If you want to be an entrepreneur, debt is a form of enslavement that you just can't afford.
I'm the founder and CTO of Kynetx. This series of articles relates my discoveries and feelings about starting a high-tech business. This is the thirty-second installment. You may find my efforts instructive. Or you may know a better way---if so, please let me know!
I run into people all the time whose lives are not startup compliant. They express a desire to start a company and have ideas, but they've made choices that limit their ability to live the startup life. They say "I'd like to start a company, but I need a salary."
Starting a company requires extreme flexibility in personal finances. You will likely work for long stretches with no or greatly reduced salary. Debt is the number one impediment to being flexible. Whether it's a high mortgage, student loans, child-support payments (not exactly debt, but still a future payment obligation), car loans, or credit cards, many people are not able to start a company because they've given away their freedom by going into debt in one way or another.
I estimate that since starting Kynetx five years ago, there has only been a 18 month period where I was at full salary. How do we get by? We have a very low debt load; we have no debt besides a mortgage. When you have a low debt load, slashing expenses is as simple as not buying stuff. There's all kinds of room in a typical family budget to do this. But when you have a high debt load, much of your income goes to servicing debt. As a consequence, there's just not as much room to slash expenses.
Young people are naturally more flexible in their finances because they don't have as many kids, a mortgage, and so on. I tell students that the best time to start a company is right when they graduate. They're already used to being poor, so it's not a big change. This is a point that I think is largely overlooked in discussions about how to unleash more innovation: student debt reduces the number of people who can afford to start a company. (Note: student loans are especially pernicious for other reasons.)
If you want to be an entrepreneur, you have to stay out of debt. If you're in debt, use the snowball method to get out of debt and save an emergency fund. Once that's done, you'll be free to enjoy starting a company because you'll have less worry about what happens if things don't go well. Debt is a form of enslavement that you just can't afford.