Posted by: GregDeTisi | March 30, 2011

Good Debt VS Bad Debt

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 is what you are buying going to give you a long lasting pleasure and be a great investment to your life? I know that it is easy to find pleasures and to blow money every now and then but what I am saying is that how much you spend on rubbish can be destroying your future.

For example with the way the world is going in the global economy you won’t get much help from governments or organisations when you retire. You are buying stuff now that might give you a fix of temporary nature but what long lasting affect will it have on your future lifestyle?

Debt is measured by how much you borrow and how much can be paid back versus what the possible return could be.

So if you borrow money to blow money then when you pay that money back you aren’t getting any long lasting return or reason for borrowing in the first place. Bad Debt is doing exactly that. Borrowing money for no real reason exept the fact that you ‘want’ something badly enough like a ‘desire’.

Good Debt though means that if you wanted to start an enterprise or a new venture of some kind then you might borrow money off of an organisation or off of a friend maybe? This means that you are borrowing the money to use it in a ‘constructive’ way where high returns are likely depending on the soundness of your venture idea. So if you have a sound system of business you can work with to bolster your future income and give you a retirement fund then it is worth maybe borrowing some money for this.

Therefore this is classed as good debt. Many great’s of our time have used good debt to fund their enterprises. People like Donald Trump and Bill Gates have used this idea. Now I am not saying that you should approach a friend and ask for $10k ‘unless’ you have done your homework and preparation to position yourself well in learning the figures and determining the returns you are likely to get depending on the soundness of the system or product.

So bad debt is aimless spending with no returns.

Good Debt is planned borrowing that will likely be giving you a high return on your efforts. If you have a problem with borrowing from a friend then offer an interest payment to them for their confidence in you. Or you might want to find out about borrowing with a bank or with your mortgage again depending on your confidence of the business you are going into.

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

I also found that when you are trying to better your life and start a business, you might want to consider a business where you don’t have to invest more than $50k. Why this amount? Well if you start a franchise or a traditional business you will have alot to consider like staffing issues and rent for a building not to mention overheads of stock and storage. Then you will have to turn a profit whilst dealing will many differentials to add to the stress of trying to follow your passion for freedom and a life with your family.

Don’t panic though though because for under $50k you can get started in your own Internet Business.

For alot less than that you can be in business with no headaches and no staff plus no storage or overheads of a building’s rent. You just need to find the right system and someone who is doing this successfully. Don’t go throwing a ton of cash at something you don’t understand or that hasn’t got many good reviews.

It is just a thought but you might want to 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 realised that I must ‘learn’ from experts in this area. That is what I did personally. Well I wish you luck with using your Good Debt instead of Bad Debt, you can change the habit and leverage your loan.

Next time you go to spend money on something temporary remember that you do have a future and that if you want a secure one you might want to learn more about Investing your money using Good Debt.


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