How to Use Debt Properly

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Having debts isn’t necessarily a bad thing if you’re using debt to control assets and for growth.

Listen to learn how to make debt work for you.

Video Transcript

Hi, Jay Massey with the CashFlowDiary.com with another tip about real estate and business.

Today we’re going to talk about the purpose of debt. Many people understand the concept of leverage.
When I say the word, leverage, you think about debt or using other people’s money, and typically banks.

Why is leverage so important either in your business or when it comes to real estate?

One of the first things to understand is that leverage isn’t just about money. That’s not what we are going to talk about today. We’re going to specifically focus on the money components as it relates to leverage. What does that mean? That means for you and I, we use a little bit of our own resources in order to obtain a really bigger result.

In this case, what is the purpose of debt?

I believe that the purpose of debt is simply to control the asset. It’s to control the asset. It gives you the ability to control more assets than you could otherwise do on your own. Some people think that oftentimes when you’re using leverage, especially inside of real estate, it is to be able to magnify the return, which is true. That can happen.

Oftentimes when you’re buying and holding property, when you’re using typically the most amount of leverage, you don’t necessarily always generate that magic word called cash flow. You do with an organization typically achieve growth.

One of the major purposes of debt is to be able to obtain growth as well as control. Using those two in combination at someday when you finish paying it off, then you have that magical thing called cash flow. You can retire and live a completely different lifestyle.

If you like information like this, feel free to go over to our website at CashFlowDiary.com or you can check us out in iTunes. Additionally, some of you may want to take advantage of our absolutely complimentary course, Cash Flow Foundation.

It’s step number one inside of our cash flow creation system that’ll actually show you the steps necessary to create your own personal cash flow pipeline.