Using Credit Responsibly For Investing in Stocks, Assets, and For Personal Items
You should never buy anything with credit again unless you have the cash to immediately to pay it off with cash set aside.
If value of what you are buying exceeds or is equal to the credit you are buying it with then using credit is also acceptable.
This is my basic rule of thumb which I would generally follow unless in rare cases you are buying a business or business assets with a well thought out business plan that will allow you to pay off the principal that you borrowed.
There are many great companies that couldn't make it without startup capital, and there are many great businesses that need business assets to keep their customers happy.
There is nothing wrong with credit and loans themselves so long as you are using them in a responsible fashion as cash or for investments' only.
To use credit in a reasonable fashion though we will need to develop habits and questions that we ask ourselves before we use it.
The first thing you should ask yourself is what you are buying with credit, is it asset or an investment? In the case of investing in stocks, you can use margin which is a form of credit through your brokerage to leverage higher amounts of stocks or commodities in hopes to gain more profit.
However, if you are using any form or credit for personal use and you don't have the cash sitting at your side, you run the risk of paying interest and starting to fall behind.
In time people develop habits that will keep them and their family debt free for life.
The first thing you should do is get a box that you put in your closet, and after you buy something with credit, you will immediately place the amount of cash you charged in that box.
The problem with putting money in your bank account after buying something off credit is that you will be more tempted to spend it thanks to modern day debit cards and checks.
Lastly the thing people forget about credit is that it ca actually be used to make money quickly and pay off the principal with hardly any interest at all.
This could be done investing in stocks or buying a house,a business, or many other assets that are out there.
Pretend you invest in a house on credit for 100 thousand dollars but the house is actually worth 140 thousand.
If you followed the example in the last sentence you could then sell the house quickly and pay off the loan completely thereby pocket the difference for your own personal profit.
If value of what you are buying exceeds or is equal to the credit you are buying it with then using credit is also acceptable.
This is my basic rule of thumb which I would generally follow unless in rare cases you are buying a business or business assets with a well thought out business plan that will allow you to pay off the principal that you borrowed.
There are many great companies that couldn't make it without startup capital, and there are many great businesses that need business assets to keep their customers happy.
There is nothing wrong with credit and loans themselves so long as you are using them in a responsible fashion as cash or for investments' only.
To use credit in a reasonable fashion though we will need to develop habits and questions that we ask ourselves before we use it.
The first thing you should ask yourself is what you are buying with credit, is it asset or an investment? In the case of investing in stocks, you can use margin which is a form of credit through your brokerage to leverage higher amounts of stocks or commodities in hopes to gain more profit.
However, if you are using any form or credit for personal use and you don't have the cash sitting at your side, you run the risk of paying interest and starting to fall behind.
In time people develop habits that will keep them and their family debt free for life.
The first thing you should do is get a box that you put in your closet, and after you buy something with credit, you will immediately place the amount of cash you charged in that box.
The problem with putting money in your bank account after buying something off credit is that you will be more tempted to spend it thanks to modern day debit cards and checks.
Lastly the thing people forget about credit is that it ca actually be used to make money quickly and pay off the principal with hardly any interest at all.
This could be done investing in stocks or buying a house,a business, or many other assets that are out there.
Pretend you invest in a house on credit for 100 thousand dollars but the house is actually worth 140 thousand.
If you followed the example in the last sentence you could then sell the house quickly and pay off the loan completely thereby pocket the difference for your own personal profit.
