Good vs. Bad Debt

How do you feel when you hear the word ‘debt’? 

I bet that it’s a word that sends a shiver up your spine.

You might feel like debt is this prison that you’ll never get out of, no matter how hard you try. Just when you think that you’ll be out, you get more years added to your sentence.

It is totally understandable to feel like this. Most people are scared of the word ‘debt’ and really just want financial freedom to live the life you want without worries.

But what if I told you that you need debt to make that financial freedom happen?

Here’s the thing…

Not all debt is bad. If fact, debt is often a critical component of wealth, especially for investors. This is particularly true for commercial investors; they need to borrow to fund the purchase.

It’s time to stop fearing debt and learn the difference between the good and the bad.

If you’re buying cars, going on many vacations, and splurging on clothes, that’s bad debt – no doubt about it.

Why?

Because none of the above will put money into your pocket. 

Instead, they take it away without providing any tangible value. You own a bunch of nice things, but you’re burying yourself under a mountain of debt. 

At some point, you’ll likely realise that it wasn’t worth it.

When you do, you’ll want to get out of debt as quickly as you can.

Now, there are many ways of doing this. As a rule of thumb, you’ll want to pay off your debt with the highest interest first. In most cases, this will be your credit card debt. You need to get out of it as fast as possible to give your cash flow a boost.

I’m sure that you already know this.

But, did you know that good debt can get you out of bad debt?

In a nutshell, anything that you borrow for that puts money in your pocket falls under good debt. 

It gives you a cashflow injection that you can use to pay down bad debt and support your lifestyle. Ultimately, it can provide you with the money you need to be financially free for good.

It’s obvious that investing in property qualifies as good debt. That is, if you play your cards right and ensure that your investment truly pays off.

If you make this happen, debt can be the best thing to happen to your financial situation. 

Now, I get that it might be scary to borrow 60-80% of a property’s value from a lender. It’s a large sum of money and you may feel uneasy about it.

After all, buying any property really is a massive commitment.

But if you do your due diligence, taking out a loan should be no problem. 

Instead of an obstacle, it will be a step on the way to financial freedom. With positive cash flow, you can get out of bad debt quickly and replace your income.

And as your portfolio grows, so will your wealth.

I hope you now understand why debt isn’t always a bad thing. Play your cards right, and you can use it to achieve all your goals.

In my next emails, I’ll talk about the ways you can finance your investments and make sure that your debt helps you achieve your investment goals.

In the meantime, go ahead and sign up for my webinar if you want to learn more about getting the money that you need to start investing.