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I would go forward from where you are. Look for additional contract work and look for additional business that can leverage your assets as they are. Tell everyo

I would go forward from where you are. Look for additional contract work and look for additional business that can leverage your assets as they are. Tell everyone you know that you are looking for work and are available to start immediately. Go back to all of your old clients and see if there is any basis to consult/contract or support them--that doesn't involve incurring additional expense in advance. Simplify your life to the point of austerity and pay as you go. Don't "bum" anything from anyone, e.g. find a mutually acceptable quid pro quo for room/board from parents and/or friends. Sell any other assets you don't need for work (e.g. television, videogames, other non-essential and time-wasting items), use the money for food and debt service. On 30K of credit card debt my calculation is that you owe about $500-600 in minimum payment, use the 6K to continue to make minimum payments. Put your credit cards in your sock drawer and only carry one for bona fide emergencies (e.g. car breakdown). Carry cash and pay cash for everything, it will give you a sense of where you are spending money immediately. Don't take any contracts that require you to advance any money or risk more than a week's labor until you get your debt paid off. Don't "pay up front and invoice in arrears," get your clients to cover the up front expenses and take a fee for your services and the use of your software platform.

davo11 18y ago
Rather than keep the 6K separate, pay the 6K on one of your cards (the one with the highest rate) and do a cash advance on the card every time a payment is due, this will decrease your interest a bit. You're probably paying 20% on your cards to, currently you have a yearly income - on paper anyway - so banks will still talk to you, so look at minimizing the interest, some options are 1) get a personal loan for around 5 or 6% (not sure of the current rate in the US) from a bank 2) get one of those cards with a 2% transfer rate for 6 or 12 months and transfer all your debt to one of those cards then stick it in your sock drawer 30K probably seems like a lot now, but it's not much in the scheme of things just do all those unpleasant expense minimization techniques and watch every penny and it will be gone in no time.
- skmurphy 18y ago
  He needs that 6K to live on until he can find more income. If you pay 6K on the credit card you still owe the minimum payment next month only now you're broke. At the margin he will have to declare bankruptcy. This is a cash flow budgeting problem: many bootstrapping startups face these kinds of issues. As for getting a personal loan he's broke and has no assets: I would be cautious about falsifying a credit application. He needs to focus immediately on income: focusing all of his efforts to earn many times more than $600 (6 months of 20% interest on 6K) over the next six months will be more useful than more debt juggling.
  - davo11 18y ago
    No, if you put the 6K on the card, you're limit is still the same, but you are charged less interest. You can then take money off the card as you need it and you are then paying interest on the current balance. e.g. Balance = 20,000 Payment of 6,000 Balance = 14,000 - interest is now calculated on this balance next week take out 500 Balance is now 14,500 and so on. 'will be more useful than more debt juggling.' it's not juggling debt it's minimising you're costs. Not minimising your costs is the difference between having enough cash to be a startup for another 6 monts or not 30,000 @ 20% interest = $6,000 p/a 30,000 @ 3% interest = $900 p/a To maintain the 30,000 debt on a card you'd have to come up with 6,000 a year if it's a personal loan it costs you $900 a year - so fo a couple of phone calls you can change your costs by more than $5,000. 'I would be cautious about falsifying a credit application.' I never suggested any falsification, this is debt management 101.
    - skmurphy 18y ago
      This can be a a slippery slope: you put the 6K back on and you borrow more than 6K again. For folks who are in debt it's a safer habit to switch to pay as you go. As to taking out a new loan when he doesn't have a steady source of income and no assets to offer as collateral it can be difficult to be entirely candid on the application and still get the loan. In hindsight your creative writing may be construed as fraud.
      - davo11 18y ago
PieSquared 18y ago
I haven't been in such a situation... but you said, "Sell any other assets you don't need for work (e.g. television, videogames, other non-essential and time-wasting items), use the money for food and debt service." Is the $500 you're going to get for selling a TV and a video game system going to help that much? It seems that you should keep anything you actually use, to me - you're in enough stress as it is, you don't need to make yourself feel desperately poor. Or am I missing something?
- skmurphy 18y ago
  It's a question of focus. He is desperately poor: he's completely broke. He has talents that he needs to focus on making money. My assumption was that he still wants to be an entrepreneur: he needs to learn how to bootstrap on minimal cashflow.
- run4yourlives 18y ago
  I think you'd get a bigger payoff from not having the TV and games around to distract you than simply the $500. Every hour not spent watching TV can be better spent somewhere else, even if all he's doing is reading.
  - skmurphy 18y ago
    TV is a "two bird stone" in that regard. Videogames as well.
lsc 18y ago
Good advice about not wasting time on people who want 'credit' - always check before hand how long it will take you to get paid. And don't count your money until the check clears. (though personally I'd wait two weeks, or even a month for a client if I couldn't do better.) about selling crap: sure, selling your video game system and TV is fine... if you have systems that are worth more than the time it takes to sell them. Right now it's pretty easy for me to get work at $80/hr... selling, say, the obsolete servers in my garage or my TV won't net me $80/hr. I guess it might make sense if you have nice stuff, or if you can't find contract work at all. (I've been there, I've made rent by selling obsolete computer parts.

davo11 18y ago

Rather than keep the 6K separate, pay the 6K on one of your cards (the one with the highest rate) and do a cash advance on the card every time a payment is due, this will decrease your interest a bit. You're probably paying 20% on your cards to, currently you have a yearly income - on paper anyway - so banks will still talk to you, so look at minimizing the interest, some options are 1) get a personal loan for around 5 or 6% (not sure of the current rate in the US) from a bank 2) get one of those cards with a 2% transfer rate for 6 or 12 months and transfer all your debt to one of those cards then stick it in your sock drawer 30K probably seems like a lot now, but it's not much in the scheme of things just do all those unpleasant expense minimization techniques and watch every penny and it will be gone in no time.

skmurphy 18y ago
He needs that 6K to live on until he can find more income. If you pay 6K on the credit card you still owe the minimum payment next month only now you're broke. At the margin he will have to declare bankruptcy. This is a cash flow budgeting problem: many bootstrapping startups face these kinds of issues. As for getting a personal loan he's broke and has no assets: I would be cautious about falsifying a credit application. He needs to focus immediately on income: focusing all of his efforts to earn many times more than $600 (6 months of 20% interest on 6K) over the next six months will be more useful than more debt juggling.
- davo11 18y ago
  No, if you put the 6K on the card, you're limit is still the same, but you are charged less interest. You can then take money off the card as you need it and you are then paying interest on the current balance. e.g. Balance = 20,000 Payment of 6,000 Balance = 14,000 - interest is now calculated on this balance next week take out 500 Balance is now 14,500 and so on. 'will be more useful than more debt juggling.' it's not juggling debt it's minimising you're costs. Not minimising your costs is the difference between having enough cash to be a startup for another 6 monts or not 30,000 @ 20% interest = $6,000 p/a 30,000 @ 3% interest = $900 p/a To maintain the 30,000 debt on a card you'd have to come up with 6,000 a year if it's a personal loan it costs you $900 a year - so fo a couple of phone calls you can change your costs by more than $5,000. 'I would be cautious about falsifying a credit application.' I never suggested any falsification, this is debt management 101.
  - skmurphy 18y ago
    This can be a a slippery slope: you put the 6K back on and you borrow more than 6K again. For folks who are in debt it's a safer habit to switch to pay as you go. As to taking out a new loan when he doesn't have a steady source of income and no assets to offer as collateral it can be difficult to be entirely candid on the application and still get the loan. In hindsight your creative writing may be construed as fraud.
    - davo11 18y ago

PieSquared 18y ago

I haven't been in such a situation... but you said, "Sell any other assets you don't need for work (e.g. television, videogames, other non-essential and time-wasting items), use the money for food and debt service." Is the $500 you're going to get for selling a TV and a video game system going to help that much? It seems that you should keep anything you actually use, to me - you're in enough stress as it is, you don't need to make yourself feel desperately poor. Or am I missing something?

skmurphy 18y ago
It's a question of focus. He is desperately poor: he's completely broke. He has talents that he needs to focus on making money. My assumption was that he still wants to be an entrepreneur: he needs to learn how to bootstrap on minimal cashflow.
run4yourlives 18y ago
I think you'd get a bigger payoff from not having the TV and games around to distract you than simply the $500. Every hour not spent watching TV can be better spent somewhere else, even if all he's doing is reading.
- skmurphy 18y ago
  TV is a "two bird stone" in that regard. Videogames as well.

lsc 18y ago

Good advice about not wasting time on people who want 'credit' - always check before hand how long it will take you to get paid. And don't count your money until the check clears. (though personally I'd wait two weeks, or even a month for a client if I couldn't do better.) about selling crap: sure, selling your video game system and TV is fine... if you have systems that are worth more than the time it takes to sell them. Right now it's pretty easy for me to get work at $80/hr... selling, say, the obsolete servers in my garage or my TV won't net me $80/hr. I guess it might make sense if you have nice stuff, or if you can't find contract work at all. (I've been there, I've made rent by selling obsolete computer parts.