Nowadays, we keep receiving message from public media that encouraging us to buy things on credit or do credit card balance transfer. In other words, these activities have more or less stimulate consumers to buy anything they want (but not essential need) by raising consumer debt. In this case, are we using debt (credit) as tool to get something that we don’t really need?Under this scenario, almost everything we own does not actually belong to us. What can be foreseen, however, is that for those who poorly manage their money may find themselves keep digging the debt hole bigger and deeper. Until the day that the hole is so deep that it can’t be covered at all, everything will be repossessed. So, what is the ending of the story? You own nothing but consumer debts. Your merchants and bankers will chase you for payment. You have no other option but to keep working hard, day and night, to pay off these consumer debts.
Is debt an absolute woe? Well, not exactly if you raise debt based on investment return point of view. For example, you may raise debt with bank to buy an investment property for rental income. If the balance of rental income is positive after all necessary expenses as well as loan payment, this debt is actually helping you to generate positive cash flow.
The bottom line is that, similar with how we evaluate the value of our money spent, before raising any debt, think twice is it a “need” and/or it will generate positive return that further enhance your cash flow. Most importantly, say “NO” to consumer debts as they do not generate any good to you.
I have a friend working in the bank. He practices those credit transfer from banks to banks. He has 14 credit cards. The beauty of my friend is that he knows the loop hole of this system, he manage to borrow a large sum of money where he used it to invest.
ReplyDeleteHis return of investment is much higher then the interest charged by the banks by doing those credit transfer. He is taking super big risk but high risk has high returns.
To be financially independent, one shouldn't have any debt. You might not be rich but if you are debt free, you are on your way to financial freedom! :)
Just my 2 cents!