Debts is Only Good if it's expected to give you INCOME ESTEEM.

Some people have a very negative idea for debts because what we were taught in the school system, it is not so great but can be powerful and it could be used in a good way,

What do I say, my questions when people say to get out of debt when it comes to your mind when people say, guys, I think about credit card debt, student loan debt, all that negative debt that you people use for shopping and personal things, and it's your idea of debt, good or bad.

Debts is Only Good if it gives you INCOME.
Image by Rilsonav from Pixabay 

Some people have a very negative idea or connotation towards debts. And that's because what we were taught in the school system and the traditional education system, that it's not so great, but if you research work on it, and have such financial resources, and attend seminars of financial leaders, then you understand that debt can be powerful and it could be used in a good way, and it could generate you money. So for those of less thing, debt is a four-letter word. But most people, in a position so-called financial gurus who say they live debt-free.

And other people say cut up your credit cards. And you know, that's good advice for certain types of people. So you should cut up your credit cards. If you don't know you can't control your spending. You should definitely, but I don't know how people live without credit cards. I don't know how you can check into a hotel, rent a car or go shopping and go out for dinner. But you should cut up your credit cards if you're a shopaholic. That's good advice.

And the other thing about debt, there's good debt and bad debt. So this is going to be the lesson today is there's good debt and bad debt and if you only have bad debt, which I classify student loan debt as bad debt.

The main reason is bad debt is because it's the worst possible type of debt. You see if I get into trouble as a businessman with debt, I can declare bankruptcy and clean. But the trouble with student loan debt, you can't do that. You know, it hangs around your neck for the rest of your life.

So if you're a student, you shouldn't take on student loan debt unless you 100% guaranteed that you will commit to graduating.

So have you seen a lot of kids drop out of school? And so the problem with student loan debt is a person has to know, what are they going to study? You know, I have two friends. They're both medical doctors. And they came out of school with $500,000 in medical debt, I mean that student loan debt, but they paid off in five years, because their medical doctors had high paying jobs. And so the delayed having families and all this and the whole objective was to pay for becoming a doctor.

But I think you have friends who have no idea what they're going to school for. So I have this friend and she's changed her major like three different times from business to now nursing. And it's a lot of money and she still has no idea that what she wants to do, and she tells me she's like Alex, I want to change my major from nursing. But I'm already practically done. And I can't pay back this debt. So she's stuck with the nursing career and she doesn't even like it. You know, when I was your age, like I think I said earlier is that my classmates were making like 110 hundred 20,000 a year, which is not much money.

But for my generation, if I made 20,000 that was a lot of money. I mean, it's just out of proportion. So where were the highest paid graduates in the world? And my starting pay was about 47,000 a year. My classmates were making three times as much as me. But the choice we make I didn't want to do what they did. Yes, I had to join the labor union. Ships officers, we had to join the MMP masters made some pilots, which meant we're a labor union guys. So labor union guys may more money.

And nothing personal, but I don't want to be a union member. So I joined Standard Oil of California as a ship shipping officer. And then I didn't have to join the labor union. But I only got 47,000 a year. That was different. The differences in Standard Oil was still sailing. And a lot of those labor union jobs are gone, because the pay got too high. Yeah, I mean, so there's always a good and bad and it's hard to understand that when you're younger, but I knew when I was 22 years old, I didn't care if they paid me 100,000 a year. I wasn't going to join a union. It was just principal, my father, Poor Dad was head of the teachers union. And from what I saw,

I didn't want to be a teacher. I didn't want to be a union member. So it was kind of youthful exuberance on things.

But anyway, today it's harder because you don't know what, what is this mysterious high paying job.

And even lawyers today are having a hard time because they don't need that many lawyers, which is a good thing. And there's artificial intelligence, which is replacing a lot of the high-end jobs. Like even accountants today, they don't need accountants, because artificial intelligence can do a lot of the work for them. So that's why for your generation student loan debt, I would say, is possibly one of the most important things you need to decide before you take on no debt. Number one, are you going to graduate? And number two? What are you going to graduate s?

Any comments on that if you want to talk about so my dream and passion has always been to be an entrepreneur, but when I started studying it, I told my dad, it was the last thing I would ever do because I thought that what they were teaching me was what I was going to be doing on a day to day basis. But these teachers don't, aren't practicing what they're teaching. And so we give you this wrong conception of what you're studying. And reality is the traditional idea. It's obsolete. What mattered back then does not apply to how you're going to run your business. Now, you know, today if I was in your position, and I was pretty clear when I was about 15 I want to sail the seas, I sail, huge ships, you know, throughout the world. But that was a dream of a kid.

By the time I was 22, I was tired of it. I didn't you know, I didn't want to sail the world anymore. So I understand, you know, what it's like to keep that what they call it is finding your way in life. Right? Yeah, that's not easy. So I commend you guys and that's why we're doing the millennial money is because as these programs progress, you're gonna find out in my opinion, you guys have a harder road to go through the knighted. For me, it was really easy. There were a lot of jobs economy was booming and all this and it was easier.

So you guys have got to be smarter. So as far as a subject of debt. Good debt and bad debt.
Again, it goes back to the financial statement.
debt is good or bad
Image by Mimzy from Pixabay 
Income expense as a liability, so debt falls in here. So if you let's say I'm going to buy interfaces, I'm going to buy a house emphasize my house as an asset. That's not true. Your house is a liability. I don't care if you have no debt on it or not. A house is a liability. Same as if you have a car. A car is a liability. And the reason for that is, as we've talked about earlier, the six words that are basics of financial education, Financial Intelligence, income expense, liability. And the two other words are cash flow. So when you look at the average person, they have a job.

Money comes in here, they pay for the house, and the money goes to a bank through a mortgage, so it's not an asset because the cash is flying flowing out. So it's a liability. So the definition of liability, does it take money from your pocket? And for an asset does it put money in your pocket. So when I have a rental property here, it puts money in my pocket. So if I live in that house, it's a liability.

Because even though I have no debt on it, I still have taxes, depreciation, repairs, and upkeep, insurance, and all this. When I rent a property, I've done a good job buying it and structuring it every month. It sends me money. So I started off when I was 25, I had a little one-bedroom and it put 25 bucks in my pocket was a start. So this was good debt. You say this. The debt also went out and paid.

But it also put $25 in my pocket. So-net. I was making money from my little house. So today my wife I own 6500 and every month 6500 houses, put money in my pocket. My people will live on love paying all this because they have a place to live. But all of this comes from debt.

So we don't, we have 100% finance here. It's all debt. So this is good debt. What makes a good debt is the two most important words cashflow. Does that make sense to you? Yeah. Any comments on this? So numerous people my age think that is horrible. And you just showed us a perfect example of cash flow and how debt can generate income. And many entrepreneurs use this formula to make money on a day to day basis. So what most people do is they have student loan debt. Sl, and that debt is going out this way.

You know, it doesn't put any money in your pocket, you can say, Well, I have a job. Well, this tool, you work for it. So I don't work for any of this money here. I do this job once, set the deal up. Every year, I add more and more and more money. I'm borrowing money from here. It's coming here and going this way. So the debt is putting money in my pocket. And bad debt is taking money from my pocket.

So the problem is if you're going to use that, you've got to be much smarter than this person here, you've got to be very, very smart. That's why I took real estate classes when I was 25. I've never stopped taking real estate classes. Because you buy a piece of real estate and you make a mistake, this turns into a liability.

This, if if I get the renter leaves the place, this goes here that fast, and the cash flows that way. Guys quite out of my pocket. So has nothing to do with real estate. It's nothing to do with a car that there was a student loan. It has to do with these two words here. So good debt, again, is debt when I borrow for this, and it puts money in my pocket. If I had a car and I borrowed money from it and somebody rented for me as an Uber driver or something and put money in my pocket, it would be an asset. My wife and I have a boat. And you know most boats lose money but our boat makes money because it's in a charter, you know, people rent my boat all the time. So has nothing to do, whether it's a boat, student loan debt, a house, a car, or whatever it has to do with these two words here. And so most of the time, you know, you've had accounting classes that don't talk much about this. This is something they never mentioned to me in college. Why is that? You think like you mentioned before, I mean, some people are teaching students something that they don't apply in their daily life, something that they barely know about, and they only learn through a textbook, but you have you've taken accounting classes, right? Yeah, exactly. I did it as well. I did finally get a high grade the second time around, but that was because I had a real content teaching me the real applications of accounting, as opposed to a fake teacher. Right. So your advisor Tom, we all right, Tommy, and one hour what I could have learned the entire semester with this one teacher that wasn't even accounting in his real life.

The big lesson for you is that it's nothing to do with the house, the car, the student loan, it has to do with whereas a cash flowing, if the cash is flowing into your income statement into your pocket, it's an asset. It's good debt. But if it's taking money from your pocket, it's bad about that does good debt and bad comments. I think just like Trump, you know how to apply the rules of debt, and he calls himself the king of debt, right? If you're gonna be successful I whether you're an employee or entrepreneur, you've got to control the direction of your cash flow. Like most people here we've talked about earlier. They get a job and the cash flows out here it goes to the government called taxes.

Trump doesn't do this. I don't do this legally. The reasons because we're entrepreneurs, not employees. employees have this entrepreneurs because it's type of acid and the other thing, so what would like to say to the young millennials listening to this? I'd say don't be afraid of debt and if you know how to use it, use it good debt puts money in your pocket credit card big good debt boy just depends on what you spend the money on. Right? So if you spent it on something that's going to produce income for you like an asset, then it's good debt. But if you spend it on let's say, a jacket that you wanted from Burberry, then it's not the first property there was in Maui Hawaii in the 1970s. I bought it with a credit card. Wow. property was $18,000 my first preference but I've taken several real estate classes. And so I knew what to look for. I found this one property it took a long time. When I found that I just broke up my credit card and bought it and I put $25 in my pocket and went from this little janky little thing. This is years ago. $25

It was good debt. I wish I never sold it. I don't know though it was a big mistake to sell it because today is probably worth four or 500,000 and that's a whole nother story. That's why I don't flip properties you know, I don't like to do that stuff. So anything else so good debt what money in your pocket? bad debt what takes money out of your pockets?



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Beyond Narrative | Blog Where Every Single Word Matters: Debts is Only Good if it's expected to give you INCOME ESTEEM.
Debts is Only Good if it's expected to give you INCOME ESTEEM.
Some people have a very negative idea for debts because what we were taught in the school system, it is not so great but can be powerful and it could be used in a good way,
Beyond Narrative | Blog Where Every Single Word Matters
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