I'm about to put you guys one game okay that is actually a very very powerful tool that for some will keep them in a forever hamster wheel of financial stress but for others, the rich can lead you to a life of financial freedom, financial independence and generational wealth.
Welcome back I'm here to teach you all the lessons about money as you should have learned in school but she was too busy poking dead frogs. Please be sure to subscribe because we talked about everything from personal finance to economics to investing and I get straight into it.
What is Debt?
Honestly, debt is debt right! but what you do with the debt is what separates it from the good and bad. So business loans could be good or bad, mortgage loans could be good or bad, student loans you get the point.
Good Debt
The difference between good and bad debt is that good debt makes you money. It can also be strategic debt that helps you reduce your expenses and that would be like consolidating your loans or things like that.
It can also be debt tools that have some perks like your credit cards I have to catch back and stuff right so technically it is debt when you pay it off you don't pay any interest so it's a good perk.
Bad Debt
Then what is bad debt the debt does not make you money. It actually costs you more and a lot of times makes you car poorer, house poorer or just poor depending on what exactly it is that you have gotten.
It's when you get things that you don't need that you cannot afford that she wouldn't be able to buy without the debt and its things that cost more than what they're actually worth which a great example is a car loan in which the minute you roll off the lot you upside down how did that happen.
How to Flip Debt from Bad to Good
1. Mortgage Loan
Let's show you how to flip these things from bad to good starting with a mortgage loan. When you have a mortgage loan if you just buy a big house that you can barely afford if your lender got you in because they had to twist this and turn that.
You're gonna be house poor instead buy a duplex or a triplex or a four-plex that way you can still have a 30-year fixed-rate loan but you can rent those other units out and if you do this right you can actually end up paying nothing out of pocket for your living expenses.
Yours attends we pay the mortgage for you that's a good deal to me I have more about that in this article up here so be sure to check that out.
2. Student Loans
With student loans a lot of times people just go to college because they believe they are supposed to but a lot of them don't know the answer to the very most important questions you need to ask. Is this career in demand? is this how are you going to be able to cover my loan expenses? Is it worth to go to school?
A lot of time you can probably get to the same place if you don't want school and use those years for experience instead of exposure to that industry.
Study your fields see if there are courses see if there are other ways around getting a degree or Exede you can get a lot of grants a lot of scholarships.
A lot of scholars who actually go on apply for a true story I got $2,500 of a scholarship and only two people applied two people apply to get $2,500. I don't know about you but I'm applying to everything okay so do not limit yourself.
3. Business Loans
This could be a personal one that you use for a business - what the idea is the money is going towards your business but if you haven't researched your business, if you do not know your target market, if you don't know the demand for that product or service you're going into it blindly and you almost will always fail.
Why do so many businesses fail? because a lot of times x equals jump in headfirst you had to find a good balance right.
So you don't want to become like analysis paralysis where you're doing so much analysis that you get nothing done but you don't want to just jump in and assume that you know it all because there could be some tricks of the trade that you ain't know about.
So basically when you're getting into debt really think about is it's going to make me money. Do I really need that new purse? Do I really need a nice vacation? or should I just do it the traditional way and save that money up.
But now the caveat here is you can use your credit card right! because what you want to do is get the points but you have to pay that off at the end of every single period because you do not want to take an interest because these interest rates are scary right now.
So make sure you're not keeping balances and make sure you're making your payments on time now what you should do is invest in things like real estate.
When using a mortgage that's a thirty-year fixed-rate allows you to control a very expensive property for very little down as well as 3% down in some situations and then as I said if you buy a multi-family property or if you maybe Airbnb the back house or garage or something you can really make money off of that debt.
Take advantage of any savings taxes you know so the credit union that I used to work for us a 10% interest on the first thousand dollars. So you better believe I always keep a thousand dollars in that account because I'm getting 10% and I'll have to do a damn thing.
So I really recommend you to check your local bank check your credit union sees how you can maximize your dollar for Less work. Invest in a business if you have a passion you have a side hustle monetize it. Do not just sit on your butt all right.
Something that you should know about that is that it depends on the lender right so maybe one lender will give you 13 % and another idea will give you 6. You must shop around because if you don't shop around you're doing yourself a great disservice okay.
So get your rates to compare whatever points you may have to pay. Really again do your research so you can see what you're going to be dealing with and you know how to make moves based on that information.
What Do We Learn?
What we learned that there are like that is that but what you do is what determines what's good from bad okay do not spend on material things do not spend on things that you cannot afford and they're not going to make you money.
Pay things off one time do a lot of research before you get into any debt make sure you're not just blindly signing your name to things without any research without any question that you're asking.
You're literally signing your life away right so you want to make sure with your decisions that you're making make sense with a seat all right that's it for this video if you got the time.
I mean the choice is yours you've got this one so we're both if you want to shoot please drop a comment and make sure you subscribe and hit the bell all those things are free I ain't charging you for nothing I got you and as always keep your money up.
Also, Read
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