Many financial gurus promise us that we could be free of debts and be wealthy if we follow their plans. They could make us believe that all debts are bad and should be avoided. They could convince us that the less debt we have the better. However, it is not always true and avoiding debts too hard could actually limit our options. In fact, avoiding debts could stop someone like us from becoming rich. If we want to get wealthier by applying for debts properly, we should fully understand about multiple types of debts. In fact, by choosing “good debts” and doing things properly, it is possible for us to become wealthier. There are multiple definitions of bad debts, but they usually require us to make monthly repayments. These debts are also bad, if the item we purchase decreases in value progressively. Potentially bad debts could include car loans, personal loans and credit card debts. Good debts are different things and they could actually help us put more money into our pocket. Without these loans, it would not be possible for us to do business and earn some profit.
In general, debts we choose should encourage positive cashflow and it should help us to acquire more incomes. On the other hand, bad debts take money away from our cashflow. It means that good debts should help us to become richer and richer, while bad debts make us poorer and poorer. It means that we should be able to separate debts. So, it is inappropriate to avoid debts entirely. By choosing good debts, they could help us improve our cashflow, we should be able to become free financially more quickly. It is also possible for us to reduce stress easily and focus more on core business operations. The amount of debt could be quite overwhelming for us, but we should be able to improve our condition by shifting our thinking pattern. Eventually, we will be able to earn more than what we pay each month to lender. This is something that we need to achieve when applying for loans. We should have good plans to fully utilize debts. Unfortunately, many people choose bad debts more frequently and this will result in reduced cashflow. With good debts, we won’t miss opportunities and we will be able to expand our business when the time is right.
Instead of avoiding debts entirely, we should try to minimize cashflow from our budget. By lowering negative cash outflow, we should be able to improve our finances, although we have a sizable amount of debt. This could be achieved by negotiating for lower interest rates or increasing our income. Money that we acquire from lenders should be used to purchase equipments and materials that can help us produce new things. These new products must be easy to sell and we should have clear understanding about the local market. Good debts could really improve our finances and make us wealthier more quickly.
