At one point in time most of us have been in one debt or the other. Most of us might have also made this resolution not to ever get into debt again. If you have done I would like you to know that you are not alone. There is this general knowledge that debt is bad. Also we are all advised that if there is just one thing to avoid, avoid getting in to debt because debt is bad. But is this really true?
Imagine this situation. Let us assume Taiwo and keke Ogunbe out of the blues park their Hummer Jeep in front of your house and then walks up to you with all the documents of the car then tell you that if you could give them #100,000 the Hummer would be yours. Let’s assume you don’t have that amount of money but you know where you can burrow it from. And you also know an auto dealer who would be willing to buy that hummer for nothing less than 10 million naira. Would you go ahead into borrowing the #100,000? Now tell me, is this good or bad?
Recently a friend of mine, a professional forex trader used a #200,000 value share certificate to obtain a loan from a bank. From his calculation, he will be able to triple the value of the money borrowed within a year by trading forex with it. Isn’t this really nice?
From my own point of view the goodness or badness of a debt depends on what you intend to use the debt for.
From an investor point of view there are two thought forms to debt. Bad debt and Good debt.
Bad debt is what most people are familiar with. It is also what most people engage in. Bad debt is when you finance liabilities with debt. This includes parties, weddings, funerals (This is typical for most Nigerians), feeding, clothing, cars e.t.c. things that do not increase is value. This is the type of debt you are advised not to go into because paying back will give you a lot of headaches and stress.
Obviously, Good debt is the opposite. And is what the ‘MegaRich’ of the world engage in. It is debt that will go up in value. Good debt is when you finance assets with debt. Generally these are things that will bring you more money or value than the debt used to finance it. Such things automatically generate money to pay back the debt and additional money for you. This includes investments, businesses and properties.
There is also something I term ‘Super Duper’ good debt and that is debt that you do not have to work hard to pay off. Or better still, imagine a debt where you never, ever have to pay it off or someone else pays for you. Did I hear you say how someone can pay for my debts? It’s possible and it’s happening all around you. It’s just that you don’t know it. I’ll show you how.
Assume I borrow 4 million naira to purchase some blocks of shopping complex. The agreement is that I’ll pay back #280,000 every month for the next 2 years summing up to 6.27 million naira for the two years. Now assume I lease out the blocks of shopping complex, collecting a total rent of #300,000 then use the rent for my monthly payback. So who is paying my debt? Is it me? Of course not. My tenants are literarily paying for my debts. And in less than two years the building will be fully mine after my tenants have fully paid for my indebtness and any rent from then on will be cool cash for me. Would you agree that is a good debt to have.
If you have once said, “I will never go into debt again.” I need you to do a rethink. My advice is that if you really want to excel financially you should look for ways to engage in good debts and avoid bad debts at all cost. This is because good debt will lead you to financial freedom while engaging in bad debts is as good as digging your own grave.
In conclusion, those that said don’t get into debt are not totally wrong they just didn’t tell you the type of debt not to get into. Now you know.
I hope I have been able to give some useful insights into the World of Money, Finance and investment. For more Insights, Resources and Feely Downloadable eBooks on Wealth, Finance, Career, Jobs, Investments e.t.c. logon and join other Nigerians on www.getinspiredng.com Registration and Access is absolutely free.
Thanks and see you at the top.


Akinrelere Idowu T.
(Project Coordinator: www.getinspiredng.com)

restructure your write up and fingers crossed you might get takers.

go straight to the point