Tax time and I'm thinking financials

This happens to me every year about this time - I put off doing my taxes until the last minute (hey it's MARCH already, it IS the last minute!). Pretty soon I'm flustered, trying to get a grasp on my financial picture as I pull together all those W-2's, I-9's, and whatever other obscure forms I need to get things in gear. And every year I realize just how badly starting my own business impacted my credit score.

I suppose it's not unusual for people who decide to start a small business - a few small credit card advances turned into a larger debt consolidation. Then a couple large clients defaulted on their account and suddenly I can't pay my bills - hmm, guess I'll try to get some sort of loan. Before I really knew it my credit score was in the gutter. And I'll probably be digging out for quite a while!

The most important thing is to be armed with as much knowledge as you can get BEFORE you try to start a business. Think before you open yet another credit line. Remember that payments aren't the ONLY thing which affects your score - even a simple inquiry by a bank can ding your score a few more points, even if you don't apply for the loan! And don't fill your credit card - make sure to keep it below 50% of the approved balance if you can. The irony is that my parents, who have quite a bit more money than I do, probably don't have any better a credit score. Why? Because they don't need credit cards! They pay everything in cash, and have even paid off their house and cars. Hopefully things will begin to get better soon, but until then I'm just going to file those taxes and keep a close eye on my credit score :)

Debt consolidation and you (or me)

If there's one thing I know about, this is it! Being a small business owner, I've run myself into the ground not once, but twice in trying to self-finance a startup company. Starting your own business isn't fun, and it isn't easy (and I hate it when my friends make offhand comments like, "Well you're a business owner, you have PLENTY of free time. Oh and why don't you pick up the check for lunch?" GRR! But I digress.) However what saved my bacon was using Debt Consolidation Services. Now before you roll your eyes on this, I am serious!

There are a number of not-for-profit agencies out there who will work with you to help get things straightened out. What's great is that they can get the interest on your credit cards reduced or even eliminated AND they talk with your creditors so the phone calls stop. I think that was the biggest thing for me - I grew to dread the phone ringing because I KNEW it was a creditor, not a friend or family member. When my kid brother got into trouble, I advised him to go this route and it has really worked for him also. The key is not to spend money to save money - a good not-for-profit debt consolidation company should not have service charges, although they may ask for a donation to finance their efforts (I added $10 a month as a donation to my payments because I was so grateful for what they did for me!) and I'd NEVER advise taking out a debt consolidation LOAN in these situations - why would you risk your home or car for your credit card bills?

I don't think a lot of people realize just how much financial trouble my generation has gotten itself into. Working two jobs, poor health care coverage and job instability has led to an entire generation that uses credit cards for daily expenses - and savings are almost an impossible dream. One reason I tried to start my own business was simply that I didn't want to continue running on that never-ending debt race - and debt consolidation services plus credit counseling helped me get there. Fortunately I'm finally beginning to get ahead :)