True debtor cycle
source
While others see debts as a limitation to plan, others have leveraged the process. The secret of Other People's Money (OPM) as always said by Robert Kiyosaki is indeed an opportunity to make wealth. How sweet it can be to generate a system that produces lifelong interest. banks and other investors are always on a standby to fund your projects. I just came to realize that when one builds a good system, money will come. It's like I am delving a little from the center of this article. So what was the topic again? Oh! Yes, 'true debtor cycle'.
Who is a debtor? Without much grammar we can just say 'the one that owes' and mostly attributed to finance to even concentrate it more and could say money. Remember from my first paragraph I talked about Robert Kiyosaki's illustration of other people's money. Does this mean he is a debtor? Of course. I know what you may be imagining, Robert is a wealthy man, a millionaire author and a business tycoon. What probably would make him a debtor?. Aside from him, even billionaires are debtors. We have seen the government in debt haven't we?. There is nothing wrong in owing debt yet a lot is wrong in your debt cycle when it turns out you are a true debtor.
source
There are times I am always out of cash and couldn't reach the bank, maybe due to busy schedules or feeling reluctant. ALL I'll do here is put up a call to one of my business friends to send me some funds that I will refund later. At that point, I am a debtor. I have money in my account, I have a running business, customers are owing me too and mostly I may not even have to reach the bank to refund because cash flow within business activity can work it out. I don't know if this is beginning to open up to you. As I said, I am in debt, yet I am not a true debtor. I could even leverage his money to make more money; remember, I have a little system (medium scale business) that can help do this. He will find no offense in this, it's what we literally do within ourselves (giving out money or resource is never a problem, it's who you give it to).
From here we can sense a difference between a debtor and a true debtor. Let's look at this instance. Mr. Ben's entire earning for the month from his business/job/investing is always toggling between $450 to $500 dollars every month. His expenses (putting all life's and business expenses together) is always toggling between $650 to $700 dollars. Assuming all his money are in debts( people are owing him $450 to 500 dollars every month) so that he also has to owe people ($650 to $700 dollars every month). In one year, assuming all his debtors paid him, would he be able to clear his debts? Of course not. If you calculate the price differences you'll know. He has in the process entered the true debtor cycle.
True debtor cycle is a financial trap
If how much you owe is greater than how much you are owed and or how much asset you have to cover debt, then you are a true debtor in the Circle of uncertainties and depression. When making financial decisions we have to be very careful and sensitive. I was just looking at the scenario that is currently playing out in the financial markets. A lot of investors(traders) have been liquidated in the last two or three liquidations that struck the crypto markets and without doubts, the true debtor cycle for some have been activated.
source
The cost of wealth or financial freedom will always come at a cost of risk. Nevertheless, risk wisely, a lot of us borrow funds without financial intelligence. One of the things I try to afford is not being a debtor(never really love debt, yet I must admit it, to expand business I'll need it) but being a true debtor. One of the punishments you wouldn't want to get is climbing off debt.
Also, spending habits need to be trimmed, it's surprising a lot of us don't even understand our income flow. That idea that you'll be paid at the end of the month and you keep on accumulating debt that exceeds your monthly earnings is a deterring behavior. Get debts that will make you more money, that's the secret of the rich. Gradually learn how to put up systems(businesses) that can generate cash flow. It will take time, so don't be in a haste, good structures stand on good foundations. I told my brother they are some debt I cannot take until I have proven myself capable with systems that can convert these debts. We have to constantly learn and improve. life is too short to stay in a cycle of frustration. "Never mistaken carelessness for mature risk, no matter the number of times you'll try it, one result is inevitable; loss"--- dani-asi.
To conclude, let me add, some get debts to expand wealth while others get it to become true debtors. The result is based on our financial education about how money works. Until you know how to play your cards well, you may always end up a victim. Luck is not financial intelligence, if you think I am wrong, ask a gambler. One way or the other they always end up losing it all just like some of us have during this bear market strike.
Posted Using InLeo Alpha