Navigating Debt & Creating Financial Security in Your Business

Alright, y’all, welcome back to another episode of the Sophie Kessner podcast. I am your host you can call me Sophie And in today’s episode I want to explore an interesting conversation around money, finances and business and debt. This series is continuing to build upon itself and I feel like this is a really important conversation to have. We’re unpacking the process of moving away from certain business practices that may have been financially beneficial but emotionally destructive. So one of the biggest things that I want to start with here is the conversation of debt. Now, again, i want to preface by saying I am not a financial expert and I am not a banker and I am not a tax advisor in any of those realms. This is me sharing from personal perspective and opinion based on my life experience and the experience that I’ve had working in a bunch of companies along with working with tons and tons of clients and running their businesses. So you always have to just profit that. Nothing else that I’m sharing in here is tax advice or financial advice. Again, this is just me sharing personal opinion, and any decisions that you make with any of the pieces that I mention is 100% up to you. So, that being said, let’s dive in.
So an interesting conversation that’s been coming up for a lot of folks is when you come face to face with the belief being busted that it can be an instant, overnight success in your business. And this is a very uncomfortable thing to come face to face with because it means a few things. One, when you start to realize that the way in which you are trying to build and run your business doesn’t actually feel sustainable for you. It can create a lot of confusion and shame and frustration. And I say that because when you’re first getting started, the biggest thing is you’re committed, you’re all in, you’re willing to do whatever it takes. But oftentimes inside of that process, we’re doing things in ways that aren’t actually truly sustainable. We’re posting and showing up in ways that, yes, we can do this for a few months and maybe even a year or two, but after a certain amount of time it’s not sustainable. We cannot sustain the pace and the time and the energy and the focus that goes into producing at the level that we originally start with. And when that happens, what we see is there tends to be a dip, a big dip, in both engagement and in revenue and sales for folks. Now what’s interesting about this is the conversation of how do you balance that? How do you balance being able to move through seasons of building something that is going to be more easily sustained while also navigating the emotional depth of having to decide how to supplement income, how to move through seasons of having less income while you’re building out something that is going to be more manageable?
So one of the interesting things that I love to point out here is, even if you’re somebody who has struggled with chronic illnesses or struggled with things like neurodivergency or has any other components where you feel like you are somebody who is less privileged in any way whatsoever whether you’re a single parent or caretaking of elders the biggest part that we want to look at is how can you actually do business in a way that’s going to work for you and your lifestyle and the way in which you move through the world So that it can be sustained over an extended period of time. Because the biggest trap that we get into when it comes to business and money is this idea that we’re sold, that you quit your nine to five and you have financial freedom. You’re living the laptop lifestyle, as they call it, and that laptop lifestyle is very quickly diminished when we realize that, oh, this is not what it looks like if you’re somebody who is not in your early 20s, close to the Eurocentric center of beauty and having the privilege that folks who are closer to that center do have. And so this is an interesting conversation, because then it’s less about oh well, i just need to create a bunch of content and post all of the time, or I need to work harder. And it’s more conversation of how do I actually build the business in a way that’s going to work for me And how do I actually create something that I can manage and sustain for a long period of time, and a lot of time, as we get to this place after having accrued a lot of debt, which is really, really unfortunate, but also just the reality for a lot of folks. So I think the first thing that we want to do is going back to some of the earlier episodes where we talked about financial literacy is getting really clear on what your numbers actually are.
Now, this process of getting clear on your numbers can feel very, very confronting, especially if you’re somebody who has spent a lot of time always focused on the idea or the mindset that I’m just going to make more money Because, though you can always make more money, you don’t want to get stuck in the hamster wheel of always having to make more money, to where you can never enjoy the money you actually have because you’re so busy having to always make more. So we need to understand a few things. Number one how much debt do we actually have? What is the debt that we have? Number two what does it actually cost for us to live, and how can we decrease expenses during a season when we know that we’re going to be shifting and pivoting? It might last a few months, and it might last more than that, but what we want to be aware of is how can we start to become more conservative with the way that we manage and spend money, so that we’re only investing in things that are going to be supportive for the long term picture, versus getting caught up in the short term game?
Now, when we’re thinking about debt, a method that I really appreciate and that I love when it comes to debt payoff is the snowball effect, and the creator of that. I’m actually going to go ahead and pull it up real quick. Okay, dave Ramsey is the creator of the snowball strategy when it comes to paying down debts. So Dave Ramsey is who is popularized by, and he’s a personal finance expert. So, essentially, the snowball method or the snowball effect for paying off debt. You can Google it and look it up, but it’s pretty straightforward. You take all of your debts and you look at, okay, which one is going to be paid off in the least amount of time, like the shortest amount of time to paying it off, and you look at, okay, well, what money do I have to start paying to add to increasing how much I can put down per month on my debt to pay it off sooner.
Because debt is a really, really, really heavy thing to carry around with us, especially when we’re building businesses and we don’t have a healthy relationship to money, and by that I mean we ignore what our finances look like, we don’t like to think about budgeting, we like to overspend And we tend to always think that the answer is just to make more money versus planning and setting ourselves up for retirement. Now, if you’re younger, if you’re listening to this, the idea of retirement might sound really, really far-fetched because it’s so far off. But the older that you got and if you are somebody who has kids or you take care of family members, the more that you start to realize that this is something you do want to start to think about and plan for, and have financial security and have a savings and have investments. And again I want to emphasize I am not a financial expert, i am just sharing personal opinion from somebody who for years did not have any of this information in hand. So the snowball effect essentially says hey, let’s write out all of your debts, let’s look at what the bare minimum payments are in every single piece of debt, and then from there, let’s go ahead and figure out how many months is it going to take you to pay off each piece of debt, so that you can then prioritize them, starting with the one that’s going to take the shortest amount of time to the one that’s going to take the longest amount of time. Then the strategy is pretty straightforward. From there, what you’re going to do is you’re going to look at OK, what are your total monthly debt pay off costs, meaning? how much do you pay per month for debt if you’re paying the minimum amount on every single piece, and then can you pay anything additional towards debt per month? For some folks that might not be possible. For others maybe it’s $100 or $200 or more, or maybe you’re splitting extra money across multiple cars and paying more than the minimum. Now the way that this strategy works is, instead of splitting what you’re paying in addition to the minimum payments across multiple pieces of debt, you take that payment, that additional amount, and you apply it towards the piece of debt that has the shortest amount of time to pay off.
So, for instance, if you have a credit card that has $1,000 on it and you are trying to pay off that plus seven other things, you want to pay off the thing that’s going to be the shortest. So let’s say it’s your credit card. The minimum payment on that might be like $29 a month, but let’s say you have an extra $100 that you can put towards paying that off every single month. If you have that extra $100, you’re putting $129 towards that one credit card, which means, instead of paying it off over the course of oh gosh, let’s do the math on that 29 months. I think is what it would be. Let’s see.
Ok, so over the course of 35 months is what it would take to pay it off. If you’re just paying the bare minimum without interest, you can pay it off in 10 months, less than 10 months if you’re adding that extra $100 to it So you can get out of debt faster. And then the real magic happens when you take what you were paying on that card that $129, and now you apply it to the next shortest amount of time to pay off the next piece of debt, which might be card number two that has $3,000 on it. So then you take whatever that minimum balance is Maybe it’s $40 on that one And so you add the $129 that you’ve finished paying off for the other card, because that’s $0 now and you apply that to the $40 that you’re paying towards the second card And now you’re paying $179 off. So you’re paying it off exponentially faster. So you’re decreasing your debt, you’re decreasing the amount of money that you’re paying per interest every single month and you’re able to get out of debt a lot faster.
So again, if you want to Google that the debt snowball strategy there’s a ton of calculators and things that you can use. We’ll be putting together a little financial package for folks on all the spreadsheets and pieces that I’ve developed over the years and using a lot of these things. So that’ll be great. So the next part is going into what you want to do when you’ve gotten clear on your debt and when you’ve gotten clear on what your basic living expenses are. So we know that you need to be paying bare minimum payments and also your bare cost of living. When you know these numbers, it’s helpful, though sometimes it can be confronting, because you know how much money you need to be making every single month to survive, to live. Now one of the simplest solutions is how can you start to cut down expenses for a short period of time for six months or a year so that you can focus either on paying off debt are investing money into other things to support you in increasing your earnings, so that would be something like investing in higher education, investing in potential certifications or trainings or mentors or whatever it is, but you’re looking for ways to where you can minimize your cost of living for a short period of time so that you can work towards a long-term goal.
Now, what I would look at here is getting clear on OK. Well, if I know in my business that it takes time for me to bring clients in, it takes time for me to make sales, then I want to work that into my financial plan when it comes to growing and launching my business. If I don’t want to be spending 10 plus hours a week marketing on social media, spending two, three hours a day on Instagram, then I want to spend a lot less time on there, and then I need to be realistic with myself around. Ok, well, if I am doing that, then what does that mean in regards to the amount of sales that I would be bringing in and how that would coincide with the amount of monthly revenue that I’m generating and my ability to cover my living expenses? So, if you’re somebody who is doing something like coaching or mentoring or consulting, the highest ticket item that you likely have is going to be one-on-one consulting or coaching or mentoring or whatever it is. So my invitation is always to focus on the thing that is going to provide the highest return for the least amount of work or effort, and in this case, that would be the one-to-one coaching and how you can support clients in getting amazing results. It’s also the thing that tends to be what brings the most referrals, because the more people that you have that come, that have a really personalized experience, they can get great results. And so you figure out. Ok, what is my capacity? Do I need to have supplemental income by working with somebody or for somebody else in the interim, of getting all of my stuff off the ground and then working through whatever emotional pieces might come up in that process.
I think one of the most unrealistic expectations that we put on ourselves when it comes to the online space is this idea that you just quit your 9 to 5 and then you’re automatically a six-figure coach. And though that might be true for some, it’s not the reality for all And it’s important to work with the possibility that, though we are hoping for the best, we’re also planning for the worst. We’re also in preparation to say I want to be financially responsible And I don’t want to put myself into a place where I’m high stress And I want to be able to make sure that I’m financially stable and good so that I’m not putting myself into a risky position financially. So if you are somebody who is transitioning out of a full-time corporate job, getting your business income to a stable place before you quit, are slowly seeing if you can transition hours so that you’re not having to rely solely on the business. Now, if you’re somebody who is financially supported, whether by a spouse or partner or savings or whatever it is, then you have that ability. Then again, planning for how you’re going to be transitioning into the process of growing and scaling a company, because it does not happen overnight And I think that’s another big part that we really, really want to continue to emphasize is business growth and business success does not happen overnight.
Now the other part that I really really want to hone in on is two pieces One, knowing what the bigger picture of what you’re trying to build and getting clear about this and specific about this, because a lot of folks say they want to be financially wealthy and abundant, which is great, and what does that actually look like in the day-to-day of the business that you’re building? What’s the business model that you’re trying to create? And then, in tandem with that, what is actually going to make you comfortable so that you’re feeling good about what you have and it’s manageable for you to run. And what I mean when I say that is if I look at what my cost of living would be and what I charge for either private, individual sessions, depending on the different services that I offer, because I don’t just offer long-term coaching packages or business mentorship. I also offer ad hoc trauma resolution sessions based off of my training with somatic experiencing work, and because of that I know that I have a certain amount of hours per week that I can dedicate to that, that have a sliding scale, and so I allocate a certain amount of hours to each one of those spots. So I have a set amount of monthly income that’s coming from that. And then I have clients that are either on retainers or they have recurring appointments or they’re booking months out, so that it’s setting me up for consistent, stable income over the course of X amount of months.
Now I think this is important for us to take into consideration, because it’s something that oftentimes gets knocked. A lot in the industry is people want to skip straight to the part of having a really big group coaching program and making tons of money, but oftentimes there is a transitional phase where you’re working with folks and you’re learning and you’re developing your skills and you’re developing your strategy and you’re developing your formula and you’re figuring out what’s going to be sustainable and manageable for you as far as the clients that you work with and that you take on, so that you can then figure out how you want to build the group program, how you want to build the course, or whatever else it is. Now, i say this because, again, i’ll reference back to the experience that I’ve had. We’ve launched and had great success with plenty of group programs in the cohort model over the years, and I don’t think it’s a bad business model by any means, but it wasn’t something that was sustainable for us, especially after I had my son, and what I came to realize was OK, we need to turn this into something that’s evergreen, so that we just have a set schedule every month and we just know what we’re doing. And it’s simple and it’s easy for us. Now, the caveat to that is it’s slower, it’s a lot slower. It’s exponentially slower to scale something at that pace versus trying to go super hard, super fast.
But we’ve made and when I say we, i refer to my business partner, mel Judson we made a promise to ourselves that we were not going to approach this from the lens of urgency. We were not going to approach this from the lens of emergency. We were going to approach this solely from the perspective of trying to build something that is going to be sustained over years of time, which meant our core strategy for marketing also shifted. It went from being predominantly social media to Mel not making a social media post in over three plus years and my social media presence being incredibly unreliable in regards to not posting very much at all and creating a separate account, because we focus more so on relationship building, referrals and SEO marketing through podcasts and blogs that we’ve created over the years. So, again, we want to really look at how are we being both strategic and intentional about the way we’re building our businesses and the way we’re setting ourselves up? because, yes, the angle absolutely always is getting to a place of financial independence where we feel financially secure and we feel like we’re financially set and having a business that we truly love and enjoy. That’s making an impact.
But unless we know these things and we’re setting ourselves up for that, it can feel like an incredibly crazy roller coaster and emotional ride, and that’s not something that I think most folks want to ride on, especially for an extended period of time. So hopefully this episode has provided some insight and some support for those of you that are riding a little bit of that emotional roller coaster and this current season of your life and questioning what you should do or where you should go or how it should be, and my answer to that is, to just focus on what is actually going to feel right for you. If you’re in a place right now where finances are unpredictable and scary, having another job opportunity or a place to work to secure yourself financially is incredibly important for your mental health and for your financial health And, in that process, finding something that’s going to feel good to do while you’re in the process of slowly building up your business or your practice. So, again, it’s pacing. It’s pacing ourselves, it’s pacing the way we build, it’s pacing the way we scale so that we can sustain the business growth four years on end, which might not look as sexy as doing 100K launches and 50K months back to back or scaling to 100K in six months, but it is the thing that is going to last you years and years and years on end, and you can look at this as a long term financial investment in both yourself and your business.
So, all of that being said, if you found this episode helpful, please feel free to leave a review and share it out to anyone you feel would benefit. I would also recommend going and looking at the blog that will be attached to this episode. There’s a lot of really great information on there and other resources and tools to support you in this process. But the biggest thing that I would look at is getting clear on what your data is, getting clear on what your monthly expenses are, and then figuring out the financial plan for yourself and how much time you have to show up to market to run the business, and figuring out how you can set yourself up for financial success in the short term while you’re building for the long term sense of abundance and wealth. All right, y’all. That is it for today’s episode. I will see you on the next one.