My definition of "Debts"
Most people define "debts" as a kind of monster, and they should be avoided as much as possible. But guess what? The moment these people get into debt once, they become addicted to it and get stuck in a never-ending cycle of debt.
Debt? Monster?
For others, I don't know, but for me, debt is like a monster in my childhood. My single mom and I lived through debt, I remembered when I was in Primary 2(Grade 2) of schooling when I first get to know about the debt my mom got into to pay for my school fees. I didn't think much at that time, but after seeing my mom still choose to go into debt again and again, even though she had already paid off the previous debt and was getting back on her feet again. I then started to have a change of mindset, telling myself that if I'm not backed into a corner, I'll never get in debt.
Addicted?
Who would get addicted to debt? You're kidding, right? That's the response I get when I tried to tell people this, even though that person is addicted to debt(He chose to not admit that he is). What I'm trying to say is no matter how much people fear getting into debt, the moment you get into one, you're never getting out of it. Rubbish? Hey look, isn't my mom a good example of "addicted to debt"? Even though she earns more and more each month, enough to live debt-free and even have left to save up, she still gets into debt repeatedly. Then what about those who get into debt to buy luxuries? Even though some of them earn enough to live debt-free and even have some left to save up or invest, they're still in debt at the end. At first, they'll look like they're wise with their credit card, paying on time without any problem, after a while, they start getting addicted to using credit cards on basically everything since it seems so easy. At times it even exceeds their planned budget and their financial situation starts to go negative. That's when their life starts going haywire.
Bad debt
It's extremely easy to get into debt these days, there're even fewer conditions on getting one now. And therefore the rate of debt is increasing even faster than 5-10 years ago, even a person with a median income now possesses 3-5 credit cards. This makes it easy to buy the latest iPhone 13, the latest Core I9 Pc, the best television, home theater, and pay for an expensive vacation. The term "bad debt" is when we buy things we don't need, with the money we don't have, just to impress people we don't like. We never need the things we bought with credit cards, we don't need the latest this and that, we just need something usable and durable. The only reason you should buy high specs device is only if your work requirements are high, your phone is broken, and your tv broke down. What's worse is buying junks you don't need with money you haven't earned, only to show off to a few *ssholes in your office that you're a (fake) rich, and you don't even like them. What's the point?
Good debt
I was lucky I had the chance to converse with some wealthy people and get ahold of some secrets they don't want too many people to know. They only want us to know the word "Debt". They don't want others to know about good debt and how to maneuver it to build wealth. I tried revealing this secret to friends and all I received was either their sarcastic or skeptical looks. The term "Good debt" is using debts to build your wealth and your net worth. An example would be using debts to buy real estate that could generate cash flow for you every month, or sell it and keep the profit margin if your property appreciates. Another way is you can risk loaning money to invest in cryptocurrency, in case you make the right decision and your crypto goes 1000% or even more, you'll be able to pay off your debt plus interest and keep the rest as your investing capital. There are a lot more ways to go about it, it's up to you how it'll be done.
Conclusion
Even now, I'm in debt, and it's approximately half good debt and half bad. My personal opinion about debt is, it's not wrong to want to reward yourself sometimes, but it shouldn't be done excessively. You got to control your emotions about your needs and wants, take a few days going through your decision before buying it. Make sure you plan your expense, don't let your debt payments exceed your limit. Debts can build and destroy, it's your choice how you want it to be.
Do everything appropriately, not excessively.
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Great article, tricksowned! Thank you! I would add a small but a really important remark that nowadays it got much easier to sell bad debts or even the whole portfolio with almost zero effort. Everything is done via Debexpert. Here are some more details https://www.debexpert.com/blog/how-to-sell-debt-to-a-debt-buyer
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