Want More? Spend Less!
Many wished that money grew on trees. Just seed, plant, and let it grow! Having a never-ending supply of cash may be a dream. Wouldn’t you love to do whatever you want whenever you want? The truth is, if you plan properly, this day of true financial freedom can occur.
It is far better than the alternative—incurring debt. In order to pursue true wealth, you need to understand the difference between “good” and “bad” debt.
So how can you tell the good from the bad?
Here are the working definitions of what I am talking about:
Good debt: Good debt involves purchasing something that will gain, retain, or create value. A home mortgage is a prime example of good debt.
Bad debt: To put it simply, bad debt is any debt you incur when buying something that will lose value.
Ugly debt: Ugly debt is debt incurred when purchasing something consumable (meaning it will have no further value). This seems logical, right? Spending does not equal happiness
Many spend more than they make going deeper and deeper into debt. Before you consider debt, ask yourself:
- Is this adding to my wealth or subtracting from it?
- Do I really need this now?
- Do I have enough in savings to pay for this?
- If I borrow, how much interest will I pay?
- Does this make financial sense?