338. How One Founder Stopped Letting Debt Steal Her Profit

Let’s talk about debt.

Before we get started, let me just put a little disclaimer that I am not a financial professional and this is not financial advice. I’m just sharing what I’ve learned, experienced and seen. You should always talk to your accountant or financial advisor. 

I know, not the sexiest topic — but it might be one of the most important conversations we can have as business owners. Because the truth is, debt can be both a tool and a trap. And if you’ve ever found yourself stuck in the cycle of high-interest credit cards or floating cash flow with short-term loans, you know exactly what I mean.

Today we’re diving into the real cost of carrying debt in your business, how to get out of it without losing your mind, and how to use it strategically when it actually makes sense. No shame, no fluff, just honest talk about money and smart decision-making.

Let’s do this.

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Getting Out of Debt

With that in mind, I want to start with debt. Now, debt is not always a bad thing. Lots of people and businesses leverage debt to grow or buy things. But high-interest debt, like credit card debt is often a never-ending cycle that will sabotage your business growth. 

If you’re in debt, no shame. In my early 20s my personal debt was so bad they actually froze my bank account and I couldn’t even access my paycheck because it was direct deposit. I’ve had my car towed for unpaid parking tickets. I had to go on high-risk car insurance that was 2x the regular rate because I couldn’t pay on time. Being poor is expensive. I have been in debt and I get it. 

I will say, since I had that experience of having my bank account frozen… I’ve never not paid my credit card in full again. And I’m embarrassed at how much interest I likely paid on a taco bell meal. 

Being in debt doesn’t make you a bad business owner. But if you don’t make that debt a priority, and you continue to kick that can down the road, you’re only gonna create more problems in the future. 

And having debt cripples your ability to create and grow the business you want. It eats into your profit month after month, it adds stress to your decision making and it limits your ability to invest in growth opportunities. So if you’ve been putting off that debt let this be your sign that you can’t do that anymore. 

And know that you are not alone. 

I recently caught up with a Lounge member who is finally in the process of paying down her debt. I first talked with her, I think it was the end of 2024. She had booked a velvet rope call to strategize the year ahead. One of the things we talked about was her debt. 

She’d been carrying credit card debt for a long time, had taken on Shopify loans too, all to keep her business afloat and keep growing. It has been weighing on her, but it became this background noise she kept ignoring. Yea, she was paying it but it has sort of  become this normal thing in her business. 

I told her that day, it has to be the number one thing she focuses on in 2026 because she is wasting so much money on that high interest rate. 

Fast forward to now – she’s paid off her Shopify loans and consolidated her debt so that every dollar she puts toward it is going to the principal instead of making the credit card company richer. She still has a way to go, but she’s got a plan and is making real progress on paying down her balance because she’s doing it mostly interest free. 

And that’s what I want for you too. So, what can you do?

How exactly you handle the debt will depend a bit on your situation, but let’s talk through a few different options. 

If you’re just talking general debt like loans and you have multiple of them, there are two ways you can tackle this. The avalanche method, where you pay the highest interest debt first or the snowball method, where you pay off the smallest debt first to create momentum. 

Honestly, one is not necessarily better than the other, it just depends on what works best for you. While the theory of paying the highest interest rate sounds better because it will typically save you money over the long-term, if it’s demoralizing to try and get aggressive paying it off but it’s so big you don’t feel like you’re making a dent and it makes you want to quit, then the snowball method is the better option even if it costs you a bit more in the long run. 

If you have credit card debt, that’s where you need to figure out how to consolidate that so you can get a lower interest rate. Credit card interest rates are ridiculous. Honestly, even 1 or 2 points on loan debt can be the difference of affording or not affording something. Mike and I bought our home right before interest rates spiked. If we were trying to buy our home today. Just a 3% increase in our interest rate would be almost $1k more a month. Every percentage point matters. 

Anyway, if you have credit card debt the first thing you’ll want to look into is getting another credit card. I know, sounds counterintuitive, but many banks will offer balance transfers with 0% interest for a set period of time, say a year, sometimes for free with a small one-time charge. I promise, this one-time charge will still save you TONS in interest. 

Even if you can’t transfer the entire thing right away, every little bit helps. Once you pay that down a bit, now your utilization goes down, raising your credit score, and if you need to, you can either get a balance increase on your existing card and transfer more or yep, you guessed it get another card that has a zero interest balance transfer option. 

You’ll also want to be smart about the cards you do have and how you’re utilizing them. For example, that Lounge student I mentioned. She had the Chase Ink business credit card. Now, depending on which version you have one of them gives double points on Shipping and paid social ads. That was maxed out in her case, so she couldn’t earn double points for these things she was already spending money on – she was just paying out of her business checking account with cash. In that case, I recommended she pay down that card first so she could earn double points on those business expenses and earn some free money. 

Once you’ve got the interest thing handled the best you can, then it’s time to find more money to put toward that debt. It might look like taking less money out of the business if you can, treating any marketplaces as bonus money and using that to pay more toward your debt, it could like optimizing your business to increase your revenue so you have more money to pay the debt, or all of the above. 

For example, the Lounge member had put her best sellers on Etsy. She wasn’t doing much with it, but it was generating a few sales her and there organically without much effort. In that case, I told her if she could to take ALL the money that was earned through Etsy and put it toward the debt. For you, that might look like your Amazon, or if you’re primarily a  marketplace or in-person it might be your website.

If you can manage to not take any more money than you truly need to live on for a little while and just focus on paying down the debt, it will make a huge difference in your profitability moving forward. 

When I first went full-time in eCommerce Badassery, I didn’t take money out of the business right away. My goal was to invest back into the business as much as possible. I had built up a cushion in the business and our personal finances. And we were able to essentially just live off of his income during those first few months. 

Not All Debt is Bad

As I mentioned earlier, not all debt is bad. But you need to be really intentional with that debt. Is that debt going toward something that will directly increase your capacity to make money, for example purchasing equipment, or buying more inventory for a proven seller. 

I think it was Vanessa of Taylor Made who mentioned on the podcast way back that she invested in a specialized printer to create her labels in house instead of buying them from a supplier. She originally hesitated because she wasn’t sure they’d be able to do it, using the software, etc. but in the end it added a lot of flexibility to their business and saved them money in the long run. 

What you don’t want to do is use debt to patch cash flow gaps over and over without fixing the underlying issue. LIke I did for my taco bell tacos. 

Know Your Numbers

Before you take on any kind of debt in your business — whether it’s a credit card, a loan, or a buy now, pay later option — you’ve got to understand exactly what you’re signing up for.

How much is it really going to cost you?

Can you afford the repayments based on your current cash flow?

What’s your average order value, profit margin, and customer acquisition cost? Because if you’re borrowing money to fuel growth, you want to be damn sure that growth will actually pay off.

And look, I know math isn’t everyone’s favorite part of business — but this is the stuff that can make or break your profitability. A loan that seems manageable on paper can actually eat up your cash if you’re not careful. So before you say yes to anything, run the numbers, map out the repayment, and be honest with yourself about whether the ROI is really worth it.

Should You Use Shopify Capital Loans

And those Shopify Capital loans? They’re kinda tricky.

Yes, they come with a fixed fee, and there’s something really comforting about knowing exactly what that loan is going to cost you upfront. Honestly, I get that. My husband and I pay a higher premium on our insurance just so we can have no deductible — because we hate financial surprises.

But here’s the catch: you have no way to reduce that cost by paying the loan off early. And depending on how quickly you repay it — which happens automatically, by the way, through daily withdrawals — your APR could end up being just as high as a credit card.

So when does it make sense?

If you’re investing in something long-term — like developing a new product line or buying equipment that’s going to take the full loan term to pay off — maybe it’s worth it.

But if you’re just trying to float some cash flow or cover short-term expenses? You might be better off looking at other options first.

Like a credit card with a 0% introductory APR, or checking if your existing cards offer split pay or fixed payment plans for large purchases. I actually do this a lot — like when my cat needed $5,000 emergency surgery, or when we bought an outdoor dining table. In both cases, I was able to break the payments up over a few months — sometimes with no extra cost at all.

Even in my business, I do this. For example, I pay Circle (my course and membership platform) annually to get the discount, but then I split the charge on my credit card over 12 months for zero interest. So I get the best of both worlds: the upfront savings and a manageable monthly payment.

Have a Plan Before You Swipe

Just because debt can help your business grow doesn’t mean it always will. Before you take on any kind of debt — especially the kind that costs you interest or chips away at your cash flow — you need to have a clear plan for:

• What the money is being used for
  
• How it will help you increase revenue or reduce expenses
  
• When and how you’ll pay it back
  

Debt without a plan is just a very expensive bandaid.

So if you’re thinking about putting something on a credit card or taking out a loan, the key question is: Does this move bring in more money than it costs? And how soon?

If you’re vague about how it pays off, you’re better off waiting. But if you have a solid plan — or better yet, a repeatable sales channel behind it — then it can be a smart move. Just don’t use debt to fix problems you haven’t actually diagnosed yet.

Debt for Inventory: When It Makes Sense

One of the most common — and often justifiable — reasons to use debt in eCommerce is for inventory.

If you’re stocking up on best sellers you know are going to move, and you’ve got the data to back that up? Then leveraging a 0% credit card, short-term loan, or even a Shopify Capital offer might make sense. Especially if not having the inventory means you’re missing out on revenue.

Here’s where it gets tricky: you’ve got to be honest about how fast it’s going to sell, what your margin is, and how long it will take to make that money back.

If it’s going to sit on your shelf for six months, and you’re making 50% margin, that money might be better spent elsewhere. But if it’s something you move like clockwork — and you can pay off the loan before interest kicks in or before the repayment terms start affecting your cash flow — then go for it.

It’s not about never using debt — it’s about using it like a tool, not a crutch.

Here’s the deal. Runnning a business is hard. Doing it under the weight of debt, unpredictable revenue, and financial stress make it even harder. You might not always get it right and that’s okay. But I do want you to know that it’s possible to fix things when you get a little off track and if I can help prevent those mistakes in the first place, well I want to help you with that too. 

If you are in debt in your business right now just know that you’re not alone, you’re not a failure, and you can absolutely turn this around. 

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