“Yes!!!! I’m finally debt free!”
Shouted happily by my friend. I can still remember the big smile on his face, nakakatuwa to see him that happy… But then, I interrupted him and told him na there’s nothing wrong naman with Debt. In fact
Rich People use Debt to leverage.
Obviosly na-spoil ko ang celebration nya na Debt Free na sya.. I feel the need to explain. I told him.. You see may 2 kinds ng Debt.
Good Debt and Bad Debt
Rich people use Debt to leverage – using OPM (Other People’s Money) They borrow money from banks or other institutions and use the money to expand their business. In order to see what your best option is, you must explore all your options. It is considered Good debt because the money will be used to buy an “Asset” In simple terms,
Asset is something that will put money into your pocket
Now, There is also Bad Debt. This happens when you borrow money and buy for example, a Cellphone kahit may ginagamit ka panaman na cellphone. Or buy a new laptop kasi gusto mong mag upgrade for computer games. That’s bad debt, bad debt because you borrow money to buy a liability. Liability is something that takes money out of your pocket. I told to my friend na while the middle class are avoiding Debt, The Rich are using OPM to further leverage. Kaya they are getting richer and the poor gets poorer e. This is the importance of Financial Literacy. It may be simple as it may sound, pero a lot of people don’t know this, Kasi it’s not being discussed sa school. I told my friend na, now you know an Asset, Liability and Debts, now #UtangPaMore PS If you want to learn more regarding Other People’s Money, Debts and Assets and Liabilities Please share and subscribe to www.NolanLazaro.com Now!