25 Jun Good Debt vs. Bad Debt… The Answer May Surprise You
In today’s economy there’s a lot of chatter regarding debt. People who have over extended themselves are scrambling to pay down debt when the focus should be on creating new cash. If you’re in trouble with mounting consumer debt the only choice for you is to find ways to put more money in your pocket.
Once you have a Cash Machine plan in action you need to focus your attention on keeping that income coming in and creating a cycle of cash flow. The biggest slowdown of a new Cash Machine is once you start making money you go into a continuous cycle to pay down debt. This will get you nowhere fast. In fact it will stop you in your tracks. In six months you’ll find yourself stuck with a Cash Machine that’s not profiting because your money went straight to your consumer debt.
Your seed money, i.e. the money you use to get your Cash Machine going, is business capitalization. This is an example of good debt. If you borrowed money to start your business, then you need to show profits. Pay the minimums on this good debt so you’re showing progress.
Don’t get me wrong you need to keep making your minimum payments on all you consumer debt but stay focused on the broader picture. In my Millionaire Maker’s Guide, you’ll find an equitable format for paying down debt while still investing in your future.
When you’re starting out, you need some life support so you can continue to create new cash in your life. That means you need a team, people who support your life to give you the time you need to make money. This is where your first money should go. Once you have that life support you need to focus your earned money on marketing, marketing, and marketing. That means if you need a website it’s time to invest your earned money. Once you have established your life support and marketing plans you’ll see more money coming in the door.
You want three to five layers of marketing so that you can start to put money away for your wealth account. Then you can start putting a little extra money toward your debt. You’re not pouring your money on that debt, you’re just making some headway. In this model you will pay off debt, it’s just going to take you a little longer.
The best advice I can give to those of you facing large amounts of debt is to create new money. Get your Cash Machine off the ground based on a successful model company. Do not focus so much on your credit cards and lines of credit, it’s not that you don’t care, you’re just making sure you have a plan that will create a steady flow of income. Your future is not based on the amount of debt you carry, it’s based on how much cash you can bring in to change it.