Using Your Credit Like The Rich

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The average person may have a credit card or ten and have them all maxed out, using them for luxury items.  This is what keeps the world in debt and broke.  By having to pay a bunch of credit card debt, you lose monthly cash flow.  So at the end of the month, you are left with less money.  When you use your credit like the rich, you’ll notice that you are not losing cash flow, but gaining cash flow… even if you make the same amount of money at your job.

If you’ve read the book Rich Dad Poor Dad, it mentions there are two types of debt

  1. Good Debt
  2. Bad Debt

Good debt is debt that puts money into your pockets, and bad debt is debt that takes money out of your pockets.  So an example of good debt would be you buy a house and rent it out to a tenant.  That tenant pays the mortgage and taxes.  Whatever is left over is yours.  So the tenant is paying off the debt for you.  An example of bad debt would be you buy a car, with a car loan, that you drive back and forth to work, and you pay off the debt yourself.  So bad debt is debt that you pay back.  Good debt is debt that someone else pays back for you.

Another example off good debt is debt that your business pays back.  So you may take out a loan for web traffic pointing to a product of yours or a membership site you have.  After your site makes money, it pays back the debt for you.  If your site offers membership for a monthly fee, you can get customers once and have them pay you each month.

Passive income is a concept you should be familiar with.  It’s when you make money without having to put in much (if any) of your time the way you would at your job.  So you may have people doing the job for you or you may have your money working for you.  Buying stocks that pay a dividend is passive income.  Having a business where you have employees do the “heavy lifting” for you is passive income.  Having a website that has paid membership or the traffic coming into your site is buying your products are other examples of passive income.  Yes, you may have to work harder in the beginning, but once everything is set up and your asset(s) start making money for you without you doing much work (if any work at all), you can make money without sacrificing your time.

Opening your mind to a concept of using your credit like the rich requires a solid foundation of confidence, much like the rich and power.

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