This is a good post. Opportunities can be seized and debt avoided simultaneously.
This is a good post. Opportunities can be seized and debt avoided simultaneously.
How's about an example of good debt?
You own a machine shop. An oil company comes to you need 10,000 widgets over the next year for 1.5m. Your current machining capacity will not be able to fill this order. So you go to the bank and borrow $700k for 2 new precision lathes. So a year later you have 2 new machines paid for and some profit to boot. Now given your increased capacity, you can receive a higher volume of work than before and make more money moving forward from that contract.
Now would it have been smarter to decline the opportunity because you didn't want to borrow?
You own a machine shop. An oil company comes to you need 10,000 widgets over the next year for 1.5m. Your current machining capacity will not be able to fill this order. So you go to the bank and borrow $700k for 2 new precision lathes. So a year later you have 2 new machines paid for and some profit to boot. Now given your increased capacity, you can receive a higher volume of work than before and make more money moving forward from that contract.
Now would it have been smarter to decline the opportunity because you didn't want to borrow?
I guess to m it would depend on how solid that contract was. Is this oil company going to be in bidness 6 months from now?
I would have to negotiate to contract out some of the work and take a Lesser profit before I would set the stage for possible failure.
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It's called a calculated risk. You calculate the likelihood that the customer will default on the contract. If it was Baker Hughes that wanted a bigger order than I was ready to handle, it'd be a no-brainer if the margin is there. If it was Joe's Oilfield Service, there'd be a thorough grapevine investigation and likely no deal.
Even subcontracting the work, your taking on risk. Who's holding the bag when your subcontractor fails to deliver? Who still has to pay your subcontractor when your customer doesn't pay?
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There is risk with everything you do. Successful people mitigate that risk appropriately most of the time.
I like Dave. Lot of his ideas were taught to me by my grandparents.
My advice, work hard, do things your proud of. If you can save, save. Pay what ya can when ya can. Don't get caught up in the rat race to make a fortune. Or retire by a certain age. Just try to stay out if debt as much as you reasonably can.
There's no real difference in living and worrys, whether you make a lot or a whole lot. Once you reach a debt free life, little problems stay little.
Being a good guy and trying to live a good life trumps all the money in the world.
we have owned our own business since 2003, we cash flow the entire thing, I have 9 "employees" I carry ZERO debt in my business, it can be done. I never ever leveraged my family or put it all on the line to grow my business. Starting a business and growing it was risky enough LOL I guess if the definition of success is borrowing money and all it takes is one major event to put your company out of business and your employees out of a job and possibly destroying your own life financially, then I must be an abject failure.
Yes. though lately I have been "following" him less. Seems like once you learn his baby steps and then latch on to the whole tithing thing, you pretty much no his pitch. I lurk a lot (and post a little) over on www.reddit.com/r/personalfinance - that is a really good group and they have a lot of good pointers about various situations
Been debt free since the late 90's. Its easy.
Don't buy what you can't afford, and pay all of your bills on time. Pay the house off early, and enjoy the ride.
Don't buy what you can't afford, and pay all of your bills on time. Pay the house off early, and enjoy the ride.
