Good Debt
Reading time: 2 – 4 minutes
There really is no such thing but if you can take a negative and make a positive from it then it gets cleansed. Most people think Good Debt is some cornball angle of bettering yourself by paying for a expensive ass college. Most people think Good Debt is taking a much needed vacation after enduring years on a plantation. Most people think Good Debt is taking your wife to eat a special dinner to thank her for hanging in there with you when things looked bad. None of these are Good reasons to go into debt but, I’ll explain what is.
Good Debt:
- Buying a inexpensive reasonably priced reliable car so you can make sure you keep your job.
- Getting a Home Loan to purchase a starter house that fits your current needs for space and is cheaper than renting!
- Borrowing 100K from a bank to buy 10 rental properties at 10K each.
- Borrowing 20K from the bank to expand a profitable business you already figured out.
- Borrowing 30K from the bank to pay a good salesman salary to push your product.
- Opening a rotating line of credit to increase your inventory when business demand rises.
- Borrowing 30K to buy a empty lot of land (zoned commercial) you can do whatever you want to with it!
Bad Debt:
- Paying for a expensive college that will not guarantee you will get a good job when you graduate.
- Buying a 7Series BMW for 100K when you will want a new one 2 years from now.
- Paying for ANYTHING on your credit card so you can accumulate bullshit points or frequent flyer miles!
- Going on shopping sprees, putting it on your Platinum, Gold, Double GOD credit card to show you have money!
- Buying a 400K home because your realtor told you it used to be worth 850K before the recession.
- Buying a house to be closer to malls, shopping, theaters and restaurants AKA to create more debt!
- Listening to/Hanging Around people deep in debt and feeling bad that you don’t have your life on loan like theirs.
Rich people use debt to create more money while Poor people use debt to enjoy their life. That’s the rule of debt! You can trick the same way if you had cash and it wouldn’t come back to haunt you. You would just kick yourself later for wasting your money on stupid shit. But, once you put it on credit the interest will make you kick yourself every month for a year until you pay it off. If you don’t have a plan to make more money by using your access to DEBT then more than likely it’s Bad Debt.
Bottom Line: Rich people use debt to create more money while Poor people use debt to enjoy their life.
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Yup I learned the difference when I read “Creating Wealth” by Robert Allen. and the Robert Kiyosaki books
The rule is absolute! But, most of us grow up getting credit cards and celebrating a opportunity to trick! We feel chosen and honored to be given a credit line! And, this is why most cats see credit as a chance to buy things on loan and look better. If you aren’t building something you’re breaking yourself.
Credit is the worse thing anyone with a compulsive issue(which is just about anyone today) to buy things they dont need! I believe that credit should only be given to businesses already established or given to people who will start a business. I see it all the time! People pulling out their credit cards to buy the latest wares! Why do you need a IPad 2 when you already have a IPAD . Credit makes it easy for the banks to put their boot on your neck. Once that happens you will be their slave forever! My first car cost me $600.00 and it took me where i needed to go. Mind you its wasn’t a panty dropper like most but it took me from point A to Point B with no problem and i still had an extra $100.00 in my pocket! Its like you said on yesterdays article about the game! You need to get out of it! its made to make you dependent on them and not yourself.
Cash is always King in my book!
They hook you at such a early age and they know you don’t have the knowledge about money to manage it. I remember when I was in Law School some cats were taking the loan money to buy land for mineral rights! And, I was sitting there buying a weight bench!
Once you see those credit cards as extra or emergency money instead of seed money to use to grow you are trapped!
They really push this stuff with college students through credit cards. The kids are already in debt with student loans and then they take on credit cards to “enjoy the college experience.” Which means buying more and more clothes, taking road trips, buying cars and doing other unnecessary yet costly stuff. Then they get out of school with 100k in debt and hardly any jobs in sight. Then, out of desperation from not being able to find an entry level corporate job, they take whatever low-paying customer service job they can get.
That expensive college education has turned out to be a bad investment for many these days. Like you said in your podcast yesterday, it should be plan B or C. I’m working on getting my own empire started, so I can do just that instead of using it as the plan A.
It’s all a grand plan homie. Your parents end up bailing you out and you learn early that it can mess up your credit. So the cat who gets out of school works to bring back up his FICO score so he can…. of course get more credit for his house. Then the cat learns to keep good credit and the banks are happy you learned your lesson at 18 as you probably will be a good slave and pay on time from this point forward. Then you get a financial advisor who lies to you about what is good credit and you repeat the same propaganda to your friends, kind and mawfuckers on the street as you take pride in managing your debt. The shit is stupid all the way around.
They will make school so expensive everyone will go to community college for the first two years and then transfer. So instead of 4 years at 30K you have two years. Then the dumbass cycle starts up all over again of proving you are smart and that you have what other folks have. By the time you learn to get rid of your debt you’ll be married with kids remembering this post saying damn I knew the game.
Credit is convenient and that’s the trap!
2 days in a row..spitting game. Good Debt…what? There is a such thing. Damn. I’ve been asleep. After reading the above I’m tossing this credit card letter I just got in the mail. LOL.
Damn those were some smart kids!
I had to learn the hard way with debt iam paying off. Thanks for the good debt advise. Every day there is credit card offer in my mail box that goes in the trash.
Freeman how can you get a loan for a small cheap car for like 5k? I know that most dealerships don’t want to finance something that small. I would just like to know because I prefer to buy a cheaper car from a private seller if something ever happened to mines. I don’t wanna mess with dealerships until I am straight writing checks.
@AH – Thanks! You don’t have to throw them away just use them to build a business or something else. I’m not telling you to cut them up at all.
@JB – There are a lot of people who have been laced with this game since birth. I was lucky to be around a couple of them in school who showed me money in places I would have never seen.
@Eman – I learned the hard way myself. The business cleared me of all of my debt as that was my angle when I started. Again, the credit cards don’t have to be thrown away as it’s money that can be used like the Rich people to create a business.
@JB – It’ll better for you to save your money to buy the 5K car outright. In the meantime while saving you can have the money to fix your old car and rent a car until it gets fixed. Otherwise it might be better to borrow the money from a family member or borrow a family car in case you need it.
I have school debt which is bad debt. Im going to leave school with about 36k in the whole. I am screwed. Wish I would have known about community college earlier. Its free. So now I figure to live free I need about 150k. thats my magic number. thats my school loans a place to stay food for about 10 yearss. $150k thats my number to freedom.
We all have to purchase our independence after going in debt over ignorance. 36K ain’t that bad as I had something like 130K to get out from under. It’s good that you have a number which means you have a plan. You’ll get there faster than you think so don’t fret time because it’s not about wasting time once you’re on the right road.
Once you purchase your freedom, think about building so you never go back.
A little off topic but I notice a similarity between what you talk about and that of Ayn Rand, one of my favorite authors who talked about Objectivism and Selfishness to achieve personal satisfaction. If anyone wants to read her stuff Google “The Virtue of Selfishness”. Pretty good game.
Welcome – Never heard of her but I’ll definitely check her out. What’s listed in this post is nothing new as from my readings I am sure I picked it up too. Thanks for the angle.
Oh nothing is wrong and I have a lot of dough saved I just like to a;ways have a plan B because I worked hard for my money I saved and I wanna keep it growing.
If you are making a good investment with your money then that’s what the cash is for. Making sure you can keep money coming in is vital so the vehicle that gets you there is super vital.