Cash Budget Challenge Check-In: Overcoming a $1,645 Financial Emergency

After having spent over a year climbing out from under consumer credit card debt, at the beginning of this month I found myself once again in that same position.

And let me tell you, I was NOT happy! It’s been a rough first year as a full-time entrepreneur and I won’t pretend I did everything perfectly. I took on a lot of projects and clients that were not right for me. I also spent a lot of time fighting my own voice because “of what the industry will think” and other types of peer pressure.

After accumulating over $3,000 in credit card debt on my business credit card card, I knew it was time to re-evaluate everything. The trajectory of my business wasn’t going in the direction of success.

If you spend more than you make, you’re on the fast track towards failure — especially as a business!

In order to dig myself out of this financial and creative rut, I enacted the 60-Day Cash Budget Challenge, where I vowed to only use cash, or instant transfers from my business checking account, to pay for business expenses.

It’s been 30 days, so it’s time to evaluate my progress at the halfway point.

Dealing With Budget Setbacks

Once you decide to tackle an audacious goal, the Universe will, without fail, mess with your motivation and try to knock you down. On July 1st I started the Cash Budget Challenge and wouldn’t you know it, within seven days I found out I needed emergency minor surgery to remove all four of my wisdom teeth.

My insurance only covered a small portion, so I was stuck with a $1,645 dental bill, including medication, that I couldn’t afford.

How was I going to pay for this?! I used almost all of my savings over the past year to keep my business afloat, and of course using a credit card was out of the question.

After getting completely stressed out and angry, my husband was able to calm me down. These things happen and taking care of my health is a number one priority.

So we looked at all our accounts, the income from all my projects/clients, and credit cards. In the end, we paid for about half of the bill from this month’s cashflow (thanks to some extra work I landed ahead of time), and the rest we put on a personal credit card.

It was a gut-wrenching decision and I HATED having to use another card so soon after I vowed to go on a cash-only spending challenge.

Thanks Universe! Thanks a lot…

dealing with a business budget setback

Bouncing Back from Disaster

When life doesn’t turn out the way you hoped, planned or intended, you have to deal with it — and fast. That’s what being an entrepreneur is all about. You are your business, and you have to learn to go with the flow.

It took about 10 days to fully recover from the surgery, and my bottom lip is still a bit numb. During this time I barely did any work at all, and in fact I only clocked about 3-4 hours within the first week.

Having to fork over extra money, and charge some to a credit card, was bad enough but now I couldn’t even do any extra work to make up for it. Ugh…About halfway through July I was completely devastated at my progress (or rather lack thereof). I felt like a complete failure and a fraud.

How could I succeed with my business if I can’t even stick to a simple Cash Budget Challenge?

I quickly turned to the other members who joined in the challenge to find some support and guidance. I received some very encouraging advice, messages and emails — which meant the world to me.

Without the support of that community, I wouldn’t have been able to get myself back on track again.

Focusing on the Positives

Now that I shared all the bad stuff, there has also been a lot of good things that transpired during this time.

Now that I’m almost completely healed, I’ve been pushing the productivity into overdrive. I even landed a new client who paid 100% of the invoice up-front, which was for the full amount I quoted.

Thanks to various projects, I brought in an extra $554 in revenue. Which has of course, gone straight to the credit card I used to pay for the rest of the surgery. SO not all is lost and I won’t have to pay any high interest charges.

Here’s a snapshot of my business income and expenses for July 2014 (this includes income I received and deposited during the month, not the projects that were billed out):

biz income-graph july 2014

Click the link to get access to the free Business Budget Template I created.

biz expenses-july 2014

Business expenses for July 2014. This only includes business transactions, not personal ones.

This month was definitely all over the place, and included some extra expenses that don’t consistently pop up on a monthly basis. For instance, I had to pay the remaining balance on what I owed my web designer for the site’s new look. I also had to figure out how to pay for the above mentioned emergency surgery (not shown).

At the end of it all though, I was still able to cashflow the majority of the expenses and even had a small profit at the end of the month. My personal expenses don’t look that bad either, but I’ve set aside every extra penny I have to put towards my credit card debt.

How to Deal with a Business Budget Emergency

I said all this so I could explain how a real life budget situation works, and that you can’t plan for everything. There will be times that your budget works nearly perfect, but those months are few and far between.

If you run your own business you know that feast and famine type of lifestyle, and you have to learn to adapt. I may not have made the right financial choices this past year for my business, but the point is that I’ve stopped the cash hemorrhaging and I’m working to change those habits now.

Handling a financial emergency is all about patience and adapting.

How did you fair after your first month? Did you have budget issues like I did, or was your July more productive? Head over to the group and share your progress.

Join the Challenge

Or if you haven’t joined yet and would like to, click the button or read more about here. Hopefully August will be a more promising month for Careful Cents.

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