DEBT CAN GENERATE INCOME

YOU SHOULD USE DEBT TO GENERATE INCOME!

Let's see how Robert Kiyosaki explained that. 👇🏼👇🏼 

When people say to get out of debt, they think about credit card debt, the student loan debt, all that negative debt that people use for shopping and personal things. And Robert Kiyosaki's idea of debt good or bad is different. He has a very negative idea or connotation towards debt and that's because of what we were taught in the school system and the traditional education system, that it's not so great. But because of that, he understands that debt can be powerful and it can be used in a good way and it can generate money. Debt is a four-letter word for most people. There are many people his my position, so-called financial gurus who say ' live totally debt-free '. And there are other people who say cut up your credit cards. And you know that's good advice for certain types of people that don't know or can't control your spending. If you are one of them, you should definitely do too.

So, Robert Kiyosaki says that there are good debt and bad debt. 

BAD DEBT 

If you only have bad debt, which he classifies student loan debt as bad debt. The main reason the bad debt is bad is that it is the worst possible type of debt. If he gets into trouble as a businessman with debt he can declare bankruptcy and he's clean. But the trouble with student loan debt, you can't do that. 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 absolutely 100% guaranteed that you will commit to graduating. He has seen a lot of kids drop out of school and asked himself the question why is that so? And so, he had understood the problem with student loan debt and says that a person has to know what are they going to study.
One of the most important things you need to decide before you take on the student loan:
1. Are you going to graduate?
2. What are you going to graduate as?

He says if you gonna buy a house, everybody thinks a house is an asset. That's not true by Kiyosaki's opinon, he claims that a house is a liability, and doesn't matter if you put no debt on it or not, Robert Kiyosaki classifies a house as a liability. 

If you live in the house - it's a liability because even if you have no debt on it, you still have taxes, depreciation, repairs and upkeep, insurance, and many similar this. 👎🏼

Same as if you have a car. 
A car is a liability and the reason for that the six words that are basics of financial education, financial intelligence, income, expense, asset, liability. And the two other words are cash flow.

So when you look at the average person does the car take money out of his pocket?
They have a job, money comes in, they pay for their house or car, and the money goes to a bank, through a mortgage, so it's not an asset because the cash is flowing out, so it's a liability. So, the debt falls in here.

GOOD DEBT

If you borrowed money to buy a house, and you rent that house you've bought - that borrowed money from the bank is 

coming to you back by renting the house you've bought.  And all of this comes from debt. And you're 100% financed there, it's all debt. 

So, borrowing money that going to generate more money, that's the way the debt is putting money in your pocket. Not like the bad debt that is taking money out of your pocket. So this is good debt.👍🏼

 Or, if you had a car and you borrowed money for it, and somebody rented it from you as an Uber driver or similar, and that's a way where the car can put money in your pocket. This way the car wouldn't be a liability, it would be an asset.

And what makes the good debt - good is that when you borrow money for a property that can be your asset, that puts money in your pocket.

 Robert Kiyosaki 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, numerous people actually think debt is a horrible thing, but if it puts money in my pocket - it's not bad at all. 

YOU NEED TO BE REALLY SMART WHEN USING DEBT TO GENERATE YOU MONEY

For example, when you have bought a property, and if you rent the property, you've done a good job buying it and structuring it, because every month it sends you money.

 But if you make a mistake, if a renter leaves the place, the asset becomes a liability. It turns the good debt turns into a liability. And it's going out of your pocket. 

That's why Robert Kiyosaki advice us to take real estate classes to never stopped taking real estate classes as the years pass.  

LET'S RESUME HOW TO USE DEBT AS AN ASSET

LIABILITY VS ASSET

The definition of liability - it takes money out of your pocket.

And for an asset - it puts money in your pocket.

BAD VS GOOD DEBT 

If it takes money out of your pocket., it's bad debt.

Money in your pocket. Good debt.

That's all there is. Yeah.

Could a credit card be good debt?

Well, it just depends what you spend the money on, right?

Write in the COMMENTS your opinion on that.👇🏼

Thank you, Robert Kiyosaki, for this million-dollar worth lesson!

YOUR WEALTHPAL