How I helped an owner-operated ad agency pay off $20k in credit card debt in just four months using our spending guide

Case Study: An owner-operated ad agency paid off $20K in credit cards in four months with a proper spending guide and clear business goals.

The Problem | The client had accumulated $20K in credit card debt

Three years ago, a client came to Recorded Bookkeeping for help paying off their $20k in credit card debt and no budget in place.

They were making money but had no idea how they’d not been able to pay off their credit card each month. They needed help getting their finances in order and getting rid of the debt was a top priority for them.

The Solution | Creating a spending guide that put their goals first

What we did to get $20K credit card debt paid off in just four months with a budget

1. We combed through all the money leaving the account. Every single thing. There were a lot of client meetings over dinners that we eliminated, software that wasn’t being used and owner’s draws that were no longer needed.
2. Then we made a cash flow list. After we knew what would be coming out of the account each month, it was time to figure out when it would be coming out and what money would be coming in. Because they were an owner-operated advertising agency, they had some retainer clients, but also some project clients as well. Luckily, during this time, they had a large project come through and we were able to use part of those funds for a credit card payment.
3. They followed the plan. It’s one thing to have a plan and it’s another to follow it. The clients were committed to this and took the plan to heart, following every suggestion. They told us that every time they were spending money, they were checking in with themselves on whether the purchased was aligned with their business (did they need it to do their job) and goals (would this get in the way of paying off the card?).
4. Monthly check-ins. We got on a call each month to go over the previous month’s financials, what was going on behind the scenes, how they were feeling, any new projects or clients on the horizon and how much we’d be allocating to pay down the credit card in the next few weeks This kept them accountable and in the loop.

The Takeaway

Spending money in your business isn’t always intuitive and you can get yourself in a pickle if you don’t know what your goals are. Your spending should be tied to your business goals – whether that’s increasing owner’s pay, paying off debt, hiring employees, renting a nicer studio, etc. The money means nothing if it’s being spent on meaningless meals out and new gadgets and software that don’t bring in new clients.

Having a budget (spending guide) isn’t about not spending money, it’s about spending it strategically.

If you’re struggling to set goals and use your business money, grab your own spending guide here for free. Or if you’re not the DIY type, we can do it for you. Find more information about a VIP week here.