What Is Leverage Good Debt VS Bad Debt

Good Debt VS Bad Debt

Do you know the difference? 
Good job if you do.

I know from experience, 
so I am familiar with both ends of the spectrum.

That’s why I am writing this – to help you ‘should’ you need more understanding of the topic.

 

In simple terms, when you are in the process of parting with your hard earned cash – you might want to consider a few things first of all.

 

Firstly – an important thing to consider is ‘what you are buying and why it will add value to you or your life!’

Also – if that is going to give you a long lasting pleasure and be a great investment to your life or not?

Sure, sometimes we just want a HIT, FIX, BUZZ, HIGH!

We want a fairly meaningless thing to give us some pleasure in a particular moment don’t we?

Sure, we do we are Human after all.  But, a constant habit or behaviour of buying THINGS may be alot of fun, but, may not bring long term value.

We all do it; we buy things, they bring us joy, and we fill our lives and homes with things.  They can make us feel warm and fuzzy inside, and so in some respects we all need things to a degree.

But to what end?

What do we NEED vs WANT.  Have our wants gotten out of control?

Well – the evidence shows that is has.  So, we have gotten addicted to obsessing over WHAT WE CAN GET.

We buy simply and easily often with just the push of a button and BAM – it’s on it’s way to us.

That’s awesome isn’t it and I love it also, but we have to watch what we are doing day in day out.

If it is not really worth it though, then it would be fair to say that it is just simply a momentary JOY invoking purchase yes?

Make sense?  We all have them.  I HAVE THEM, and there is nothing at all wrong with buying for pleasure.  It feels good.

So I know i do, but I also know that ‘the thing’ I buy is not determining my overall happiness level.   This means that I am happy regardless of what I buy. If I wasn’t then I would depend upon that thing.  And happiness then is based on owning something new.

But – it is easy to get drawn into buying things and thinking that these things are determining our levels of happiness and joy when we are the answer.

Now, this may seem kinda weird, like I am trying to put you off buying and being a Business Coach who helps others sell – it could seem short sighted of me no?  Why would I suggest you are careful with your spending?

Sure, I am not as wise as that guy obviously, but it doesn’t take much wisdom to know that money either works for us or against us. 

Bear with me; here it comes:

As I stated, we buy stuff and we make our homes nice and stylish and they bring us calm sure.    I do get that, but there is a line between enhancing our lives with enrichment and buying to compensate for something that is missing.

We need an emotional attachment to something, and hoarders are prime examples of buying gone mad.

They have a hole inside which needs filling.

It’s psychological!

Now I sell my Coaching, and it is not cheap, so one might argue that this is not a vital purchase.  True!

However, it depends upon what results I can achieve for my client, agreed?

So, for example, if a person pays me and I can help them to create their dream life or business which may equal many times more than what they paid me then was it worth it?

Certainly for my clients it is worth it – as they get desired results and its win win.

Plus I only work with those who can see that they need to invest in themselves in order to create growth and increase.

What Is Leverage Good Debt VS Bad Debt

So, where am I going with this?

Good question!

Simply that – spending can increase our wealth and growth OR it can make us poorer with little to show for it.

So, of course, I am not against spending, what I am against is mass consumerism rather than self investment.

If we aimlessly spend, we often get nothing long term from it.   Sometimes we do, and the joys are there, but mostly we lose money.

It’s like gambling.  It is useless.  It gives a buzz to a person who 90% of the time loses.  So, what is the point exactly?

If you are going to gamble then make it on YOU investing money wisely.

Study ‘how to’ increase what you have.

See what I mean there?

A simple rule is ‘if it increases your net worth’ or has future value, it’s good debt.  If it doesn’t do that and you don’t have cash to pay for it, it’s bad debt.

The next thing to understand is ‘how much debt you have!’

A simple metric is looking at your debt-to-income ratio.

So we know that some spending brings no real ‘long term value’ necessarily and may drive us into using credit cards and store credit etc, which creates more debt, or there is the idea of spending to increase wealth, happiness, growth, income and so on.

What Is Leverage Good Debt VS Bad Debt

: Urgency Fixes And Short Term Gratification!

I know that it is easy to find pleasures and to blow money every now and then – but what I am really saying is; how much you spend on rubbish can be destroying your future WHEN YOU COULD BE INVESTING IN YOUR FUTURE.

Good Debt VS Bad Debt

And the earlier you start the better.

What Is Leverage: What is your roadmap?

With the way the world is going in the Global Economic Meltdown, you won’t get much help from governments or organisations when you retire, you just won’t.

So, don’t rely completely on outside sources but rely on yourself.

You are buying stuff now that might give you a fix of a temporary nature, but what long lasting affect will it have on your future lifestyle?

LOOK FOR WAYS TO CREATE MORE MONEY!

We can save more, and we can also look for other ways to increase our revenue.

I made around £3 on eBay initially after starting an account just by getting rid of stuff around the home.  I then invested this into my education which made me worth more.  So I charged more for my services and so, you see I used what I had and created more from it.

What do you have that you could sell?

Records, Clothes, Technology, Cars, Furniture?  Perhaps lying around your home you have some stuff?

Also – you have value which you can bring into the world without doubt, and when you find that value and you can use it to grow your wealth you will be able to increase your worth and save that money to invest for further growth.

We all have gifts, skills, talents, abilities, experiences and so on which we can draw from and express in order to create more.

And I don’t mean create more in a greedy sense either, I mean create more in order to help your life, your families life, your associates life, and give back in order to create more increase.   We can ALL do more good when we are worth more.

This is not about being a cold capitalist either, in fact some capitalism is great, greed isn’t.

What I mean is that when we can leverage ‘what we have’ we can even borrow from investors to help us reach that destination.

See the difference there?

If you or i have a sound financial plan, strategy, vision, goals, a solid message and we have executed thorough in-depth research then we can aim for greatness which will increase our quality of life and that of others as we become an asset.  So, there are times when a person can use investors in order to help them grow and expand.

Not, all debt therefore is bad at all.  It depends how that money is used.

Now, you may be very familiar with this already and you may be saying ‘Yeah, i get it Greg!’, it’s obvious!

So, then good for you. You know that there is a distinct difference between ASSETS and LIABILITIES.

Here’s a simple example:

Most of the middle classes are in DEBT BAD DEBT, as they spend what they earn to come across as rich, and so, should they lose their career they have nothing.  And they end up in serious financial problems.  Lenders keep lending and they keep borrowing to get out of the funk they have gotten themselves into.

So, the flashy goods, cars, fashion, jewelry, and so on, LOOKS GREAT, on Social Media, but in reality it is a great example of a person WHO MAY BE on the edge in reality.

I hate to say that – but it is true.

My philosophy is this – If you cannot afford it then it is really a good idea?

As I said, use money to make money, sure and as you build that then you can buy the toys.  But many do it backwards.

So, what I have always done is to look for ways to create more and save that so I can place it into greater ways to increase wealth.

I am a Business Coach, So, I help businesses grow, and so people need to buy from my clients, therefore it may seem as though I shouldn’t really talk about this, but when we understand it we become more savvy.  I help businesses sell ethically, great products and services, so – I get WHY PEOPLE BUY and I study this every day, but I also love to help clients to sell responsibly.

So, my point here is that – YOU AND I can use what we have to create more ethically, and we can design our lives and business, and as long as we sell honestly to our customers, we are not a part of the problem as people need to buy, rather, we are increasing our revenue to do good things for others.

It comes down to seeing our value and using it whilst also not being greedy and selling just to make money and getting others into debt.

If a person can afford luxury, then let them buy it. It feels good.  Nothing wrong with it, supply and demand right?  Sure!

I am just sharing that, if you want to increase your own wealth then understand how your value can bring value to others lives.

What Is Leverage Good Debt VS Bad Debt

We all need groceries, clothes, Cars, relationships, and tech these days, but we can help to deliver these things in the right ways.

Let’s make no mistake that buying can be an addiction like gambling, drugs, drink or Sex.  Shopaholics!

We all know one or two don’t we.  Then there are coffeeoholics these days, So I am not suggesting we add to the problem, I am simply suggesting that we do our best work and we don’t just blow it.

A Doctor will probably live a high end life, and they are compensated for this, but if you run your own business, it could all be gone in a flash.  This means to me that we need to learn to save and invest and create cash flow and reserves.

Good Debt VS Bad Debt

What Is Leverage: Why Are We In So Much Debt?

Simple! Banks lent More money Than people Could Afford to pay back!

Ergo, You Have MASS DEBT and everyone panicking!

Debt is measured by how much you borrow and how much can be paid back. Some simply cannot pay it back. 

With good debt though – it can be used to command a possible great return with the right application.

Confused now?:)

Simply get clear on borrowing the right things ‘if’ you are going to borrow that is?

If You Borrow With No Real WAY OF RETURN ON YOUR BORROWING then think about FIRST!

So if you borrow money to blow money then IT IS DEAD MONEY!

BUT EVEN when you DO pay that money back you aren’t getting any long lasting return nor a long term purpose for borrowing in the first place.

Bad Debt is exactly that.  Its bad and it’s DEAD really!  

Borrowing money for no real reason except the fact that you ‘want’ something badly enough like a ‘ strong desire’ can be dangerous.

Good Debt VS Bad Debt

What Is Leverage: Are You Ready To Wipe Out ‘Bad Debt?’

1) You will clear out your Credit Cards and only keep 1 or 2 that are useful for maybe a business?

2) You will need to Stop using money that you don’t have.

3) Know exactly what you can live on. Versus What You Earn!

4) DON’T USE loans where you can help it.  

5) If You Earn a Middle Class Wage Don’t TRY AND KEEP UP WITH THE JONES’S!

6) Look For Value for money Bargains, offers, discounts! They Are Everywhere.

What Is Leverage Good Debt VS Bad Debt

: SO WHAT IS GOOD DEBT!

IS THERE SUCH A THING? Well Yes There Is!

Good Debt means that – if you want to start an enterprise or a new venture of some kind then you might want to borrow money off of an organisation or off of a friend maybe to get started. This is knowing that you will pay them back AND THAT YOU HAVE OPPORTUNITY and POTENTIAL FOR GREAT RETURN ON INVESTMENT.

NOTE: I will say that i believe in borrowing from savvy investors. Those who know business and have the experience in business.  They lend money in smart ways.  They know what to invest in and what not to.  But if you borrow from a friend or family member you could lose money and lose a relationship.

Close relationships can become damaged and we can hurt others where money is concerned.

So tread with GREAT caution.

Do’t be quick to borrow money without prior deep and thorough research.  Drill down into your market, go narrow and understand exactly what you are getting into.  Only then should you look to borrow.

So, make it leverage rather than AIMLESS DEBT!

This means that you are borrowing the money to use it in a ‘constructive’ way where potential returns are likely to occur depending on the soundness of your venture idea. So, if you have a sound business model or system you can work with THIS IS BORROWING to bolster your future income and give you a possible retirement fund.

This Is Therefore classed as good debt. Many great entrepreneurs of our time and in past times have used good debt to fund their enterprises.

Now – I am not saying that you should approach a friend and ask for $100k ‘unless’ you have done your homework and preparation to position yourself well in learning the figures and determining WHAT THE LIKELY returns could be MAYBE? And it all depends on the soundness of the system or product, but as I stated, I personally would suggest you approach a sound investor with knowledge of your market/sector.

What Is Leverage: SO Have You Got A Financial Gameplan Yet?

OK OK this is an old crappy video. VERY OLD and one of my first so its ropey!  But, the point here is I am trying to emphasize NOW that many things have not changed from then.  Technology has of course moved on in leaps and bounds and thankfully my newer videos are slightly better.  But solid principles do not change.

So, what are we learning?

So, when I talked of investments several years ago I meant investing in YOU and your future and in anything which may help you grow you a plan for your future.   So, what have you done so far?   Or have you relied heavily on what you earn now and not saved?

NOTE: We have to of course be careful with where we put our money, but we can borrow it, ‘if we feel it’s going to help us’ and if we have made a decision based on gathering as much knowledge and information as we can to mitigate as much risk as we can.

Good Debt is planned borrowing that will likely be giving you a high return on your efforts.

So, who do you borrow from?   This is an area to be very careful about!

If you do have a problem with borrowing from a friend then you could offer an interest payment to them for their confidence in you, but I am not saying YOU SHOULD at all.  I am simply offering potential solutions.

You may wish to find out about borrowing with your mortgage lender – but again, this really depends upon your confidence of the business you are going into.

What Is Leverage Good Debt VS Bad Debt

: IMPORTANT THOUGH to know now and that is – there Are NO Guarantees In Anything!

This Is Why You Want To Find As SOUND AN OPPORTUNITY as you can find to start out.

This Is Where Robust Planning Comes In!

I found that it is very useful when you have a solid business plan and you are determined to make the change based on your longterm desire for a better life, so you then go into the situation with your heart and mind working as a team.

You may also have a team around you with shared vision and passion for your message.

Good Debt VS Bad Debt

What Is Leverage: 

So, take the PASSION but use the LOGIC to support your ideas.

I also found that when you are trying to better your life and start a business, you might want to consider a micro or small business where you don’t have to invest more than $50k.  You can start low, grow and invest back in.

If you start a franchise or a traditional business you will have a lot more on the physical side to consider such as like staffing issues and rent for a building – not to mention overheads of stock and storage.  I am sure that you can see the difference in what I do, Coaching writing, podcasting, blogging, and selling affiliate products, versus owning a store with rental costs, various overheads, staff, stock and so on.

Each to their own, but my point is that we (you and I) can leverage from the era we are in.

We can use our ideas, values, expertise and experiences to create huge brand.

Can you see that? I am not saying DON’T buy a traditional business at all, I am saying to think about ‘if’ it is REALLY what you want, REALLY!

What Is Leverage: Work Online?

Don’t panic too much – because for under $3k you can get started in your own Micro or Small Expert Business that can pay you for many years, and I KNOW AS I AM DOING THIS. 

Returns Can Be Anywhere from $3k per month to $30k+ Depending On Your Experience and Your ability to Market intelligently and Hard and Find Business for your product or service. 

Could it mean less headaches and no staff?

Plus no storage or overheads of a building’s rent?

I don’t know as I don’t know you, but, it’s just a thought to get across.

What I realized many years ago was that I just needed to find the right system and to copy someone who is doing this successfully.

NOTE: Please don’t go throwing a ton of cash at something you don’t understand ‘or’ that hasn’t got a great reputation or many good reviews or testimonials.

It is easy to be seduced by offers and opportunities, so be careful what you buy into.

Good Debt VS Bad Debt

What Is Leverage Good Debt VS Bad Debt

HOT TIPS:

1) Research Everything inside and out and back to front.
2) Follow your heart but also be realistic and take your mind.
3) Consider what your future vision looks like and build a business into it.
4) Trust that your passion ‘or a part of it’ can be monetized as value to others.
5) Ask yourself and others what you and they think are your greatest strengths and abilities.
6) Be in integrity with your mission in life and ‘do’ what you say you are going to do. Come from a place of authenticity, truth and honesty in what you do.
7) Only Listen To Successful Leaders in your business niche and in other niches.  Learn from everyone but, only work from the successes of others. 

8) Don’t be afraid to step outside of the crowd to do something different.

What Is Leverage: I recommend that you outsource some of the things you don’t understand, I did.

Take my word for it I ‘struggled’ with throwing money at various online ventures but I soon realized that I must ‘learn’ from experts in this area.

That is what I did personally and the more I got the help in my weaker areas the more effective i became in my role.  So, know your role and that of others and don’t try to do it all alone.

Next time you go to spend money on something temporary remember that you read this and have a think about where that money may be better spent.  Ask yourself if it was worth it or not.

If we wish to have a sound financial ‘future’ we need to build it.

If you want any help with this let me know and please check out the links below BEFORE borrowing anything from anyone.

Please feel free to share this with as many people that you can.

I Wish You Massive Success

Best as always

Greg

What Is Leverage Good Debt VS Bad Debt

BUSINESS FUNDING TOOLS,  RESOURCES AND ADVICE

IMPORTANT TIP:  If you are considering starting a startup and DON’T pay your partners – you may end up with a hefty bill if you fall out.  Please bear this in mind up front and hire financial help if you need more clarity around founders, teams and pay.  I recommend watching the FREE Stanford University Startup training’s.  I have all on my iPhone I watch at home or listen to anytime whilst driving.     Message me if you would like these.

KICK STARTER FOR CREATIVES

FUNDING WITHOUT LOANS – AND WAYS I HAVE GROWN MY BUSINESSES HERE

IF YOU ARE INTERESTED IN BORROWING MONEY FOR LEVERAGE IN A SMALL BUSINESS THIS MAY HELP

MORE LOAN INFORMATION WORTH READING BEFORE YOU CONSIDER ONE

1ON1 FREE SMALL BUSINESS COACHING STRATEGY SESSION WITH ME HERE

START A MICRO BUSINESS FROM HOME WITH MY PASSION DEVELOPMENT SELF STUDY COURSE – EVERY TOOL AND RESOURCE YOU NEED TO START RIGHT FROM YOUR PASSIONS AND IDEAS. 

Good Debt VS Bad Debt

GregDeTisi

Author and Small Business Blogger at Greg De Tisi Writing and Small Business Blogging

Author, course creator and business blogger - Greg has been supporting Small Business clients from all backgrounds all over the globe for over 15 years in developing ideas and passions into sustainable Small Business Models. Greg now has more of a focus on supporting his local business community in Bristol UK.