Bad debt is what I call an inherited behavior. You’ve just decided that you don’t want it, and you don’t know how to deal with it. Debt is the cost of money. If you can get money for zero, one, two, three, four, percent, why would you ever pay that off? When you can get money and go invest it for ten, fifteen, forty, a hundred percent. There are cryptocurrencies that are doing 100 percent, and people have used credit card to begin the game of investing.
Bad debt. Just to put a summary on what you are going to do. You’re going to get my Millionaire Maker book. You’re going to go right to page 194, and you’re going to get on that debt plan. It’s called the Power-Down Debt Plan. We’ll get you out of bad debt.
Now, let’s talk about good debt. Again, just the cost of money. My favorite use of good debt and zero percent credit cards is rehabbing a house, or some sort of an asset. So, use the zero percent credit card, buy all the supplies, buy all the equipment. You can even pay vendors with credit cards. Do all the work. Sell the house. Sell the car. Sell the whatever you’re going to do. Pay off all the cards, that’s the key. You got to pay off all the cards. You’re back to zero. You made all the profit, and you didn’t pay hard money loans at fifteen percent. You didn’t pay any interest. It’s free money.
So, I want to teach you how to be responsible and use good debt to become multi-millionaires. There are so many benefits to credit cards. I literally have clients pay everything. They pay their utilities, their mortgage, their phone, their kid’s tuition. Everything is paid on a credit card.
Now, that gets really risky for those of you who make money, and don’t feel like you have any bills. Because what’s going to happen is you’re going to have one, two, or three, depending on the credit cards you use. You really need, effectively, anywhere between five to seven credit cards. So, you can put them in different categories. Maybe one is used for your home expenses. Then you have a corporate card, that writes off your phone and vehicle. You have another one for gas, another one for food. So, systematically organize your cards and what bills it’s going to pay.
Here’s the risk, you spend all the money that goes into your bank account when you have a job, and then you don’t allocate enough money to pay these bills. Now, I want this to become a weekly habit. Weekly, I want you to pay bills. Say you have four credit cards, you’re going to pay credit card one off totally. That’s the benefit of it. You have no increased interest. You stay at zero percent. You could stay zero percent your whole life, if you pay them up on time.
But what happens is, you make money, you buy a bunch of stuff, and you’re not using your card. So, put your debit cards away, don’t use cash. Have cash for emergencies. Once you pay off credit card number one, start using it again. Same with credit cards two, three, and four. So, you’re just cycling paying all your bills, personally and corporately, and get a system for your money management and your credit card use.
How do you leverage it? So, there’s companies that I’m associated with, and you could even call your company, and work on getting zero percent credit cards. Now, why is that important? Well, I’ll give you a story about a client of mind who I helped get over $150,000 in zero percent credit cards. We did it in a very specific time frame, in a very specific order, and he has that money to use for years.
Prior to this, because he’s a flipper on rehabs of houses, he would borrow money from hard money lenders, which that would be me. Well, I’m expensive. I’m between 12 and 15% that you’re gonna pay and some points. So, why would you use me as a hard money lender, when I can show you how to use $150,000 for free?
It’s the responsibility factor that a lot of people get freaked out about. So, don’t freak out about it. He went out and bought a house for a rehab, and then he used these cards, Home Depot, whoever. He put $78,000 of rehab in zero percent credit cards, sold the house, paid off all the cards, instantly increased his credit, and then went again, and then went again. So, he was getting down to be able to flip three houses in a year with free money.
Let’s talk about your business. You need to get incorporated, that’s going to cost a little money. You’re probably going to need a trust. You might need a database, if you don’t have one. You’re going to need a website. You’re going to need videography, photography, you’re going to have to hire some people. So, another way to use credit cards to get started, by using them and spend them right is the key. So, again the language and the way you think about debt has got to shift.
The number one thing that is just an obvious, and you’ve been doing it forever, is using your debit card. It’s the biggest mistake. Why are you using your debit card? It’s money straight out of your bank account. Using a credit card is essentially using somebody else’s money for 30 days. So, why wouldn’t you put all your purchases on a variety of different cards?
In my opinion, you’re going to need six to seven credit cards to keep your credit good, and keep a rotation of revolving credit line, and you use them properly. You do pay them off every 30 days, but it’s somebody else’s money. Put your debit card away, get your credit cards out. It’s going to build your credit. Your debit card doesn’t do anything for you.
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