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 Because it is automatically withdrawn from their wages at work, the money due becomes a burden rather than a source of enjoyment.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.