If You're A Writer, Debt Is The Enemy

(So I was writing an upcoming essay about file architecture and publishing, and discovered a few unpublished essays I’d written during my morning commute over hte last year. This was originally finished back in April, with some minor rewrites to bring it in line with the current circumstance, so please forgive me if the tone sounds at odds with the current run of essays)

If You’re A Writer, Debt Is The Enemy

Right now, I owe people money.

I hate owing people money. As a writer and publisher, debt is the enemy. Every time I’ve ended up in deep shit and contemplating giving up, the slow accumulation of debts has been part of the problem.

My big goal as a writer and publisher is staying out of debt for as long as possible.

I failed at that over the last two years, for many reasons. Many of them were out of my control, but a handful were just me being stupid. Market conditions for writing and publishing changed and I reacted to them out of panic.

Now I’m paying the price for that.

One of the reasons I gave up freelancing to return to the full-time workforce is so I can clear that debt as quickly as possible, rather than digging myself in deeper. The faster I pay off the debt, the faster I can go back to doing the thing I love–releasing weird books.

I’m glossing over a lot of ground here in the name of making a point. People who know stuff about money will be pointing out there is good debt and bad debt, largely differentiated by what you spend the money on and how it accumulates interest.

They will point out that debt can be a useful tool if you handle it sensibly, and going into debt is occasionally useful when building up capital or assets. This is true. I’m largely okay with some form of debt (my home loan), while vehemently against others (credit card and short-term loans).

But here’s the thing about writers:

Our income isn’t paycheck based, which complicates all manner of discussions around sensibly handling debt. When your income comes in the form of irregular buckets of money dumped into your account at varying intervals and amounts, servicing debt is hard. Doubly so when it’s happening on top of living expenses (See SYNCHRONUS INFRASTRUCTURE FEES VS ASYNCHRONUS WORK for more on this).
Debt is at its most dangerous when it’s taken on in the service of a self-identity, and writers (as a group) have a long history of making really bad decisions in the name of sustaining their self-image as writers.

Spend enough time around writers and you’ll see this manifest all the time:

Aspiring writers who have spent thousands getting their book out, without a clear understanding of how to earn that money back.
New freelancers putting bills on credit cards because payments are late, in the name of staying freelance
Writers and aspiring publishers throw money they don’t have at courses or tools that promise to solve problems, in the hopes that the solution will earn more money back.
A general refusal to put any focus on how much they’re spending on their writing business, and how much they need to earn in order to cover the costs, so they run their writing at a deficit.

There’s nothing inherently wrong with spending money on tools or courses or pretty book covers, so long as a) you have the money and b) you accept the risk you won’t earn it back. Lots of rich folks publish books as a hobby – it’s how half the major publishers got their start–but if you can’t afford to lose the money or have to borrow to make it happen, then you’re officially in dangerous territory.

At this stage, some folks will nod their heads and murmur something about there being no money in writing. Others will ignore me and roll the dice, hoping the book they go into debt to produce will capture the zeitgeist and turn them into one of publishing’s outlier success stories.

Both are looking at the wrong thing.

Writing is an asset-generation business.

More importantly, it can be a cheap method of generating assets. You can write a story with a notepad and pencil from the dollar store. You can submit or publish a novel with little more than a wordprocessor, a cheap laptop, and free wifi at your local cafe.

You have to invest a little sweat equity in producing the work and levelling up your skills, but there are ways of doing that without going into debt. Even producing ebooks and covers is a learnable skill, if you invest a little time in Youtube tutorials and practice your skills.

Going into debt to produce an asset is a gamble, because assets don’t typically have a straight money-in to money-out equation going on. This is one of the things that separates them from day jobs.

I know that an hour of time devoted to my day job is worth about $35, for example, but an hour devoted to writing a flash fiction piece could earn me $150 if I sell it to a market paying “pro” rates for fiction.

Or it could earn me about $25, if I use it as one of my monthly “things” over at Patreon.

Or it could earn me nothing, if nobody wants the story. But even then, the story is an asset–I can use it as a freebie in a newsletter mail out. Or I can include it as a bonus story in a collection of other stories. It’s still an asset, but not necessarily a high-value asset.

Still, when figuring out what to do with a spare hour, writing a short flash piece has a lot to recommend it.

It’s low risk, potentially high reward. And I enoy writing short stories enough that even when the stories don’t earn much, I at least enjoy the process.

Now imagine that every time I write a flash piece, I have to pay $50 to submit it. Is spending an hour on the story still a good idea? Is the risk to reward acceptable? Answers will vary according to circumstances, but as soon as it becomes “should I borrow $50 to submit this story,” most people will say no.

High Risk Novel Production

From a purely monetary stand-point, producing a novel is a high-risk writing activity.

I always start off using a a thousand-word flash fiction here because it’s easy to conceptualise in terms of time and effort.

Flash doesn’t take long to produce if you know what you’re doing, they can be done with minimal tools (I used to write mine on index cards), and there is a number of paying markets willing to look at thousand word stories. (Link Kowal)

It’s a low-key investment of a little time, and no money beyond a laptop and internet connection I’m paying for anyway.

Now let’s say I want to earn the same $150 from a self-published book. If it’s priced at 99 cents, it will take approximately 428 sales. If it’s priced at $4.99, it will take about 42 sales.

Both those numbers assume I’m not spending any more money producing the book, so every additional expense (editing, cover design, marketing) increases the number of sales required in order to break even.

Writing the book will also take way longer than an hour or so to produce. On raw math alone, we can assume a book will take about 40 to 100 hours to draft, let alone edit. So I want to make exponentially more sales than the above in order to justify the time and effort required.

Bigger investment of time and resources means it’s a bigger gamble.

The nature of being a writer and publisher active in online spaces is the sheer number of folks who cross my path spending thousands to publish their first novel, justifying the risk on the belief that each expense will bring in enough readers to cover the costs.

It’s a solid enough theory. It feeds into familiar business adages like “you’ve gotta spend money to make money,” and I’m willing to concede there’s some truth to that. If you’ve got the money to risk and have a long period between spending it and making it back, it’s an incredibly smart play.

If you’re going into debt in order to make it happen – particularly debt that grows due to interest – then you’re probably going to lose much more than your book earns. Not definitely–publishing is full of outliers–but the odds aren’t in your favour.

Even if your predictions are right, and you are likely to earn your money back, modern loans are often predicated on the notion that you’ll pay things back in small, regular increments.

You know what’s incredibly irregular? The profits from writing and publishing. We’re the very definition of an industry where the expenses are synchronous and regular, but the rewards are asynchronous and hard to predict.

Even with all that, owing money might not seem like a big deal, but here’s the thing to keep in mind.

The Ikea Affect

Psychology is full of experiments that show human beings are wired to avoid having things taken away from us. Once we lay claim to something – a house, a box of CDs, an idea, an identity – we tend to overvalue the thing we own compared to someone coming at it cold. In his book on consumer psychology, Predictably Irrational, Dan Ariely notes that as soon as we start thinking about selling some of the clutter around our house, we immediately start to mourn their loss.

This feeling of ownership is magnified by “the Ikea effect,” wherein putting effort into an object magnifies our sense of ownership. Here’s Ariely again:

OWNERSHIP ALSO HAS what I’d call “peculiarities.” For one, the more work you put into something, the more ownership you begin to feel for it. Think about the last time you assembled some furniture. Figuring out which piece goes where and which screw fits into which hole boosts the feeling of ownership. In fact, I can say with a fair amount of certainty that pride of ownership is inversely proportional to the ease with which one assembles the furniture;

Ariely, Dan. Predictably Irrational: The Hidden Forces that Shape Our Decisions (pp. 141-142).

The world of sales and marketing is full of situations where this sense of ownership is leveraged. Auctions, for example, play on the fact that you start to feel a sense of ownership as soon as you make a bid…and you feel loss the moment someone else outbids you and takes the item in question away. Lots of online marketing is designed to get you past the first hurdle – making a decision to engage – knowing that once you’ve invested time it’s easier to get you to say yes to the next request in the queue.

What’s important here is that power of ownership isn’t limited to material things (Ariety). We take ownership of ideas and identities, and cleave to them.

Writers are subjected to a double-whammy here. We invest heavily in our work, but also in our self-identity as authors or creative. Our culture has spent our entire lives framing “the creative life” as something valuable, so to feel it slipping away after investing in it strongly can be distressing.

Which is how we end up talking ourselves into the notion that the possibility of breaking even on the money we borrow to fund writing or publishing efforts is actually closer to being a certainty.

In the example above, submitting a flash fiction for free is easy, but the moment you add a price tag to it, it introduces hesitation (and it should. Don’t pay to submit stories. There is absolutely no reason for it).

But once we’ve invested time and money in a solution – particularly money we don’t have – its easy to see how we balk. Flash–by and large–is not a particularly time consuming thing for an experienced writer to produce.

Longer work like a novel, though? If building an Ikea coffee table is enough for us to overestimate the value of a piece of flat pack furniture, how do the hours and weeks we invest in creating longer works change the way we think of their prospect? In my experience, there is a tendency among writers to overinvest in their work. Particulary their early work.

Similarly, when we’ve invested in a solution we think should advance our careers and put time and money into it, we tend to overinvest in that solution regardless of the results. We’ll double down on it as the only way to solve the problem, even when it’s clear that the solution isn’t working the way we want.

On the publishing front, this can mean staying focused on strategies that aren’t working for us instead of stepping back and reassessing our path forward. It can mean added stress, because the risk keeps getting bigger. If you owe money and it costs you money to move forward, then you’re either not paying back your debts or you’re digging a deeper hole hoping to strike it lucky.

On the writing front, this can mean sticking with a story that it might be better to set aside, or slaving over the same book for years because you want to get it “right”.

On a personal level, I dislike debt because it also changes the way I write. When I’m servicing debt and my sole income relies on writing and publishing, I start obsessing about making sure every project earns money and push myself to the extremes of anxiety. It’s not long before I’m writing sparodically–or not at all–and most of the projects end up unfinished or not as good as I’d wish.

The myth of the starving artist says poverty is the source of creative purity and greatness. Mostly, in my experience, it’s just a source of ongoing stress that erodes your ability to write. I prefer my life to be dull and stable, so I can focus on what really matters and write.

A good chunk of my stupidity over the last year was spurred by this phenomenon. I’d invested hard in building Brain Jar up and maintaining my freelance work. When the money started to dip below my cost of living, my first instinct wasn’t to recognise that the downturn in the economy made freelancing unfeasible for a while.

Instead, it was a series of attempts to diversify, advertise, and change my business plan. Which mostly made me busier, ensured I actually produced fewer books, and left me overcommitted.

I assumed I couldn’t give up freelancing after keeping myself afloat for three years with my combination of mentoring, writing and publishing. I told myself I’d made myself unemployable and I’d hate the notion of being in an office all day.

And I clung to it a long time, until a finance podcaster my spouse recommended to me asked a question I had no good answer to.

“Why are you investing more in the thing that isn’t working instead of earning money some other way?

What I Should Have Done

I spent the first three years running Brain Jar running at a loss, largely because I was in it for the identity rather than the money. That was fine at the time–I was doing my PhD and had a research stipend covering my expenses.

It wasn’t until I got serious in 2020 and started publishing other people that I needed to really understand my cash flow, and searching for a solution led me to a book and a philosophy that suited my temperament and philosophy.

Mike Michalowicz’s Profit First–and, if you’re doing direct sales, the companion volume Profit First for Ecommerce–were lifelines that helped me keep Brain Jar Press in the black for four straight years. It’s telling that my debt issues showed up when I varied from its philosophy, rather than doing what I should have done – cut back.

At its default, Profit First is simple: divide your business income into four accounts, and automatically divvy up any money received based on set percentage.

A small chunk goes towards your profit account – draw half of what’s in there out every quarter to reward yourself for running the business, and leave the other half there as an emergency fund.
A slightly larger chunk goes to a Tax account, where you set aside what you’re likely to owe the government at the end of the financial year. If you stash more there than you need, transfer it to your profit account after taxes are paid.
A fairly sizable chunk will go to your operating expenses. That’s what you can use to run your business–don’t spend more than you have in this account.
The rest goes into your living expenses. Pay your rent and other non-work expenses from this.

At the end of every quarter, take a look at your percentages and see if you can move them. Also take a look at your expenses and ask how you might reduce them by 1% to ensure your systems are running lean.

There’s more to it–the book is packed with useful advice and ideal target percentages to aim for–but that’s it in a nutshell. If you’re running a direct sales store as a writer or publisher, consider setting up a fifth account where you transfer the cost of goods sold (printing costs, author royalties) before you divvy things up as above. That makes it easy to keep replenishing stock when needed.

I will admit, it’s not a book or system for everyone–my spouse, who has worked in the finance departments of the motor industry–takes one look at my set-up and shudders. But they’re good with money and accounting systems and work with far more complex cash flows than my modest writing and publishing endeavours are ever likely to reach.

Writing and publishing small business with a lower case s. Profit First is built for the emerging entrepreneur who–lets face it–doesn’t have regular cashflow yet and probably doesn’t have a strong business background.

THat’s writers. Heck, it’s most creative industries. And every other writer or creative business owner I’ve recommended the book too has eventually sent me a huge note of thanks.

Embrace the Business Mindset

One of the smartest writers I know is Charlotte Nash, who writes under a few different pen names. There’s a lot of incredibly smart stuff I’ve picked up by paying attention to them over the years, but the thing that solidified them in the ranks of “smart people worth paying attention to” is simple.

I have thirty years of talking to writers about business and money, and going to every course and panel I can track down. In all that time, Charlotte is the only one to mention setting aside a portion of all their writing income for superannuation (that’s a 401k for American folks) to cover their retirement.

That shouldn’t be revolutionary, but it blew the minds of thirty odd writers in the room when she said it.

Writers, by their nature, tend to be very bad money. I don’t blame them for that – the moment you announce that you want to write for a living, people start telling you there’s no money in writing and do not shut up.

They keep saying it even when you’re making money from your writing. They keep saying it even when you point out that there are publishing companies that are parts of large, multinational conglomerates, so obviously someone is making money from books.

The insistence continues: there is no money in writing. Over and over.

Which tends to lead most writers into assuming that they aren’t engaging in a business activity when they sit down to scribble a story or poem. They rail against the move from “author” or “writer” to “creative”, and actively hate it when folks like me start referring to their work as “content” or “assets.”

Make no mistake, though–writing is a small business. I became one with my first short story sale, where I had to provide my business tax details or forfeit a sizable chunk of fee the publisher offered. I applied for an Australian Business Number that afternoon, and started filing my writing income as part of my tax return every year.

I may not think of what I do as a business, but the folks who published me (and the Australian government) sure as hell did.

In recent years I’ve even started paying tax on my earnings. I know, because part of my debt is because I cut back the amount I put into the tax account I hadn’t needed for a few years…and immediately paid the price when the tax department realised I owed them money.

A good chunk of 2026, thus far, has been spent clearing debts. We’re almost done with some of the big stressful stuff that emerged from repairing the old flat. That was largely the point of getting a day job again, and when the debt is cleared…well, hopefully I’ll have another gig lined up so that excess cash that can get dumped into emergency savings and then building up a decent “if shit goes wrong” nest egg.

If not, well, at least I the debts will be cleared and I can start from a relatively clean slate. And you can bet that I’ll be doubling down on my Profit First system on the writing and publishing front…and paying real close attention to my personal finances at the same time. Building up a nest-egg there to cover a year of operating expenses, while simultaneously cutting back on the stuff that’s costing too much.

Most importantly, I’m shifting my focus back to the real heart of the writing business – building up a body of work, rather than a single project. Increasing the value of the various book-based assets I’ve already generated by producing more and finding more readers.

Check out Profit First (recommended for everyone) and Profit First For Ecommerce Sellers (recommended for anyone selling books from their own site)