Debt Management
Debt Management cannot be ignored when we are building a foundation for the rest of a Strong Financial House. This can make the difference being financially stable or not.It is important to know that there are two kinds of debt, simply put: Good Debt and Bad Debt.
Bad Debt-how to pay off and when?
The Bad Debt is a car loan or credit card debt, for example. Many people think that paying off debt, EVEN IF IT MEANS FORGOING SAVING, is the only way to approach money owed to someone else. There are very strategic ways of approaching debt, and we can help.
Good Debt-how to make it work for you.
But Good Debt is money that you have borrowed in order to attain something else, a means to an end, which can be profitable. Think of your home mortgage, you borrowed money, and it is possible to buy a home that appreciates in value, and if you happen to want to sell it at the time when the property value is higher, you may make a profit.But, there is actually a way to use your home’s equity—from paying down your mortgage, or from appreciation, WITHOUT having to sell your home. This is called arbitrage.
The only way banks make money is by lending money and charging interest. Let’s say the bank pays you 2% on your checking account, (that is money out), the bank MUST make money to cover that cost. So, they lend your friend money to buy a car at 5%. The bank makes 3%--the spread—that’s Arbitrage.
Arbitrage is the business plan of all banks, so what about Your Family Bank—act like a bank.
You will not think about your mortgage the same way ever again!