I Bought A Business and Now I'm Living Paycheck-to-Paycheck

Brought to you by the EveryDollar app. Start budgeting for free today. I'm 28 and I have about $375,000 in debt. $375,000? Yes, ma'am. Does that include a mortgage? Yes, the mortgage is about $120,000-ish. Oh, okay. Dang. Okay, so what's the rest of the debt? The rest of the $250,000? Like $190,000-$200,000 is an SBA loan on my business, which is my full-time income. Is it profitable? That's why I'm calling you guys. Okay. Oh, that's not good. So when I purchased my... If we're your only hope to make this business profitable, oof. What's the business? I'm a small distributor for a snack company. I deliver to big box grocery stores. Okay, what was the loan for? The loan was for the acquisition of the business that I bought from the last individual. Oh, okay. Was it profitable when you bought it? Yes, sir. Okay. So what's going on now with it? So basically, how do I word this? So basically, the last owner of it, he was doing about... It's a 100% commission. He was doing about $15,000 a week in sales. So he was taking home about $2,200. And since then, all of the stores had resets done. So my product presence has kind of slowed down a lot in there. And I'm doing about $10,000 to $12,000 a week on a good week. And what are you taking home from that? It's not a lot. So I'm making about $1,500 to $1,800 a week. Okay. Where does the other $10,000 go? So some months, I'll do like $5,000 or $6,000, $7,000. And then some months, I'll do $10,000. So I pay about $3,000 a month just on the SBA loan for the business. So that's cutting into your profits? Correct. That's the bulk of it. And you're doing this full-time, 40 hours a week? Yes, sir. More than that, but yes. Okay. And you're making about $5,000 or $6,000 a month? Yes. And you've got a sizable level of debt. What's the other $60,000 in consumer debt? About $30,000 is credit cards. $20,000 of that is just regular this and that on my wife's credit card. About $2,000 is my credit card, just regular consumer. And then $8,000 of the rest of it is on a new HVAC system for our house that we got last year. Okay. Does your wife work? No. We have three and a half children. Okay. Well, congratulations. My oldest stepson is 19. He supports himself. He lives with us. That's why I say the half. Okay. Okay. So this is even riskier because you're a single income household on 100% commission. Correct. You guys have anything in savings? We have our $1,000 emergency fund. How much money do you have to make where budgeting is just optional? If you chose C, watch this. She makes about $170. I make about $115. Hold on. Did you go back after you paid off everything, borrow some more money? Oh, yeah. We like to go here and there and get this Mercedes. Oh, no. You went full South Beach. It's not just about how much you make. It's about having a plan for what you've got. So start budgeting with every dollar for free today. We have our $1,000 emergency fund and I have about $600 in my wallet of money that was given to me by various family members to keep gas in my truck so I can keep working. Wow. So is it that tight every month to where you're barely scraping by because you've got $3,000 in loan plus all the family expenses making $5,000 total. What's your rent or mortgage? About $1,250. So just between the $1,250 mortgage and the $3,000 to service the loan, you're already barely putting food on the table. Correct. Do you see an upside? Do you have a hope that this business is going to be profitable soon? Do you see an actual realistic future? So I have a couple more accounts, a couple more grocery stores that are opening up in my area. One of them is going to... I'll probably do on the low end about $2,000 a week in sales in there. So that'll be a chunk extra, I guess. When does that happen? In June is when they're opening. Okay. How old are your kids? The three? Okay, 12. He'll be 13 soon. And then my daughter just turned seven. And then my youngest son just turned three. Okay. So the three-year-old's home. I just was wondering if your wife could jump in and do something while the kids are in school at least. But the three-year-old... We've been talking and trying to figure out when my three-year-old goes to school that she could go find somewhere to go. Yeah, but that's going to be in two years, unless you guys are going to do a preschool or something. You know what I mean? I do wonder, just for a six, seven-month period, it doesn't have to be long, but for you guys, an extra $1,000 a month is life-changing. So to supplement a little bit, my dad is also in the same business just for another company. I've kind of worked my route around to where I can spend Wednesdays with him, and he's offered to pay me some extra, totaling about $1,000, $1,600 a month extra. That'll help knock out these little debts. Why would you be working with him on a Wednesday versus just in the business? Because most of my accounts are big contract accounts, and a lot of his are small cash stops. And the big contract accounts, their receivings are all closed on Wednesdays. Gotcha. Gotcha. I have a couple stores that will let me come in on Wednesdays, but I've just started doing those. Well, that's great. I mean, an extra, yeah, $1,500 doing that, that's going to be very helpful. Yeah, your best bet is just to get more of these big contracts and make this business more profitable in order to have some extra. Yeah, and you and your wife also, I mean, this $200,000 small business loan is like, but you guys need to sit down, and you both need to have a date on the calendar that we can't live like this for the rest of our lives. So what's the point? We're still here a year from now. That we eject. Yeah, at some level. What's that date? If we don't see progress by when, we need to start having some really serious conversations about what it looks like to get out of this business. Because if you can just go work full-time making 70 or 80, it's a better bet. Yeah. Even still having this business loan. Is there a way you could sell this business to someone else? I could. The problem is I'm kind of upside down. So I owe like $190,000, $200,000 on the business, and on paper, it's probably worth about $140,000, $150,000. Okay. Well, I mean, even if you came up with a difference, it still might be worth getting out of this eventually. Yeah. Or getting the business out. What I would do is get it profitable enough. If it's not going up, I mean, yeah. I mean, if you hit some big accounts, and you get it back going, and it's actually- Sustainable. A blessing in your life, yeah, long-term, then obviously that's the win. But if you're in your wheels like this, you can't be doing this for another two, three, four years, Austin, right? Yes. That is correct. Yeah. So you guys, you and your wife need to sit down and just have some level of a plan. Some timelines. Yes, timelines. What's going to happen? If this happens, here's what we'll do. If this doesn't happen, here's what we'll do. Because right now- Yeah. We need to hit this benchmark net at this point. We need to see this and this, right? Because if the June accounts don't end up happening, then you're still exactly where you are, right? So there needs to be some benchmarks that you guys need to be hitting. And if that's not the case, then yeah, we got to figure out what to do. Because like George said, even if you found something that paid 80 grand a year, you're still going to have this debt. But hopefully, even if you get it cut in half, selling it for not a lot, that's 100 grand, and people got student loans for 100 grand. You just look at it as another debt to get out. And Austin, dear Lord, please cut up the credit cards. You guys can't keep doing this. Yeah, that's- Cut them up. Tonight. The majority of- Do it now. The 20,000 was brochured. Do you have one? Yeah. Well, get it out. You guys got to figure out. Go shop at Aldi. Beans and rice. You don't get fancy food, right? You guys can't afford it. We got to cut our lifestyle down. Yes. And adding this guardrail is going to help you get out of this mess. Right. And it's going to be hard. You're going to have to get creative. But once you take debt off the table, we can finally get out. We got to plug the leak first. Absolutely. Yeah. You're not going to be able to get out of this mess as you continue to dig out the bottom. So cut them up tonight. You guys need some extreme changes. So I'd make a timeline and I'd cut up credit cards for the business. I would make a timeline for the business and cut up the credit cards tonight. 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