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!