Topic: Learn to use DEBT in a proper way to create asset - page 9. (Read 1274 times)

The advice you say is not wrong if it is used by everyone who wants to build any business in their own environment, because having initial capital to build a business from scratch is always much better than making a loan in any form to start a business. Because the level of risk that a business owner must bear will be very different between using his own capital and using borrowed money from other people, so the main choice remains his own capital, no matter how small. Because capital from other people must be repaid within the time specified by the borrower himself.

If I were to start a business, I would prioritize saving money instead of taking on debt. Using debt can be risky and add to overall problems since it will accumulate interest in the long run. It's okay to take a loan for your business if you are confident that you can repay it quickly. Having financial stability and a safety net before starting a business is always a good idea. Taking out loans may seem easy at first, but it can become a risky gamble. It is always better to save money and use it to invest in your business rather than borrowing from others.

This is a way to use money correctly and ideally, back to the reality where borrowing money is generally to cover life's needs.  I'm talking on a lower middle class scale and  that's definitely what's happening. There will be no option to expand the business and so on because debt for them is a way to take the opportunity to cover deficiencies  with the burden they will bear in the future.

Meanwhile for business people of course developing their business by taking on debt, there must be a separate guarantee that is commensurate right? do not necessarily borrow large amounts if there is no similar collateral. Therefore business people can take advantage  of loans in a profitable direction. The conditions above and the debt conditions in the second point  have different purposes. So we are still at the first point where debt is only to cover unmet needs.

Where do you place yourself from 2 position above?

You know, like I said, it depends on the person who will handle the money owed. In my experience, yes, I borrowed money, but not from a friend of mine here or from any bank. But I borrowed money here on the forum from @shasan worth $200, and even my interest is fine and payable in 2 months.

The 50 dollars I invested here in our area, which is a type of microbusiness that can be considered a small barbecue business, and the 150 dollars I bought potential crypto assets here in the field where we stayed most of the time. The first month I borrowed the loan was the 150$ I played in trading, and in the first month when I carried out trading activity in 5 variety crypto, I made a profit of 170$ in 1 month aside from 150$. In addition to the Barbecue business, I also made money from that, and until now it still exists. I paid off the money I borrowed from @Shasan, so thanks to him, my profit continues even in my crypto trading, which has produced other crypto assets.

If you do not have a quick return and assets that cover the costs of the debt, it is better not to borrow, otherwise you will put yourself in options that may be bad, and thus this is like shooting at your projects and dreams.
Regardless of things, the philosophy of getting money from money through lending leads to a decrease in the value of money. Therefore, banks and governments must encourage investors to make money from projects such as agriculture, industry, or services, more than borrowing.

In my own opinion, one thing that I consider as good debt is purchasing property, as we know that land appreciates the price from time to time which is a good investment and business too, because you can let other people rent to your house, in that way you can acquire profit which help you to pay your debt or if you have no plans to put it for rent,  You can sell it at the higher price and you were be able to pay your debt while having large profit

It's never been good to start your actual business with borrowed money. You're in an experimental mode when you start and most of the startups end up failing and that's why it's not a good idea to start it with a loan. People who have been into the business will say the same thing and that's why someone who's pulling off a business needs to have their own money so, if it ever fails, you'll have no obligation to pay that will be suck you up together with the failed start up.

Thanks to the modern time today, many does take loan with the fancy things that they can have. It's all about the validation that they're taking from people. Expensive phones, cars, etc, but lack in assets and investments that will generate them more money. These possessions that people are wanting to have have a quick depreciation.

Yes I think we shouldn't be taking debt for our personal leisure or product which depreciates with time which is the mistake people make but it's equally risky when you borrow it for business but it gives a possibility of giving profit which could cover the interest charges. I personally don't think these loans or credits are good because it pushes people at the brink of poverty with penalties and late payment fee, etc.

One should never fall in debt for products like car, expensive mobiles and all. Because only few are able to manage it wisely as I have seen people using two credit cards and keep rotating the amount between two.

That's true, I think borrowing money to create or start a business is bad, because most business doesn't make much profit early, and with the debt chasing it's very hard to expand it. The better way to start business would be using our own money or find some investors. I didn't say that there is no good debt, I think we should only borrow money when our business is settle, established and ready to do a big expand, when we reach that level of business borrowing money will be a good thing, our business already generate profit and we can calculate based on data on how much we can borrow money based on our monthly profit that, so that the monthly payment for our debt is not hinder the development of our business

Most people don't know whether their business is successful or not because it depends on how seriously they take their business. Many of them borrow money because they "feel confident" that their business can be successful. But after they run it, they know it's not easy and many of them give up and ultimately, they can't pay back the loan money.
If they can run their business well, it will be successful, but it will depend on how hard they are willing to work.
There is nothing wrong with being in debt as long as someone can repay the debt. If he can't pay it back or is in doubt, he shouldn't borrow money from anyone.

To clear the doubt, let me ask you something.
 
Have you take a loan from your friends or banks? how much you take it? is your business successful? if you answer "NO", then I don't see it's a good reason to create a business using borrowed money.

I can say something similar, buy shitcoins instead of Bitcoin, you have a chance to get rich overnight than invest in Bitcoin.

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.

Having good debts are easy to establish when you have actual assets that the banks will see for you to use it as a collateral. But if you're starting from zero, it's not advisable to take loans and that's why even if the sole purpose is going to be for business or investments. You shouldn't do it.
Don't rush into the scene just because you see people telling that it's okay to have a good debt because it is for business, investment or buying an asset. Remember that there's an interest that you need to make, so you need to establish yourself first before making a good debt.

Immediately I saw the title of your thread, I knew you'll mention Robert Kiyosaki, I'm a big fan of his content especially when it comes to debt, assets and liability. The reason many people are advices to avoid debts is because many people don't have the attributes that entrepreneurs have to use other people money effectively or would I say using debts very well. If the average person gets into debts they can't come out of it because they use debts to buy liability either knowingly or unknowingly. People use debts to buy houss,(which are liability but people think they're assets but this is a topic for another day. Note I'm referring to personal homes and not rental houses).

Since people don't have the ability to use debts for good, it's better they get avoided. If all the active users of the forum were put into debts, many won't be able to get out of it so instead of leaning how to use it, avoid it. You can make it without debts as that's not a path for everybody to follow. Those who know how to do it are allowed to do and if you want to learn then you need external guidance and not just by reading on the forum because it's a very risky thing to do. It's this same debts that has taken alot of entrepreneur of business.

An example is SBF of FTX that tried to use customers funds (others money, AKA Good debts) but couldn't use it effectively or used it wrongly and got caught slacking that his company and reputation is paying for that. Knowing how to use debts to your advantage is a good attributes to an entrepreneur and puts you ahead of others so it's something worth learning but also not for everyone.

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. And I will agree that this is just like gambler per se, wherein you borrow some money from your friends and go on put a business or buy a house as a investment and wait for a couple of years to make money.

But still though, how can you pay it back when you are just starting your business? For sure once you borrowed that money, you have to pay it back the soonest as it will accrued big interest overtime. So it's a big risk in my opinion.

I'm still very surprised by people who can manage their debt well, they manage their debt smartly so that it doesn't affect the finances they have, if we look at a country, there are still many countries that routinely create debt for their country even to the point of entering in large amounts, debt will be good if the borrower is able to pay it on time, and is also able to be careful in managing it. for me, managing debt is a job that is not easy but not so difficult. Apart from that, there are some rich people who say that those who don't dare to take out loans will continue to be poor.

Something bad should not be considered as good. Debt in any form is not advisable to anyone. I have been in that state only a few people can pay their debt even if they get back the money after the period. I believe paying off debt is an individual behavior. Many people find it difficult to pay off their debt. These set of persons in my opinion lack trust and should be allowed to take loans.

This has been said a million times, but its easier said and done. I have to say its not an easy thing to just get debt and acquire assets with that debt, it is definitely not a horrible idea but not that easy neither. I could say that I have a lot of "assets" in my house, if you consider ps5 or an iPad and what not as assets, after all in my nation they do not lose that much value, so you make a profit when you buy one and sell one 8 months later. But that is of course not what asset is, and I do agree that one should do that, but I just can't do it all that easily, it takes time, first you need to pay for your medical bill debt, and then school debt, and then credit card debt you needed to make to live, all those things get on top of each other and give you no chance to get debt for other reasons.

Debt is not bad at all and seriously, I also started my trading journey from a debt and since then I was able to multiply that money and repay my debt without worrying for the interest. Though there are times that debt becomes more of a problem than it helps and the reason for that is because we are not able to identify its purpose.

Bank debt is quiet high when it comes to their interest, so make sure you do the math and make sure that if you are going to use it for a business or something that will make you money, it will cover the premium and the interest as well.

borrowing capital to open a business or business makes sense, because there are people who have an idea for a business but don't have enough money to start it, they can take out a loan to run it, but as long as they run it well and it must produce results, because a business basically has to produce its own profits. and people who borrow money to open a business are only certain people anyway because people like this tend to be people who have strong determination because they dare to take out a loan to run their business idea.
it's not wrong if they borrow money to open a business, because if they are sure that what they are going to do can be profitable, it doesn't matter, I support this. because this also opens someone up to be more courageous in taking steps, on the other hand there are definitely risks but as I said only someone who has a strong determination to do this because rarely do people dare to do something like this which is very risky. the key is confidence.