Debt debt debt debt debt debt debt debt debt debt. It's like this horrible song
that no one wants to sing. We got it in our head, it's part of our consumerism
and what we've been taught is that all debt is bad but today, I want to
challenge that and I want to ask, okay, I get it, there's bad debts out, there's
consumer debts but are there good debts?
Alright, my friends, we are doing financial education 101 and we're here
to talk about that big hairy scary word, debt. Debt, depending on how you are
raised, there's a good chance that you were raised in a home that said debt is
bad and there is so much truth to that but that is not the entire truth. Let's
talk for just a moment about what bad debts are, right. We have parents that are
teaching their kids and they want them to be wise but the reality is, we're
being taught by consumers, not professional business people usually and
not professional investors and so what a good well-intentioned parent is going to do
is they're going to tell their kids, a car is a debt and when you buy a car on loan
then you're going to have to pay that back and by the way, your car is going to go down
in value, it's not an asset, it depreciates in value. You have this
obligation and you might sign up for a five or a six year obligation every
month shelling out hundreds of dollars so you can pay that. What makes that a
bad debt accurately stated is because it costs money. You lose money every month,
you need to make more money and service that debt and the payoff that you get is
having a car but what we'll do then is we'll say, well I got my car and I need a
boat and you might even say I need a house. This is going to sound crazy but
you're like, whoa whoa whoa whoa whoa, Kris, you can't call a house a bad debt, that's an asset.
Your house is an asset and it's a bad debt. Why? Because it costs you money. Look at
the lifestyle you've built for yourself, your car costs money, your house costs
money, your cell phone bill costs money. If you continue making choices to
increase your revolving debt and your credit debt then it's like, I also have
$10,000 on credit cards, I've got my student loan debts and at the end of the
day, I'm piling up things that cost me money. Sometimes we say debt that's bad,
we almost look at it and we associate bad with wrong which is also not
necessarily true but what I want to do is, I want to share
with you a good debt. I know some of you are like, whoa, Kris, this doesn't make
sense, what do you mean good debt? Debt by its nature, that
four-letter word, it's bad and so if you have it, it's bad. Let me share with you a
different kind of debt. If I buy a house for $100,000 and it's worth a hundred
and twenty thousand dollars so I buy it with some equity in it, is this good or
is it bad? Well if I bought it and I do nothing with it and it costs me then I'm
going to put it into my bad debt pile but if I rent it out and on a lease option
for example with my compassionate financing system, you can get my book for
free by the way, I'll teach you this whole thing, it's just up here in the top
left corner. If you buy the house and you do a lease option, let's say you're
making $400 a month on it, after you've serviced the $800 bill,
so let's just say it's a $1,200 to rent it out, I have an $800
mortgage. Well I'm servicing with this investment
my mortgage and there's $400 left over and all of a sudden it
goes from being a bad debt and it turns into a good debt. Why is that? Because by
having this asset in my life, I'm $400 more a month better off
by having my personal house in my life under the same $1,200 a month mortgage,
I'm $1,200 worse off every month for having it. Both are
assets but one makes me money and wouldn't cost me money and so just pause
for a moment and you got to create a balance sheet in life where your good
debts are actually bigger than your what? Than you're bad debts. Most of us we just
have bad debt. I've got debts that cost me money and then we can feel trapped in
our job and this is where we start striving and wanting this thing we call
financial freedom because we're enslaved, weren't bondage to choices of the past
and to be responsible with those choices means how do I service my car? How do I
service my house? How do I service my credit card debt? How do I service my
student loan debt? How? And if you don't have a plan for that then really what
you're doing everyday by going to work is just trying to make a bunch of money
to pay for a bunch of past choices that depreciate in value and sink you deeper
and deeper. Let's talk about gray area debt, let's talk about student loan debt.
If I want to go to school and get a college degree, is this a good debt or a
bad debt? Friends, if you go to college and you get a degree and it helps you
earn on average twice as much as just someone with a high school degree then
that schooling investment can actually make you money and if the
priest income is used to pay that debt off then it can be a good debt and this
is the question that you really need to start asking yourself, is this financial
choice of leverage or is this loan going to make me money or is it going to cost me
money and this is what's going to eliminate the gray area and it's going to help you
know good debt and bad debt. Right now I just spent six figures on a mentoring program
with Tony Robbins, went to this amazing Tony Robbins event, it's one of his
highest level events and he has a very limited number of people that can come
into his really expensive mentoring program and basically travel the world
with him, tour with him and learn from him and grow from him. That was a big
expenditure and the question is, is it good or is it bad? Well what makes it a
good debt is because the time I've already spent with him has put my
business on a different trajectory and it's teaching me how to be a better
businessman, it's also teaching me how to clean up my psyche and bring it to a new
level, that's all making me money so I classify
that as a good debt and so you just got to make sure you're not justifying
choices and actions but you really got to ask, is the choice I'm making going to
make me money or is it going to cost me money?
And if it's going to make you money, it's likely going to be a good debt, if it's
going to cost you money, it's likely going to be a bad debt. Let me give you another
example. Some of you here are subscribers, right? Subscribing that they'll get my
daily videos and some of you might say, well you know, Kris, I've been learning
so much from you about real estate. You know what I want to do? I actually want
to get with you live, I want to go to one of your events and I want to learn from
you and maybe I'll spend one or two thousand dollars to learn from you on
how to do your best real estate strategies from A to Z, give me the
contracts, the flyers, the paperwork, you could actually put that on a credit card
for example like a visa and whatever credit card you have you go a
couple thousand dollars in debt and now it's time for the magic question. Whether
it was a good choice or a bad choice comes down to financially speaking, is it
going to make you money or is it going to cost you money? If that is a part of your
education and it helps you do one deal, let's say you even have a house, you take
my lease option system instead of just being a landlord, if you own real estate,
you're a landlord, please take the lease option course, let me give you my
contracts and all of a sudden you collect a $5,000 downpayment by putting
a family in that home and you're clicking $200 more month than you would
on normal rent, add that up over 12 months and that's going to come down to
putting an extra ten thousand, maybe seven to eight
dollars in your pocket. Would you pay $1,000 for $7,000? I'd do that trade all
day long so even though you went into debt, if you use the gains to eliminate
that debt then all of a sudden your credit card becomes a what?
It becomes a tool. Every month, I pile thousands of dollars into an insurance
policy and it's a special type of policy where I can pull the money out, I can use
it, I can invest it and then I pay it back.
I'm basically borrowing my own money for myself while it's earning gains and it's
got protection. Well I'm putting money in there and putting it towards an
obligation that I can borrow, use and leverage. If I'm using it for something
that will make me money, is that a good debt or a bad debt? It's good so this is
the big question that I want to leave you with today is, as you're building
your life, one of the things that you want to strive for, eliminate your
bad debts. The other thing you need to strive for, create good debts. Kris, are
you telling me that you want me to create good debts? Well understand that
when we buy real estate unless you're waiting to buy it all paid off, what
we're not trying to do is sign it for a 30-year mortgage and pay it off, we're
not even trying to pay it off, what we're doing is we're controlling the asset,
control it for four or five years, make forty or fifty thousand, maybe a hundred
thousand dollars, we sell off the asset, the loan is gone, what's left over is a
pile of profits that you've made along the way.
Friends, this is ultimately how people get ahead in life is they learn the
difference between good and bad debt and then they make choices and alignment
with that and one of the things that I love about real estate is that when you
buy the best real estate and you do it the right way then you are in fact
usually acquiring a good debt and it's making you money and then in time you're
going to retire that debt and you're going to be left better off. This is the investor
mindset, that's the consumer mindset and so what I hope you gain from today's
video and what I'd love for you to do is comment below and share in your life
what decisions have you made that you classify as bad debts and why and what
good debts do you have and why and here's the goal, every year you need a
goal to be adding to this balance sheet the number of good debts that are making
you money because the more of them you have, the more successful you are, the
better off and you get to a point where you can wipe out all that debt be way
ahead of the game and still have your residual income. Friends, create good debt
and cancel out the bad debt. Take home message, eliminate the bad debt, get as
much good debt as you possibly can your world's going to get rockin. If you
want to know how to get into the good stuff, the good debt that is going to
produce residual income, cash flow, equity growth, and really get you where you want
to go in life, click the link of me and my team can share with you exactly what
that looks like otherwise, get live with me at one of my
events where I can share with you the mindset of the millionaire because this
good debt bad debt, it really comes down to the real estate between the two years
and there's a lot more where that came from so click the link, find out more,
subscribe, ring the bell and see you tomorrow.