Monday, May 18, 2015

So you want to be an artist…

When we moved from Massachusetts to Kentucky a year ago the plan was for S to stay home with our sons and rebuild his pottery business. In the past year we’ve both learned a ton about the difficulties stay at home parents face, especially those that are also trying to build a business. To say we were na├»ve when we went into this would be an understatement. Incredibly, S has been able to rebuild his studio, launch his website, and begin producing work for sale… all while providing wonderful care for our sons and without the benefit of significant start-up capital.

Building up to and shortly after his launch at the end of last year, we were feeling really optimistic. He literally sold out of his inventory during the holidays and quickly put that income back into supplies to continue building the business. Then the long, colder than normal winter set in and we were quickly confronted by the fact that our rental property and it’s uninsulated garage where he set up his studio, wouldn’t allow him to make work not to mention the fact that it doesn’t have the electrical service required to run his electric kilns he usually uses for the first firing of his work. He struggled all winter to try and insulate and build a wood burning heater and set up a small studio inside the house but progress really stalled out for a few months.

Once the weather started turning, he started producing work again and was finally able to do gas kiln firings. Upon opening the gas kiln he discovered that the firing had not gone well and most of the work was unsellable. He did some repair work on the kiln, tweaked his glaze recipes, produced more work and did another gas kiln firing. Again, almost a total loss. Yesterday, he was trying to figure out what the problem could be and began to disassemble his kiln to do a complete examination and assessment. I was watching from the kitchen. When he pulled the last ring of the modular kiln up, the entire floor of the kiln gave away. The whole bottom of the kiln had degraded to the point of crumbling away and now sits as a pile of rubble in his kiln shed. So now we have two electric kilns that are unusable at our rental and a completely dead gas kiln.

We spent most of yesterday morning feeling pretty awful about the situation. All of the hard work he has done over the last year to overcome all the ridiculous obstacles trying to build a business with no capital and two toddlers on hand has come to a screeching halt. At this point we have to make a decision about proceeding, options range from scrapping the whole business idea to using the emergency savings to build a cheap make-do new kiln or, on the really big financial impact side, taking out a business loan to get him the equipment and studio space that would really support art as a business.

How do we proceed? At this point we have very little (financially speaking) invested, do we put the idea on the shelf for a few years so S can seek other income opportunities while we continue to focus on debt? Do we dip into emergency savings and continue to trickle money into the business as a bare minimum approach? Do we go “all-in” and move to another location that would better support a pottery studio, or rent studio space, or buy a place and build a permanent kiln and studio? It’s so hard to decide what to do, we want desperately to be out of debt but we also want to raise our sons at home and both have careers doing what we love to do. 

Friday, May 15, 2015

Doing the shuffle

Over the course of our debt pay-off journey we've shuffled debt around numerous times to take advantage of lower interest rates, to lower our monthly payments, and to consolidate debts. The last shuffle we did consolidated a high interest credit card with a defaulted loan at an 8.39% interest rate through Lending Club. Before that, we had done a balance transfer on another credit card debt to secure a 0% interest rate until June 2015. Now, with the promotional 0% rate coming to an end it’s time to come up with a plan to pay off the remaining $4,200.

Our options include:
1.   Doing another balance transfer on the credit card (we have two that we have just transferred debt back and forth between) which would secure a 0% rate for another year but cost us a transfer fee and potentially set us up for another transfer in the future if we can’t get it paid off in a year.
2.   Leaving it where it is and continuing to pay it off as quickly as possible. The interest rate would be high somewhere between 8.99% and 15.99%.
3.   Taking out another Lending Club loan. We could probably get a lower interest rate around 6% for a three year loan which would make payments affordable and easy enough. This would also cost us a fee.
4.   Consolidating it with the larger Lending Club loan for a lower rate for a three year loan. This would be a more aggressive pay-off for all consumer debt and would also cost us a fee.

My next step is to explore cost and feasibility of each option this weekend.