Through the past few years, many of us have been conditioned to believe that being in debt is a bad thing. While it certainly may be true that debt is dangerous in the wrong hands, there are actually many ways that debt can be very effective and can actually help you get more money. This is referred to as leveraging your debt to increase your wealth. If this is a new concept for you, let’s go over a few points on why this method of personal finance can be so successful.
1. Using debt to build multiple income streams
We would all like to make more money, but the old saying that it takes money to make money certainly applies. You can leverage your debt so that you can easily create numerous new streams of income that have the power to turn you into a millionaire. How does this work?
By using an investment into a new business, you’re diversifying and adding another income stream to your own personal income. Whether you’re using your debt to invest in the stock market or a completely new business opportunity, you can create as many new income streams as you can afford. As your bank balance grows, you can reinvest your earnings to continue creating more income streams. This is one of the primary ways that successful business owners continue to make so much money. These techniques are just as effective when used for personal finance.
2. There is such a thing as good debt
Bad debt is something that no one wants to have. This means that you are in over your head and have no way to pay back your bills. Bad debt is also debt that is not working for you, but rather against you. Good debt is the money that you use to leverage to create more income streams. You can look at it like this:
3. Leveraged Debt = Powerful Investments
When you’re properly handling your debt, you’re leveraging it for your future. It may not happen overnight, but you’re building a strong foundation that you would otherwise not be able to build. Let’s face it, most of us are not independently wealthy and if we want to make money, we’re going to need money. For most of us, that does mean going into reasonable debt. The key is don’t let your debt control you. It is a good idea to stop thinking of debt in the form of credit cards and overspending.
Good debt is something far different. You’re not leveraging it to buy useless things, you’re leveraging it to ensure your future. It all boils down into how you handle that debt. If you’re not careful and you overspend on things that are of no importance to your future, you’ve got bad debt. However, if you spend it wisely, investing in multiple income stream opportunities, you have got good debt that will pay off for you for years to come.