Webmasters and Debt: One perspective - GoFuckYourself.com

$5 submissions · 03-27-2004, 06:55 AM

Using debt as a constructive tool in growing your online business

by Gene aka $5 Submissions http://www.webmasterlabor.com

From an early age, I have been trained by my parents that debt is bad. The most frequent justification for this belief is that debt reduces your total net worth and your financial flexibility. As an online entrepeneur, I've found that while my parents' advice is 100% correct in regards to personal finance, a different way of conceptualizing debt is needed when it comes to business finance.

Debt, like any other tool, can be used negatively or positively depending on the circumstance you find yourself in using it. When you are growing your online business, debt may not be a purely negative thing since it allows you to leverage existing assets and maximize your ability to grow your business quickly.
Of course, there are definite traps to avoid when using debt as a tool to grow your business.

Trap #1 Undisciplined use of Debt

If you treat your credit card as a piggy bank which you frequently dip into for the smallest and most frequent expenses your business faces, you may easily find yourself so deep in debt that whatever income your business generates becomes immaterial.

Treat your credit card as a tool to pay for STRATEGIC expenses. These expenses should have the very real possibility of generating revenues or increasing efficiency which generates revenue.

Create a hierarchy in your decision making before choosing to use debt. Put strategic expenses at the top and non-strategic/non essential expenses at the bottom. Spend credit resources based on this hierarchy.

Trap #2 Untimely use of Debt

Just as there's a hierarchy in the THINGS you wish to buy, you should employ a hierarchy in the TIMING of your purchases. Debt should only be employed when revenue closely appears to be unable to cover your expenses. However, if it's still too early and revenue might pick up, hold off on whipping out that credit card.

Similarly, use debt for business EXPANSION only when it appears that revenue is ramping up and can be accellerated with strategic reinvestment into your business via debt. If revenue is anemic, make sure to fine tune your business model and increase revenue before you resort to using credit.

Trap #3 Addiction to Credit

Sometimes even businesses with the best potential and significant revenues fail because the owner has failed to get out of the "strategic debt usage" mindset. Debt is only a tool. Don't be afraid to stop using the tool and start using cash when you are able to. Sometimes, its hard to shake a mental habit. However, your mental attitude must change and conform to your material condition--once you have a cashflow, start using that cash. Being stuck in "survival" mode while your company is actually flourishing may mean the eventual death of your company due to ineffective management of assets.

(c) 2004 WebmasterLabor.Com This article is free. Feel free to publish in original unmodified form for your webmaster newsletters, resource sites, chatboards, and email groups.

$5 submissions · 03-27-2004, 07:10 AM

One explanation for the failure of many dot bomb companies back in the late 90's is due to their failure to use the hierarchies mentioned in this article. Of course, most were funded by investor money instead of debt. And most focused on online content/services that had unproven revenue generating potential. Regardless, the mindsets were there and the symptoms were there.

Indeed, it could be a boon to adult webmasters that most of us don't have investors and are used to relying on personal resources for financing. This makes many of us keen on increasing efficiency and return on investment.

Shoehorn! · 03-27-2004, 07:15 AM

Very good article.

chemicaleyes · 03-27-2004, 07:20 AM

Nice post Gene!

Bigfuck · 03-27-2004, 07:24 AM

Nice post
looking at costs is so important and credit is a cost
credits have to be used wisely

$5 submissions · 03-27-2004, 07:17 PM

If you guys have any advice, comments, feedback, experiences with using debt to grow your business, please post here.

$5 submissions · 03-27-2004, 07:27 PM

Quote:

Originally posted by uproared
Nice article, I'll finish reading it once the poker tournament finishes - I'm almost out

Cool, thanks!

$5 submissions · 03-28-2004, 03:01 AM

Illicit · 03-28-2004, 03:09 AM

Very Good Article

Napolean · 03-28-2004, 03:32 AM

nice post, doesnt seem to apply to my debt tho and i was excited, lol

any tips for a guy behind on electric, phone and rent?

$5 submissions · 03-28-2004, 03:34 AM

Personal debt got you down, I would suggest the following:

1) Consolidate your debt -- call all your lenders and tell them, you'd like to consolidate or it may be BK... Faced with that choice, they'll take consolidation

2) cut up all credit cards that are nonessential

3) start charting your expenses and start cutting nonessential items

Quote:

Originally posted by Napolean
nice post, doesnt seem to apply to my debt tho and i was excited, lol

any tips for a guy behind on electric, phone and rent?

Living For Today · 03-28-2004, 03:34 AM

Good to see a nice informative post

Thanks mate.

quiet · 03-28-2004, 03:36 AM

great thread and article

Napolean · 03-28-2004, 03:36 AM

Quote:

Originally posted by $5 submissions
Personal debt got you down, I would suggest the following:

1) Consolidate your debt -- call all your lenders and tell them, you'd like to consolidate or it may be BK... Faced with that choice, they'll take consolidation

2) cut up all credit cards that are nonessential

3) start charting your expenses and start cutting nonessential items

cool wasnt expecting any serious replies.

no credit cards here, so i got that goin for me
and i started a new job so im gettin back in action

few more weeks and i can afford your services

AlienQ - BANNED FOR LIFE · 03-28-2004, 03:37 AM

$5 Dollah hit me up tomarrow I wanna make ya a banner for my Ialien.com pre promo openning bro;)
Ya contribute some great shit to the boards;)

This eyeball does not forget

Nice writing there.

ICQ: 78943384

kmanrox · 03-28-2004, 03:38 AM

that's why i only use my debit cards.... the credit cards are store far far away....

$5 submissions · 03-28-2004, 03:40 AM

Thanks, AlienQ. Will do!

Quote:

Originally posted by AlienQ
$5 Dollah hit me up tomarrow I wanna make ya a banner for my Ialien.com pre promo openning bro;)
Ya contribute some great shit to the boards;)

This eyeball does not forget
Nice writing there.

ICQ: 78943384

Napolean · 03-28-2004, 03:40 AM

Quote:

Originally posted by kmanrox
that's why i only use my debit cards.... the credit cards are store far far away....

ive heard of people doin so bad with credit cards that they actually freeze them in ziplock bags in their freezer.. just to give them time to think about a purchase and have second thoughts..

now thats insane.

Pornwolf · 03-28-2004, 03:42 AM

We were tricked! Now we owe him for that article!

quiet · 03-28-2004, 04:02 AM

Quote:

Originally posted by kmanrox
that's why i only use my debit cards.... the credit cards are store far far away....

ccards aren't all bad. i love my air miles

$5 submissions · 03-28-2004, 04:07 AM

That's a lot of miles! Nice!

Quote:

Originally posted by quiet

ccards aren't all bad. i love my air miles

Odin · 03-28-2004, 07:19 AM

03-28-2004, 09:09 AM

nathan_f · 03-28-2004, 09:12 AM

a good read for sure.

Keev · 03-28-2004, 09:50 AM

Sounds like bits and peices of advice from rich dad, poor dad.

Odin · 03-28-2004, 12:40 PM

Tight · 03-28-2004, 05:17 PM

Quote:

Originally posted by $5 submissions
One explanation for the failure of many dot bomb companies back in the late 90's is due to their failure to use the hierarchies mentioned in this article. Of course, most were funded by investor money instead of debt. And most focused on online content/services that had unproven revenue generating potential. Regardless, the mindsets were there and the symptoms were there.

Indeed, it could be a boon to adult webmasters that most of us don't have investors and are used to relying on personal resources for financing. This makes many of us keen on increasing efficiency and return on investment.

Very good point!

$5 submissions · 03-28-2004, 05:28 PM

Thanks, Nathan!

Quote:

Originally posted by nathan_f

a good read for sure.

PhotoGreggXXX · 03-28-2004, 05:44 PM

personally I'm all about profit, expansion and the future. Investors and credit all want to take a part of the pie.

Vehicles and equipment are debt free, and I owe zip except monthly operating expenses. Puts more $$$ in my pocket and for expansion.

swami · 03-28-2004, 07:15 PM

.Nice one.It would be nice to have some equally good info on webmasters dealing without outstanding debts that they are owed e.g. from sponsors reluctant to pay.

$5 submissions · 03-28-2004, 07:21 PM

Quote:

Originally posted by swami
.Nice one.It would be nice to have some equally good info on webmasters dealing without outstanding debts that they are owed e.g. from sponsors reluctant to pay.

ICQ me and I'll conduct an interview with you to research this topic and I'll write an article on it.

Just let me know.

stephanie m. · 03-28-2004, 07:24 PM

nice post

thanks!

sean416 · 03-28-2004, 07:38 PM

nice read. I use credit cards in moderation. I think the people who say "I'll never use them" are living in yesterdays world. Credit cards have many advantages the only thing I try and keep in mind.. is have a wad of cash in your pocket and your credit card. When you spend money on the credit card consider your wad getting smaller. If my pocket is empty with no cash.. my credit card does not get used.

$5 submissions · 03-28-2004, 08:04 PM

Guys, the archive for these articles are located at http://www.webmasterlabor.com/articles/

nofx · 03-28-2004, 08:05 PM

great read, thanks

$5 submissions · 03-28-2004, 08:25 PM

Quote:

Originally posted by Keev
Sounds like bits and peices of advice from rich dad, poor dad.

I read rich dad poor dad. It's main advice is that wealth is more of an attitude than anything else. An attitude that allows people to accumulate assets instead of liabilities. I dug the book.

webmaster x · 03-28-2004, 09:19 PM

Debt is not all bad. You just have to use it wisely. I know a guy who started his Active X empire with a credit card limit of $1000. It can be done. Thanks Jebuz for elance.com

foreverjason · 03-28-2004, 10:10 PM

You have great articles!

Keep them coming.

$5 submissions · 03-28-2004, 11:10 PM

Thanks, Jason!

Quote:

Originally posted by foreverjason
You have great articles!

Keep them coming.

lil2rich4u2 · 03-28-2004, 11:46 PM

i was always told that if i cant afford to pay for it in cash, then dont buy it!

This works great for personal stuff but may not apply to business type expenses since lots of them may be a bit more costly and not everyone has that much cash laying around.

Another great way to think is why should you have to pay interest? Fuck these companies, dont pay them shit! If you use your CC then pay it off the next month in full to avoid interest

seams to work for me

quiet · 03-28-2004, 11:48 PM

Quote:

Originally posted by lil2rich4u2
If you use your CC then pay it off the next month in full to avoid interest

precisely what i do.

Garou · 03-28-2004, 11:49 PM

Quote:

Originally posted by $5 submissions
If you guys have any advice, comments, feedback, experiences with using debt to grow your business, please post here.

Can I have a debit investment from You?

$5 submissions · 03-29-2004, 12:27 AM

LOL, thanks... I think ;)

Quote:

Originally posted by Garou

Can I have a debit investment from You?

03-27-2004, 07:20 AM	#4
chemicaleyes UNSTOPPABLE Join Date: Aug 2003 Location: UK :: ICQ# 156068 Posts: 11,569	Nice post Gene! __________________ No way as way, No limitation as limitation. AmeriNOC formally PhatServers

03-27-2004, 07:24 AM	#5
Bigfuck Confirmed User Join Date: Mar 2004 Location: In a fucking big house Posts: 4,961	Nice post looking at costs is so important and credit is a cost credits have to be used wisely __________________

03-27-2004, 07:17 PM	#6
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	If you guys have any advice, comments, feedback, experiences with using debt to grow your business, please post here. __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

03-28-2004, 03:01 AM	#8
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	bump __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

03-28-2004, 03:09 AM	#9
Illicit wtf ? Join Date: Dec 2003 Location: GFY Posts: 11,895	Very Good Article __________________ Insert Sig Here

03-27-2004, 06:55 AM	#1
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	Webmasters and Debt: One perspective Using debt as a constructive tool in growing your online business by Gene aka $5 Submissions http://www.webmasterlabor.com From an early age, I have been trained by my parents that debt is bad. The most frequent justification for this belief is that debt reduces your total net worth and your financial flexibility. As an online entrepeneur, I've found that while my parents' advice is 100% correct in regards to personal finance, a different way of conceptualizing debt is needed when it comes to business finance. Debt, like any other tool, can be used negatively or positively depending on the circumstance you find yourself in using it. When you are growing your online business, debt may not be a purely negative thing since it allows you to leverage existing assets and maximize your ability to grow your business quickly. Of course, there are definite traps to avoid when using debt as a tool to grow your business. Trap #1 Undisciplined use of Debt If you treat your credit card as a piggy bank which you frequently dip into for the smallest and most frequent expenses your business faces, you may easily find yourself so deep in debt that whatever income your business generates becomes immaterial. Treat your credit card as a tool to pay for STRATEGIC expenses. These expenses should have the very real possibility of generating revenues or increasing efficiency which generates revenue. Create a hierarchy in your decision making before choosing to use debt. Put strategic expenses at the top and non-strategic/non essential expenses at the bottom. Spend credit resources based on this hierarchy. Trap #2 Untimely use of Debt Just as there's a hierarchy in the THINGS you wish to buy, you should employ a hierarchy in the TIMING of your purchases. Debt should only be employed when revenue closely appears to be unable to cover your expenses. However, if it's still too early and revenue might pick up, hold off on whipping out that credit card. Similarly, use debt for business EXPANSION only when it appears that revenue is ramping up and can be accellerated with strategic reinvestment into your business via debt. If revenue is anemic, make sure to fine tune your business model and increase revenue before you resort to using credit. Trap #3 Addiction to Credit Sometimes even businesses with the best potential and significant revenues fail because the owner has failed to get out of the "strategic debt usage" mindset. Debt is only a tool. Don't be afraid to stop using the tool and start using cash when you are able to. Sometimes, its hard to shake a mental habit. However, your mental attitude must change and conform to your material condition--once you have a cashflow, start using that cash. Being stuck in "survival" mode while your company is actually flourishing may mean the eventual death of your company due to ineffective management of assets. (c) 2004 WebmasterLabor.Com This article is free. Feel free to publish in original unmodified form for your webmaster newsletters, resource sites, chatboards, and email groups. __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

03-27-2004, 07:10 AM	#2
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	One explanation for the failure of many dot bomb companies back in the late 90's is due to their failure to use the hierarchies mentioned in this article. Of course, most were funded by investor money instead of debt. And most focused on online content/services that had unproven revenue generating potential. Regardless, the mindsets were there and the symptoms were there. Indeed, it could be a boon to adult webmasters that most of us don't have investors and are used to relying on personal resources for financing. This makes many of us keen on increasing efficiency and return on investment. __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

03-27-2004, 07:15 AM	#3
Shoehorn! Die With Your Boots On Join Date: Oct 2003 Location: Hawaii Posts: 22,872	Very good article. __________________

03-28-2004, 03:32 AM	#10
Napolean Old school Industry Role: Join Date: Nov 2002 Location: Kettering, OH Posts: 4,327	nice post, doesnt seem to apply to my debt tho and i was excited, lol any tips for a guy behind on electric, phone and rent? __________________ Need a programmer? (Desktop/Web Applications) --- Skype: napoleande

03-28-2004, 03:34 AM	#12
Living For Today Confirmed User Join Date: Feb 2002 Location: Brisbane, Australia Posts: 3,970	Good to see a nice informative post Thanks mate.

03-28-2004, 03:36 AM	#13
quiet we'll miss you our friend. RIP Industry Role: Join Date: Sep 2001 Location: Fernie, BC Posts: 25,115	great thread and article __________________ we'll miss you our friend. RIP

03-28-2004, 03:37 AM	#15
AlienQ - BANNED FOR LIFE best designer on GFY Join Date: Mar 2003 Location: IALIEN.COM - High Definition Video and Photographic Productions -ICQ 78943384 Posts: 30,307	$5 Dollah hit me up tomarrow I wanna make ya a banner for my Ialien.com pre promo openning bro;) Ya contribute some great shit to the boards;) This eyeball does not forget Nice writing there. ICQ: 78943384 __________________ NAKED HOSTING FTW!11 I'm On The INSANE PLAN $9.95/mo! \| The Alien Blog Adult News Worth Reading Updated Daily \| Content For Sale! 641 PICS 216 MINUTES OF VIDEO $350.00 \|ICQ: 78943384 \|

03-28-2004, 03:38 AM	#16
kmanrox aka K-Man Industry Role: Join Date: Oct 2001 Location: The Gutter Posts: 29,292	that's why i only use my debit cards.... the credit cards are store far far away.... __________________ Crypto HODLr Crypto mining Angel investor

03-28-2004, 03:42 AM	#19
Pornwolf Drunk and Unruly Join Date: Jan 2002 Location: Hollywood Posts: 22,712	We were tricked! Now we owe him for that article! __________________ I've trusted my sites to them for over a decade... Webair, bitches.

03-28-2004, 07:19 AM	#22
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03-28-2004, 09:12 AM	#24
nathan_f Confirmed User Join Date: Sep 2003 Location: Think of me as Chomsky with dick jokes. Posts: 3,983	a good read for sure.

03-28-2004, 09:50 AM	#25
Keev Confirmed User Join Date: May 2001 Posts: 5,335	Sounds like bits and peices of advice from rich dad, poor dad. __________________ ReliableServers.com - NO REF LINK!

03-28-2004, 12:40 PM	#26
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03-28-2004, 05:44 PM	#29
PhotoGreggXXX Confirmed User Join Date: May 2003 Location: Las Vegas Posts: 1,616	personally I'm all about profit, expansion and the future. Investors and credit all want to take a part of the pie. Vehicles and equipment are debt free, and I owe zip except monthly operating expenses. Puts more $$$ in my pocket and for expansion. __________________ PornPayouts! Tons of Exclusive new HI Dev Videos... Home of the WeDo Girls! e-mail: [email protected] ICQ - 138-053-157

03-28-2004, 07:15 PM	#30
swami Confirmed User Join Date: Aug 2003 Location: vanuatu Posts: 1,989	.Nice one.It would be nice to have some equally good info on webmasters dealing without outstanding debts that they are owed e.g. from sponsors reluctant to pay.

03-28-2004, 07:24 PM	#32
stephanie m. Confirmed User Join Date: Feb 2004 Location: cancun~~~~~~~~~ ICQ 292 580 143 Posts: 2,484	nice post thanks! __________________ One of Six new Reality Sites in RealityCash - Coming soon.

03-28-2004, 07:38 PM	#33
sean416 Confirmed User Join Date: Feb 2004 Location: Toronto Posts: 3,633	nice read. I use credit cards in moderation. I think the people who say "I'll never use them" are living in yesterdays world. Credit cards have many advantages the only thing I try and keep in mind.. is have a wad of cash in your pocket and your credit card. When you spend money on the credit card consider your wad getting smaller. If my pocket is empty with no cash.. my credit card does not get used. __________________ ServerProvider.com

03-28-2004, 08:04 PM	#34
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	Guys, the archive for these articles are located at http://www.webmasterlabor.com/articles/ __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

03-28-2004, 08:05 PM	#35
nofx Too lazy to set a custom title Join Date: Nov 2002 Location: Virgin Mary's womb Posts: 16,826	great read, thanks __________________ Often times I wonder why There's love and hate, theres live or die. When sickness comes I must decide: When feelings go, theres suicide.

03-28-2004, 09:19 PM	#37
webmaster x Confirmed User Join Date: Mar 2004 Posts: 4,400	Debt is not all bad. You just have to use it wisely. I know a guy who started his Active X empire with a credit card limit of $1000. It can be done. Thanks Jebuz for elance.com

03-28-2004, 10:10 PM	#38
foreverjason Confirmed User Join Date: Mar 2003 Posts: 1,452	You have great articles! Keep them coming.

03-28-2004, 11:46 PM	#40
lil2rich4u2 ICQ: 175171926 Join Date: Oct 2002 Location: New York, NY Posts: 11,046	i was always told that if i cant afford to pay for it in cash, then dont buy it! This works great for personal stuff but may not apply to business type expenses since lots of them may be a bit more costly and not everyone has that much cash laying around. Another great way to think is why should you have to pay interest? Fuck these companies, dont pay them shit! If you use your CC then pay it off the next month in full to avoid interest seams to work for me __________________ HEY!! Unbeatable hosting! Customer service is top notch! --> ISPrime <-- Do a search on any board, their reputation is rock solid .. for years!!