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In 2008 I was $99,876 in Debt

My first business in college was selling old edition textbooks online. It was great, I made a lot of money because I was one of the first people selling textbooks online. Then my contracted bookstores all realized they could sell the books themselves and effectively discontinued my relationships with them.

In an attempt to diversify online, I expanded into drop-shipping electronic items from Sharper Image, Wal-Mart, Target, Amazon, and Overstock. I was foolish enough to try and do it all myself, so I worked my a*s off. I didn’t sleep. I disappeared from Thanksgiving until New Years because the number of orders coming in was insane.

The revenue was great, but that didn’t mean great profits because the profit margin per order was razor thin. It’s a unmerciful business model. Also, part of the drop-shipping game is that commission checks on sales don’t get released until 90 days after an item is bought and sold. For me, it was a brutal game of shifting money around fast enough to make sure everything was paid on time. I had to max out credit cards to keep the ball rolling. My financial situation would swing drastically up and down as I waited up to 90 days for $40,000 commission checks from the big retailers.

On top of my cash flow buffering, the whole business was sketchy because it was based on a loophole where I’d get an amazing deal on the product by stacking a click-through discount, with a coupon, with a sale pricing, with a credit card cash-back, and with a discounted gift card. The retailers picked up on my loop-hole and re-adjusted their terms of service to make it illegal for anyone to stack discounts with a click-through account. I didn’t pay attention to the change and kept on going. 90 days later, none of my revenue checks came in. The client customer service people happily referred me to their terms of service that stated, in bold, that I was acting illegally and that they had the right to withhold my payout. I contacted a lawyer and tried to fight, but I got nowhere. There was nothing I could do to get my commission checks without hiring a lawyer full time and spending even more on legal fees. Amazon owed me $35,000, Sharper Image owed me $8,000, and Wal-Mart owed me $5,000. I didn’t see any of it. I officially closed down the business in 2008 and walked away $99,876 in debt.

If you are in a similar situation of overbearing debt, here are some key ideas that helped me dig out of the hole and back on my feet.

  1. Staying calm – It would’ve been so easy to freak out emotionally during this time, but I kept calm. If things got to be too much, I found healthy ways, like talking a walk, to release my anxiety.
  2. Keeping focused – I knew I was going to pay off my debt, it was just going to take time. So every day I kept working to generate revenue to pay down my debt. I played the long game.
  3. Negotiating rates – I called each credit card and explained my situation and said I want to pay off my debt, it’ll just take time. Then I asked them if they could lower my interest rate, more often than not, they did.
  4. Finding quick wins – To build momentum, I didn’t always focus on paying off the highest interest rate cards first, but rather, I’d try to find quick wins by paying off the card with the least on it. By doing so, I was building up a sense of victory to keep myself going when everything seemed so bleak.
  5. Tracking meticulously – I kept a constant eye on my spending and my finances to know where every dollar was going and how much was left on each credit card.
  6. Enjoying life – It would’ve been easy to become a hermit crab during this period of my life, but I knew that by doing so, my mental and physical health would’ve deteriorated. So I made it a point to still go out, hang out with friends, and enjoy life…just on a tighter budget.

I still review my personal finances every month and it’s amazing to look at the chart above from 2008 verses this chart from last month and see how far I’ve come.

Tom Krieglstein
Tom Krieglstein
Tom started his first business, an online retail store, as a junior in college which he grew to $1.5 million dollars in annual sales. Through his second company, Swift Kick, Tom has spoken to over half a million leaders around the US and the world including South Korea, Indonesia, and Bermuda. Tom was named the #1 leadership speaker an unprecedented 5 years. He’s a TEDx speaker, Guinness World Record holder, and has co-authored the award winning book “First Year Student to First Year Success.”And on a personal note, Tom lives in New York City, was named after a cat, and loves peanut butter.