Leverage is the use of financing to borrow capital for an investment, with the expectation that multiplying the risk-reward relationship of the investment will create more potential profit. In other words, the more money you invest, the more risk you have and the larger the reward (profits) you receive, if all goes as well with your investment.
Kiyosaki vs Ramsey Who is Right About Debt?
Robert Kiyosaki and Dave Ramsey are probably two of the biggest names in personal finance today. But they have almost polar opposite views on financing and investing. For those not familiar with these two, Robert Kiyosaki is the author of the best-selling book Rich Dad Poor Dad, which he has now turned into a series of books, and a brand of educational games and other media. Dave Ramsey is a best-selling author, a nationally syndicated radio host, and owner of Ramsey Solutions, an educational company that sells personal finance training programs.
Robert Kiyosaki became famous for teaching such unconventional notions as “Your home is not an asset”. Here’s how he defines assets and liabilities, “ An asset is anything that puts money in your pocket every month, and liability is something that takes money out of your pocket every month”. He also believes you should “never say, ‘you cannot afford something’. That is a poor man’s attitude. Instead ask yourself, ‘How can you afford it?’”. These unusual concepts are what made him popular and helped him take the personal finance world by storm. His philosophy on debt is that it should only be used to finance assets like rental properties, not liabilities like cars, boats, and as he says, “doodads”. He believes the key to investing is to leverage your assets to maximize your ability to purchase more assets. Which on some level makes sense because you can grow your investment portfolio much quicker. But this is not without risk!
I have a daughter who is 20 years old. Over the last few years, I have been trying to teach her how to handle her money. I’m proud of the fact that she has had a job, a bank account, and has been earning her own money since she was 15. Now a sophomore in college, she is receiving credit card offers daily and I don’t want to see her fall victim to the temptation of easy debt. Finances can be a difficult minefield to navigate as a young adult. I began thinking about what I was taught, what I have learned on my own, and what I wished someone would have told me when I was 20. Here is the advice I offered to my 20-year-old.
Tips For First-Time Home Flippers Article submitted by guest blogger Ray Flynn of DIYGuys.net Even if you don’t intend to…
Because today’s retirees are healthier and more active than their counterparts of the past, many are choosing to pursue new hobbies and passions. Rather than downsizing to a tiny condo and resigning themselves to a quiet and sedentary future, some older Americans are embracing a lifestyle known as homesteading. As Small Farm Nation explains, this way of living can be a financially savvy, independent and overall healthy option for modern seniors.
This year has been tough in many ways, both personally and business-wise. The Corona Virus has not made real estate…
Were you contemplating a downsize when the pandemic came along? Don’t give up on your dreams just yet! It’s still a realistic possibility, you just need to know how to navigate real estate’s new normal. And even if you want to wait to move until the pandemic subsides, there is plenty to do in the meantime so you’ll be ready. Here’s what you need to know.
One of the first things you begin to realize when you own rentals is that tenants can be rough on your property. I often joke that they can tear up an anvil! So how do you protect your property against damages? Many times you can minimize your chances of damages, or at least make them easier to repair, by using the right materials for your remodels.
Trading Time for Dollars
These past business experiences have taught me that being a business owner and being self-employed are not the same thing. For many years I thought I was the owner of a small business, but as it turns out, what I really owned was a job! I was literally “self-employed.”
When I started in the rental business back in 2002, I used to collect rent in person at the door. …