Quote from: teamsherry on May 09, 2024, 04:42:33 PM

Quote from: Alphakilo on May 09, 2024, 08:35:52 AM

Wealthy people love debt. Unlike the poor people who just want to get out of debt as fast as possible, the wealthy are looking for more ways to increase their debt. In school I was taught that there are two types of debt the good debt and the bad debts.

Wealthy people are in the good type debt. Good debt is money borrowed to invest in a business like real estate , restaurants, or property whose value will bring in more money than the debt. However bad debt is there borrowed to buy liabilities. This is where the wealthy are smart. Their debts are the good kind of debt that increases their wealth despite being in debts.

As my economics professor would say, Using someone else's money (debt) to increase your own wealth is a skill the wealthy have mastered.

Debt has never been a bad thing it's just used wrongly by most common folks, have you ever wondered why bank gladly borrow money to business men even if they are owing?, that's because they make money of the little percent they take as interest.

If you take loan to invest in a business then you have made a good use of a loan and if you use it for personal needs like buying food or living luxury then you just created a mess for yourself to solve later.

You can't classify using a loan to solve your personal needs as the wrong way of managing debt. We all know that most people who usually use loans to solve their personal needs do that. because they don't have any other way or solution for their problem, even though they will know that at the end of the day it will be a great liability for them to pay back. But some loans or debts are collected due to emergencies, and there is no other solution, so they have to do that in order to feel free from it.

Furthermore, it is not that the poor cannot collect debt to invest in others to make a benefit, but they don't usually have the chance to do that due to their financial status because, without collateral, no one will give you a loan of a higher amount that will be enough for you as a poor man to start up a new business. That is why loans became a liability to the poor and, at the same time, sweet for the rich, so don't see the fault of the poor, who always struggle with depth.