Last month, we announced we’re working with the savvy minds behind Ellevest, a female-focused investment platform specifically tailored to address women’s salaries, life cycles, and preferences. Today, then, we’re so excited to be back at the super-chic conference table with our Ellevest friends to talk money…or, perhaps more accurately, the lack thereof: debt.
While the D word can certainly be a bit (read: a lot) scary, there are times when debt is necessary and effective for growing or marketing your business. While most of us will have to take on debt at some point in the life of our business, it’s important to understand the difference between good debt and bad debt—the key, as you may have already guessed, lies in interest rates and tax breaks. Today, then, we’re breaking down the good, the bad, and the ugly of all-things debt related. Read on to find out if you should take on debt in the name of increasing brand visibility.
Don’t Take on Debt If…
Let’s start with the monster of all debt monsters: credit-card debt. With sky-high interest rates ranging from 12.0% – 22.6%, credit card debt is the absolute worst form of debt you can have, which is why you should never (as in never) take on more debt if you’re still working on paying off those credit cards. If you’re currently underwater with your credit cards, stop everything you’re doing and work on paying off your balance first and foremost—this means stop building your emergency fund, stop worrying about costly marketing efforts, and focus solely on getting to a zero balance on those interest-heavy credit cards.
“If you have credit card debt,” Ellevest Co-Founder & CEO Sallie Krawcheck says, “pay it off now. Do not go. Do not collect $200.”
Keep in mind, while marketing your business certainly is essential for signing clients, there are ways to go about marketing that don’t involve taking on debt. If you’re underwater with credit cards but still know you need to market your business to sign clients (so that you can, ahem, pay off those credit cards), get creative with your marketing efforts. Considering guest-blogging for local blogs or media outlets, or being part of an “Instagram Takeover” for a page with followers you can convert into clients. Instagram stories and social media contests are also great, cost-free ways to accrue followers and potential clients. If you’re dead-set on paid advertising, consider building out a small budget (no more than, say, $50 each month) for boosted Facebook posts or promoted Instagram posts—you can set your own budget, define your audience, and rest easy knowing you’re not out an arm-and-a-leg.
Do Take on Debt If…
If your credit cards are completely paid off, first of all, kudos—treat yourself to a glass of wine or three—and, second, consider taking on some healthy/good debt in the name of marketing your business. “Good debt” is debt that’s low-interest and debt that you can pay off in a reasonable amount of time. It’s so important to do your research before taking out a loan, though, as you need to ensure you won’t get eaten alive by accumulated interest down the road. Be sure to look out for interest rates that adjust over time—your loan may be interest-free for the first six months, but then increase to a whopping 20% after that. Will you be able to pay off the debt you’ve accrued before those six months are up, or will you find yourself stuck making massive payments that barely chip away at your balance and, instead, go almost solely toward interest?
Overall, when it comes to taking on debt in the name of building your brand, there are a few important things to keep at the forefront of your mind—the most important of which being interest rates. If you have high-interest credit cards, pay them off before you make any costly marketing moves on behalf of your business, and, instead, challenge yourself to get creative with cost-free communication efforts while you work on chipping away at that debt!
Ready to take the leap and start saving for all of those hashtag-business-goals of yours? Head to Ellevest today to take advantage of their FREE Investment Plan!