The Debt Curve vs. the Wealth Curve
Most people are familiar with the dangers of the debt curve. As we borrow more money, the interest costs us more and more. We in turn borrow more, and the vicious cycle continutes. Sound familiar? It’s the foundation of the credit card industry as well as the federal budget.
It’s a vicious cycle because the problem gets worse as time goes on. Instead of solving the problem, we just put it off until tomorrow. The danger is that tomorrow the problem is a little bit bigger. And then it gets pushed off again.
The good news is that the power of exponential growth goes both ways. Our debt can increase exponentially, but so can our wealth. How? Through investing. Instead of paying 5% or 10% or 20% annual interest on our debt, we can get paid 5% or 10% or 20% on our assets.
Impossible?
Absolutely not. There are millions of people around the world who are getting richer every day through this simple approach. For most Americans, it means investing in stocks, mutual funds or real estate. I don’t think it’s really possible to get rich through investing in mutual funds, but anyone who is committed can find a way to get 10% or 20% return on their investments after inflation.
Here’s a great post about how to get on the debt side of the curve to the wealth side when buying a car. Anyone can do it. It’s not a secret. You don’t need to know any calculus, statistics, or advanced math. You don’t need an MBA or college education. So, it’s not about some hard-to-find knowledge. It’s about finding a better way of managing money, and actually doing it.
It’s possible to use the same sort of strategies in every aspect of our lives. Instead of getting a loan, pay cash. If we don’t have enough money, find a way of increasing our income or buying it for less. Many people make a big financial decisions when they visit a car dealership and get a 5 or 6 year loan that shackles them in debt. If we devote our brain power to finding ways of buying a car (or a house) without taking out a loan, we will find a way.
There is no shortage of money or information in this world. Financial success can be achieved by finding the strategies that lead us to wealth, and following those strategies.
Related posts:
- The Debt/Investment Curve
- How Your Thoughts Affect Debt
- The Four Secrets To Unconventional Wealth
- How To Know The Difference Between Money and Wealth
- Weekly Wisdom: Creative Wealth Creation
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
