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EXECUTION I'm going to go from bankruptcy/£240,000 personal debt to a life of freedom using Facebook ads.

Paul David

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Ok, where do I start with this? This is long so i'll break it up into smaller more readable posts. Your time is valuable so I hope you can get something out of my story.

Yes you read it correctly, my name is Paul and at the time of writing this, I'm £240,000 in personal debt and on the verge of bankruptcy.

If my story prevents just one person from making the same mistakes I've done then this will be worth it. This will also help me document what I'm going to do to fix it.

I opened a computer repair shop in 2000 (aged 20), and at the time I used to buy and sell computers but didn't know how to repair them. So I taught myself. Business was good for the first few years but instead of thinking of ways to grow the company I decided at aged 22 to buy myself a brand new Mercedes (£34,000). I paid a £10,000 deposit and put the rest on finance. Mistake number 1. (Not the finance, buying the car!).

To be Continued.......
 

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Paul David

Paul David

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Fast forward 18 months and my Mercedes wasn't suitable for carrying computers and laptops so I sold it at an £18,000 loss and bought an old van. When I was younger I always had the mindset that I was going to be rich, financially. I'd see big houses and think I'll have one of them one day. I never doubted my ability to become rich.

I've also always wanted more. When someone would say be grateful for you what you've got I'd think but yes there are people who've got a lot more than me. I'm not happy until I get that. This attitude can be a good thing but for me, it's been the biggest reason why I'm now in so much debt. After 5-6 years I decided I didn't want to be stuck in a shop fixing computers all day and came across people selling laptop chargers on eBay. I was hooked. So I started selling laptop chargers on eBay alongside running my shop.

From an early stage in my business, I was kindly offered an overdraft from HSBC bank to fund my growth. Instead of using any profits from my business to grow I spent that on my own personal things and used the bank's money instead.(mistake number 2).

To be Continued.......
 
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Paul David

Paul David

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Eventually, I ended up with a £50k bank overdraft that I had personally guaranteed.

I had a couple of websites I used to purchase new and used laptops from for my customers and loved the idea of running a similar site. So I purchased a domain called whichlaptop.co.uk and for the next 3 years alongside running the computer repair shop and selling power adapters on eBay, I tried to grow the laptop brand. The issue was that the larger stores like PC World and Best Buy were selling new laptops cheaper than I could buy them from the distributors. They were loss leaders to these companies and they made a profit on the after-sales. I must have sunk £100,000 into trying to grown the domain over the years not to mention the time invested. At worse I thought I had a good domain name which is of value. (Mistake 3)

To be Continued.......
 
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Paul David

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A few years later I was offered the opportunity to purchase a website that enabled people to put the specification of their laptop on and it would generate a price for me to purchase to re-sell on. This cost £6000. Funded by overdraft. (Mistake 4)

So now I was running a computer repair business (with staff), selling power adapters on eBay, and trying to grow 2 websites at once. (Mistake 5). It seems so ridiculous even writing this.

To be Continued.......
 
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Paul David

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Anyway, I then came across a company in Scotland who had 5 computer repair shops (they were actually buying laptop adapters from me). So I drove 4 hours to Scotland to see what sort of set up they had. I drove back a couple of hours later and I had decided I wanted to have more repair shops. (Mistake 6).

I rebranded the whole repair company, new company name, new logo, refitted the shop, increased the repair prices etc. Can't even remember now how long the idea lasted for but one night after having to get out of bed again as the shop alarm was going off at 4 am I thought, imagine this with 3-4 shops. Nope, not for me.

To be Continued.......
 
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Paul David

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I eventually did nothing with whichlaptop.co.uk website or the website for buying laptops for people and let the domain expire. I run the computer repair shop until 2016 alongside my eBay business and by that time I'd had enough of the repair shop. Profits were down as people hardly had laptops or desktops anymore and I didn't even like being in the shop. I tended to work from home mostly and let my staff member run it. I made a decision (after some help from @Vigilante ) and closed it and now focused entirely on eBay business.

I couldn't become rich selling power adapters only on eBay so I started a website selling batteries alongside (mistake 7). I'd seen another company doing really well and thought yes I like that idea. This, unfortunately, was around the time a couple of planes went down due to lithium-ion batteries exploding. So my courier in the UK, Royal Mail, refused to carry them anymore. There was also that many different models of batteries that it ended up being a dropshipping model so I pulled the plug after 12-18 months.

To be Continued.......
 
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Paul David

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Next idea was Amazon FBA and i was still running my power adapter eBay business at the time.

I bought a course for for Amazon FBA for £4000 and started to look for things to sell. Initially I struggled with the notion of selling random things as I'd always wanted to build something big that meant something. So it took me a while to find a niche I could add value to. I found a couple of products to sell and did OK but nothing exciting. I then came across a power adapter seller in US doing really well. And herein lies the £150,000 mistake.

To be Continued.......
 
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Paul David

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I had some power adapters that were selling well with Amazon FBA, so I decided to borrow more money (I was still heavily into my HSBC overdraft) from a peer to peer lending group to buy more power adapters and sell them in Europe via Amazon and USA. Over the course of 18 months, I stupidly borrowed £50,000 then another £100,000. Personally guaranteed by me. (Mistake 8) And I must also state at the time that I was advised not to on here.

I created 30-50 FBA listings per Amazon country and shipped power adapters direct from China to Amazon. Some sold but the majority didn't. It cost me a lot of money eventually to get them out of Amazon and back to me in the UK. I eventually sold them at a huge loss. My eBay and Amazon store had 3 employees at the time (one of which was my Brother) and I had to let them go. Eventually, I put my company into liquidation and set up a new company to buy the remaining power adapter stock at cost with the profits from ongoing sales. However now I was personally liable for the debts I'd guaranteed. £50k from HSBC and £143k outstanding from peer to peer lender. My plan was to pay it back with the profits from my new company. (Mistake 9).

To be Continued.......
 
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Paul David

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My new company couldn't afford to keep up repayments on the loans and they got called in.

Fast forward to now and I've just sold my power adapter eBay brand and put everything I've got into a new e-commerce brand. I love everything about it. I love the niche, I love the products, I love designing them, I love the types of customers that buy them. I launched 7 weeks ago primarily driving traffic from Facebook ads which I had some knowledge of but didn't get off to the best of starts.

Until reading a post from @RazorCut yesterday I got some advice from @biophase I was about to make the same mistake again of looking for something else. I spent over a year getting my new brand to launch and had to get over a lot of hurdles and here I was again only 7 weeks thinking about something else. Only this time it would have to probably involve getting a job which terrifies the life out of me.

My sole aim is to grow my new brand, if I have to bring in income from somewhere else to grow it I will. And in order to do this I'm going to become as proficient as possible in facebook ads as this is the fastest way to grow my brand (I have a competitor who spends $80k a month on facebook ads) so i know the concept works.

If I have to take on Facebook ad clients once i've learned enough about ads that i can provide enough value then I will. I'd rather do that than trade my time being somewhere at a set place for a certain amount of time each day.

So my journey begins. I will touch on some of the mental torment i've gone through in the last year or so as I believe having a positive mindset makes a massive difference.
 
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Paul David

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I've always thought that I could get through anything and that I was strong-willed and confident.

However I've really struggled mentally with the situation and level of debt I have. I've felt like a complete failure. I've let my Wife down, my children, my parents and also myself. I've had massive sleep issues and ended up on sleeping tablets. I see other Fathers at the school when I collect my children and think to myself I wish I was them. In fact, I was I just wasn't me.

I'm also not ashamed to admit I've contemplated suicide on numerous occasions. I think the fact that I didn't was because I couldn't do it to my children. It's a selfish thing to do. Not so long ago I even googled whether it was possible to kill yourself but then have the Doctor tell your family it was a heart attack or something. Madness.

I have a loving Wife and Children and just by them being them I'm beginning to get through this. It's not nice having companies chasing you for debts every week. I get a horrible feeling inside when I hear the post coming through the letterbox, is this another debt letter. I could file for bankruptcy but I need to ensure we don't lose our house. It's jointly owned and there's not a great deal of equity compared to my debts and luckily my wife has a good job.

I may still have to file for bankruptcy but I'm going to give it everything I've got to get out of this. The thought that after all the work I've done over the years to end up bankrupt upsets me. Especially for someone with my traits, I'm the one who was always saying I'm going to earn this or do that but to put things bluntly without my wife or help from my parents I'd be homeless and living on the streets now.

I have recognized however though that negative thoughts aren't going to get me anywhere. I've been reading self-help books to reinforce some positivity into my mindset and I've certainly gone past my F*ck You moment. No more negativity and punishing myself for the mistakes I've made in the past.

I can't change anything that I've done, there are some expensive lessons there but I can control where I end up the future and that's where I begin.

If anyone feels like they can offer any help or advice feel free. I'll try and update whenever something meaningful happens but for now, if anyone wants me I'll be mastering facebook ads and growing my brand and I hope that this helps people to NOT make the same mistakes as me.

"If you try chasing two rabbits you won't catch any." This is what I would tell my 20 year old self.
 
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I could file for bankruptcy but I need to ensure we don't lose our house. It's jointly owned and there's not a great deal of equity compared to my debts and luckily my wife has a good job.
Sometimes the bankruptcy could be the best way to start over. Consider the options you have and pick the one that makes the most sense for you. Try not to be too attached emotionally to the house, especially since like you said you don't have that much equity there. Talk to a lawyer about possible options.

If anyone feels like they can offer any help or advice feel free. I'll try and update whenever something meaningful happens but for now, if anyone wants me I'll be mastering facebook ads and growing my brand and I hope that this helps people to NOT make the same mistakes as me.
If you need any help while you're learning facebook ads, I'll be happy to help and jump on a call from time to time and answer your questions.
 

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Sounds like a solid amount of failure lessons. Looking forward to hearing updates. Question. Have you spoken to a bankruptcy attorney yet?
 

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The best you can do is learn from those misstakes and keep going. I must say i made a simar misstake with FBA but luckey for me i only invested 4000€ of my own money in French presses. iv still got most of them at home (anyone want one? :happy: ) but lucky ive never know debt.
 

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The best you can do is learn from those misstakes and keep going. I must say i made a simar misstake with FBA but luckey for me i only invested 4000€ of my own money in French presses. iv still got most of them at home (anyone want one? :happy: ) but lucky ive never know debt.
Haha made me laugh. In all seriousness well done for starting, are they still listed on Amazon? Whats the main keyword, pm me if you like and maybe I can help you sell them. Can't make any guarantees though
 
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Paul David

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Sometimes the bankruptcy could be the best way to start over. Consider the options you have and pick the one that makes the most sense for you. Try not to be too attached emotionally to the house, especially since like you said you don't have that much equity there. Talk to a lawyer about possible options.


If you need any help while you're learning facebook ads, I'll be happy to help and jump on a call from time to time and answer your questions.
Thank you. Much appreciated. I will take you up on that offer at some point in the future!
 
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Paul David

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Sounds like a solid amount of failure lessons. Looking forward to hearing updates. Question. Have you spoken to a bankruptcy attorney yet?
I've spoken to numerous people about my options. The three options I have are 1. file for bankruptcy (which is complicated somewhat by the fact I'm the Director of a company) and I'd have to step down. 2. Try and pay off the debts in full or 3. negotiate a settlement with the creditors.

At the moment I'm going down the option 3 route. I'm not going to lie it doesn't look great on paper. However, the one positive (if you can actually call it that)is that I have very little equity in my home so the creditors know what if I file for bankruptcy they won't get a penny back from any assets as I have.

I'm pretty confident that I could negotiate a settlement figure of around £8k-£10k with HSBC. The other main creditor which is a peer to peer lending group will be more difficult however I'm pretty sure if I make an offer of £20k-£30k or tell them I'm filing for bankruptcy they may (and should) accept. The lending company would go to the people who've loaned me the money and present the offer to them. If it was me and I had to take £20k-£30k or nothing I'd have to take the money.

So there are options to possibly get the debt down to £40K or something even though yes on paper the debt as it stands is significantly more than that.
 

MHP368

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Ok I was just curious because I know sometimes we can "catadtrophize" so to speak worrying about unknowns.
 

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Negotiating the debts makes sense to me. I would calculate the number of the total debt repaid at around 2X your director fees. Or about 2-3x your house equity. Somewhere in that range seems like the right trade for avoiding bankruptcy.

But it’s not a fair trade at 10x your equity. Don’t overvalue your pride.

I know it must feel like you have no pride left but ego is a funny thing. It still drives you even at your lowest points. That shame you feel. That’s a feeling YOUR EGO CREATES TO TRY TO PROTECT YOU. Ego is such a huge impediment to progress.
 

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Wow Paul. When I encouraged you to start a thread I didn't realise how much you had to get off your chest. That is a whole world of lessons we all should learn from. Thank you for sharing.

In many ways to air it like this must feel like you have drawn a line in the sand and crossed over. Yes there is some baggage you will need to take care of from your past life, however firmly fix your gaze on the future and use the pressure from the outstanding debts as fuel for progress.

No matter how hard the journey don't give up the fight. Your family needs you. Stay strong, stay focused.

I'll PM you.
 

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I've spoken to numerous people about my options. The three options I have are 1. file for bankruptcy (which is complicated somewhat by the fact I'm the Director of a company) and I'd have to step down. 2. Try and pay off the debts in full or 3. negotiate a settlement with the creditors.

At the moment I'm going down the option 3 route. I'm not going to lie it doesn't look great on paper. However, the one positive (if you can actually call it that)is that I have very little equity in my home so the creditors know what if I file for bankruptcy they won't get a penny back from any assets as I have.

I'm pretty confident that I could negotiate a settlement figure of around £8k-£10k with HSBC. The other main creditor which is a peer to peer lending group will be more difficult however I'm pretty sure if I make an offer of £20k-£30k or tell them I'm filing for bankruptcy they may (and should) accept. The lending company would go to the people who've loaned me the money and present the offer to them. If it was me and I had to take £20k-£30k or nothing I'd have to take the money.

So there are options to possibly get the debt down to £40K or something even though yes on paper the debt as it stands is significantly more than that.
In the UK you can file for an IVA. During an IVA:
- a third party company negotiates your debt with creditors
- a large chunk is usually written off by the creditors
- you can remain in control of a company

If you want to keep your company, an IVA may be the best solution. If you go for bankruptcy, you can't control a company (for so many years, can't remember how many)
 
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Paul David

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In the UK you can file for an IVA. During an IVA:
- a third party company negotiates your debt with creditors
- a large chunk is usually written off by the creditors
- you can remain in control of a company

If you want to keep your company, an IVA may be the best solution. If you go for bankruptcy, you can't control a company (for so many years, can't remember how many)
Yes, I've looked into IVA, it's similar to negotiating myself with the creditors. You can't be a Director of a Limited company for 12 months after filing for bankruptcy.
 

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In the UK you can file for an IVA. During an IVA:
- a third party company negotiates your debt with creditors
- a large chunk is usually written off by the creditors
- you can remain in control of a company

If you want to keep your company, an IVA may be the best solution. If you go for bankruptcy, you can't control a company (for so many years, can't remember how many)
Is this similar to a CVA?
 

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Paul, the main thing I would say is that it seems your only mistake seemed to be not building equity in the business before exploring new channels. Everyone has done it to some degree, so your situation is somewhat academic... the problem is that since the numbers are comparatively large, you're feeling overwhelmed. Stay strong, "they can't eat you".

The way I'd fix it is to center what you're doing around the building of equity, which would allow you to balance growth against a shareholding within the business. Your present situation happened because you borrowed unsecured money against non-existent assets - money which was used to buy products over-which you held no IP (equity).

What I would do is consider very deeply what you're doing to build real equity in your new brand. What products are you selling? Can you create traffic streams away from FB ads? Can you talk to companies about creating affiliated offers? What's the barrier to entry on manufacturing the products yourself?

If you're not careful, FB ads are going to be your new eBay/website/stores/FBA.

--

PS one thing you absolutely must look at is to somehow get your personal debt to offset your tax obligations. I'm not an accountant, but this is what Donald Trump did in 1995 -- using losses as a means to write-off tax can, in some jurisdictions, give you a tax-free buffer when you do start earning again.

In the UK, this is what a profit/loss account is for in a business. You carry over losses and that offsets corp tax moving forward. If your business is in the hole, would be worth seeing if an account can offset the debt as a loss.
 
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Paul David

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Paul, the main thing I would say is that it seems your only mistake seemed to be not building equity in the business before exploring new channels. Everyone has done it to some degree, so your situation is somewhat academic... the problem is that since the numbers are comparatively large, you're feeling overwhelmed. Stay strong, "they can't eat you".

The way I'd fix it is to center what you're doing around the building of equity, which would allow you to balance growth against a shareholding within the business. Your present situation happened because you borrowed unsecured money against non-existent assets - money which was used to buy products over-which you held no IP (equity).

What I would do is consider very deeply what you're doing to build real equity in your new brand. What products are you selling? Can you create traffic streams away from FB ads? Can you talk to companies about creating affiliated offers? What's the barrier to entry on manufacturing the products yourself?

If you're not careful, FB ads are going to be your new eBay/website/stores/FBA.

--

PS one thing you absolutely must look at is to somehow get your personal debt to offset your tax obligations. I'm not an accountant, but this is what Donald Trump did in 1995 -- using losses as a means to write-off tax can, in some jurisdictions, give you a tax-free buffer when you do start earning again.

In the UK, this is what a profit/loss account is for in a business. You carry over losses and that offsets corp tax moving forward. If your business is in the hole, would be worth seeing if an account can offset the debt as a loss.
Thanks for your advice. Completely understand where you're coming from regarding Facebook ads becoming the new ebay or Amazon store with no control. I'm actively trying to build assets for the brand, email lists, facebook fans (although not worth much financially), instagram followers, facebook messenger followers.

Regarding the offset of tax, the debts were passed down from my previous Limited company which has now gone into liquidation so I don't think I can benefit using the new company. I will speak to my accountant about this and thank you for the suggestion.
 
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Paul David

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Is this similar to a CVA?
CVA is applicable for dealing with debts and keeping the company going. It doesn't apply in my instance because I've already placed the old company into liquidation.
 

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Hope it helps you getting it out there. I’m in a similar situation and had to write down all my mistakes a few days ago just so I could stop a negative thought cycle in my head. It seems a bit easier once you own it.

Similar story but not quite as much £ as you. Have a relatively good e-commerce business in a nice niche but over the past year or so I’ve spent a lot migrating the website with a developer I didn’t trust, it’s a flop so we’re cutting our losses and doing it in house. I bought a car from company money when we had no company money I stupidly started another company and spent a whole lot of money and company time building an app that we haven’t actually had time to launch yet even though it’s really good. And also spent time creating other websites and ideas.

A month ago I deleted almost all websites except our main profitable three. Stopped all side projects.

Hope you hit your goals and sort your situation out whilst avoiding bankruptcy. Keep going. Keep fighting. In a year or two when you have loads of money and freedom you’ll look back and wonder what you were worrying about.
 
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Appreciate the story!

For your new company, did you validate the product well before hand?

You failed sure, but you learned a lot too. And your tenacity is admirable. Just keep going, eventually you'll make it. Cut the 'I wish I wasn't me' thoughts out of your head. They will undo you. You took risks because you know eventually a risk you take will pay off far greater than whatever slowlaners are doing.

The money you owe the bank is not something to feel guilty about. They're a major bank. The money they lent you didn't exist before you borrowed it. It costs them nothing.

The peer to peer lending is harder sure, but they're making money too and I wouldn't feel bad either. Pay it minimally while you work on the new business!
 

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Good for you for taking some bad lessons and making the most of it. Negotiating with the creditors can certainly be a good bet, but also don't know the option of bankruptcy if it ends up being your best option- I feel as though there is this very negative connotation with bankruptcy as in bankruptcy = Failure, and that isn't always the case. Though it is always a last resort option, sometimes it can be the best option given the situation. Good luck with venture!
 
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Paul David

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Hope it helps you getting it out there. I’m in a very similar situation and had to write down all my mistakes a few days ago just so I could stop a negative thought cycle in my head. It seems a bit easier once you own it.

Similar story but not quite as much £ as you. Have a relatively good e-commerce business in a nice niche but over the past year or so I’ve spent £10,000 migrating a website with a developer I didn’t trust, it’s a flop so we’re cutting our losses and doing it in house. I bought a car from company money when we had no company money (£12,000) I stupidly started another company and spent £15,000 and a lot of company time building an app that we haven’t actually had time to launch yet even though it’s really good. And also spent time creating other websites and ideas.

A month ago I deleted almost all websites except our main profitable three. Stopped all side projects.

But we’re now out of cash, the business is -£50k and I’m -£25k whilst struggling to pay the bills. Sales have crashed partly due to the rubbish new site and the market in general right now.

Did I mention I have a £10k family holiday booked to Florida in Feb? Need to pay that in Nov! (Or not... can’t wait to tell the kids!)

Currently trying to sell the car, sell the app, get the new website live and may have to borrow £30k just to keep the bills paid whilst we hopefully catch up over Black Friday and Christmas.

Hope you hit your goals and sort your situation out whilst avoiding bankruptcy. Keep going. Keep fighting. In a year or two when you have loads of money and freedom you’ll look back and wonder what you were worrying about.
I got the same anxiety feelings reading your post and the circumstances as I do when I think about the situation I'm in.

I can certainly identify.

Thanks for your kind words and I hope things work out for you also.
 
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408
835
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Appreciate the story!

For your new company, did you validate the product well before hand?

You failed sure, but you learned a lot too. And your tenacity is admirable. Just keep going, eventually you'll make it. Cut the 'I wish I wasn't me' thoughts out of your head. They will undo you. You took risks because you know eventually a risk you take will pay off far greater than whatever slowlaners are doing.

The money you owe the bank is not something to feel guilty about. They're a major bank. The money they lent you didn't exist before you borrowed it. It costs them nothing.

The peer to peer lending is harder sure, but they're making money too and I wouldn't feel bad either. Pay it minimally while you work on the new business!
Thanks for your reply and kind advice. For my new product, I have priced it at the higher end of the market and only have 1 competitor at the price point. They are doing extremely well.
 

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