Dealing With Debt
Many, if not most, of the stories we’ve recounted in this series involve debts that were paid down through cutting expenses. Moving to a less expensive home, and even into a mobile home in one case. Counting every dollar. Cutting out luxuries and frills.
But it’s less painful, if perhaps more work, to instead increase household income to discharge a looming debt. Which is precisely what Jeff Neal says he did when he realized he was paying far too much in interest on an $8,000 loan, and that paying it off rapidly would be a wise financial move. In his words: “I did have a plan, and I kept the plan simple: accumulate more money.”
How he made that money was novel indeed. Having decided that an ecommerce site selling a niche product was his best side-hustle opportunity, he did some research and settled on selling—and breeding—crickets. To limit his initial investment, he found a cricket farmer who would drop-ship to him, meaning he could avoid carrying inventory.
Four months—a timeframe that was actually slower than he expected—the debt was paid off, but the business has endured, and has continued to provide a supplementary income to Neal and his family, including his three kids.
This interview has been edited for length and clarity.
What was your total debt, and how did you acquire it?
My debt was $8,000, and I used to it buy a minivan for our growing family. I took out a personal loan from SpringLeaf Financial (editor’s note: Springleaf Financial is now part of OneMain Financial).
Was the debt worth acquiring?
Yes, it was, because when I purchased the van, we only had two kids. Now we have three. So that minivan is an excellent resource at the moment.
What motivated you to pay it off?
A 27% interest rate over five years is what motivated me. Had I just made the minimum payments every month, I would have ended up paying back over $14,000. So it was urgent to get this paid off quickly. I’m decent with websites, and knew that drop-shipping niche products was a lesser known way to make money. But by no means is it a get rich quick scheme. That said, if you find a niche product that has high search volume, with little competition, you can start selling right away. But that’s also dependent on finding a supplier that will drop-ship for you. I contacted about 20 cricket farmers before I found one that was willing to drop-ship. And once I established that relationship, I was able to get a Shopify store launched. I hired someone off Fiverr to whip up a $5 logo. And after a few forum posts, I started getting some business.
What was your plan to reduce your debt?
I did have a plan, and I kept the plan simple: accumulate more money. I knew an ecommerce site with a niche product was the path of least resistance. And after some researching, it was obvious that crickets were a very niche product that I might be able to bank off of. So I put together a site with Shopify, and reached out to some cricket farmers to supply my orders. And luckily, after making some posts in forums and Facebook posts, it built enough momentum to earn some revenue pretty quickly.
How did you stay on track?
Juggling the orders was difficult. I kept forgetting who did and did not receive an order. I was trying to answer emails while at my full time job. It was very disorganized at first. And the last thing I wanted was for this little midnight side hustle to interfere with my full time job. What’s great about Shopify is that it gives you all the tools to keep track of orders and customers. So if I had communicated with a customer, Shopify would actually document that, and keep it listed with the customer’s history. That made it easy to reference previous discussions with other customers. And once I developed a simplified, but disciplined, routine, my daily cricket workload became about 1-2 hours per day.
How long did it take you to pay off the debt?
It took four months, and it was longer than I planned. I wanted to pay it off a lot faster. But I didn’t know where I was going to come up with the money to pay it off at the time. And four months is pretty good, so I’m satisfied with the time frame.
What advice would you give to others struggling with debt?
Make more money. You can budget all day, and you can pinch pennies all day, but making more money is going to get rid of debt faster than any other trick. Pick up a side hustle, walk your neighbor’s dog, look for gigs off Craigslist, whatever it takes. Just make more money.
How do you remain debt-free today?
Luckily, I’m not in a situation where I need to take out a large personal loan for large purchases. The minivan has held up well, and I avoid using credit cards at all costs. And if I got in a situation where I needed a lump sum of money for a large payment, I’ll have an easier time saving up for it due to the additional income. I haven’t stopped selling crickets, although I’ve lightened up on the blitzkrieg marketing tactics. But overall, it’s still operating more successfully than I had imagined.