Know the proper way to create assets through Debt

[gunhell16]

Let's speak about debt today, why it's bad for the majority, and how it's used to benefit the few. People in debt include your neighbor who owes a motorcycle and a vehicle, and someone you know who borrows money to build a house. We can see that most of them are unhappy. Because it is automatically withdrawn from their wages at work, the money due becomes a burden rather than a source of enjoyment. This is typically the reality of a debt-ridden life.

Using debt, however, is not a terrible thing. True, many individuals have become unhappy as a result of debt, but if you are strategic and utilize it to build an asset, it can help you become wealthy or escape from life. And it is doable. In reality, all of the successful entrepreneurs we know use debt to expand their firms and sustain their lifestyles, a practice known as leverage. Instead of investing your own money in assets, you will use other people's money as capital. Instead of waiting a short period, you can get started right away with just your simple idea and other people's money.

Let's talk about this, friends. If you don't already know, there are two forms of debt. This is bad debt, while the second is good debt. And we know Robert Kiyosaki explained this concept.

1. Bad debt: This is what makes a person suffer because it is the goods that give us liabilities or the ones that decline in value, such as electronics and cars. The frequent difficulty with these loans is that you will have to pay a hefty interest rate.

2. Good debt: This is the kind of debt that will make you wealthy. Alternatively, you will make money because, rather than spending it for your own needs, you will utilize it to construct an asset. Which, if handled properly, can provide you with additional revenue.

To help us understand good debt, consider the following scenario: you want to start your own business and have a product, a business plan, and a marketing strategy in place. However, the issue is that you lack capital. And you need $1,000. So, you shared this concept with people who you believe have the potential to become investors. You explained it clearly, presented it effectively, and they liked it and were eager to spend. And you persuaded your friend to borrow money, which you will repay in two years with interest. Then you started your business right away; people liked it, and it was successful within the first year. It gives you a consistent income, and it continues to grow.

After two years, you have compensated your pal. And your business just keeps expanding. It all started with an idea. Your goal is to start a business and leverage other people's resources to grow your assets. However, it serves as a reminder that you must also exercise extreme caution when using debt. Although this is a useful tool, you must prepare yourself to use it effectively.

What I mean is that you must understand how to handle money. Must be able to communicate, lead, negotiate, sell, and work interpersonally. Because borrowing money and using it in your business does not guarantee that everything will be OK and that your business will expand on its own. It's just that the weather doesn't always agree with what you want in your life.

[Don Pedro Dinero]

The problem with Kiyosaki's plan is that it doesn't work for ordinary people, and he has acknowledged this at some point, without saying so. Getting into massive debt by acquiring assets to receive positive cash flow, and with it acquiring more assets to receive cash flow is a plan that can only be executed well by a minority of intelligent people with emotional control and who have luck on their side, or at least that bad luck is not unfavorable to them.

For most people it is better to acquire assets with what they save, and in any case to get into debt to pay for their house.

[0t3p0t]

The problem with Kiyosaki's plan is that it doesn't work for ordinary people, and he has acknowledged this at some point, without saying so. Getting into massive debt by acquiring assets to receive positive cash flow, and with it acquiring more assets to receive cash flow is a plan that can only be executed well by a minority of intelligent people with emotional control and who have luck on their side, or at least that bad luck is not unfavorable to them.

For most people it is better to acquire assets with what they save, and in any case to get into debt to pay for their house.

I agree with your opinion mate. As poor and ordinary people doesn't have the guts to even get an account from banks so how much more they can get any loans from them whein they haven't had this collateral thing on them right? Lucky people who has inheritance from their late loved ones maybe able to perform this strategy. We all know that majority of people are the ordinary one that even have this what we called lack of knowledge about investments. Here in my place people are involved into something like debt after debt but non of them got the cash flow it is because it won't work for them or they mismanaged that debt which is a bad debt I would say.

[Bodhi2021]

Thank you for this your wonderful points and explanations, I now know the difference between a good debt and a bod debts, but seriously we all made mistakes in our ways of life's one way or the other, we think living in a luxurious life is the key to success rather it's not like that , we see our friends riding cars we also want to ride a car and not knowing deep well how he or she try to source for it, not knowing how difficulties roles and sacrifices he as made to get to that position he might have borrowed money to establish a business or invest on something that will fetch him or her money for a start before getting to the position he was to purchase a car , and we that doesn't know think since he has borrowed the money to purchase a car we decided to go and borrow too for us to purchase a brand new one too, not knowing that he initiated something good for himself first before he bought his new car, seriously this is what we should sit and think deeply about. Have really learn from you (Appreciation)

[0t3p0t]

Thank you for this your wonderful points and explanations, I now know the difference between a good debt and a bod debts, but seriously we all made mistakes in our ways of life's one way or the other, we think living in a luxurious life is the key to success rather it's not like that , we see our friends riding cars we also want to ride a car and not knowing deep well how he or she try to source for it, not knowing how difficulties roles and sacrifices he as made to get to that position he might have borrowed money to establish a business or invest on something that will fetch him or her money for a start before getting to the position he was to purchase a car , and we that doesn't know think since he has borrowed the money to purchase a car we decided to go and borrow too for us to purchase a brand new one too, not knowing that he initiated something good for himself first before he bought his new car, seriously this is what we should sit and think deeply about. Have really learn from you (Appreciation)

Envy is one of the seven deadly sins in the holy scripture so beware. I also got this phrases from Buddha that says:

Do not overrate what you have received, nor envy others He who envies others does not achieve peace. - Buddha

If our friends, neighbors or relatives has acquired something luxurious we should feel happy for them for getting their dream car, house or whatsoever come true and it doesn't mean we are to compete with them as well. Our goal is to acquire assets not liabilities so make your smart choices.

[Zed0X]

~
For most people it is better to acquire assets with what they save, and in any case to get into debt to pay for their house.

This is the way to start. Have more savings to have more cushion and emergency fund that could sustain you even if you struggle in the first few months of opening up a business. Another thing I would add here is to have a good credit standing with no default payments. The reason for that is you'll eventually need to take a loan to expand and the same loan could also give the borrower some tax breaks/benefits.

[yohananaomi]

Why do people sometimes assume that debt is something that should be avoided and become ridiculed because of their inability? but it could be true if we have the ability to not go into debt when doing any business.Saving well and having enough money to be able to do business is certainly a wise thing to do.But sometimes what has been done and calculated is not sufficient and must be supported by loans.As long as doing additional business is certainly not prohibited, as long as we have a good reputation for lending,.because one day, when we are going to expand, we will certainly need a loan again. As long as our reputation remains good, it won't be a problem, and it's not a taboo thing.
and you don't have to borrow using collateral in the form of assets that we have; it's only done initially, and after that, it will be easy.and you don't have to borrow using collateral in the form of assets that we have; it's only done initially, and after that, it will be easy.

[Don Pedro Dinero]

Why do people sometimes assume that debt is something that should be avoided and become ridiculed because of their inability? but it could be true if we have the ability to not go into debt when doing any business.Saving well and having enough money to be able to do business is certainly a wise thing to do.But sometimes what has been done and calculated is not sufficient and must be supported by loans.As long as doing additional business is certainly not prohibited, as long as we have a good reputation for lending,.because one day, when we are going to expand, we will certainly need a loan again. As long as our reputation remains good, it won't be a problem, and it's not a taboo thing.
and you don't have to borrow using collateral in the form of assets that we have; it's only done initially, and after that, it will be easy.and you don't have to borrow using collateral in the form of assets that we have; it's only done initially, and after that, it will be easy.

Hi mate. I want to suggest that you improve your writing by doing one simple thing: improving your punctuation. Simply putting a single space between the full stop and the beginning of the first word, and avoiding things like putting a full stop and a comma in a row or lower case after a full stop would look much better.

But to get to the point you are making, which is the subject of the thread, for me borrowing for investment is reasonable as long as you are clear that debt implies risk, and that more debt implies more risk. What Kiyosaki advocates I have argued that it does not work for ordinary people but in general debt is used a lot nowadays, so a little calculated debt is within reason and many businesses use it. But that's not what he does, as he owes a total of 1.2 billion dollars.