually more uncomfortable trying to extract the value and show up as the person who gets the result versus taking on the debt. It’s actually just easier for them to take on the debt. And then they can shame themselves about the debt instead of shaming themselves for possibly failing if they do the thing. Our brains are like, y’all, they’re all crazy. Like we’re just not wired for, we have to really, really have to rewire the basic functions of our brains. They all do this. It’s like a lot of nonsense, like taking action that makes no sense.

So it’s really powerful if you’re in debt and you’re resisting it, you could ask what you learned from it. Did you take on an investment that you didn’t actively engage to create an ROI? Did you take on an investment that you expected to do the work for you, and you didn’t do the work? Did you take on an investment that you ignored red flags within yourself and said yes, even though there was red flags coming up, but you decided I’m not as expert as this other person, so I’m going to pay them, and I’m going to hope that their expertise rubs off on me and then you don’t make the money back. Did I, was I afraid to let go of employees? I just couldn’t do it.

You want to really evaluate so that you don’t repeat it if it feels like something that isn’t in benefit of you. Like if you take on debt to invest in your business and then you create a return, you’re not going to be bothered by that. So if you’re bothered by the debt, you want to learn from it, so you don’t repeat it in the same way.

And then something else to think about, which I’ve already said, is what if this is a more common problem than you think, and you’re not a personal failure? 70% of businesses have debt right now. So if you have it, you’re part of the 70%. Now, I know it doesn’t make it better for you, but I think it’s interesting to know that it’s a more common problem than you think.

Now, I bet 70% of those businesses are, like I’m wonder what the percent of that 70% is startup businesses, but even if it’s to maintain the asset that’s going to pay you forever, it doesn’t mean you’re a personal failure. It means you’re an entrepreneur. And you do what it takes to create the asset and keep it alive so that you can profit for years and years to come so that you don’t have to work for someone else. That’s the risk, the inherent risk of entrepreneurship. That’s what we do.

So here’s, I created like a little bit of a process, like a four-step process, if you have debt that I wanted to share with you. It’s very simple, but it’s very powerful. You want to first find allowance for how much debt you have and how long you will be in it. That’s the first step.

The second step is to create a plan for payoff that doesn’t include starving yourself or the business. Or doesn’t require urgency or being rushed. So, notice if your plan for payoff requires urgency, rushed, starving yourself, or starving the business. It’s going to be really hard to pay that debt off if you’re starving the business, because you can pay the debt by starving the business and then having like not investing, not having any sort of business expenses, like you could do that, but you’ll and you’ll be paying it slowly because you’ll just be paying it off of the profit that you have after starving your business.

Or you could invest in your business, figure out what’s happening that’s keeping you from making more money to pay off that debt, and then maybe you make so much more money that you’re able to easily pay off the debt. Like that’s another option other than starving the business. Like the year that I didn’t take a profit, I also invested $233,000 in the business. And in that year, I took my restructured business that had a profit of like maybe 10% all the way to 65% in the middle of the restructuring. Like that’s profound.

But if I had just like been like, I got to do it on my own and I can’t have any support and I can’t have any help and I can’t get any, you know, mindset help, business help, marketing help, like I don’t know that I would have gone to 65% profit at the multimillion dollar level. It’s crazy. In twelve months. So, like between this year and next year, I’m probably going to make up for the year that I didn’t take the profit and how profitable we are. It’s bananas.

So, create a plan for payoff that doesn’t, my advice is that doesn’t include starving yourself or the business, and it doesn’t require urgency or being rushed. And starving yourself is not the same as cutting your luxury consumer lifestyle. Just so you know, that’s not the same. Starving yourself means actually not allowing yourself to live any joy or any have anything at all because you’re so shamed for having debt. We don’t want to do that, but we also want to look at, could I cut things down?

Then the third step is you want to enroll your financial partners in your plan. So your spouse or your business partner in your plan and set boundaries. Now, this is where I could see myself getting in trouble because if your spouse is listening to this episode, and I tell like, what I’m going to advise you is to tell your spouse, this is my plan, this is how long it’s going to take to get the business, the debt paid off and the business back to health, and until it’s there, I can’t, this is either I can’t put money towards the family living expenses or this is the only amount of money I can put towards the family living expenses and it’s final.

Because we have to keep the asset. And it’s hard because you’re the person not building the business that isn’t the CEO, doesn’t understand what it’s going to take for you to manage your mind with the debt, and go out and keep making money. Like it’s a superhuman thing, especially if you have a lot of it. So then go out and figure out how to make enough money to pay that off, plus then some, because you want to pay yourself. And so you can’t have someone nagging you about how much debt you have, how long you’ve had that debt, when’s it going to be paid off? What’s happening with the business? Why aren’t you making more money? None of that is helpful.

So you really have to set boundaries around letting other people shame you, other people rush you, other people put pressure on you. You can’t allow it. It will crumble you when it comes to making money. And if you are a partner listening to this episode with your spouse who maybe has investment or business debt, just know that I’m on your side. I want your partner to get out of the debt as well. I want your partner to have a healthy business that pays for all of your expenses. Of course.

It’s my dream when businesses start paying for vacations and start paying for retire spouses and pay for private schools, and buy new homes. I love that. But I also know that CEOs can’t operate very well under pressure and urgency and shame and regret and someone else pushing them and making them feel terrible. It’s not going to, it’s not going to help them sell coaching.

So you’ve got to enroll your financial partners in your plan, and you’ve got to set boundaries. And then you’ve got to execute the plan with confidence, sufficiency, and worthiness. You are not your debt. Your value is not decreased because of your debt. Your leadership is not in question because of your debt. Your money-making capacity is only influenced by your debt if you allow it. I really want you to hear that.

And lastly, you get to decide how you want to feel about it. In fact, the way I like to feel, like think about debt, that creates a really positive feeling for me is that debt can be your silent partner. It can be what allows you to create your business and your freedom. It can be what keeps you holding on to your asset. It can provide opportunities you wouldn’t normally have access to. Now, it should be used intentionally with awareness to the risk, with tolerance to the risk, and commitment to honor it.

So I want to tell you one last story because we also live in a society where we are constantly looking to get out of owning and being responsible for things. We want to blame other people, we want to get out of things, we don’t want to honor things because it’s easier. So in college, I had a friend who filed for bankruptcy, and we had the exact same amount of debt, like roughly $10,000 to $12,000. She filed for bankruptcy, and I did a debt management program.

And here was the thought I had that had me do that debt management program, that has now become such a valuable story and a way I coach my clients that I’ve made so much money from that experience of having that. Like it’s part of my value that I now deliver as a coach is having gone through that experience. My thought at the time, without ever having a coach and knowing what coaching was, because I had the, I mean, my friend’s parents were really close to me, so they were urging me to file bankruptcy. They were like, then you won’t have to pay it off, and you can start fresh. Then you don’t have, you know, you don’t have to spend years trying to make it work.

But my thought was, I spent this money, I agreed to pay this money, I owe it, and it’s my lesson to pay it. I thought that before I even became a coach. I just felt like it would be wrong to file bankruptcy. I chose to go into the boutiques. I chose to try on the clothes. I chose to buy the clothes. I chose to go out to the restaurants. I chose to go out to the clubs at the time. I’m not doing that stuff now. I chose to go on the trips. I chose to rack the money up. I chose to live above my expenses. And I signed every credit card slip saying I’m paying that money. I owe it.

And I really believed it would be a great lesson for me to figure out how to pay it. I just knew it. I knew something inside of me, if I learn how to pay this, it’s going to it’s going to mean something. If I pay this off, I’m going to know this about myself that I pay my debts. Like that is my self-concept. I pay my contracts, I pay my debts, I pay what’s owed. And because I know that about myself, I can sleep really well at night. Like, I feel very good about myself at night.

And I do think it’s important for us, when at all possible, if at all possible, to pay the debt, to figure it ou,t and to learn the lesson because if you learn the lesson, then you get to keep the value forever, and then the value goes into the asset. Right? This experience for you will then become something you coach someone on at some point, or something similar. And you will coach them like a rock star straight through it, and you will become so valuable that more people will want to pay you, and you’ll make more and more money.

So it can be your silent partner that allows you to create your business and your freedom, that keeps you holding on to your asset, that provides opportunities you wouldn’t normally have access to. And you are not the number of your debt. Your value hasn’t decreased. Your leadership is not in question. And it only impacts your ability to make money if you allow it.

All right. I hope this episode was so helpful. I’ve been thinking about it for so long and just wanting to have a conversation with all of you about business debt and I just, if anything, want to make you all have better, more useful thoughts so that you can go out and make money and then obviously get out of the debt and grow your financial asset of your business for years and years to come. I’m on your side with this, I promise. I hope you all have the best, most amazing week, and I will talk to you next week.

Hey, if you’re ready to make money as a life coach, I want to invite you to join my 2K for 2K program; where you’re going to make your first $2,000 the hardest part using my simple five-step formula for getting consults and closing new clients. Just head over to StaceyBoehman.com/2Kfor2K. We’ll see you inside.