Debt is like a sword, it is a weapon, you can use it to good use, like cutting the enemies, protecting your family or you can use it to cut yourself, so it depends on what you do with it, there are two kinds of debt, there is the good debt and there is the bad debt, yeah there is, so for this article I will be teach you a new vocabulary on how we see debt, I want us to think of debt as nothing more than leverage, yes it’s leverage. So debt is nothing more than the money that you borrow from someone or an institution to perform an activity, and that activity can make you richer (your cutting of your enemy) or it can make you poorer (cutting yourself) so it’s that simple, so when you think of debt in that setting or in that circumstance you’ll be able to utilize it,
So good debt, what do I mean by that, let’s say there is a business loan that you borrowed from the bank, to expand your business, to buy that new piece of machine, to hire more employees, or it could be a mortgage that you borrow from the bank, to expand your property, that’s good debt.
But observe it’s not so much about the debt, it’s the person that is borrowing the money. So let’s it’s an entrepreneur that is borrowing the money from the bank, if the entrepreneur is smart, and uses the money to build a company that generate more income, that’s good debt.
But what if in that circumstances the entrepreneur borrows the money and makes a bad choice with it, like buying the wrong piece of machine or expanding too soon, now the business is losing money, now he went from good debt to bad debt.
Does that makes sense, now let’s talk about bad debt the second kind of bad debt, and they are car loans, credit card, Pay day.
And other kinds of debt that you are borrowing for your personal pleasure and you’re not really generating income from it, that’s bad debt,
So whether a debt is good or bad, is simply based on leverage, how do you use this leverage to make you richer or poorer,
Before we go further, it would be worthy to note that every millionaire or billionaire of any type of business, uses debt and leverage in one way or another, so I would like you to share with you three steps on how to get out of bad debt and into the good one, the first thing you need to know when getting out of debt d that you need to focus on increasing your income, not lowering your debt,
So by doing this you need to ask yourself this, with the money I’m making right now, how long will I be able to pay all my current debt, will it be 10 years, 20 years, 30 years or more, are you going to clear your debt with your current income, so what you’re going to be focusing on is not lowering your debt but maximizing your income. Good news about this guys, is that I am going to show you how to pay off your debt within a short space of time, so just relax,
It doesn’t even matter what you do, you can have a job, a J.O.B (just over broke) or you could have a business, it doesn’t matter what you need is what I call a high income skills, a side hustle that you can use to make money in your spare time, when you’re not at work, when you’re not in your business, you need to make more money so that you can pay off your debt faster.
Let me use an example, let’s say Mr. James is a college school student, Mr. James is doing well for himself making a couple of hundreds a year, but is heavily In debt, so Mr. James during summer time start’s teaching Golf and during winter he teaches people how to skate, so he’s a golf instructor in summer time and in winter he is a skate instructor.
So what am trying to say in a nutshell is that this is something that he loves, his passion, but it’s also something that he makes good money from.
By having that high income skills, he adds another cash flow apart from that 100k that he is bringing in.
The second step I want us to elaborate on is that you use good debt to invest in yourself, now remember I mentioned in our previous article that debt is nothing more than leverage, let’s use the Mr. James analogy again, that even when Mr. James have made enough money from his high income skills, he still invest in himself, he still grows he still attends seminars, programs to upgrade himself.
You see money should be seen as nothing more than a byproduct of value creation, if you want to make money, you have to deliver more value to the marketplace and the only way to improve your skills, most people just say they want more money, they need a 100 a month, but they are not willing to invest theirs selves, as a famous man once said “invest in yourself ,it pays the highest”, you see life doesn’t give you what you what it gives you what you deserved and if you haven’t worked for it, if you haven’t hustled for it, if you haven’t improved your skills for it, it won’t give you what you want, then you don’t deserve it.
The problem is you don’t have a debt problem, you have a skill problem, so the higher your skill set is the higher your gain.
And step three is very crucial one, let’s say you have a 5,000 dollars debt to pay, I want you to be very specific about it and not just randomize numbers, because clarity is power, vagueness is weakness, this may seem like a very easy thing to do but this has the most powerful psychological benefit.
If you have one competitive advantage over others in a business, what would you choose, would you say I want to have a huge capital, would you say I want to have the best product or services, would you say, I want to have the best team? Would you say I want the perfect timing? Or is it the latest technology? What would you say? if you were given any of this options? I think the best option to choose would be a hungry market, yes, a hungry market for what you sell, because your product or services may change but a hungry market will always buy from you.
The problem is many business people, they get into trouble because they place their focus on the product and services instead of focusing on the customers and clients, they are so fixed on the product, solutions and their company instead of focusing on the needs of what the marketplace wants. Sometimes they spend so much time and money creating the perfect product or services that nobody needs, it’s just like throwing a stone in water hoping to feed the fishes with it, the fish won’t bite, it needs to have the right bait, in the right water, at the right time. So before we can go further, we should ask, what is the right bait? What is that irresistible offer that you can offer to the marketplace?
most times it may not be what you think they want, but what they actually want,
And they are different ways you can find out what your marketplace want, you can run a survey, to find out what they kind of want, that way you can find out, as ironic as this may seem, it is a known fact that people vote with their wallet.
To drive home our point, let’s use this analogy, let’s say you have a great idea and you take this idea to a group of people, let’s say your friends and they say to you “yes, James, your idea is a great one, you should definitely go for it” that means your idea is a bad one and you’re probably going to waste your time doing it, but if they tell you “wow, what a nice product, let me definitely buy some” and they pull out their money and buy your product that means your product is a great one. Why? Because people vote with their wallet. So before you go out there you need to ask you’re self how can you minimize our risk, to make your product more appealing, you can do that by going out there faster, sooner, fail fast, that way you can be able to find out very quickly if your offer is something the marketplace wants or you are wasting your time, cause they are a lot of people who waste years, spend tons of money to work on a product, only for them to realize that nobody wants to buy their product, and very soon they run out of business. In conclusion, until someone is willing to pull out their wallet and buy from you, you don’t have a business. Unless the fish is willing to take the bait, you don’t have a catch. So don’t focus on the product, focus on the market place and you’ll be able to succeed in your business.