I was reading a history book the other day, and I saw a stat that nine out of ten Spartans hated bad
Debt, and then I also found another stat
That said 8 out of 10 Spartans loved to leverage good, debt to their advantage
We're taking out the white board today, so we can go over this with you in this video. We'll uncover
Why it sometimes does and doesn't make sense to take on debt to increase your wealth to do that?
I'll go through the different types of bad debt along with good
debt and
Give you examples of each one and by the end of it
You're in a know how to leverage good and bad debt to your advantage now
I don't want you getting burned
So I'm going to show you how to reduce your risk of losing it all when it comes to leveraging that good debt
We need to begin with this one thing that you should want to get out of debt
But there's also times that it makes sense to take on debt in your life what holy smokes this dude is nucking futs
Okay
maybe I'm a little bit nuts now you may think that this sounds strange coming from someone who bases the majority of his content and
Teachings around the importance of getting out of debt if you are one of those headline readers, then yes, you would be correct
But there's always more to the story
And that's why you cannot be a headline reader one time someone told me that she saw in the news that fish oil is bad
For you now
I had been taking fish oil for years when I heard this so I got a little concerned even though
I did a whole lot of research when I first started taking it and didn't find any negative information about this
I still questioned what I was doing and doing at the time
I eventually found that video and the article that she was talking about and it was complete BS
Well unless all you did was read the headline which is exactly what she did
So to ensure that you're not a headline reader you have to watch this whole video so that you understand
Don't be that guy and don't be that gal the beautiful thing about today's day and age is that we're fortunate enough to have access
to choices
Many many choices choices are extremely important because you and I are completely different
And you might not care about the things that I care about and vice versa
Some people will tell you to never go into debt for anything
But that's just not true in many cases to truly understand the difference between good debt and bad debt
We need to look at both of them separately
It's so easy to go down so many different right holls with both of these because sometimes depending on your particular situation
A good day could easily be turned into a bad day very very quickly
I know what you're thinking and the answer is no the lottery is not good or bad debt
That would be categorized as stupid, so don't be stupid and ever play the lottery
It's basically a tax on the poor and you're on the path of not being poor so don't do it before we get too far
Into this and debt is dead, and it comes with risk attached to it
No matter how good or bad you think it is now. That's my PSA for this video
So what is bad debt to easily understand?
What bad debt is think about things that you borrow money for that will not give you some sort of return while carrying that debt
You could also think of it as things that will basically depreciate or are a sunk cost
Depreciation stinks when you're not getting the return on that item now
Let's go through a couple of examples of bad, debt and excuse my handwriting
I write like a five-year-old so I apologize I'll try to make it legible
Car loans by far one of the worst types of debt out there
It's an item that not only costs you money to maintain, but it greatly decreases in value at a faster rate than
Bread gets moldy and that is serious business
Especially if you buy new and just so you know it's financially
Stupid to buy a brand-new car so please don't be stupid. I know you're smart so you probably haven't done
This yet and if you have fix the problem
Next we've got credit cards as bad
debt this one actually makes an appearance on both the good and
Bad debt list and I'll explain the good side in a minute a credit card would be considered bad day for
Anything you put on your credit card in our charge interest where those items aren't
Generating you generating you
Generating you a higher return than that actual interest rate now this can be anything you put on your credit card from that laptop
To close to even that gym equipment that I have in my garage if I would have charged it onto my credit card
next we've got
Student loans as bad day now this might get me in a little bit of trouble by some people because you might disagree
But while you're borrowing stew loans they could be considered a good debt because the return on that investment
Is coming in in the form of knowledge?
Anything you borrow above and beyond that amount like my dumbass did is bad
Debt once you were done with school and have a job student loans instantly turn into bad debt in my opinion very
Very bad debt especially because the only way to get rid of those things is by dying or paying them off
Take your pick. Yes
There are loans that you took out to get a college education to hopefully make more money
But once you are done with that education and you have a job
It's not generating you a recurring revenue your current job
And experience are there's also no guarantee that you'll even get a specific return on your student loan day
That's where things get a little bit weird, and why I question some of things going on in our current education system
But we're not going to talk about that right now
Lastly, we've got mortgage as bad
Debt the mortgage on your primary primary residency for the most people is bad debt
You might be saying why well that's because most people own a home for the sole purpose of needing a place to live
We tell ourselves the story that Oh my home is gonna generate me so much money when I sell it. Okay cool
When are you gonna sell it um? I don't know look
I understand that most buy a home in hopes that the value of that home will
Appreciate and that could definitely be the case, but while it's not generating you any money
And you don't have a plan to sell it when it hits a specific value, then it's bad debt
You're only hoping that it'll give you a return your investment when you sell it now
There's a lot of debate out there
Whether home is a good investment or not, but that's outside of the scope of this conversation right now
Here's a real-life example with me. I currently own a home with a very modest mortgage payment
I'm not receiving any money from it because I don't have any roommates at the time so my mortgage is bad debt
but my plan in the future is to rent this property out at that point it will be giving me a
Recurring stream of revenue as long as someone is living here at that point. It will hopefully be good day
Okay
so that's the list of bad debts if you have any complaints that you want to file with me leave a comment down below and
Let me know why you do or don't with that now. Let's talk about good debt good
Debt is used for one thing to generate more money even though good. Debt. Can be considered good
There's always cases where this can turn into a really bad. Debt that could ruin your finances later on in this video
We'll go over how to increase your likelihood that your good debt starts out and stays good
so for good, debt think about those things that will give you return and appreciate I
Told you you'd make another appearance credit cards is good day
So credit card, debt that can be paid off every month with the sole purpose of the reward benefits is always good
Debt it could also be considered good
Debt if your return on the money borrowed is at a higher rate than how much you were paying in interest now
This is usually a very unlikely case because interest rates on credit cards are absolutely insane
But by the way if you want to borrow money for me at a 22% interest rate
You know what actually 20% interest rate then please, please?
Please contact me because I would love love love to help me. I mean I would love to help you
I'm very transparent about the fact that I really like
Leveraging credit card debt to increase my yearly income through those rewards that I get from using it
There's the even websites out there that are dedicated to credit card hacking to maximize rewards. It's called. What does it?
Call I think it's credit card churning, and there's quite a few people out there that do it
I don't personally do this sort of thing at this time, but it's actually pretty interesting
Next we've got a mortgage for some sort of rental property as good debt
if someone wants to start investing in real estate
Then debt will most likely need to be taking on taking on some sort of debt who in the world has
hundreds of thousands of dollars just to dump into a couple of rental rental properties to start making money off of
Not many
So whether you're flipping houses or?
purchasing properties for the sole purpose of
Renting them out this can turn out to be a very very lucrative way to leverage debt in your favor
Business investment is good. Debt. Sorry. I couldn't fit it on there. I hope you forgive me now
I don't fully agree with this one, but I'm not here to hide information from you because I don't completely agree with this thought process
Depending on the type of business there does come a time where debt may need to be taken on to grow the business
This in isn't always the case
But this is usually the case when it comes to a business that sells think of a physical product now
I'm of the opinion that you shouldn't take on debt to start a brand-new business
Period I have a very hard time believing someone who says that you have to take on debt to start a business you 100%
Do not I actually think that it's a very stupid move to borrow money to start a business when you don't even have a proof
Of concept if you can't afford to start it up by funding it yourself or finding investors
Then you should try something else and come back to this idea when you have more money now
We're gonna go into how to reduce the risk of good
Debt if you decide that you want to start working with good debt to try to increase your wealth the first one
We're going to talk about is of course the mortgage or rental properties as good debt now
I will of the opinion knew that if you want to start investing in rental properties
Then you need to do one of two things or both
Actually, you need to start small so buy a property that you know has a high likelihood of making money
But the returns may be smaller than you would actually like this first property can be a way for you to test out the waters
Just to make sure that this is something that you want to get into
It'll also be a way for you to focus on the whole learning aspect of what goes in to
Property investing especially if you haven't done it before the next thing I would say to do is educate educate
educate yourself
And I would even say find a mentor who has done this sort of thing before there's all kinds of great
resources out there to help you start learning about this area of investment the one that comes into my
That pops into my mind that I know has a great reputation is bigger pockets calm
I'll throw a link down in the description for you
If you want to check them out
And the next one is the business investment as good debt now I would recommend that you start small that that's my main
Recommendation for you first you want to prove the business model and prove that you were selling something that people actually want
While you were cash flowing the whole thing out of your pocket
Cash flow that business until you're to the point where you cannot grow without any sort of outside investment
investment or an influx of cash through some sort of debt
Then before you accept any kind of money you have to stop and ask yourself
Okay
Am I content with the current revenue that I'm making or am I okay with selling off some of the company or?
Borrowing to speed up the process that's gonna be a very important question for yourself
That's going to be
specific to you depending on your
Situation and what you really want because if you were happy with the current state of your business
And you are willing to grow slowly, then don't borrow money, or don't take outside investors
I've cash flowed all of my businesses in the past
And I'm actually glad that I did because some of them didn't end up working out
So how bad would that have sucked if I had taken out a bunch of debt and then failed?
Let me answer that for you
It would have sucked really really bad on the other hand I do have some friends who are running a company that sell a physical
Product and they're growing at a stupid rapid pace
And they're getting close to the point where they have to decide whether it makes sense to borrow money or to bring on investors
To help grow the business to that next level listen
What comes down to is the fact that taking on debt isn't the actual?
problem the biggest issue that most have is getting their debts under control and learning how to properly manage money and
There's no shame in admitting that you're not good with money or that you haven't been good with money in the past
I'm the poster child of bad debt decisions okay, I racked up eighty two thousand dollars in debt
But I paid it all off in four years
Why in the world would you borrow more when you haven't proven to yourself that you can properly manage?
Debt this all needs done in stages
Leveraging debt is a part of the wealth building stage of your debt free
blueprint approach that I teach getting your bad debts paid off and learning how to properly manage your money is the
Foundation of this whole thing so if you don't focus on that first
Then you're just building a house of cards that will be more likely to fall down
So do you want to build your life on solid ground or a pile of?
sand make sure you hit that thumbs up button and let me know in the
Comments the type of story that you've been telling yourself, that's been keeping you in debt
Then also make sure to pick up your FREE copy of the debt free prep workbook long
It's still available click around my head Creek around my head click around the head or get the link down in the description
Thank you so much for checking out this video. I hope you found some value in it. I'll talk to you later folks a Dios