Dave Ramsey: Prime the pump once with company earnings, but avoid credit cards | New

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Dear Dave: I’m on Baby Step 2 and started a YouTube channel earlier this year which led to a new opportunity to earn some extra income.

I try on and review clothes, and I get paid $30 for each clip that is 30 seconds to two minutes long. Right now I have about 1,000 viewers. This forces me to buy items from multiple brands. I usually return the items when I’m done shooting, but I’m currently funding this with a credit card that I only use for this project. I only pay the minimum each month until I get the refund, so at any given time there may be up to $4,000 on the spinning card. I make around $86,000 in my regular job, so is this a good way to fund my project and list it as a business expense?

– Amber Dear Amber: You are taking a risk here, from a trading perspective, by playing with $4,000 in debt to win $30 each. It’s excessive. And you shouldn’t be paying for the clothes in the first place. These brands should give you clothes to review – which you keep – for marketing exposure, but I’m not sure you have enough eyes on you yet to justify them giving you the clothes for free.

Basically, it sounds like you’re trying to position yourself to be an influencer. And the way influencers get paid is to monetize eyeballs. Obviously YouTube and other platforms will pay you if you can get the eyeballs. But 1,000 viewers is really not a lot these days. You’re getting there, though, and I’m glad you’re working on it and trying to make things happen.

You make a lot of money, Amber. I want you to set aside $2,000 or $3,000 for this business, maybe from business income, and prime the pump once. By this, I mean opening a separate checking account that is solely for your clothing exchange process. Here’s the thing, let’s say you bought $1,000 worth of stuff from one of these companies, and they suddenly decide not to take it back. You just ate that $1,000. And guess what else? Now you really have credit card debt.

There are three things you can always be sure of in business. First, it’s going to cost twice as much as you think. Second, it will take twice as long as you think. And three, you are not the exception to these things. While we’re at it, add this to the list of things you can always be sure of – you’ll never find me advising or approving credit card debt!

— Dave

Dave Ramsey is a financial consultant, author and radio host.

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