During this time of the pandemic, we should be more careful about how we spend our hard-earned money. When we hear the word debt, we sometimes have this bad connotation about it. But this article perfectly explained historical debt and how good debt can actually help us in our education, careers, and businesses.
For the longest time, since we started our relationship, we always buy all of our stuff in cash. Saving up for something has always been our go to strategy and it works. We were so scared of debt. Credit cards are a no no, because we know a lot of people who were burried in debt because of bad debt. Because we both work in a Financial institution, horror stories of our clients even haunted us in our dreams. LOL! That is until we decided that we need a car.
When we purchased our very first car, we paid it off through a bank loan in a span of 18 months. We didn’t have enough money to buy it in cash. But we realized later on that the money we earned because of our car is even higher than the car’s value. Same thing happened with the new truck that we also loaned in 2019. It has helped us with our food and tech businesses. These are perfect examples of debts that generated income for us.
One of the most successful entrepreneurs from Migs’ family educated us about the pros of borrowing money for a business. He told us that we should not be afraid of debt, as long as we set our priorities straight and use it to make more money. That’s how he started his first business. Although we haven’t tried a business loan yet – we totally get his point. It just takes hard work and responsibility to pay off a debt in order not to be burdened by it.
How do we manage debt? We follow these rules at home.
- Prioritize bills. We do not let bills pile up because that would mean additional fees.
- Needs before wants. As long as there is food on our table, bills are paid, our clothes are clean – we couldn’t care less if we do not have the latest model of home appliances, gadgets, shoes or bags.
- We make wise purchases. We do not settle for cheap items that we won’t be able to use for a long time. We always prefer quality products.
- We take care of our health. Even if you have insurance to cover your hospital bills, the time that you lost is invaluable. It sounds cliche but health is wealth!
- Taking a vacation once in a while for our mental health. Being frugal doesn’t necessarily mean that you shouldn’t be exploring. You can always travel and stick to your allotted budget.
- We prepare our meals. Home-cooked meals are always healthier and yummier.
- We only withdraw a small amount of money. We always prefer online transactions to save time and to refrain from going out. Because going out could mean gas + food allowance.
- We do not compare our lives with other families. Life was never a competetion. Our goal is just to make ourselves better.
Debt can be considered as equity depending on our mindset and commitment. Debt has saved many people and businesses. What about you? What’s your take on loans/debt?