Topic: Learn to use DEBT in a proper way to create asset - page 10. (Read 1274 times)

now that i blasted all the bad debt examples in previous post..

good debt is ONLY IF the use of the money is well planned out and accounted for, actually utilised and optimised to expand business prospects to generate more income than the repayments to also leave the business in a sustainable state after repayments

just asking for debt money does not guarantee business growth, sustainability, success
before even asking for money, look at what is needed, optimise things to reduce the needs, then prioritise what remaining needs money needs togo to, then ask for the least amount needed. that way less then is needed to be repaid

I always get to see this topic being discussed by many content creators that are into finance and I find them helpful especially for topics that many people don't understand like this.

There is a common denominator for most people especially this holiday season. A gift should be given to someone because it is a norm during this time but I don't do it anymore because I have to take care of myself as well. These gifts, gadgets and other depreciating things must only be bought if you need them, no one stops you from buying these things but make sure that you need them and you thought of it for so many times before purchasing.

It's easy to say about using good debts but someone may have the intention of having good debt but may fail into establishing the business that's mostly for expansion. Don't get into debt as for me, it is better.

In real life this will never work unless you are rich and have the contact to grow your business, let's see what is good debt, anything that is utilized that may give potential returns but how rich makes the most out of it while an average joe who wanted to quit job and start their own business by taking loan end up broke after few years.

Rich people have the capital but they simply don't use it, they use it to pay back the debt in case if their plan goes wrong ways but an average Joe will never have backup resources to pay back and then end up defaulting on the loan.

* 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.

Basing up on your post above ^^^
This is what im trying to achieve again considering that i had made out some bad decisions in the past on which i've taken up some loan but all of those amounts been used into such waste
like buying up something which isnt useful or not really considering on building some business but rather i did purchase a car. Sooner or later you would really be able to realize
that the decisions you had made is really that completely wrong.

Now that im trying to recover out on which its never been simple but it isnt really that impossible if you are really just that eager on doing things on which
you are really serious on trying out to achieve.

It is true a loan you take can be used to build your wealth, however if it was possible to avoid asking for a loan we should take that path as taking a loan will in most cases be an inferior solution than just using your own money, as in the example given by the OP the business idea became a success, but as we know most businesses go bankrupt in just a few years and if you asked for a loan to start that business not only you will not have it anymore but now you will owe a lot of money that you now need to pay up.

There is too much talk about Debt and its impact on life with in different regions we have different view about this all because in few countries peoples don't like this and feel this is not good for anything but still in few countries we have good things about this all which bring good changes but for this all we need to make a solid strategy which helps us for having better use of this all without any strategy and pre-planning things can go into wrong way, and you can go into deep trouble.

Even I am personally having good changes with my debits and this make me to do many things which were never been possible because I have short of money for long time so mostly I suggest just go ahead, but you need to think about this before jumping and having better use of this because many times we have terrible impact as well, but this all depends on the user how he is going to do this all.

if anyone says this to you:
"yo bro i wanna start a business. please go to the bank, get a loan $1k, then give me that money, ill pay you back+$100"

..RUN!

think about it.
if the amount is $1k. and the guy says he can pay you back $1100 in a year, why hasnt he gone to the bank himself to get a $1k loan with a $1050 payback.. why is he not taking the bank risk of 5% interest himself but "promising" you 10% if you take on the debt risk with the bank

also note while he runs the business for a year promising you $1100 at year end. you are paying $87.50 back to the bank each month to pay back the bank $1050 by year end. if you skip 3months of repayments the bank call YOU out and make demands.. and the bank wont accept the excuse "please wait another 9 months my buddy made a promise he will pay me"

remind yourself again why your buddy wont approach a bank himself.

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if your buddy has not explained how every penny of the $1000 will be used. how it will make the business run better compared to not having the $1000.
if your buddy says he will take a salary every month, but wants you to wait until the year ends. just say no. you come first
if you are not getting paid before he does.. run

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banks have experience of looking over business proposals. if they turned him down.. get curious. there must be a reason

The example you gave shows exactly how loans taken from the bank or from family and friends is being put to good and proper use.
Good debt and bad debt? You don’t have bad debts as a borrower, you incur bad debts as a lender giving out loans that won’t be paid back. That’s bad debt.
Loans are majorly taken out to help solve an emergency or for business purposes. If you end up spending the loan on irrelevant things, that’s a choice purposefully made knowing the loan has to be paid back.

I am not comfortable with loans because no business is predictable. Natural disasters, changes in government policies and conflicts could lead to the collapse of any business and the banks will not take any excuse when they come to ask for payback. They will claim the collateral making you lose more than you bargained. I prefer to start a business with the funds available and gradually grow or expand the business. But loans could be of great importance, especially to businessmen with good business plans and the requisite skills to run a business.

In my country, there has been an increase in a loan system called "easy buy". People can now buy phones, gadgets and even designer clothes on credit. I find it unreasonable to access loans just because you want to change a phone, car or television. All these items are fragile and decrease in value drastically. But I might consider taking a soft loan to buy a house because it will help me save more money.      

I agree with that, because being in debt is not always bad, depending on why we take out a loan and what we use the money for. If the designation is clear, to start a business for example, because you lack capital so inevitably you have to take a loan, so that what you planned before can be realized immediately and you can start to do business.

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However, it is careless.... if we take loans for things that are less important, such as to fulfill your desire to have a luxury house. Even though you also have a house. it's just that the house you have is very simple.
That is careless, because it will only add to your life burden, you live in a luxurious house but your life is so miserable. because you have to think about credit every month.

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So in conclusion, when we take out a loan, before doing so, we must have a clear reason and designation. So that we are not too confused in paying installments every month. Because the money you borrow, can make money back.

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.

leveraging is not creating asset or creating wealth
leveraging is gambling.. and there are losers when people leverage

leveraging is only good if you win.. but always bad for all other circumstances

99% of real entrepreneurs (not ticktok influencers) gain capital from investors. that invest in a business for a percentage ownership of the business.. they then get returns on the success of the business at a rate of the profits of the % share they invested of the company

this is not leveraging, this is straight up normal investing

if you are starting a business but not taking a loan.. but instead (as op describes) ask a friend/neighbour to take out a loan ("convince friend to borrow money"), you are doing a disservice to your friend. because if the business fails. not only do they not get ROI from the investment. but the loan company are then chasing after your friend for the debt you convinced him to take up.. so double harm on both sides of the rotten deal

That's right, someone who takes out a loan to start a business must be able to handle their money well, by using it in a controlled manner so that it doesn't just go to waste. Also, in my opinion, borrowing money to start a business is not wrong, because you have to have the courage to take action, even by borrowing money for capital to start a business. someone who has an idea to start a business but they don't have enough money to run their idea into a business and they take out a loan to start the business in my opinion they are people who dare to take action, because they dare to take risks to become better. There are people who stop when they run out of capital to start a business, because they don't dare to take risks so they prefer to quit.

I personally prefer to take out a loan if I don't have enough money to start a business, because in my opinion we should have the courage to move forward, even though there are risks, but in my opinion that doesn't make me stop there. Dare to take risks is an action that is not wrong, because at least if we fail, we have tried and done our best. By taking out a loan to start a business, it means we have to manage it well so we can produce and pay off the debt we have. Regarding the risks, the important thing is that we have the courage to move forward, which is good.

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.