If you’re buying an asset that makes you more money (whether through appreciation, cash flow/dividends, or tax benefits) than it costs to borrow (paying down your principal and interest while more than keeping pace with inflation), you can make a legitimate argument to go into debt to invest in that asset.
If you’re going into debt to buy something that doesn’t make you money, you’re giving into your inner child.
Only borrow money to buy things that go up in value. Otherwise pay all cash for it or not at all.
Are you a “cash” only person (like Dave Ramsey) or do you prefer to utilize debt on your behalf?
Honestly, I see the pros and cons to both sides. Being more financially risk averse/conservative, I get the appeal of only using “cash” (or, even if I’m putting it on a debit/credit card, only buying what I can afford to pay at that very moment). It’s a safer position from the standpoint that you aren’t going to get yourself into massive debt. This strategy makes a ton of sense for those trying to minimize spending on things they don’t need (mostly consumer products that contribute to lifestyle creep).
But if you leverage debt to buy assets (like real estate), where someone else is paying the loan down for you, you can scale much more quickly.
Imagine wanting to buy a rental property. Let’s say you’re looking to buy a single family home for $120,000. If you have to pay cash for it, it will take you a long time to save up $120k. Even if you’re investing it, unless it’s in a self-directed IRA, when you pull your money out to purchase the property you’ll get hit with taxes. But if you only had to save up $30k (for a 25% down payment on an investment property) or even $4,200 (for a 3.5% FHA loan, where you have to live in the property for at least one year), you can get started much sooner.
Leverage works both ways. It can help propel you to success or drive you into the ground. But as long as you’re taking on appropriate risks (preferably starting small unless you have a ton of experience and expertise in what you’re investing in), you can build wealth at a greater pace by leveraging debt as opposed to paying all “cash” for everything.
What are your thoughts/how do you prefer to invest?
1. Stay adequately hydrated. This will help you feel more alert and awake, it will help your body feel better (and more your joints lubricated), and it will help your kidneys.
2. Eat a healthy diet (varied color and type of fruits and vegetables each day; different protein sources each day). The cleaner you eat, the better you feel. Aim for a good variety so you aren’t missing any key nutrients. Take a multivitamin as a true supplement (it’s meant to add to your dietary success, not to be your dietary success).
3. Live a healthy lifestyle (minimize sitting; do meaningful exercise at least 30-minutes per day…do something physically and mentally challenging every day). Be outside – get some sunshine (vitamin D).
4. Maximize quality sleep. A high quantity of sleep can be helpful, but why sleep more than you need to? At that point you’re literally sleeping away time in your day, and time is the most important and scarce non-renewable resource we have. Focus on getting just the right amount of good sleep.
5. Interact with someone you care about each day AND treat them well. Be generous. It will help you mentally and make others feel good too.
6. Forgive yourself and don’t sweat the small stuff. In the grand scheme of life, it probably doesn’t really matter.
7. Be interested/learn something new every day. When you stop growing or getting excited to learn, you slowly start dying and becoming less interested.
8. Be involved with a good church (or other positive community). See, talk with, and interact with positive people in a positive environment often.
9. Spend less than you earn. Automatically set aside money to “pay yourself first” and invest. This will help you feel less financial stress and allow for you to spend on things you actually care about.
10. Have long-term goals. You should always be striving to improve yourself.
When Rousseau said that man is born free but lives in chains, he knew that most of those chains are self-imposed. We feel like we are a slave to so many things…to money; to expectations of family, friends, or bosses (or our perceptions of those expectations); to what we think we need for a “normal” life. Free yourself from those shackles. Do not be bound by doing things for others’ satisfaction. Learn to say no. Say no to material objects, to projects you don’t want, or to people who do not build you up. Surround yourself with positivity and a can-do attitude. You are more free than you think. You just need to act on it.
If you aren’t willing to work for it, don’t complain about not having it.
This is a simple, but true statement:
“If you aren’t willing to work for it, don’t complain about not having it.”
The truth is, many of the things we desire most in life won’t come easy. If you want the best marriage, an extremely successful career, lots of money to save/invest or to spend on things you want, amazing health, etc., you’re going to have to work for it. It doesn’t just naturally happen, especially when it is in our programming to embrace being comfortable.
Society has contributed to making our lives as comfortable as possible. It’s kind of a double-edged sword. It’s nice that society has made much of life easy and convenient, but oftentimes, what is easy and convenient is not what’s best for our long-term goals. There are too many exciting things vying for our attention and making us lose focus on what’s important, too many delicious treats/junk food to add to our expanding waistlines, and the affordability of those items seems relatively low. But that’s part of the genius of any good company’s marketing plan…Because, on a case-by-case basis, most of it IS inexpensive. But when these actions are compounded daily – when it becomes the norm to go on a shopping spree instead of saving money, to binge on a Netflix show instead of working out, to going on social media instead of reading a book, or to eat fast food instead of making a healthy meal – that’s when it really costs us a lot.
Our goal should be to get better every day. Whether that’s 10% better, 1% better, or 0.1% better…if we can improve ourselves everyday, we will look back 20 years from now and be amazed at all we have achieved. The key here is to start with your next decision. It can seem overwhelming if you have to make the right decisions all day. But if you just do what you feel is right for your next one, and build momentum from there, you’ll be alright.
Remember that we have choice in everything we do and there are consequences to those choices. Do we want a positive result or a negative one from the decisions we make? Is the short-term pleasure going to outweigh the long-term effects of it? Many of us subconsciously complain about lacking what we desire – a lean body, a big bank account, a perfect marriage – but we don’t put in the effort that it takes to achieve those things. The way I see it, you have two options…Option one is to change your habits and to work hard for what you want. Option two is to stop complaining. You didn’t want the result badly enough to act on it, so stop complaining. Nobody wants to hear you complain anyways – at least not those who have already achieved what you want to achieve.
