How to Lose Debt in 90 Days

Hello, hello and happy Friday! Did anybody catch my attempt at a movie reference in the title? Anybody? No? Ok... moving on. Earlier this week I read an article presented by Entrepreneur.com covering some great tips on how to reduce business debt. I don't know about you, but these kind of pointers are always welcome. Let's take a look.

Identify ‘good’ vs. ‘bad’ debt
First things first, begin by evaluating your checkbook with the mindset that not all debt is going to be bad. The article provides a great example of how you can identify good and bad debt: "For example, if a company has a significant amount of liability associated with the ownership of an office space, that could be considered good debt due to the long-term benefit of potential appreciation and taxable offset opportunities. If a large portion of a company’s current debt is associated with revolving credit not backed by collateral (e.g. credit cards), that is likely something to identify."

Tackle the current debt aggressively
Once you have your debt identified, it's time to start getting rid of the bad as quickly as possible. This can be done by recording a breakdown of monthly payments along with charged percentages. Focusing on the larger percentages initially is the best bet. The example given explains that a particular company began paying off credit cards with a 10% or higher interest rate first, which decreased their monthly spending and increased cash flow. Sounds like a win-win!

Take on new debt strategically
Let's just be real, it's necessary to buy things, especially for a business.  This point is a great reminder to fully evaluate wants vs. needs. As the write-up mentions, "Adding debt can be a positive decision if it will push your company towards its strategic goals."

Monitor your credit usage
I had no idea how important a credit score was! That's one of those things that comes along with #adulting. There are tons of tools, apps, websites, you name it, available to help you monitor and even manage your credit score. Some of these "not only monitor your score, but will highlight the metrics used to generate those scores, such as credit being used versus credit available."

Check out the article I linked above where I got these ideas for even more details. I hope you had a "light bulb moment" or two while reading this post. I also hope you'll share your tips on how to eliminate debt! Let us know in the comments below. Have a wonderful weekend!