How to Start Up and Pay Down Your Student-Loan Debt New graduates face higher student loans than any other generation -- making starting up all the more intimidating. Here are five lean start-up strategies to help you shake off those debt woes.

By Annie Mueller

Opinions expressed by Entrepreneur contributors are their own.

As if the stress of landing start-up financing weren't enough, some young entrepreneurs must also deal with mountains of personal debt.

In 2010, graduating college seniors carried an average of $25,250 in student-loan debt, up from $18,650 in 2004, according to the Project on Student Debt, an initiative of the Institute for College Access & Success, a nonprofit independent research and policy organization in Washington.

But for many young entrepreneurs, that "average" doesn't even scratch the surface. Just ask Mikey Rox. He was 27 years old and juggling three student loans which totaled approximately $29,000 when he launched his business in 2007. Now, five years later, Rox has managed to pay off two of the loans through the success of his New York City-based copy and creative agency, Paper Rox Scissors.

Mikey Rox
Mikey Rox, the founder of Rox Paper Scissors, got side jobs as a mystery shopper to pare down his debts.
Kari DePhillips
Kari DePhillips waited to start up her the PR firm the Content Factory until she had enough paying clients.

Similarly, Kari DePhillips also faced stiff student loans when she launched the Content Factory, a Pittsburgh PR firm, in 2010 at age 27. But her loans amounted to a whopping $100,000. The Content Factory is now on track to bring in $500,000 of revenue in its second year, and Kari is paying off her student loans on schedule.

The lesson here? You can pay your bills, and you can pay off your debts while starting a business. But you have to be smart about it. Here are five strategies for digging out of debt:

Keep cash flowing.
Whether it's keeping your day job or taking on a side gig, many entrepreneurs find that having an added source of income is absolutely vital for keeping themselves and their young companies afloat. Rox says that he found unique side work -- being a mystery shopper, participating in focus groups and subletting his spare room -- to bring in extra cash as he built up his business. Going a step further, DePhillips actually waited to start up until she had enough paying clients lined up.

Startup lean.
Keeping your startup costs as close to zero as possible is another smart entrepreneurial strategy. For his part, Rox kept his costs down by working from home and building a business that functioned primarily over the Internet. DePhillips put off bringing in a partner, hiring contractors or employees for as long as she could.

Keep track of your personal finances.
Don't get so involved in your business' financial situation that you lose track of your personal finances. The last thing you need when supporting a start-up is a personal financial crisis. Scheduling payments ahead of time helps DePhillips keep her own finances in check so she can attend to building her business. Rox is able to keep his financial responsibilities on track because he makes time for managing them. He says being patient and growing a business slowly can help.

Spend smart.
Think long and hard before you spend your cash, even on valid business expenses. DePhillips notes that even basic business needs, such as getting a phone set up, might be something you can do without in the first few months. Rox spent $1,600 of his $2,000 in savings to build out his website, which sounds like a lot. But he called the expense crucial for being able to market his business.

Hang in there.
All entrepreneurs are going to face those tough times, especially in the start-up phase of business. But the common refrain for these young entrepreneurs? It's so worth it. DePhillips recalls working 15 hours a day, seven days a week, as she struggled to get her business off the ground. And Rox notes that it seemed like he could only take baby steps to launch. In retrospect, he now says growing slowly and organically was his best strategy. "It takes longer to get where you want to go," says Rox. "But you have a much better chance of getting there."

Wavy Line

With six years of experience, Annie Mueller has used her attention to detail and standard of excellence to produce high-quality content for business websites, lifestyle blogs, business and tech blogs, print newsletters, and educational publications. She specializes in helping small businesses and entrepreneurs navigate the world of internet marketing and create effective and affordable strategies for online marketing and social networking. She can be found online at

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