Recently, newspapers have written about the steady increase of people’s indebtedness.
I would be very happy if the debts were good, that is, if the average person had become indebted to generate additional income, for example to buy a property, renovate it and then resell it.
A so-called good debt, in fact, produces cash flow and increases the financial capability of the family budget. We should have many good debts!
But many contracted debts are not of this type.
In fact, in Italy, England and America before us, we are drowning in bad debts, that is, those debts that do not make money but have been incurred to buy luxury goods: cell phones, televisions, refrigerators, cars, and even holidays! People are borrowing from the future!
We need to develop personal financial education to teach people how to manage their finances and avoid unnecessary debt.
How do you distinguish a good debt from a bad debt? It is simple, just keep in mind the 3 basic rules to learn how to use leverage, or as Americans call it: “other people’s money”
1. The debt has to make money instead of burning it.
2. Its duration must be greater than or equal to the investment payback period.
3. Never borrow to buy assets that do not produce income (including the first home purchase).
Today the middle class is not only shrinking, but its standard of living is going down.
In fact, only those who have a proper financial education are achieving excellent results even in times like this so-called crisis. Increasingly people are coming to my seminars who want to get off the work hamster wheel and acquire information of investment methods that allow them to improve their lives and that of their family.
Money Makes you Happy is a revolutionary book: Change your life and your economic situation forever and gain Financial Freedom
People want to have simple but important things : peace of mind for their parents in their old age, money to help their children, or the knowledge that they have control of their own lives and choices.
All this is possible only by acquiring the information needed to make it happen. Today, those without the right knowledge end up paying a very high price.
Maybe the politicians running for office should think about it. Or, maybe, for them it is much more convenient and useful to have ignorant people?
To your financial freedom