Ask James – Going Into Debt to Kickstart Business

Hey James!

I’m trying to get my photography business up and running, still in college, not sure where to start. I want to shoot weddings, portraits, whatever will get me paid but I don’t feel like I have the adequate gear yet. I watched a DVD from a Newport Beach based wedding photographer who charges upwards of 20k-40k for weddings and he said that the way he became successful was by charging everything to credit cards (I think he said at one point he had around 100k on his credit cards), getting in over his head and swimming to the top. He then showed the students in the room his Nikkor 300mm prime lens and asked one of the students how much more confident he would be if shooting with that lens, and that it was worth every penny just because of that. I dunno, something just didn’t set well with me watching that video course and I wanted to run it by you to get your thoughts, because I know you’re a bit outspoken against debt and credit cards.

Michelle M

Funny thing is, I know exactly who you’re talking about and watched that same video back when I shot weddings. Obviously, I think he’s being incredibly irresponsible by telling all of his students to go max out their credit cards in an effort to “kickstart” their business, but I don’t think he knows it.

Here’s the danger when someone mega successful tells other people how to be mega successful: He rolled the dice and won, and the odds were stacked against him, and now he’s telling everyone else to go roll the dice as well. Why are casinos so outrageously profitable? Because in the end, the house always wins. Why are credit card companies so outrageously profitable? Well, I’ll let you fill in the blanks.

This Newport Beach wedding photographer operates his business in one of the most affluent area codes in the entire country, where a bride will pay 50k for her wedding photographer because her friend spend 40k. If you live in Milwaukee (nothing against Milwaukee) and try to implement that same business model, I’m certain the results won’t be the same.

I went into debt one time as a photographer, to buy a Canon 1Ds Mark III. I think this was around a year after leaving the bank to start my career as a photographer. I got a decent deal on the thing, picking it up used at a local camera shop for $3,000. But by the time I got a couple extra batteries and a charger, I was $4,000 in the hole. I knew it was a mistake when I bought it, but I convinced myself it was just a business startup expense and that it would convince me to work harder to get it paid off. Within six months of owning the camera, Canon released the 1D Mark IV and 5D Mark III. Seemingly overnight, my massive “investment” was outdated and obsolete. It took me two freaking years to pay off that stupid camera and by the time I sold it, I hated the thing. Since that dumb move, I’ve built and operated my business 100% debt free. I’ve built a six figure business now with zero debt and I actually get to sleep at night instead of worrying about debt, late fees, upcoming payments and all the dross that comes with playing the credit card game.

Credit card companies exist for one reason; to make money. And in order to make money, you have to fail at their game. So it’s not far fetched to say that they exist to make you fail. Go watch the documentary “Maxed Out” and see the damage credit cards can do. When that documentary was released, Elizabeth Warren was still a professor at Harvard and her interview in that documentary has always stuck with me. She said that when interviewing the CEO of Mastercard, she was told that one of their new targets was consumers who had previously filed bankruptcy. When she asked why, he told her “Because they can’t file bankruptcy again, and if we can get them back in debt, we’ll have them for life.” This is the type of people running the credit card companies. Sure, a small percentage of people can play their game and win, but most won’t. You think the credit card companies hate all these blogs about credit card travel hacking? No, they love it. They want everyone to read those blogs and try it for themselves, because they know the statistics. They know that the majority will fail, carry a balance, get late fees and pay interest for years and years and years. The sad part is that this entire concept of only a small percentage winning at the credit card game plays right into one of the downfalls of our society; pride and ego. We tell ourselves, “I can do this. I can beat them at their own game and win and I’ll prove it.”

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