Gym Owner Who Owes $58K, Alienated Friend, Asks Caleb Hammer for Help

A man appeared on a budgeting podcast for help with the debts he racked up trying to launch a business, totalling around $58,000.

Jose, from Dallas, Texas, told Caleb Hammer, the host of "Financial Audit," that he had lost a friend, fallen into credit-card debt, and was struggling to make ends meet since opening a gym.

Jose said he had launched the business in the past year and was doing a "horrible job" at keeping his personal and business finances separate.

He said he was bringing in around $10,000 per month, but with lots of costs. On top of that, his first employee was a friend who ended up quitting over a disagreement about commission.

Jose said his finances were about to get even worse. He was currently paying $1,600 in rent on the gym, he said, with other maintenance costs bringing the monthly outgoings to $2,000 per month.

But his rent was set to increase to $4,600 in July. Meanwhile he had minimum payments each month of $2,086, leaving him little to pay for his own life.

Hammer went through Jose's finances to see what he owed and worked out his monthly debt repayments, which came to $2,086.

Here is a breakdown of his debts and their minimum payments:

With all Jose's costs and debts, he said he should still bring home around $3,480, but his "living expenses" were "eating away at the rest."

Hammer asked Jose whether he had talked to anyone about running a business before he started his own.

"No," Jose responded, "That's probably why it's so messed up."

"You're stressing me out real quick," Hammer said. "I don't know how you're sleeping to be honest."

Jose said he was trying not to use his credit cards, but that he was still making payments that took him above his credit limit because he wasn't paying enough attention.

When Hammer read out two payments, from Disney+ and two record stores, Jose said they were "probably not me" — suggesting his girlfriend was spending money on his card.

"Well, you should probably think about that," Hammer said. "Because that's a business card, and I don't think those are business expenses, my dude."

Jose said some of the debt he'd racked up was due to the fact he was let down by the landlord of the gym, who had promised all the work that needed to be done on the property would be completed within one month. However, it took a lot longer, so his finances took a hit right at the start. This was when Jose took out an Upstart personal loan of at 30% interest, of which he had around $5,000 still to pay.

Jose also described the fallout of bringing on a friend to work on the venture on terms which ended up costing him.

Jose said he brought in a friend to work as a trainer with a deal to share his earnings. The deal let the trainer make $2,000 before paying him anything, and after he would pay Jose 40% of his earnings.

The problem was, Jose said, that his friend never hit the $2,000 threshold, leaving Jose with nothing.

He said the two fell out when he tried to renegotiate the deal, leaving his friend to quit with them not on speaking terms.

Hammer told Jose to stop spending money on takeout food, subscription services and other luxuries (including a membership to another gym — LA Fitness) which had been stretching his finances.

Hammer worked out a budget for Jose to stick to, which included starting to work deliveries for Uber Eats and DoorDash to cover the looming rent hike on the gym.

He said Jose should also separate his finances from his girlfriend's.

"You need to bring in some extra because you're about to have zero margin," Hammer said. "Actually, with the way this is going, this is going to head towards a business bankruptcy, and then personal bankruptcy, to be very clear."

Jose said he would work more hours, and was going to be bringing in another trainer who would work on commission and bring in more clients. But Hammer said he was still "scared" for Jose considering his increasing costs.

"We're heading to a place of financial nuclear explosions," he said.

Jose said he was "optimistic" because it was in his nature to be.

"If I find the right person, double on the marketing, I think within a month I could definitely turn it around," he said. "It's definitely going to be incredibly hard."