Hi, this is Jochen Siepmann, the author of The Property Apprentice; How To Earn While You Learn. In today’s episode, I’ll be talking about debt. This credit goes to Robert Kiyosaki who has been teaching this many years but would also like to convey this message to you. I would like to give credit to Robert Kiyosaki for making this public in his book, Rich Dad Poor Dad.
Is debt good or bad? Most people actually have the perception that being in debt is bad. Possibly its true and possibly its not.
So when is that good and when is that bad? Debt is bad if you get no returns for it. You buy a TV and to payoff monthly installment and you make no returns on it, bad loan. You buy a car, you switch on the ignition. Already 20% of the value gone and then it pulls down, bad loan. Because it doesn’t make you money. However, if you take a mortgage to buy a property from a bank. This absolutely makes money and you earn money, that’s a good debt. Because without it, you couldn’t have made money. For example, if you take a mortgage loan for 2% or 3% interest rate and you buy investment property that generates 6%,8%, or 9% rate yield for you. Then the differential between that is for you to take home as passive income as earnings. That is good debt, because that helps you to make money. And whenever that debt helps you to make money, then it is a good thing. When a debt doesn’t make money, then it is a bad debt. You should avoid it. Don’t fall into a credit card debt. Don’t buy things on credit that don’t give on return. Buy things in cash and if you can afford them in cash, go buy them. As simple as that. Hope this advice is useful for you. There’s more to come, so stay tuned.
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