I just wanted to say I found this article useful. When I read one of Steve's articles, even things I've already noticed, such as changing your perspective on what amounts to a lot of money, hit home more fully and in new ways. I'm amazed how insightful and useful so much of what he writes is to me.
Reading these posts is equally interesting. I find it so entertaining to think of $10,000, or $100,000 $10,000,000 as a small amount of money. It boggles my mind!
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Since his post was about money, I also wanted to bring up something I had noticed just in the last couple days regarding the common belief that debt is bad. I was taught this as far back as I can remember so it's been rather important for me. I was taught that debt is bad and if you have any you become trapped, unable to pay, and simply a bad person. I'd avoided any kind of debt like a plague until last year.
Now some people who are more enlightened about it well tell you it's OK to have debt, as long as it is invested in something earning a higher interest than you are paying. This seems to me a much more useful way of looking at it. After all, the worlds richest people have the most debt. Bill Gates probably owes billions. And how many business people have to borrow money to get their business going? a lot. Probably the highest earning investment is a business because it's return on investment is potentially very, very, very high. look at the founders of NetFlix.
But I was thinking, what counts as higher interest? The point of student loans is that your increased earning potential is worth more than the money you borrow and the interest it accumulates. What else, besides college, might qualify by that criteria? What if you took a loan to travel the world for a while and really experience what's out there? You can't really know what kind of interest that will pay. You could learn so much, experience so much more, go in an entire different direction in your life. What you learn may well pay off financially in the future. What if you get loans to dress better so you feel better about yourself? (BTW, don't worry, I don't have plans to travel to Madagascar in a $1,000 Gucci suit.)
What I believe makes debt bad for most people is that the money is in charge and not them. If
you are in charge, you can have as much debt as you want, and your wealths (financial, emotional, experiential) well always increase. If the
money is in charge or you believe it's in charge, debt becomes a fortress in which you are trapped; you were forced in and you have to struggle to escape.
I believe it demonstrates a faith in yourself to say, "I'm going to borrow this money to invest in myself, and the person I am in the future will be more than able to take care of it."
It's just an amazing new thought to me and I thought I would enjoy sharing it with you all.
Thanks again for your amazing contributions Steve,
Chad
