Tuesday, June 10, 2008

the money juggle

Please congratulate me. I just paid off a loan I took out from the bank a little over a year ago.

While I have your attention, I'm going to tell you that I'm having an "Almost Summer White Sale" at my Etsy site. I have an incredible overabundance of white at my studio, and a lot of seconds too. Since I'm done shipping all of my spring orders-- which is cause for celebration in itself-- all the pots with minor flaws that didn't make the retail cut are going up at discounted prices. So get on over there and support a working girl!

Now I'm going to talk a bit about juggling money with an art-based business. I have always been a responsible individual when it comes to money. I'm a good saver, and I've had a tidy savings account pretty much my whole life. When I was small, I kept all my money in a basket, and I would count it up almost everyday, adding to it whenever possible. My dad thought this behavior was bad tidings for miserly behavior in the future, but I always thought I developed a healthy respect for money early on and avoided many of the problems many young adults have with money, i.e. never having any. While I definitely went through my poverty phase in college, budgeting for me is like a game, and I have fun doing it.

That all changed when I started working full-time for myself. I have not had a real savings account in almost 9 years now, because all my money goes back into my business. As I have developed my business, things have gotten better, but there were times when my bank balance was lower than when I was in college.

A couple of years ago, when I decided to start working with Hector and having my wholesale line made into molds, my expenses shot through the roof. While I love and adore Hector, sometimes I would dread seeing him because he would always hand me these punishing invoices as he delivered my bisqueware. As the invoices exceeded what I had in the bank, I did what any cash-poor business does: I put it on the credit card.

There is the myth, especially in California, of the start-up that grows on a credit card. Let me tell you, this is probably one of the worst ways to grow a business, unless angel investors are on the horizon. For the first time, I was unable to pay of the balance every month. For someone like me, this is very unpleasant. Watching money get burned away on credit card finance rates is like watching, well, like watching money get burned at the stake. Every month I was sending american express all the money I had on hand, and still my balance was about the same every month. That is the bad thing about credit cards: If you have a big balance and are still using them for other expenses, they never go down.

After about a year of this, just over a year ago in fact, I told my husband what my balance was. While I wasn't trying to hide the financial trouble I was in, I also didn't really want to talk about it. He gave a long, low, whistle. One of the great things about my husband is that he doesn't get stressed out about things, especially money. But he was definitely concerned. "You need to get to your bank and get a loan," is what he said, and that's exactly what I did.

What I got from my bank was actually a line of credit, which functions differently from a small business loan in that you don't have to show a lot of financial information about your business, which can be a big mess for artists. You basically have to show you have the ability to make monthly payments. It is better to be paying your bank than the credit card company because their finance rates are lower; mine was 9%. Plus, credit card companies are evil and suck, while banks only suck. I basically paid off my credit cards in one fell swoop and then paid the bank all year, while finally being able to pay off the credit card monthly balance again.

I know you are dying to know how much money I took out. I'm just going to hold up all ten of my fingers, and flash them at you twice. That's how much, and to be out of that debt feels really really great!

14 comments:

  1. Anonymous8:26 AM

    Congratulations. I, too, started my pottery business on credit cards. I eventually had to file bankruptcy when it all caught up with me. I made an ernest attempt to pay them, but as you said, credit card companies are evil, especially when they prey on the ignorant like myself. They offer cash advances and the like which always come in handy, for the time being anyway. As in everything I have learned since getting my BFA, it was a hard lesson. I'm lucky to still be in business. Lucky? Maybe. It's still a struggle, but I do enjoy most of what I do as a potter.
    I'm always learning about the business of pottery and have a loving and supportive wife who advises me at every turn.
    Thanks for sharing your story.

    ReplyDelete
  2. Wow! Awesome tale. I can relate to a lot to your feelings and principles about money. I am, well, fortunate is not the exact word I'd use, but in a position where I received a settlement sum for an accident I was in. My leg will never be the same, nor everything that basically connects to it..., but the cash flow is what I plan to fall back on when the real expenses start happening making the financial aspects of my life a teeny bit easier. Still, even tho that cash is there (tho not readily available), I feel a loan may be the way to go- establishing good credit at the same time.

    A BIG congrats on paying off your loan (in record time it seems). Hopefully, the money will start pouring more steadily into your own pockets now.

    I'm off to buy that darling little white dogwood desert plate now.

    ReplyDelete
  3. Congratulations!

    My husband is the money manager in our house and while he supports small expenditures on my clay business from time to time, he (and I) no longer charge anything on credit cards where we carry a balance from month to month ever since we paid them off a few years ago.

    I could really use some money to buy new equipment etc. and the temptation to put in on plastic is great. I just saw a loan program from the city of Denver geared towards artists that I'm looking into right now. I wonder if other cities have similar programs?

    http://microbusiness.org/gui/content.asp?w=pages&r=289&pid=290&lang=en

    ReplyDelete
  4. Congratulations! That's a very big deal. You deserve a really great cake on a really great Whitney Smith cake stand! Yahoo!

    ReplyDelete
  5. Congrats and thank's for the advice!

    ReplyDelete
  6. Wow, that's awesome that you dug out of that! It took my husband and I a few years to dig out from under about the same amount, and I know it is hard work.

    ReplyDelete
  7. Congratulations!!

    ReplyDelete
  8. that's huge... great job!!!!
    you should celebrate!
    i understand from when i started an apparel company... brief but expensive(as the fashion designer, cheif bottle washer...etc.)
    I need to check out the sale!!!!

    ReplyDelete
  9. Maggie6:20 PM

    Congratulations! Sometimes it's just good to know that we all fight the same uphill battles...and that there is, indeed, a light at the end of the tunnel! Your work is stunning; it's worth everything you've thrown into it, and I'm thrilled for you that it's all coming back to you with so much success & happiness!

    ReplyDelete
  10. Anonymous6:25 PM

    Congrats! The list of tricks these cc co.'s pull is endless and tweaks my raw nerve when i think of it. Many people even with good credit card scores get REAMEd on the interest rates.
    Call you credit card co. and ask for a lower interest rate. LIE! tell them you LIKE their card, but have a better offer from somebody else "can they "meet it?". according to consumer reports more than 50% of the time they will do it. After all they only had it set at what it was because you didn't so much as squeek.
    I successfully have negotiated my way out of all but one late fee just by asking...I used to give excuses (envelope lost in purse!...came back without stamp..whatever). The last time I got really cocky and just asked them to waive it, The did! Remember they work for you!
    I recently "fired" capitol one My husbands card which was charging 21% and a 40$ late fee every month. I explained to him that he could get a massage (or buy me one) every week for what we were payingin fees Ah perspective...
    this is the tough thing:
    Don't by things that depreciate in value. (buy things like molds that Make you money).
    Lastly I'd like to qoute Suze Orman: (actually a S&L spoof of her) watch out because life can sometimes whip down your pants and kick you right in the money bags

    ReplyDelete
  11. Thanks for sharing this. As a struggling potter/business owner, I really appreciate your honesty in what you went through. Hopefully I will just continue to grow bit by bit and not be tempted by the evil plastics.

    Congrats on being able to pay it off! That is really great and must be a huge *sigh* of relief!

    ReplyDelete
  12. yay for you!!! you are an inspiration lady!

    ReplyDelete
  13. Michelle1:08 PM

    Congratulations Whitney! I just paid off a car loan not too long ago and it felt great.

    I've never used credit cards for my pottery business because I'm deathly afraid of not being able to pay off the balance quickly. Instead, I turn a portion of my profits back into my business and work a part-time day job. We all have to make trade-offs sometimes!

    ReplyDelete