You will recall that money is a way to preserve the value of your service or product. By doing that, the value of money has the ability to move in time. Money you save today may be spent next year. Your valuable service that earned the money moved to the future. That is all saving and investment is about. Moving your value today to some day in the future where you will spend it.
Similarly, you can borrow to get money to spend before you earn it. But remember everything is a trade. You trade a promise of future earnings for the money you borrow. Money moves from the future to the present. Debt is a way to get money now. Getting money and earning money are very different, but the money does not know. It can’t tell where it came from so you must because all time shifting money decisions affect you.
Borrowing has a price. Twofold really. Interest is the one you know about and it may be easy to cope with or not. The other is that interest and principle must be returned to the lender out of money you earn in the future. Each debt repayment dollar diminishes your flexibility and potential in the future.
Debt can be a problem if it is easier to borrow than pay it back. Or debt can be a blessing when the asset acquired has great value. Getting money is easy, but it has uneven consequences so you must be very careful with borrowing. Getting money without thought leads to weak decisions.
Other than credit cards, car loans and mortgages, there are ways to get money.
You can get it from the government, but only if they are willing to take it from someone else who has earned it. Nothing is free. If someone gets something for nothing, someone else got nothing for something. Be sure you understand getting and earning. It matters to everyone, even those who don’t need the government.
You might win a lottery which is you getting money someone else has earned with the government skimming off half before it is distributed. You might inherit money or receive a gift, but that usually does not happen until much later in your life. Again someone earned it.
For most people, earning money is the only immediate and useful option.
Once you know that any money you get, you must earn. That’s why you want to make your earning as efficient as possible. Think about your best career and work to establish it.
Tomorrow we will see about tactics. People, techniques and tools and how they add value.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772