Should You Go Into Debt to Purchase Photo and Video Equipment?

It's not exactly a secret that photography and videography equipment can be expensive — like "you can live with only one kidney, right?" expensive. And so, when it comes time to purchase that five-figure camera, you may have to make some difficult decisions, including possibly going into debt to be able to afford it. But is that the right decision? This helpful video gives you some questions to ask yourself before you commit to living life in the red.

Coming to you from Olufemii Tutorials, this video is a good look at a very practical problem that many of us will face: the need for a piece of equipment that enables lucrative work, but also sends us into debt upon its initial purchase. Once you've justified that you truly need the camera or lens, it really comes down to a mathematical question: can you expect that you'll make more money having that piece of equipment than if you didn't, and will the difference over waiting and saving outpace things like interest payments? And of course, that difference should be both significant and not just an assumption: there should be a solid, identifiable reason that this will increase your income that you be relatively secure in expecting to come to fruition. 

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Lafayette Britto's picture

This is a great piece of advice. Sometimes you have to go into debt in order to bring in the work that you otherwise would have not. Just to stretch it even further, lets say you decide to wait and save up until the end of the year to buy. You get jobs that you have to rent equipment for, now that rental you are paying for a week will be more than what your installment payment is. So is it smart?? Absolutely, but you have to know when to be smart and look for no interest options that companies offer. Make sure you have the jobs to cover it and pay it on time. IF you cant do that, then dont do it because you will end up screwing yourself.

Michael Yearout's picture

Yes, very good advice. I took it and applied it to a purchase I would like to make. The answers to all three questions were no. That tells me I really don't need that piece of equipment - I just want it.

Steve Crow's picture

I think the fallacy in logic and business thinking here is that just by having a new camera that you are going to make that extra 80k - there is no guarantee that will happen.

Customers don't often hire you just because you have a certain camera. On the other hand it's not uncommon for them to ask for the latest fad camera so that they can be cool by association. But will they pay MORE for it? Too often not sadly

Did you mention renting the latest shizzle camera?

Chasing after the latest camera to own is a never ending and very expensive road especially when you consider all the additional equipment often needed to go along with a new camera body such as lenses, rigs, storage etc - if you are changing camera brands then all bets are off.

stir photos's picture

Very good question and one that many young people should consider first. I'm not gonna say anything that small business owners don't already know, but here goes...

Camera gear (all of it) should be considered as an investment in all aspects. If readers don't know what an investment truly is, I'd start there. All the rules of investing apply. By sheer definition the question isn't pointed at hobbyists, but even hobbyists might want to at least consider some of the rules.

Part of the definition of investing is the attempt to gain an advantage and new equipment should lend itself towards that goal, but that's a very small part of the consideration. The ability to repay your newly incurred debt in X amount of time is a good question, but not nearly enough. The answer isn't known until a full cost benefit analysis is done... Until then, renting equipment might be a better option and using money that can be loaned to you might be better spent on other things. There are many variables and almost every situation is unique. That said, initial purchases don't always mean immediate debt just because they're purchased with credit versus cash. They could be poor investment decisions though. Poor investment decisions might not be immediate, but can lay in wait for years before being apparent.

If you're the person who's been leasing (or plans to lease) brand new cars every two years for 10 or more years, this advice probably isn't for you, you're view on what investments are aren't typically inline with more traditional thoughts.

Ty Poland's picture

This is an awesome article. I actually had to go into debt myself because I felt like I could be doing better work with a better drone. A lot of my friends told me not to be stupid and to wait and save up, but 10 grand doesn't come easy. I knew that if I were to get a loan and buy the drone, it would give me time to learn how to use it and become familiar with it so that I can begin doing quality work. Now I can walk into places confidently and tell them what kind of drone I have and also show them the type of work I can do with it. In all honesty, my Inspire 2 was the best decision I have ever made because of the potential it has to benefit myself and my business. I have done multiple jobs with it and have also produced some quality photos/videos that can lead into other jobs. So going into debt may sound like a big deal, but if you personally believe that it's worth it and you can make it work, consider it. If it is not something you see benefiting you, take more time to think about it!

If you know your business plan then everything goes. But, when we make any major purchase we have to ask - will it make us money and if I were spending X amount of dollars on anything is this what I would buy? It is my opinion that the camera is rarely the most strategic purchase you can make. Often it is much less exciting thing like storage and redundancy that improve your overall system. Which will make you more money - a faster computer or a newer camera? Which will have the greater effect - new camera or new lighting?

Dallas Dahms's picture

You should never go into debt for anything. Ever.

If you are using equipment to produce an output for which you are being paid regularly then you should rent that equipment and build the cost into your price. Rental costs are deductible. Capital expenditure is only deductible via depreciation and camera equipment reduces in value faster than GAAP allows.

Debt will kill you.

Mr Hogwallop's picture

Rental costs are billable to the client.

Dallas Dahms's picture

That's what I said.

Brian Schmittgens's picture

"You should never go into debt for anything. Ever." So you've paid cash for a house? That's pretty damn impressive.

Dallas Dahms's picture

What makes you think I own a house?

My philosophy on finances is simple: pay as little as possible to get as much as possible. I could have bought the house I have been living in 9 years ago and been paying 2-3 times what I have been paying in rent over the same period of time. I would have had countless repairs and taxes to pay on the property and at the end of the day I would have still had the same roof over my head.

I wouldn't have gotten any more house for all the extra money I would have paid the bank on a mortgage. My stress levels would have been so high because of the volatility of our South African security and economic situation with fluctuating interest rates that I'd probably be dead just trying to make the mortgage payments every month.

I can't take the house with me when I die (and that's a guarantee). Why on earth would I want to pour all my efforts into servicing a debt millstone? What if a Nigerian drug lord moved into the house next to mine? Who would want to buy the one I have been slaving away for years to pay for?

No sir, home ownership is not my paradigm. I prefer my freedom.

stir photos's picture

I'm just not comfortable with overarching, all in one, statements like, "You should never go into debt. Ever." When I hear terms like "output" I get nervous because it reminds me of Econ 101 (literally). Combined with, "Capital Expenditures", you're basically telling new and/or younger photographers (many with limited initial funding) to never incur debt to get an asset whatsoever. The problem is that it's the asset(s) that's needed.....

I get where you're coming from that debt is serious and can typically be viewed as negative (no pun intended), but it's a way of life. Managing debt is real and is accounted for in modern financial situations. Whether you're a new dentist small business, a home owner (or possibly one looking for a second property), a newly formed photography small business, any higher level student [incurring student loans], or a small business looking to intelligently grow, then incurring some debt is sometimes a necessary decision. In other circumstances, incurring debt might simply be a smart [business] decision.

Just because someone or someone's small business is in debt for 6 months to 3 years doesn't mean that they've immediately made a bad financial decision. That timeline is a small example, but it can easily be adjusted to business plans from 4 to 10 years, etc..

In the spirit of your broad stroke statement, debt is risk, I totally get that, but it can and should be considered calculated risk. Financial debt in and of itself isn't always and/or necessarily negative.

Again man, I'm just not comfortable with overarching, all in one, statements like, "You should never go into debt. Ever." We have to give a little more space and options to the younger and/or newer (maybe older, but just embarking on a first business try) folks.

Dallas Dahms's picture

The only time when debt is an acceptable business practise is when whatever it purchases for your business produces more income than it costs to repay the debt. In other words, if your camera purchase suddenly propels you into the earning stratosphere and can actually be called an asset, then debt can be justified. If it doesn't then your expensive gear acquisition can NOT be classified as an asset because it is COSTING you money every month, while also depreciating at a rate that is faster than you can claim a meaningful tax deduction from. In my experience buying gear does not buy you business.

The first 12 years of my working life were spent in a bank where at one point I held the lofty position of Mortgage Analyst for the institution's head office. I crunched enough numbers and produced enough reports about debt, and saw enough people's lives ruined by debt to never, ever recommend it to anybody. How quickly people forget the lessons of the most recent past.

Debt is poison. Remove it from your life and don't ever adopt the mindset that it will open things up for you. It will do the exact opposite.

Anders Madsen's picture

I agree with your analysis but not the conclusion - not completely, at least. :)

You are absolutely right that buying a piece of equipment that cannot pay for itself and the expenses that goes along with it (operator fee, maintenance, etc.) is bad idea in any business, but that does not mean that you should not go into debt to buy it - it means that you should not buy it at all, period.

Personally I will buy new equipment if there is a customer that:

1) Require me to do a job that cannot be done without the equipment.
2) Is paying enough for the job to cover at least 50% of the cost of the equipment on their first invoice.
3) I have a reasonable expectation of being able to earn enough extra money because of the equipment, to be able to pay for it entirely within 12 months.

If I have a situation where either 2) or 3) is not applicable, I will rent the equipment - otherwise I will buy it, since renting is pretty expensive where I live. Normally the rent cost will be higher than the cost of buying the equipment if I need to rent it more than 10-12 times.

I have a client that wants some very wide angle shots of the interior of their business locations, and my trusty Tokina 20-35 simply isn't wide enough. I expect the ongoing business from this client to be at least EUR 10K this year alone, so being able to create the kind of images they want is essential.

For the first two sessions (they have multiple locations scattered across the country) I rented a Nikon 14-24 and made sure that the shots were wide enough to satisfy the client. Then, a week ago I bought the Tamron 15-30 rather than renting the Nikon an additional 5-6 times this year alone. I shot a number of the images on 15 mm with the Nikon and the client did not mind at all, so the 40% price saving on the Tamron versus the Nikon made that choice a no-brainer.

The invoice I will be making for the client at some point during this week will cover the cost of the Tamron entirely (but I will have worked for peanuts), so for me the risk is highly limited - especially since Danish tax law lets me deduct the entire cost of the Tamron the first year, whereas the Nikon is expensive enough to have to be deprecated over three years, tax-wise.

Should the client suddenly decide that my services are no longer required, I will sell the lens used unless I have found an additional client that requires wide angle shots. Considering that I now own the lens, I will definitely make sure that my clients know about it so it can be put to work and start making me money.

So, while I agree that debt is pure poison in your private economy, I don't agree that necessarily is so in your business - but you need to know your numbers and plan accordingly.

Dallas Dahms's picture

Agreed. You need to be extremely circumspect when it comes to indebting yourself for any gear purchase. All too often we make these gear purchase decisions on emotional bases rather than well thought out business ones.

Personally I always buy this sort of gear used because the hit when needing to resell is much softer than if you were to buy it new.

stir photos's picture

Unfortunately, you can't say, "You should never go into debt for anything. Ever." Then, after someone slightly disagrees with you, change it to say, "The only time when debt is an acceptable business practise is when..." I mean, you can, you did, but it makes you look like you missed my whole point. And, you did btw...

Again, my whole point was/is: I'm just not comfortable with overarching, all in one, statements like, "You should never go into debt. Ever." That's what you said. You supported it with the example of Capital Expenditures and I disagreed, that's all. I'm not here to troll you man, seriously.

I'm also not one to seemingly brag about my own very, very early professional experience working at Bank of Tokyo Mitsubishi. There I worked on clients' and potential clients' lines of credit and business loans. I wasn't VP (not so lofty, I sat in the second isle, and if you've ever worked in a Japanese business bank, you know how lowly that really is), but I was there normalizing quarterly and annual earnings reports, scrutinizing business reports and plans, and even making mistakes on spreadsheets that got me balled out in Japanese... Again, I won't go into all that or that I've made a couple of successful trade purchases with debt (GASP!!!) (cough-cough Raytheon, while I was in the Army; cough-cough early in my career when I worked at Boeing). Yeah, I've "crunched some numbers" and worked for some companies, but I've never worked in "the head office", so you know... I'm not gonna brag.

Without going into all that, I will say again that I don't agree. Furthermore, if you're using your limited experience from Mortgage Lending to encompass all types of small business loans and types or questions about what exactly is acceptable debt for the vast array of small business loans out there, then I'd fain recommend you broaden your thoughts.

In 1996 I needed an implant to replace a molar that got infected from a filling that had unknowingly cracked. Needless to say, it was a big job for my newfound orthodontist, and we had time to chat along the way. Come to find out, he was from Iran, and he incurred debt to start his small business. GASP!!!! Fast forward 6 years later (and the every other month for 3 months check in of course) for a review of how my jaw bone and implant were still doing or had progressed long term- he was STILL in business (6 years later). The "debt poison" didn't ruin him! Let me tell ya, lucky for me because I didn't have to have his work checked by someone else.... So, if you ever need an Orthodontist in Southern California (more on the west side), he's still there. :) Yes, I know, hard to believe, but it's true- the "debt poison" still hasn't killed him, and it's 2017! OMG.... OMG...

I'll end this rant (and by "end" I mean I won't respond further regardless how wrong or right you might be in your anticipated response) with my favorite quote (possibly a paraphrase if I don't recall it verbatim, my bad....) from Nietzsche, "never argue with a fool in public because the casual passer-by can't tell the difference."

✌ #peace #twoFingers ✌

Dallas Dahms's picture

I'm sure you're a very nice person in real life, so I will endeavour to not get on your wrong side again by restraining myself from offering an opinion on anything you may say in the future.

Robert Nurse's picture

Since I'm an amateur/hobbyist, "justification" for high-priced gear really isn't there as it would be for pros. But, I do have one standing rule for photo gear. I make my purchases via PayPal Credit since they offer 6 months of interest free payments on purchases over $100. Therefore, if I can't pay off a purchase in 6 months, I can't have it. If I really want that body, lens, modifier, etc. I have to save up a decent enough down payment. In my view, there's no such thing as "good" debt. Yes, even mortgages and I have one.