Ever feel the weight of the world coming down on you? That’s the way anyone feels when they are buried under the rubble of what I call “bad debt.” So what is bad debt? Bad debt is any consumer debt that does nothing to increase your financial position but instead further deteriorates your financial position.
The typical suspects of bad debt are automobile loans, credit card debt, retail store charge cards and any debt incurred to purchase a “consumer want” that you otherwise would not have the capacity to pay for in cash. Conversely, good debt is any debt that increases your financial position or is tax deductible. If it does both, then all the better! The typical candidates for good debt are your home or rental property mortgage and any debt incurred to purchase an appreciating asset like a business or other investment.
Now that we know what Good versus Bad Debt is, the question is how do you become debt free? Becoming Debt Free the way I teach my clients involves a sort of paradigm shift in the way you look at your money and finances in general. Many people want to get rid of all types of debt….good and bad debt when it is really only the bad debt that creates a “financial problem” and hinders your ability to become Debt Free and attain Financial Independence. To set the stage for what I am referring to, please tell me which of these two client profiles you’d want to be if you had a choice.
Client A runs a very successful business and has various investment in not only his business, but also in various real estate holdings and other investments. Client A’s Liquid Net Worth is $10 million dollars consisting of $12 million dollars in investments (businesses, real estate holdings, stock portfolio etc) and $2 million dollars in “good debt” attributable to those investments.
Client B runs a very successful business and has spent the bulk of his working years paying OFF All of his debt on his business and his home. Because this client believed ALL DEBT was bad, He did not allocate any resources to acquiring additional investments over his business career because he did not want to go into additional debt. His main concern was to get rid of the debt on his business and his home. Client B’s Liquid Net Worth is $2 million dollars consisting of a business that’s worth $1.5 million and a home that is worth $500,000 both of which are debt free.
Hopefully the choice is clear to you. While Client B is clearly debt free, it’s easy to see that though Client A has debt, good debt might I add, he is 5 times more debt free than Client A. Now what if there was a way to even get rid of that “good debt” and to do so in a manner that is quicker and more efficient that what a lot of the other financial gurus would have you do like get a 15-year mortgage or make bi-weekly mortgage payments, would that be of interest to you? If so, might I suggest you pick up a copy of my book and sign up for one on one coaching with your very own personal financial independence coach. Call us now at 470-253-9711 to get started on the path to becoming debt free and attaining financial independence. I got there at age 34. If I could do it with all of the challenges I faced, you can too! You may also email us at firstname.lastname@example.org. If you are in the Cumming area, feel free to stop by our offices which are conveniently located 1 mile west of Exit 13 on GA 400 at 5991 Parkway North Blvd. Suite D, Cumming GA 30040