RCWEALTH

The one thing that can stifle all your potential and limit growth, advancement and all progress in moving forward is……(wait for it) – DEBT. This is a cancerous desease that affects every area of our lives. As chemotherapy weakens the body, so too are most efforts in trying to get out of debt. The pronunciation of debt has a close ring to “death”. For many that is exactly what debt signifies; the death of their finances; the death of their economic future. The death of their present would be opportunities. Worse…the death of their options.

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The first principle is that you must not fool yourself, and you are the easiest person to fool.

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Debt has been rebranded and is now commonly called “credit”. We are bombarded by “creditors” whom have rebranded the “cyanide of debt” with a glamorously full coloured label making it attractive. The side-effects are marketed as having the ability of owning your own car/house/latest gadget/vacation getaway/dream trip around the world with little or no money down. Agreements are signed, offering extended repayment periods, low monthly payments and an extensive list of collaterals accepted.

However….

All Debts are not created Equal
There is “Good Debt” &”Bad Debt”
Both are categorised by Robert Kiyosaki in his book Rich Dad Poor Dad. Bad debt is used to fund liabilities which do not give any return except short term pleasures. Bad Debt is serviced by our working income. It depletes our spending power. Bad debt keeps us in bondage – financial incarceration. It limits options and in some cases eradicates them. Some consolation can be felt when something physical is added to your possessions as a result of bad debt.

On the contrary it is a dismal, depressing and near suicidal feeling when one is repaying debt; having nothing to show for it; except the monthly payments. Debt takes away economical control from the individual. The freedom of choice gives leverage, empowerment and an affirming feeling of pride that gives the impression that one has control over some aspect of life. Debt can quickly take this away if used foolishly. To lose ones freedom of choice is similar to that of being incarcerated. Debt becomes a prison and the individual is restricted, confined, controlled by circumstances and isolation at times occurs inevitably. Imprisonment by debt robs the individual of lifes most precious resource – time.

On the other hand Good Debt is used for investments which produces a return to repay the debt and put money in your pocket. Good debt is better to have because it strenthens your earning capabilities and spending/investing power. It increases your savings and makes more cash available to fund other investments and capitalise on opportunities. Options and opportunities are results of Good Debt. This gives the power of choices and makes one more resourceful, independent, free, empowered.

If you are thinking of getting a loan – going into debt; assess your options carefully.
• Get informed about the different options available to you from various institutions and compare the terms and conditions. Ask about the hidden fees and unadvertised charges….the “conditions apply” fine print. Ask all the questions you can and always seek external advice other than your banker.
• Get counsel from entities or individuals who will not be benefitting from your loan. If you are accessing a loan to start a business or to create some cashflow ensure your plans for such are solid and your partners can be trusted.

If you find yourself in a hole, stop digging.

For those buried in debt and on the verge of a nervous breakdown…..stop borrowing. Stop crediting your life! Release yourself from the trap of keeping up with the Joneses or the pretentious fallacy of putting up a front to be perceived as that which you really are not. Your finances are your responsibility; not your banker’s nor the government. It will be a tough path back to financial stability and prosperity, but it is possible.

This is by no means financial advice. Im just saying; use debt wisely.