(W5:D1) WHAT IS DEBT AND WHY IS IT SO BAD?

Do you like spending money? ___________________ Do you like paying bills after you already received the gain? __________________ Now, do you like paying for something years after you enjoyed it, meaning you no longer are enjoying it but you are still paying it off. That is debt. When you are paying back an amount of money that was lent to you years before. While somethings you are still enjoying like a new car or a house, some debt sticks with you long after you have had your fun, like a credit card.

Debt is an amount of money you borrow from one party to another. Loans are debts, but also, any financial promise you make with another entity where you pay over a longer period of time, instead of right away.

There are three types of acceptable debt in society. These are investments in your growth and include:

Housing: You need a place to stay and sometimes, it is cheaper to buy a house on a loan than to rent an apartment. You have to live somewhere paying monthly towards your agreed upon amount. When you pay rent, part of that money you give your landlord goes towards paying off their property so after a long period of time, they have paid off their property while you are still paying rent. Instead, if you were able to buy a house, each mortgage payment you would be paying off your property (mortgage) and in the end, you have a paid for house..

Education is the surest investment into your future. While most investments, stocks, commodities, and futures, all depend on someone else’s action; education is an investment that mostly depends on you and how serious you take it and how hard you work. Without a high school diploma your income could be $515 per week, with a diploma is increases to $718 per week, and with a bachelor’s degree it increases again to $1,189. So, education is an investment towards better pay and higher quality of life.

Transportation is necessary these days to survive. We don’t live in small villages or towns anymore. Most of us live in the urban (in the city) or suburban (areas around the city) areas. Some even live far out in the rural (farmland further away from cities). Wherever you live, it is most likely not next door to the grocery store, your work, and most likely not next to family so that you can walk over to their house for a meal. We are more spread out recently and so transportation is a necessity, which is why most people borrow to buy a car. But the question is, do you need a new car? Do you need a fancy car? Do you need all the accessories? These are not necessities and only hinder you getting out of debt.

Now, even though the world uses debt to purchase these products/services, you do not. This is why you are reading this book. We will show you ways of thinking outside the box and pay off all your debt and begin stockpiling money for a higher quality of your life. Americans especially, they always want the easy way out. Did you know that most millionaires today had to go without necessities for a while as they amassed their wealth? They lived without AC during the heat of the summer to pay for their business. They lived on rice and beans so they could afford something to pay off their debt. They even worked 80-100 hours per week so they could build their business to get out from under the suffocating pillow of debt that we see most Americans suffering month to month under.

Let me explain: Debt is like a pillow. When you buy something, the debt seems okay and maybe even comfortable. Then it grows, and instead of laying your head on it you end up laying it above your head because its to fluffy and makes your neck sore in the morning. It continues to grow until it end up on top of your face, very heavy and very big until it ends up smothering you. What you thought was a pillow was instead a bag of chains, smothering and weighing you down from things you wanted to do in life and you are stuck trying to pay it off.