welcome to another financially fabulous
episode i'm Limor and i gotta tell
you you do not need to be a financial
planner to be crushing it with your
finances I'm not today's episode I'm
really talking about the difference
between good debt and bad debt and why
it matters come on this will be
fascinating
I'm sure you've hear of good debt and bad debt but the question is do
you really know the difference and why
does it even matter well let's first
talk about debt debt in general is of
course when you borrow money and then
you have to return it but on top of
returning the actual amount that you
borrowed you also have to pay something
that's called interest that's really the
fee that you're paying for the right to
borrow that money for a duration of time
so whether you've got good debt or bad
debt of course you have to pay it back
now there's lots of different sources
that you can get money from that can
turn into debt or money that you're
borrowing that is debt anything from a
financial institution a credit card line
of credit a mortgage a friend the list
really goes on and on and the source
where you get the money from is not
actually the sole decider if you're
going to have good debt or if you're
going to have bad debt but sometimes it
can actually be an indicator so let's
talk about them let's start with the bad debt
bad debt is when you borrow money and what
you use it towards actually decreases in
value over time and it doesn't generate
money for you so for example if I go
into debt and I use my credit card and I
bought a whole bunch of pair of shoes
and I wear them down over time until
they're basically got holes in them
or no longer in fashion and I've worn
them out and I throw them out well over
time they decreased in value and while I
might look really great now that's not
really making me money so that would be
considered bad debt good debt on the
other hand is when you take the money
that you borrowed and you
use it for something that's going to
increase in value over time and it might
also generate income for you so a good
example might be if you borrow money and
use it for purchasing a property because
over time the property can increase in
value and also on a monthly basis you
could be generating income for it if you
borrow money and you invest it into a
business and the business is generating
money for you every single month well
then that could be considered good debt
as well essentially when you've got good
debt what you're hoping to do is have
the income that the debt is allowing you
to generate pay off the original debt so
that you get rid of the original debt
but you still have the element that's
making money for you on an ongoing basis
now of course if you think about good
debt and bad debt there are elements
that are kind of grey zone area so of
course I would say to you you know
buying a car is bad debt because it
depreciates over time it gets run down
and the car cost you a lot of money from
maintenance gas etc etc etc and so
that could be considered bad debt but
then if you use that car and you I don't
know become an uber driver with it then
you're actually making money so I'm not
here to figure out the exact details of
the semantics of what falls into what
category but I want you to really think
about does the item or the experience
that you're purchasing increase in value
over time and that's financial value
that I'm talking about so sure you could
spend money on vacation and you know
feel a lot of personal satisfaction and
value but it's not going to increase or
make money for you in the future that's
how you know that it's bad debt if it's
going to generate money for you at a
later stage that's how you know that
it's good debt and so the real question
is okay you're smart you understand the
difference now but okay Limor what's
the point the point is that i want you
to figure out how you can actually take
good debt and set it up for your
advantage so that you can start to
generate another stream of income I know
maybe a little bit tricky or it may feel
a little bit risky up front and never do
anything that you don't feel comfortable
from a risk perspective but it's a
really really great way to be
to leverage yourself into generating
additional income and that's going to make a
difference to your life if you're stuck
for ideas I want you to check out my
video on side hustles it's a great way
for you to be able to think about how
you can potentially make money and then
leverage good debt in order to be able
to get you there that brings me to my
tweetable today don't be fooled by the
word "debt" all "debt" is not considered
equal so now that you understand the
difference between good debt and bad
debt I want you to take this into
consideration in your own life look at
your own skill sets look at your own
strength look at the things that you
value and how can you start to leverage
good debt or the money that you're going
to borrow to be able to generate
additional income for you in the future
generating additional income is the way
you're going to make your life even more
financially fabulous if you've got some
debt and you're not sure if it's good
debt or bad debt I want you to access
the free downloadable below at www.Limor.Money
I've got a series of questions
for you to answer that will help you
figure out if it's good debt or if it's
bad debt I hope you liked this video and
that you learn something if you did do
me a favor and subscribe to my channel
it's free and if you want even more tips
and tricks to make your finances fun and
exciting come on over to www.Limor.Money
because i've got lots of great
resources for you to download there for
free remember I'm not here to change
who you are or how you live your life
I've just got strategies to make you
even more financially fabulous thank you
so much for watching I'll catch you next
time till then, stay fabulous!
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