What is your income? Is it just the 2,500? If so you obviously are going to run out of money. I'm assuming you have a job. How much are you making in total?
Many people advise paying down your debt, saving money, etc. That is great advice, IF you aren't a business owner and plan on being mediocre. It's slowlane.
Here's why.
If you put 10,000 in the hands of a stupid person. They'll spend it all.
If you put 10,000 in the hands of a disciplined, risk-averse slowlane person, they'll save it.
If you put 10,000 in the hands of a savvy business owner, they'll turn it into 50,000 with their business.
For the first 2 people, it makes more sense to avoid debt, lower interest payments, etc. Because the price of that debt means its better to pay it off early and avoid the interest.
For the business owner who turns money into a lot of money, it only makes sense to pay down a loan if the interest rate is higher than the rate you can increase that money.
If you can double your money in one year, it makes sense to borrow $100,000 at a 50% APR!
If you can't double your money, or even increase it by 10%, you would be stupid to take out a loan over 10%.
The difference comes down to what you can do with the debt.
I love debt. I wish someone would be smart enough to give me a million dollars. That's because my business is growing and anything I put it comes out multiple times larger. If someone offered me a 20% APR loan I would absolutely sign up this instant. Because I know I'll turn it into a 300% return next year.
People who don't really understand money, those who regurgitate Dave Ramsey (advice for slowlaners) will tell you to pay down all debt and stop buying starbucks coffees.
IF you have a business that is going to provide you with a healthy profit margin, and you're confident that it won't go under anytime soon, then here's what you should do:
Take as much equity you can out of that house (or at least refinance to a longer term to improve your monthly cash flow situation)
Put the money in your business in the most efficient way possible.
Pay off the highest interest rate debt only if it's a similar rate to what your business profit margin is. If your business is making a 30% return and credit cards are 18% you would be losing money to pay off your cards instead of putting the money into your business.
Fastlane finance ends up looking similar to sidewalk finance because there is plenty of debt. The difference is that you use the debt for income producing assets like a business you control. The return on a business you own can be many multiples of whatever consumer debt you have. That's what makes it a better decision.
If opportunity cost went on people's balance sheets, middle class slowlane people would realize how much they lose each month. It's a million times more than the amount they saved with their frugality.
Many people advise paying down your debt, saving money, etc. That is great advice, IF you aren't a business owner and plan on being mediocre. It's slowlane.
Here's why.
If you put 10,000 in the hands of a stupid person. They'll spend it all.
If you put 10,000 in the hands of a disciplined, risk-averse slowlane person, they'll save it.
If you put 10,000 in the hands of a savvy business owner, they'll turn it into 50,000 with their business.
For the first 2 people, it makes more sense to avoid debt, lower interest payments, etc. Because the price of that debt means its better to pay it off early and avoid the interest.
For the business owner who turns money into a lot of money, it only makes sense to pay down a loan if the interest rate is higher than the rate you can increase that money.
If you can double your money in one year, it makes sense to borrow $100,000 at a 50% APR!
If you can't double your money, or even increase it by 10%, you would be stupid to take out a loan over 10%.
The difference comes down to what you can do with the debt.
I love debt. I wish someone would be smart enough to give me a million dollars. That's because my business is growing and anything I put it comes out multiple times larger. If someone offered me a 20% APR loan I would absolutely sign up this instant. Because I know I'll turn it into a 300% return next year.
People who don't really understand money, those who regurgitate Dave Ramsey (advice for slowlaners) will tell you to pay down all debt and stop buying starbucks coffees.
IF you have a business that is going to provide you with a healthy profit margin, and you're confident that it won't go under anytime soon, then here's what you should do:
Take as much equity you can out of that house (or at least refinance to a longer term to improve your monthly cash flow situation)
Put the money in your business in the most efficient way possible.
Pay off the highest interest rate debt only if it's a similar rate to what your business profit margin is. If your business is making a 30% return and credit cards are 18% you would be losing money to pay off your cards instead of putting the money into your business.
Fastlane finance ends up looking similar to sidewalk finance because there is plenty of debt. The difference is that you use the debt for income producing assets like a business you control. The return on a business you own can be many multiples of whatever consumer debt you have. That's what makes it a better decision.
If opportunity cost went on people's balance sheets, middle class slowlane people would realize how much they lose each month. It's a million times more than the amount they saved with their frugality.
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