Funding dreams on credit: Vintage arcades
Part 5: Michael, Michelle Ware inserted cards into their gaming business
Dreamers: Michelle and Michael Ware
The dream: Starting a business making vintage arcade games
How they used credit cards: Paid for business and household expenses on their lowest-interest credit card while getting their business started. They maxed the card out at $25,000 and also took a $10,000 personal loan.
How they paid off the debt: They paid only the minimum amount due until the business took off, then began working to pay off the balance. They got out of debt three years after starting the business.
5 WHO FUNDED
THEIR DREAMS ON CREDIT
Advice for others: "If you plan to leave your job to start a business, open a credit card before you leave," Michael says. "I always tell people, 'Get a credit card now because you're not going to be able to get one later.'"
The back story: The dream started when Michael built a 1980s-style arcade for his wife, Michelle, so she could play Ms. Pac-Man. Then friends and co-workers began putting in orders. "People thought it was really cool - they wanted to play all their old favorite games," Michael says.
In 2004, when Michael found out he might get laid off from his job at Intel, he decided to launch his dream business. "Michelle said, 'You can go ahead and try this, but I don't want to put the house at risk,'" Michael says.
Before he left his job, the Wares got two credit cards with high limits and a personal loan for $10,000. "I made sure we had a lot of cushion," he says. "Credit cards gave us the flexibility to borrow what we needed."
They began making a profit, and slowly started paying down their debt. When they began getting the arcade cabinets manufactured, Michael had to make a trip to China and they had to pay $40,000 to order an entire container-load of cabinets.
Today, the Wares have six employees. They have paid off their debt and have swapped out their lower-interest cards for rewards cards. They make most of their purchases on rewards cards, pay them off each month and use the points and miles to take a vacation to Hawaii each year.
They're happy they used plastic to start their business: "For us, it was a matter of balancing the risks with the rewards," Michelle Ware says.
Published: March 19, 2013
- How 'microresolutions' can transform your finances – 'Small Move, Big Change' author Caroline Arnold was tired of failing her New Year's resolutions, so she took a bold step to break them down in achievable actions ...
- Q&A 'Future Crimes' author Marc Goodman – Technology is rapidly evolving and so is cybercrime. Marc Goodman, author of "Future Crimes: Everything Is Connected, Everyone Is Vulnerable, and What We Can Do About It," explains ...
- Q&A with Ron Lieber: How to raise unspoiled kids – New York Times personal finance columnist and "The Opposite of Spoiled" author Ron Lieber touts the benefits of teaching financial decision-making at an early age ...