You may be playing a losing game if you are using credit to fund your business start-up, unless you are prepared to pay your entire balance each month. The maze begins because when you have cash you need to pay your credit card and other bills. If you need cash even for necessities, you are forced to use your credit, aka ‘funny money’.
Ask yourself if you have any gambling addictions or compulsive spending habits. Please be honest with yourself because if you do, then you have to be very disciplined in your spending, more so than others who do not feel compulsive about spending money. You should definitely get serious about this before you go bankrupt. Your situation can get out of control if you do not have enough income to cover your expenses. Never speculate, which even with a fancy name is still gambling.
If you are using credit now, do some simple math with examples. Do some calculations that prove how interest due on the money you borrow from your credit card adds up quickly and compounds. It is costing you a lot of money to use credit instead of cash (savings). Never spend more than you have immediate custody of, no matter what the excuse, including investing in your business. Only use your credit line for emergencies, other than what you can pay each month to erase any balance, as defined above.
Preparing for the unexpected should be done before it happens. You never know when the unexpected will happen. The idea to be prepared ‘just in case’ is a good, safe one. We hope nothing catastrophic ever happens, and if it doesn’t you have a windfall. We need both savings for emergencies and a business operating budget. You can probably have two free savings accounts with minimum balances.
If necessary part of your business plan should start with how much money you have to invest each month to fund the start-up. You should start putting away money into a savings account if you have a job, each payday. Even $5 will add up believe it or not if you are consistent and don’t use it.