How to Get Out of Spa Credit Card Debt

How to get out of spa credit card debt has been a popular subject within the spa industry for years… and, with COVID-19 piling onto many spa owners’ existing debt, I thought it would be topical to revisit one of my earlier blog topics to breathe new life into an evergreen topic!

(And, yes, you’re right to think that this is the perfect-tie in to last week’s publication, “Spa Marketing: How to Repurpose Your Content For Wider Visibility”.)

Without further ado, I wanted to take a deep-dive into actionable steps one can take to alleviate themselves of credit card debt, starting with my most-recommended method: accelerated credit card payment plans.

The Common Foundations of Spa Credit Card Debt

One of the most common beginnings of spa credit card debt stems from this fact: it is exceedingly difficult to obtain bank loans when a spa owner is preparing to open a spa biz.

Why? Well, as a whole, banks are hesitant to lend to our industry because the big-ticket items required for spa build-outs are typically plumbing, electrical, and construction. As such, the banks can’t take those if you default on your loan, leaving them with no collateral to work with. 

Because of this, the majority of spa owners I work with either turned to personal financing from family or lines of credit to pay for their business expenses (especially during the lead-up to first opening their doors!)

The frequency of situations like these have only increased during COVID-19, wherein many spa owners, both new and old alike, have had to turn to personal financing and lines of credit to keep their businesses afloat as each country, state, and province have alternated between stay-at-home orders and tentatively letting spas and salons open their doors to clients.

The Pitfalls of Credit Card Debt for Spa Owners

Do either of these scenes sound familiar?

• After months (or even years!) of preparation, you finally have your spa business open and ready for business… only to have cold, hard reality wash over you when you realize just how difficult it is to pay off those credit cards amongst the upkeep, staffing costs, and day-to-day financials that crop up. When you realize that you actually cannot pay off the cards within the first two years of operating your spa biz, you end up using an already high-credit credit card for your operating account. The result? An expensive hamster wheel with no end in sight!

• You were doing “okay” with your finances before COVID-19 hit. However, with the on-again, off-again restrictions and turbulent rent subsidies, you find yourself getting behind on your payments due to other emergency costs cropping up.

If so, you’re not alone: in fact, in my spa owners-only Facebook group, Spa Business Mastery, you’ll find other spa owners in your exact same boat. We are truly all in this together!

As such, I wanted to let you know about my favourite method of spa credit card debt repayment, accelerated credit card payment plans, and how they’re applicable to any spa owners (even with multiple card debts!) looking to start getting on top of their debt situation.

Accelerated Credit Card Payment Plans for Your Spa Business

Defined as a situation where, “accelerated payment occurs when a borrower speeds up the repayment of a loan”, accelerated payment plans come in the following forms:

• Making payments more frequently (usually weekly or bi-weekly vs. monthly)

• Making extra lump-sum payments

• Making the amortization period shorter by increasing the amount of each individual regular payment

Why opt for this vs. the slow-and-steady method? Simple: because it is your debt’s interests rates that are filling the hole back up quicker than you can dig it.

Accelerated payment plans diminish your interest costs; as long as you verify that you can toggle back to a slower repayment structure in case your cash flow slows, opting for an accelerated payment plan for your credit card debt is my #1-recommended way to put the debt behind you.

There is even a phenomenal explanation of what personal finance advisor Dave Ramsey calls “the debt snowball method”, which is what the accelerated debt plan is based on: I have personally used this method in my past and it’s how I paid off multiple credit cards when I was using them for the bulk of my living expenses! (As a bonus, Dave Ramsey even includes a debt calculator on this page to help you forecast what your accelerated payment plan could look like.)

Have Further Questions About How to Best Handle Your Spa Business Debt?

Reach out today: as a former spa business owner who was once in your shoes, I want nothing more than to see you happy and debt-free!