Paid Off a Business Credit Card
Well, I am very excited as I bet you can guess from the title because I managed to send in the last payment on my Capital One Business Credit Card this past weekend. I may have a few dollars left on the next bill from a little bit of residual interest, but I am pleased to say that I was able to knock one out. You may recall that I run my business activities through a limited liability corporation. This LLC handles all of my real estate transactions as well as the income that I get from blogging.
In a previous post, I mentioned that I was sending in an extra payment as a result of a check that I received as part of the Google AdSense program. This check coupled with a little bit of other blogging income and some over payments that I sent on my own have combined to pay off the card on which I had carried a $3000 balance since spring when I used it to replace the flooring in one of my rental properties.
I am really pleased that it is paid off now since the interest rate was not exactly the best. I paid $430 in interest charges last year and only a little bit less this year. So I will be enhancing my monthly cash flow by the $75 minimum monthly payment (although I was paying much more) and the $35 in monthly interest charges. That is an extra $110 per month which represents about half of the profit that can be gained by owning one of my rental properties. It would take over $25,000 in capital earning 5% interest after taxes to generate that type of passive income. And yet, I was able to do it simply by paying off that credit card, and I can now focus on the best business bank accounts rather than accruing more debt on cards.
Business Credit Line is Next Target!
My next target is a business credit line which I have also used for repairs in the past and to smooth out cash flow issues with the real estate. Obviously, that hasn’t been the best idea, but the past is over. I can only look to the future and make it better, learning from my mistakes and not repeating them.
With that in mind, I will be paying off this credit line. The total credit line is $2500 but I have not been adding to it. In fact, I was able to take what I would have paid toward the credit card and apply it to the credit line. The current balance is right at $1000 although it was higher at the beginning of 2011.
For 2010, I ended up paying $360 in interest charges which equals $30 per month. Add that to the approximately $100 monthly minimum payment and my cash flow will improve by another $130 per month within short order.
Then, I will plan on setting aside some funds for future repairs. This will be my business emergency fund. It will be a good feeling to have that money available so I don’t have to rely on credit for emergency purposes. Again, I plan on rectifying past mistakes and making improvement in my overall financial situation.
In the near future, I will be considering my overall goals for 2012 some of which will include financial goals for my LLC. As I sit down and reflect on this past year, I am encouraged by the progress I have made and will be looking forward to even more in the year ahead. Having a sense of what is possible will make it easier to sit down and work out those goals.
I am so pleased and can’t stop smiling today!