How to organize your finances to get out of the red in 6 steps?

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We know many entrepreneurs who open businesses #nastoramode, that is, who dive headfirst into entrepreneurship without planning, structure and, often, knowledge.

This type of entrepreneur often gets into debt and goes into the red before they can even launch their business. Organizing your finances, understanding the real costs of getting your project off the ground, and the best ways to raise this money are essential for sustainable entrepreneurship.

If you've already started getting into trouble and putting your foot in it, we've put together 6 steps to help you organize your finances, get out of the red and avoid going back into debt. Check it out!

6 steps to organize your finances to get out of the red
Find out the size of the problem
The first step to getting your finances in order and getting out of the red is to face your debts head on and write everything down. Call your creditor companies to find out the current value of your debt, which may have increased due to interest.

Write down the amount of the installments, the interest russia phone number lead rates charged, the remaining number of installments and the total amount of the expense. This is the only way to understand how much of the budget is committed to debts and whether it is possible to pay this amount by the end of the installment plan in a sustainable way.

Control your expenses
This is the most obvious and most talked about step for those who want to organize their finances. After diagnosing your finances, it’s time to control your expenses and cut back. We know this is the hardest part, so let’s introduce the ABCD method:

A – Food: everything you spend on food, such as groceries and bakeries (here, that Ifood, dinner at a restaurant and the wine at the weekend are out of the question, ok?);
B – Basic: the rest of the bills that are necessary for your survival, such as water, electricity, rent and fees;
C – Comfort: everything that can be cut or replaced in emergencies, such as Ifood, dining out and streaming services;
D – Unnecessary: ​​items and habits that can – and should – be cut immediately. This includes bank fees, installment purchases and drinking soda every day.
Once you’ve mapped out these expenses, you can immediately cut the ones in category D, since these are the items that are causing you to waste money. If necessary, cut back on category C expenses until you can save up enough money to pay off your debts, and then come back to them when your budget is less tight.

Calculate how much you can afford to pay for your debts
Once you have organized your finances, know your debts and find out how much you can save by removing some expenses from your budget, it's time to compare how much you earn with the total amount of debt.

Experts say that it is best to never spend more than 30% of your salary on paying off debts. This is because unforeseen events can occur along the way and, with a tight budget, you may end up back in debt.

So, if you have a monthly income of R$3,000, for example, you should commit a maximum of R$900 per month to paying off your debts. If you've done the math and your debt percentage is well above 30%, hurry up and move on to the next step.

Negotiate
Debts with the highest interest rates are the most dangerous and should be a priority when negotiating, as they grow faster. Contact these companies to negotiate interest rates, pay off debts and, if necessary, clear your name.

If, even after controlling your spending, you still don't have enough money to pay off what you owe, consider swapping a more expensive debt, such as an overdraft or credit card, for a cheaper one, such as a payroll loan or low-interest personal loan. Analyze the amounts, fees and interest charged by different companies and don't forget to document the entire negotiation.

Plan ahead and make an emergency fund
Once you’ve gotten out of the red and implemented a change in your habits, it’s time to take an important step: creating an emergency fund. Save a certain amount every month and, if possible, start before you even pay off your debts.

This way, you no longer run the risk of getting into debt when unexpected events happen. And unexpected events will always happen to your business. One way to prepare for them is to organize your finances and have an emergency fund.

Streamline your business
The last tip for organizing your finances and getting out of the red is to cut red tape in your business. Here at 55 Lab, we offer all the support for new businesses to prepare for all the market needs.
We also help companies that are already active, but are undertaking #nastoramode and need to organize themselves and establish processes. Does your business need specialized help? Get in touch with our team .