Psychochild's Blog

A developer's musings on game development and writing.

30 January, 2007

Finally out of debt!
Filed under: — Psychochild @ 6:39 AM

I am usually loathe to post personal information out. I figure few people are really interested in hearing about my kitties (they are cute!) I posted up some of my fiction in the past, but always worried that this treads a bit outside the normal realm of discussing games.

But, I have some good news: I have finally paid off my credit card debt. I figured this would be a good time to give a bit of realistic discussion about what it takes to start and run an indie business funded out of pocket. I’m going to open the coat and flash a bit of personal finances here, so avert your eyes if you’re squeamish!

Most of my debt was accumulated by buying and launching Meridian 59. I didn’t earn much income during this time, so I borrowed heavily from credit cards.

I share personal finances with my long-term girlfriend; we’ve been together for over 12 years at this point. We share financial and credit card accounts. Our story begins when we realized exactly how much debt we could get into: we had about $50,000 worth of debt we could get into at the time, and we were getting more all the time.

My career up until this point had been fairly low-key. My first job out of college was basic and low-paying and not in the game industry. My next job at was at 3DO, working for a very low wage while living in the very expensive Silicon Valley. I was able to make a bit of additional money using an Employee Stock Purchase Program (ESPP) which gave a decent return on investment. After leaving 3DO, I went to work for a dot-com right before the bubble burst making a pretty good salary. At the end of my time at the dot-com, we had saved up about $15,000 in the bank and had some 3DO stock that was worth about $10,000 at the time.

I started working with someone to start a company and burned through my $15,000. After that didn’t work, I started a different company with the other people: Near Death Studios, Inc. Our goal was to build online games when we had the opportunity to purchase Meridian 59. 3DO agreed to sell it to us because were mostly former developers, and they told us we could not get a refund. ;) At this point one of our co-founders left the company on unfriendly terms, but Rob “Q” Ellis II and I decided to press on.

In the end, each of us had to come up with $25,000 to buy M59 from 3DO. I used my $10,000 worth of stock and borrowed the rest from credit cards. Lots of little expenses came: buying a server (which Rob handled), paying off the initial investment of the founder that left on poor terms (which I paid for). The money used to buy M59 was in exchange for promissory notes from the company. The notes paid 10% annual interest for notes payable after 2 years. We were able to meet this obligation and pay off the notes a few months before they became due.

Before I got in up to my eyeballs in debt, I had a long talk with my girlfriend, and we decided we could live for a few months with just her income. We were worried about accumulating too much debt and knew that could hurt us. Of course, a few months became half a year, and so on. And, the credit card debt increased. Over a few years we racked up a lot of debt on the credit cards, even though the company was debt-free. Looking back, I realize we spent about as much as I had been making at 3DO, even though I was not making nearly that much. This is not to say that we lived lavishly: my girlfriend and I shared a house with two other roommates. We ate at home much of the time, and I had many flats of ramen that I ate on a regular basis. Unfortunately, we lived in a very expensive area and it would have cost more money to move out of the area (as well as taking time away from working on the business).

At the worst, we were $65,000 in credit card debt. While working at Near Death Studios, Inc. I made between $12,000 and $18,000 per year in salary with no additional benefits. I have had no health insurance for the past 5 years (beyond the entrepreneur plan: “Don’t get sick”), and received no dividends from the company. Most of our profit went to paying better salaries, since the employees made as much as I do (or sometimes more), or into whatever meager advertising we could afford. To put it in RPG terms, I was trading money for (valuable) experience. :)

We carried the debt for much longer than we had originally planned. We were at the end of our rope a few times, but something always seemed to happen to keep us going for a little longer. Sometimes it’s better to be lucky than good, I say! ;) But, this isn’t really what you should build a business plan on. ;)

A few years ago, I realized that Meridian 59 would probably never pay enough to get me out of debt. At this time I was contacted by a law firm to do some expert work for them to help with a patent defense. This was my first bit of contract work which would start to get me out of debt. In addition to the expert work, Jessica Mulligan started contracting me to help with work she was doing on contract. I know that Jessica contacted me because of the experience I’ve gained from working on M59 as well as the writing and speaking I have done. This contract work paid well and went almost directly to my credit card debt. In fact, it’s a current contract that I’m working on that allowed me to pay off the final bit of credit card debt.

As of this writing, there is only about $600 left on credit cards. I still have to pay taxes for the money I earned last year; I also have to pay penalty for not making estimated payments, but the penalties are cheaper than the credit card interest rates! But, the bulk of my debt has been paid off and I’m slowly saving money again.

So, it’s been an interesting ride. I’m pretty sure that I would do it all again if given the chance, although I would be a bit more careful in how I spent my money. But, I know that I can get into deep debt but still dig myself out by getting paid for my knowledge. Running my own business gave me unique skills and experience, even if my business didn’t take the industry by storm.

Anyway, a bit of info about what it took to run a business in one case. I hope people find this interesting. Questions and comments welcomed, as always.


  1. Good to hear!

    One word of warning though: I’ve noticed a strange occurrence in City of Heroes: any time some member comments to being “out of XPdebt” in the game chat, we have a near-teamwide wipe within the next mission. It’s almost like the devs coded an “anti-bragging filter” into the engine…

    Let’s hope life doesn’t follow the same model.

    Comment by Chas — 30 January, 2007 @ 10:08 AM

  2. Psychochild! I am truly impressed. I get anxiety even if I have a couple hundred dollars on my credit cards. I was pleased to see that a senate committee has begun to take a closer look at the credit card industry’s policies and practices. The worst of them all is the interchange. Have you heard of these fees? Here is a great article explaining how the industry sets these fees in secret and the cost of them gets passed on to us. Outrageous!

    Good luck with your road to recovery. :)

    Comment by Mark — 30 January, 2007 @ 12:26 PM

  3. Wow. Congratulations Brian!! That’s *really* awesome. Amazing even. You should be proud!

    Comment by Q — 30 January, 2007 @ 12:31 PM

  4. Have you heard of these fees?

    Unfortunately, yes. We have a merchant account for Near Death Studios, and we were charged a fee for every transaction. It’s actually worse for online companies like ours because the rate is higher because internet companies are “riskier”.

    Credit card companies have it so easy. They charge the merchants for transactions and chargeback in addition to charging the customers annual fees and high interest rates. But, they are too much of a convenience to ignore. It is interesting being in Germany, because the rate of credit card acceptance is much lower. Perhaps this is smarter. :)

    Have fun,

    Comment by Psychochild — 30 January, 2007 @ 1:52 PM

  5. I guess this means you won’t be eating ramen anymore. Congrats! ;)

    Comment by Neol — 30 January, 2007 @ 7:51 PM

  6. Springs to mind:

    “If you can make one heap of all your winnings
    And risk it on one turn of pitch-and-toss,
    And lose, and start again at your beginnings
    And never breathe a word about your loss;”

    Congrats on managing what most people never dare to do, Brian (and your partner of course!). It looks like it was all worth it in your case :)

    I panic every time I even have a hint of debt approaching, no doubt I will shiver when I apply for a mere car loan. So it’s somewhat reassuring to know that even if you need to eat ramen for a while you can be indie and succeed.

    Comment by Jpoku — 31 January, 2007 @ 4:38 AM

  7. Grats. Cleared my own debt last year, and the weight that lifts is heavier than you realized while you were carrying it.

    Comment by Evangolis — 31 January, 2007 @ 8:45 AM

  8. Well done. I officially think you are insane, but well done nonetheless! :)

    Comment by Moorgard — 31 January, 2007 @ 9:23 AM

  9. Knowing that you could have easily sought a “regular” programming job outside of the games industry, this strikes me as signature dedication to the craft and business of making games. Well done. There aren’t many industries that can inspire such passion… :)

    Comment by covert.c. — 31 January, 2007 @ 11:16 AM

  10. Excellent news, Brian! Next time we’re in the same town, I’ll be happy to celebrate with ya. :)

    Comment by Andy at Simutronics — 1 February, 2007 @ 7:09 AM

  11. Andy: Excellent news, Brian! Next time we’re in the same town, I’ll be happy to celebrate with ya. :)

    And now that we know whose cards are paid off, we know who’s buying!

    Comment by Chas — 1 February, 2007 @ 9:16 AM

  12. Congratulations! And it is great to hear M59 more-or-less pays for itself these days, too. (By the way, it’s “loath to”, no “e” :).

    Comment by Phil — 1 February, 2007 @ 11:39 AM

  13. That’s great news. I think the deepest I’ve been in debt was for 8k in credit back in the 80′s… Still i payed that off, saved 5k free and clear and bought a house!

    Best investment I ever made, and I’m not a money minded person.

    Now it’s worth possibly 3x the purchase price and nearly payed off. I’l retire in 4 yrs, fix it up/sell it and go try to find meaningless work in the gaming industry (dreams) :)

    Anyways I’m back… I was involved in Vanguard beta for a while when I first became aware of you visa vi the Artical on player generated content. (something MMO’s severely lack)

    I’l browse your blog and see if I can contribute, can’t say for sure that I can, but “maybe” Not sure if you even remember my few posts here. Still… I have ideas that maybe I can share.

    I love games, that’s the main thing.

    Comment by Atoyota — 4 February, 2007 @ 9:52 AM

  14. Dude, congratulations! That’s a huge accomplishment and I’m proud of you! Envious too! I don’t exactly own a video game of any size. ;)

    Keep up the good work, getting through the debt culture that we have is hard, but once you are off the hook, everything seems easier.

    Comment by Grimwell — 4 February, 2007 @ 2:45 PM

  15. Brian, congratualtions – this GREAT news! when i heard the story “fund m59 on credit cards” i was both incredibly impressed and somewhat scared for you. Really glad you now you have (m59) cake and eat it too without any
    debts looming omniously on horizon. lets celebrate someday :)

    Comment by MaxS — 10 February, 2007 @ 6:15 AM

  16. Indie funding

    [...] that you have money to throw into a project. Now, the source of that money can be an issue. As I wrote before, I used credit cards to fund my share of the purchase of Meridian 59. This method definitely [...]

    Pingback by Psychochild's Blog — 21 July, 2010 @ 1:18 PM

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