How do you use loan debt to make it rich? New rules about money: loan debt can have a positive impact.
Although the majority of financial experts advise you to avoid debt, in fact the debt is also divided into two, namely good loan debt and bad loan debt.
What is good loan debt?
Maybe good loan debt still sounds familiar to you. “Where is there good debt? The interest is definitely high. “However, it turns out there are good loan debts as long as you are wise to use them.
The good news is that good debt can actually MONEY and MAKE YOU RICH.
Before looking at the method, let’s compare good loan debt and bad loan debt.
In general, the definition of debt is the process of lending money from one party to another with a reward that is usually in the form of interest.
Debt commonly used to buy assets that will depreciate generally bad loan debt. For example, credit card debt to buy the latest smartphone .
While good loan debt is a debt used to buy assets that can generate income.
For example, mortgages to buy an apartment that immediately sell for rent with higher rental costs than the mortgage repayments.
Simply put as follows:
- Bad loan debt pays money out of your pocket
- Good loan debt makes money in your pocket
Now a new question arises, “Then how do you use good loan debt to make rich?”
You can find the answer in this article, where Rodion Raskolnikov has described all the ways to use loan debt to make it rich:
Strength of good loan debt
As mentioned earlier, good loan debt can improve your financial condition and even make you rich.
By its nature, it provides a positive cash flow to your pocket, and its own assets will continue to grow in value over time.
There are many ways to develop good loan debt into wealth coffers, let’s look at the 7 best ways as follows:
# 1 Debt Consolidation
Who says having a lot of debt is bad? In fact, you can use debt wisely to take advantage.
For example, if you have credit card debt, KTA for business, and home loans. You can outsmart credit card debt that has very high interest by taking more KTA.
As an example:
Mr. A requires a working capital of Rp500,000,000.
He also has accumulated credit card debt of Rp. 75,000,000 and a house loan of Rp. 10,000,000 per month.
Mr. A could have taken KTA in the amount of IDR 575,000,000 to cover his credit card debt which kept piling up first, then began to repay KTA with lower interest.
This method is used by many people to avoid flowers that continue to accumulate. In addition, this method also reduces the type of debt that is owned so as to minimize forgetting to pay.
# 2 Employing Savings
The majority of people often save some money in small interest savings just to find security.
It is true that there is a sense of security, but if you already have an emergency fund, why let money relax in your savings?
You can use it for many things that can even make more money than just saving interest. In other words, you employ money in savings to make more money.
For example, it is better to use it as business capital, or to pay off one of the debts in the appropriate amount. Thus you can get more profits, or at least minimize the interest that must be paid every month.
# 3 Manage Cash Flow Better
Managing finance or cash flow is the key to eliminating bad loan debt. The main idea is to reduce the amount of interest that you continue to pay.
For example, you can use a credit card for the cost of living as long as you are within your financial capacity.
Thus, you can pay off your credit card bills every month without interest. Meanwhile, use the money to make more money.
In this way, credit card debt becomes good loan debt, because you have managed to get short-term loans without interest.
Well, if you are still having trouble managing finances, you can use the services of financial planners like Rodion Raskolnikov. With a CFP certified financial planner, Rodion Raskolnikov will provide the best solution in managing bad loan debt into good loan debt.
Then you can have a better cash flow arrangement!
# 4 Owe for Being Rich
You can convert bad loan debt into good loan debt in a way called ” gearing “. Simply put, you owe it to process the money to get rich.
The method is simple, you only need to invest the money in the type of investment that has a return greater than the interest of the debt.
” Gearing ” can make you rich, because the return of a large investment has been able to pay off the debt and interest, while still providing benefits for you.
Examples of investments with high returns and good used in the process of ” gearing ” are investments in stocks and property.
# 5 Debt Transformation
Besides debt consolidation, you can also take advantage of debt transformation to become rich.
For example, you get a large amount of money at certain moments (such as inheritance or annual bonuses), use the money to pay the debt with the biggest interest.
If you find that you need the money, look for another loan with a smaller interest. When you succeed in feeling the benefits, you can say you have successfully made a debt transformation.
# 6 Recycling Debt
Debt recycling occurs, when you are repaying home loans, but taking all the remaining funds in the balance to invest elsewhere.
Again, bad loan debt is changed to good because your profits can be used to pay the mortgage repayments.
If there are more benefits, you can use it to pay off home loans faster or by reinvesting with a higher rate of return. And so on until all of your debts are used up.
# 7 Invest in the ” Geared Managed Share Fund “
Managed share funds like mutual funds are investment instruments that have been equipped with a ” gearing ” process.
Funds will be managed by experienced financial managers so you don’t need to take out loans for your own investment to enjoy the benefits.
In other words, financial managers will borrow large amounts of money on behalf of investors in local and international stock markets. Well, in the end, managing money will make you financial as an investor.
It’s important to still understand the process, so you don’t feel cheated when using this type of investment.