Learn to use DEBT in a proper way to create asset

[Samlucky O]

In the topic I covered today, let's talk together about the idea of debt, why it is bad for the majority, and why it is used as a tool for the advancement of the few. If we observe people in debt, it's like your friend who borrows a cellphone, your neighbor who owes a motorcycle and vehicle, and the person you know who borrows to build their house. We can notice and see that most of them are not happy. Because instead of enjoying the money owed, it becomes a burden because it is automatically deducted from their wages at work. And this is often the reality of a person's life in debt.

Yes that is actually true. But the root cause of such, is base on lack of planing. There is an addage that says " he who fails to plan, plans to fail" the moment you chose to borow money to build house or buy car without having a motive of borowing for business porpos has brought downfall upon him or herself.

* Bad debt: This is what makes a person suffer, because it is the things that give us liabilities or the ones that decrease in value, such as gadgets and cars. And the common problem with these loans is that you will pay them with high interest.

Loan is not for liability or fixed asset rather for investment porpos and when you take loan with high interest for business it will definitely affect you. Because you will be struggling to pay off your outstanding loan and interest and also want make profit to take care of your siblings or family there by causing more harm Dan good to yourself.

* Good debt: this is the type of debt that will make a person rich. Or else you will also earn money because, instead of using it for your needs, you will use it to build an asset. Which, if you handle it properly, can give you extra income.

It's even better to sell some properties and use the money for a genue business rather than taking loan. Because it is often said that loan for business is not good for a starter but rather good for an existing business because you have already know your way in and out of the business. Taking loan might just be an additional money to support rather using loan from the beginning because it might as well be a threat to you. Because definitely as a beginner you must encounter loss.

[franky1]

good debt is not defined as "make you rich"

good debt is where you have collateral or assets or cash to pay off a debt, but utilise debt to defer those payment thus not immediately leaving you with nothing to your name, nor defaults or debt recovery risk

for instance, a great example is
imagine you had $100k of bitcoin. but if you sold it you would have to pay upto 40% tax.
so instead you hand the bitcoin over to a loan company and they give you a loan of $100k tax free because debt is not taxable
the loan company then takes the bitcoin to cover the loan.. and job done you get $100k instead of $60k

[eightdots]

what I means you must know how to handle money. Must have skills, such as COMMUNICATION, LEADERSHIP, NEGOTIATION, SELLING and INTRAPERSONAL. Because if you borrow money and use it in your business, it doesn't mean that everything will be okay immediately and your business will grow automatically. It's just that not every time the weather agrees with what you want to happen in your life.

Money is needed to achieve something financially. Finding the money does not mean that everything will be solved immediately. Some of us have capital but have no idea how to evaluate this capital. Some of us have an idea but do not have the capital necessary to realize this idea. Both of them have some shortcomings, and they can reach their goals after these shortcomings are completed.

So, if we do not have money to achieve our goal, how should we determine the moves we will make with borrowed money? I think that's the real problem. So, you may lose your own money, but losing money you borrowed may have a worse outcome. For this, we have to learn to use money correctly. Because we may not always have the chance to make mistakes. For this, we must research well, plan well and implement it. In order to establish a successful business or to invest money successfully, it is important how you manage this asset rather than whether the capital belongs to you or is a debt.

[Baofeng]

Yeah, I heard this from Robert himself and I will say that it's very controversial, what works for him might not work for everyone.

Since people don't have the ability to use debts for good, it's better they get avoided.

I also know Kiyosaki's work well and in these types of threads I always repeat the same thing: using (good) debt to create wealth only works for a small percentage of intelligent, self-controlled people. For the vast majority of the population, if you want to improve your economic situation you have to avoid debt, especially consumer debt (taking a mortgage to buy your house is OK) and save and invest. That's all there is to it.

Yeah, and I think if we read his book we can come out with that conclusion. His formula is not for everyone and maybe I'm thinking that it has also include some shape or form of luck because that time houses are cheap in the US in the 70's-80's.

So for mere mortal like us, it's better to avoid, or if we have debts like credit cards, that should be our priority in order to have that financial freedom that we want to in our live. There's nothing with people who took DEBT to create assets, but you have to be very careful as I have said, there is this big factor we call RISK. So it's not as easy as it sounds.

[macson]

Yeah, I heard this from Robert himself and I will say that it's very controversial, what works for him might not work for everyone.

Since people don't have the ability to use debts for good, it's better they get avoided.

I also know Kiyosaki's work well and in these types of threads I always repeat the same thing: using (good) debt to create wealth only works for a small percentage of intelligent, self-controlled people. For the vast majority of the population, if you want to improve your economic situation you have to avoid debt, especially consumer debt (taking a mortgage to buy your house is OK) and save and invest. That's all there is to it.

i have experienced it when we think debt is a way out but in reality it is a trap that makes your money run low, i always think that debt to start a business is quite scary, especially since we don't know what will happen to our business.  maybe we won't get a buyer, let's be wise in managing our finances, don't let debt be a way out, it's better for you to have only $1000 in assets but no debt than to have $10k but your debts are piling up out there.

[_BlackStar]

-snip-

Money is needed to achieve something financially. Finding the money does not mean that everything will be solved immediately. Some of us have capital but have no idea how to evaluate this capital. Some of us have an idea but do not have the capital necessary to realize this idea. Both of them have some shortcomings, and they can reach their goals after these shortcomings are completed.

So, if we do not have money to achieve our goal, how should we determine the moves we will make with borrowed money? I think that's the real problem. So, you may lose your own money, but losing money you borrowed may have a worse outcome. For this, we have to learn to use money correctly. Because we may not always have the chance to make mistakes. For this, we must research well, plan well and implement it. In order to establish a successful business or to invest money successfully, it is important how you manage this asset rather than whether the capital belongs to you or is a debt.

I agree with your opinion, not all business ideas come true when someone has a budget, there are some who don't have the confidence to start it or maybe don't have the courage. Someone who has a business idea with no money seems to be more willing to take risks than someone who has money but no idea - that's no longer a secret.

In my opinion, starting a business idea with borrowed money is fine as long as there is collateral. They cannot simply hope that their business will be able to generate profits and thus repay their loans – this is too risky, especially if there is no collateral.

[Hewlet]

Although I don't quite like the idea of borrowing, their are times when it becomes necessary and if you're able to make the best use of it, it becomes a very good debt. Like you rightly pointed out, the point that debt becomes a problem is when you use it for personal consumption like food, clothing or you use it to buy an asset that will not yield a single profit but will just remain dormant as a pure liability to you and that's purely a bad debt and it's  a no no for me.

The problem with debt or borrowing is that it put you in a position to source for more which is a big problem if not managed properly. My advise is that one shouldn't take a loan or become indebted to someone unless it is very necessary to do so, if you have your way, create a system that will allow you to borrow from your investment so you automatically become your own debtor and the one in debt and you don't get pressured whenever the need to repay it comes.

[btc78]

So that we can give more clarity to good debt, I will give an example: You want to build your own business; you have a product, a business plan, and a marketing strategy. But the problem is that you lack capital. And the amount you need is $1,000. So what you did was share this idea with friends who you think have the potential to become investors. You explained it well, presented it well, and they liked it and were willing to invest. And you convinced your friend to borrow money, and you will pay him back in two years with interest. Then you started your business immediately; people liked it, and it became profitable immediately in the first year. It gives you constant income, and it continues to grow.

businesses are risky what if it doesn’t go the way you planned it? what if you lose more than you’ve put in? how will you pay your friends?

the concept of debt to me is quite not as attractive I probably wouldn’t borrow money to start a business, buy a house or a car or thing like that

if i’m going to borrow money i’d like to use it for emergency uses only

[oktana]

I do not even like the word debt, I know that there are people who are smart about it and use it to make money, then return it back on time and it’s a win-win thing, but maybe because I can’t take too much risk? I just see debts as burdens and will rather stay with what I have than get in debt. Think of the fact that you can spend your whole life just trying to repay money that you borrowed. No, I’ll rather just do the best I can and leave debt to those who know how to swing out of it.

[Xxmodded]

Many success businessmen have much debt how to build their business, but don't forget they have good method with debt applying based on ratio 20% from all total assets the have. Some businessmen with assets having above $1 million dollar they only get debt around $200k and never have higher debt than their assets having. For businessmen actually debt use for building their business but difficult for us with small assets having not easy to get debt. Not good ideas with lower assets and try to get debt more higher because when business get collapse will difficult how to pay loan interest.

I have ideas with borrowing fund in binance because have my assets on floating position, I think make its the collateral balance for borrowing on Binance and the capital I use for trading, can that be categorized as a good investment or not?

[Altryist]

i have experienced it when we think debt is a way out but in reality it is a trap that makes your money run low, i always think that debt to start a business is quite scary, especially since we don't know what will happen to our business.  maybe we won't get a buyer, let's be wise in managing our finances, don't let debt be a way out, it's better for you to have only $1000 in assets but no debt than to have $10k but your debts are piling up out there.

If you want to take out a loan at the very beginning of your activity and do not yet know what you can earn, this is a very dubious decision that can cause you a lot of problems. But if you take out a loan for a business that brings a stable profit and you can understand how much profit you will get and this will be enough to pay off the loan payments, then there is nothing wrong with this and can well be used for development. A loan can accelerate the growth of your business if you manage it skillfully.

[flyingcarpet]

i have experienced it when we think debt is a way out but in reality it is a trap that makes your money run low, i always think that debt to start a business is quite scary, especially since we don't know what will happen to our business.  maybe we won't get a buyer, let's be wise in managing our finances, don't let debt be a way out, it's better for you to have only $1000 in assets but no debt than to have $10k but your debts are piling up out there.

If you want to take out a loan at the very beginning of your activity and do not yet know what you can earn, this is a very dubious decision that can cause you a lot of problems. But if you take out a loan for a business that brings a stable profit and you can understand how much profit you will get and this will be enough to pay off the loan payments, then there is nothing wrong with this and can well be used for development. A loan can accelerate the growth of your business if you manage it skillfully.

This thought is really a trap and it draws you in over time. Starting a business is not suitable for everyone, and sometimes conditions should not be pushed to the limit. Doing business with borrowed money is always dangerous. Instead, you should work to build your own capital.

In order to pay your debts, the business you establish must bring you regular income. So what happens if you don't get the income you expect? Before you start a business, you don't know if it will make you a profit or not, and that's the biggest problem here.

It is not easy to manage the loan skillfully, but if this is achieved, the work done with the borrowed money will reach positive results.

[Pablo-wood]

Debts that exceeds your source of income is generally bad. Except for the sake of a defined investment with properly calculated risk management taking risk beyond once source of income can lead to not just debt but break down, emotional trauma, early death even lack of peace.

If one must take a loan that it above their income maybe for the sake of building a house or setting up an investment it is advised to go for long term loans and this loan's payback time should be calculated before taking them to ensure peace of mind and proper fund management

[Fortify]

In the topic I covered today, let's talk together about the idea of debt, why it is bad for the majority, and why it is used as a tool for the advancement of the few. If we observe people in debt, it's like your friend who borrows a cellphone, your neighbor who owes a motorcycle and vehicle, and the person you know who borrows to build their house. We can notice and see that most of them are not happy. Because instead of enjoying the money owed, it becomes a burden because it is automatically deducted from their wages at work. And this is often the reality of a person's life in debt.

Even so, using debt is not bad at any time. It is true that many people have become miserable because of debt, but if you are strategic and use it to build an asset, it can help you get rich or get out of life. And this is possible. In fact, all the successful entrepreneurs we know use debt to grow their businesses so they can maintain their lifestyle, and this is called leverage. Instead of using your own money to build assets, you will use other people's money as capital. Instead of waiting for a short period of time, you can start now with just your simple idea and the money of other people.

Let's discuss this matter, friends. If others don't already know, there are two types of debt. This is bad debt, and the second is good debt. And we know that this concept was explained by Robert Kiyosaki.

* Bad debt: This is what makes a person suffer, because it is the things that give us liabilities or the ones that decrease in value, such as gadgets and cars. And the common problem with these loans is that you will pay them with high interest.

* Good debt: this is the type of debt that will make a person rich. Or else you will also earn money because, instead of using it for your needs, you will use it to build an asset. Which, if you handle it properly, can give you extra income.

So that we can give more clarity to good debt, I will give an example: You want to build your own business; you have a product, a business plan, and a marketing strategy. But the problem is that you lack capital. And the amount you need is $1,000. So what you did was share this idea with friends who you think have the potential to become investors. You explained it well, presented it well, and they liked it and were willing to invest. And you convinced your friend to borrow money, and you will pay him back in two years with interest. Then you started your business immediately; people liked it, and it became profitable immediately in the first year. It gives you constant income, and it continues to grow.

After two years, you have paid your friend. And your business just keeps growing. And it all started with an idea. Your idea is to build a business, and you use other people's resources as a tool to build your own assets. But it's an important reminder that you also need to be doubly careful when using debt. Although this is a good tool, you must work yourself out to handle it properly.

what I means you must know how to handle money. Must have skills, such as COMMUNICATION, LEADERSHIP, NEGOTIATION, SELLING and INTRAPERSONAL. Because if you borrow money and use it in your business, it doesn't mean that everything will be okay immediately and your business will grow automatically. It's just that not every time the weather agrees with what you want to happen in your life.

This is what the richest people do, effectively try to borrow as much money as possible at the cheapest rate and then find assets that can make a better return - then get to keep the float in the middle. It's what insurance companies do every year and contributed to making Warren Buffett one of the richest men in the world. Mortgages are probably the only worthwhile loan to take out and it's better to avoid any other type of debt if possible, besides credit card debt as long as you pay it off in full each month. Sometimes if you're starting a business you might need to get a loan, but you can quickly wind up losing a chunk of equity or even getting lazy if your own money is not at stake.

[Alpha Marine]

One thing my dad warned me against growing up is never to take loans. He was a man who was knee-deep in debt for a good portion of his working life so he knew how bad it was because most of his salary went to pay off loans every month.
Not like my crackhead took his advice but I learned on time and I learned the hard way.

I have always been of the school of thought that debt should only be taken for an investment. Where I'm from you see people take loans for consumption. Loans for weddings, funerals all other things. I'm 100%  against that. I believe when you take a loan, the payment of that loan should come from the proceeds of the loan. So when you take a loan to buy a car that won't be used as a source of income, where is the money to pay back the loan come from?

Taking a loan for an investment doesn't mean nothing can wrong. Of course, businesses and investments can fail, but it's better to be in debt to try to get a better life than to be in debt because of an insignificant thing.
Because of my personal history with debt, I try to stay away from it. Good or bad, borrowing money is not always my go-to option.

[stomachgrowls]

Debts that exceeds your source of income is generally bad. Except for the sake of a defined investment with properly calculated risk management taking risk beyond once source of income can lead to not just debt but break down, emotional trauma, early death even lack of peace.

If one must take a loan that it above their income maybe for the sake of building a house or setting up an investment it is advised to go for long term loans and this loan's payback time should be calculated before taking them to ensure peace of mind and proper fund management

If you are taking up some loan just for the sake of buying up something which doesnt generate income then you're simply fucked up and just like on what you have said that if it goes beyond on the money that we are earning or simply with income. Then how you would really be able to repay those things on time? You are really just that basically making yourself that getting buried with debt.
Actually i did have experienced out such condition whereas tons of loans and debts had been piled up on which it did really comes into a point that im already that not able to repay those things on time
and those banks and lending firms do really tell me and having those legal actions against me because i havent been able to paid up.

Good thing that i was able to resolve out those problems even though it isnt really that simple because paying up loans which is really that more than on what you do earn
would really be tough as hell but since you are the ones who are making this then you wont really be having no choice. I do really be able to experience panic anxiety
because if banks would really be coming into a point on which you would really be that needing to face some legal actions then this is where things
will really that too damn hard to get out.

[Altryist]

This thought is really a trap and it draws you in over time. Starting a business is not suitable for everyone, and sometimes conditions should not be pushed to the limit. Doing business with borrowed money is always dangerous. Instead, you should work to build your own capital.

In order to pay your debts, the business you establish must bring you regular income. So what happens if you don't get the income you expect? Before you start a business, you don't know if it will make you a profit or not, and that's the biggest problem here.

It is not easy to manage the loan skillfully, but if this is achieved, the work done with the borrowed money will reach positive results.

This is what I wrote about above, you can use credit money if you have a business that is already working and brings the expected income, otherwise it will be too big a risk. But even in this case, I would not take credit money, because I don’t like being in debt to someone. Without borrowed money, it may take longer, but you also eliminate the case when you can lose the loan money and be forced to pay back an even larger amount.

[milewilda]

This thought is really a trap and it draws you in over time. Starting a business is not suitable for everyone, and sometimes conditions should not be pushed to the limit. Doing business with borrowed money is always dangerous. Instead, you should work to build your own capital.

In order to pay your debts, the business you establish must bring you regular income. So what happens if you don't get the income you expect? Before you start a business, you don't know if it will make you a profit or not, and that's the biggest problem here.

It is not easy to manage the loan skillfully, but if this is achieved, the work done with the borrowed money will reach positive results.

This is what I wrote about above, you can use credit money if you have a business that is already working and brings the expected income, otherwise it will be too big a risk. But even in this case, I would not take credit money, because I don’t like being in debt to someone. Without borrowed money, it may take longer, but you also eliminate the case when you can lose the loan money and be forced to pay back an even larger amount.

If you are planning on building a business via loan money then it would really be that imposing that kind of risks which it is of course normal but you would really be needing to take up that risks if you are really that serious on trying out on achieving something specially on becoming that successful because if you wont then you would really be just that remaining still on the condition or status you are now when it comes to financial state or condition but it is true that it would be ideal that you should really be only taking up some loan when you do have plans on business expansion on which i could say that it would be less risky comparing when you are really having that start up but well its up to your choice if you would be having that kind of approach on things and if you could be able to take up the risks.
Just like on what majority been saying on here is that when taking up a DEBT then be sure that you are really that making use of it into something that would generate income
because if you dont have that enough source of income then you would really be able to hardly be able to pay up that loan and this is something you should be avoiding in the first place.

[mirakal]

Debt is not something good in a general perspective do let's not make it appears as if one is bad and the other is good, most people that have been into debt have always lamented of why they took the decision at the first place, we don't seems to understand the comfort we have without being in debt like when we out ourselves in debt, many use to struggle before they can make the repayment of their debt back to their creditors, because it's never easy to pay back debt except by grace.

I don't think taking a debt falls on the good side of it because if we analyze it deeply, debts have growing interest that will definitely put us buried if we can't pay it on time due to some other unpredicted financial problems that will suddenly arise. Debts will only serve as a distraction for us no matter how we say and try to convince ourselves that we also benefit from it in times where we are empty handed.

If you consider this mindset that it's okay to have some debts because it will also serve it's purpose at some point, but knowing you have to pay it back with additional interest, that thing is always bad on my own perspective.

[junder]

Debt is not something good in a general perspective do let's not make it appears as if one is bad and the other is good, most people that have been into debt have always lamented of why they took the decision at the first place, we don't seems to understand the comfort we have without being in debt like when we out ourselves in debt, many use to struggle before they can make the repayment of their debt back to their creditors, because it's never easy to pay back debt except by grace.

I don't think taking a debt falls on the good side of it because if we analyze it deeply, debts have growing interest that will definitely put us buried if we can't pay it on time due to some other unpredicted financial problems that will suddenly arise. Debts will only serve as a distraction for us no matter how we say and try to convince ourselves that we also benefit from it in times where we are empty handed.

If you consider this mindset that it's okay to have some debts because it will also serve it's purpose at some point, but knowing you have to pay it back with additional interest, that thing is always bad on my own perspective.

It's true like that, there will be interest on the loan you make, not to mention other problems that will come. But if someone wants to start a business with insufficient funding, it is likely that they will borrow money, even though there will be interest later, this is not an obstacle to not running the business they want to run. Borrowing money to start a business is very risky, because just running a business will definitely have its own risks, especially if you add a loan, of course the risk will increase. On the other hand, they can borrow from friends or look for investors, where there is no interest, but maybe they should share the profits from the business. but the possibility of borrowing from friends is very difficult, isn't it? It's not like borrowing from a bank where there is a high probability that you will be successful in getting a loan. In my opinion, even if there is interest, if you are sure that the business you are running will produce results, there is no harm in doing it. Daring to take risky actions is not recommended and some people also don't dare to take risks,  but I myself am brave enough to take this action, as long as I am sure that the business I am running will produce clear profits and by managing everything well so that it runs smoothly. This is true with problems that cannot be predicted, especially with financial problems that are impossible to predict, but we can do our best to avoid or minimize the chance that problems will occur.

There are many points of view that judge loans are bad things also related to interest, but on the other hand to be able to run the business you want maybe this is one way, in my opinion even though there are many views that judge it bad it should not be a problem, it is better for us to focus on what will be done so that it can generate its own benefits, also if it has generated clear profits we will be able to pay off the debt and interest, because banks also want profit so it is natural that they hold certain interest in a number of loans that are done. The rest of the choice is up to us, where we must dare to take risks or not, because I myself cannot expect help from others to start a business so I dare to take this risk and I have done it, and the good thing is that I can run everything well as well as pay off the debts that I have from the loan that I initially made.