hey there alexer by the end of this video you're going to be feeling more motivated and comfortable with doing two really important things buying property and starting your own business you'll see just how many opportunities you have to turn debt into income there are so many paths to this but because you hear so much about the bad side of debt you end up running from it and missing out on the good parts too debt and discipline are in a constant battle for your financial future you need to learn them master them and use them to
your advantage which is exactly what we're diving deeper into on the alux app today you can download the app right now and listen to it and we've got an extra exclusive offer for you download the app scan this QR code on screen and you'll get 25% off the annual membership the wealthy have gotten to where they are because they see debt as a tool they use it to buy assets build businesses and increase their income this video is going to flip the script on debt showing you how to use it to grow your wealth instead
of letting it drain your bank account debt is a part of life the difference between staying broke and Building Wealth comes down to how you use it so today we're showing you 15 ways to use your debt to build wealth without getting buried underneath it number one use a mortgage to buy rental property and let tenants pay the loan now there are so many ways to grow your wealth when you own a property and we'll cover two of them right now if you're smart smart about it you can use the bank's money to build Wells
by turning debt into an asset that pays for itself that's exactly what landlords do they don't buy their properties with cash they borrow money to buy them then they use other people's money their tenants rent to pay off the loan let's say you find a rental property for $200,000 you don't need $200,000 in cash you can go to the bank put 20% down that's $40,000 and the bank covers the rest with a mortgage now instead of spending decades saving up to buy a house outright you own a cash flowing asset today then you find tenants
who pay rent let's say $1,500 a month your mortgage payment taxes and maintenance are about $ 1,200 a month that means after expenses you pocket $300 every month without working for it that's passive income over time two things happen one your tenants keep paying down your mortgage for you and two the property goes up and value maybe in 10 years time that $200,000 home is worth $300,000 you didn't just make money from rent you built Equity without lifting a finger and speaking of equity number two build against your home equity to buy more property or
start a business now if you own a property then you can borrow against it to buy more property or start a business number one lets your tenants pay off your mortgage for you and number two lets you use what you've already put into your home to fund your next venture you can do this with something called a hello C or home equity line of credit which lets you borrow against the value of your home to fund real estate Investments or other income generating moves you end up borrowing at a lower cost than using money you
already have instead of your home equity just sitting there it's working for you and actually building more wealth but you need to have a clear plan and invest in real estate that generates cash flow otherwise you risk losing your home outright number three borrow money to buy assets that generate income cars clothes gadgets the second you swipe your card on these things that money is gone that's bad debt but if you're smart you'll borrow money to buy things that put money back into your pocket and you can do this to generate passive income or put
it into side hustles which we'll talk about a bit later smaller loans allow you to do this that's how you build weal without waiting decades to save up it's called leveraging debt to buy cash flowing assets so say you take out a loan for $50,000 do you spend it on a luxury car or an asset well the first option means you're stuck paying off a loan with no return in the second option the asset covers the Cost Plus extra money in your pocket you then use that money to buy say a few vending machines that
you put in busy areas they bring $4,000 in Revenue you spend $2,800 restocking on maintenance and the loan payment and you end up with $1,200 a month in passive income now the debt is no longer a burden right it's a tool that helps you to build an income stream number four borrow small fund a side hustle and it'll eventually pay for itself now a side hustle will take up more of your time than a passive income stream like the one we just spoke about but it also has the potential to make more money like any
Venture though getting started is not free you'll need a little bit of money upfront if you can find a niche in something that has low startup costs fast payback and proven demand well then you're funding something that has a clear path to profit that's so much more stable than blindly borrowing to start a random business so if you're borrowing for a side hustle make sure it's one that actually makes money and not just something that's an expensive hobby if you borrow just enough to get started and The Business makes enough to cover the payments and
turn a profit well then the debt was worth it number five fund your first big Venture with a business loan if you're willing to put in the work time and sacrifice then you can take that side hustle to the next level and turn it into a full-scale business and the good news is you can get a loan for this too most successful businesses don't start off with personal savings they start with borrowed money if you know how to use it right debt can be the shortcut that gets your business off the ground or helps it
grow faster than you ever could on your own so say you want to open up a coffee shop and you've done your research you know there's a demand and you've even found the perfect location but you don't have $50,000 sitting in your bank account to cover the rent equipment and setup costs well this is where a business loan comes in instead of waiting years to save up you go to the bank get a small business loan and use that money to launch your Cafe today now instead of waiting you're making money serving customers building your
brand and paying off the loan with the business's income instead of your personal paycheck the key is to only borrow money when it directly leads to growth number six a business credit line can cover short-term expenses without stalling growth sometimes you don't need a big loan you just need extra cash to keep things moving that's where a business line of credit comes in unlike a regular loan a line of credit lets you borrow what you need when you need it and you only pay interest on what you use it's like a financial safety net that
keeps your business running smoothly let's say you run an e-commerce store A supplier offers you a bulk discount but you don't have the cash upfront a business line of credit lets you grab that deal sell the products and pay it back fast without draining your cash flow or maybe your business is seasonal sales dip in the slow months but expenses don't stop up a line of credit covers rent payroll and inventory until sales pick back up again it's a way to use short-term debt to unlock more Profit just don't get carried away here okay only
borrow what you can quickly pay back number seven Finance tools for work that can increase your income immediately if you want to increase your income but you're not ready to take the leap into a loan or a full business side hustle or passive income venture well fear not okay you can still borrow to increase your income but on a much smaller and manageable scale if a one-time purchase helps you increase your income every single month that's not bad debt that's a shortcut to higher earnings a photographer finances a $3,000 camera and books bigger clients making
an extra $1,000 a month a carpenter takes out a small loan to buy better tools doubling the number of projects they can finish a video editor upgrades to a faster laptop and takes on twice as many clients in all of these cases the debt isn't a problem it's the reason they're making more money the key is making sure it pays for itself if the equipment speeds up your work helps you take on more clients or increases what you can charge it's an investment if it's just a fancy upgrade with no return it's just more debt
before borrowing ask will this tool actually increase my income if the answer answer is yes then the debt is working for you not against you number eight only take on student loans for degrees that guarantee High salaries do you see student loans as a trap a never-ending cycle of debt that takes decades to pay off or do you see it as a way to get access to higher paying jobs better opportunities and a skill set that pays off in the real world perspective matters here okay if you see them as a trap it will be
become a trap if you use it to get a high-paying job well you'll be able to pay it off sooner some degrees almost guarantee you a job that covers the loan payments easily engineering medicine computer science Finance if a degree puts you in a career that pays six figures borrowing money for it makes sense but if you take out $100,000 in loan for a degree that only gets you a $35,000 a year job you're stuck paying off that debt that your salary just can't handle that's when student loans do become a financial prison a student
loan can be good debt if it meets three conditions it leads to a high-paying career you don't borrow more than you need and you have a solid plan to pay it back fast number nine use your credit card for rewards not expenses the sooner you learn this the better your life will be okay seriously credit card debt is where most people go wrong with borrowing because High interest rat rates and endless minimum payments are a total trap but if you use it strategically that same credit card can build your wealth instead of draining it you
get the most out of credit cards when you use them for rewards not debt a credit card with cash back or travel points turns regular spending into free money but only if you pay it off in full every month if you carry a balance then the interest wipes out any benefit credit cards can be a useful tool when you take advantage of 0% interest offers if you need to fund a business expense or invest in something that makes money this gives you time to pay it off without extra costs and you can use it to
build credit for bigger opportunities using credit cards responsibly raises your credit score so you'll get better loan terms lower interest rates and more financial options down the road if you learned this a little too late and you're stuck in a rut don't worry okay you can still use debt to get out of debt which brings us to number 10 use low interest loans to pay off high interest debt that interest rate is keeping you stuck in a debt cycle far more than the original loan does some of these charge 20 25 even 30% interest that
means if you owe $10,000 you could end up paying $113,000 $115,000 or more just to clear that balance you can't just make minimum payments and hope for the best okay you have to leverage those lower interest loans to wipe out highin debt one option for this is debt consolidation that's where you take out a low interest loan and then use that money to pay off a high interest loan that way while the interest debt is gone and while you still owe the money you're paying it at a much more manageable interest rate but this strategy
only works if you stop using bad debt if you consolidate but keep swiping that credit card and rack up more debt you'll end up in a worse hole you have to cut that cycle number 11 view your credit score as your financial reputation even if you've ended up in the debt trap before where you used borrowed money to buy things that don't increase in value you still have a chance to fix things let that be your lesson that your credit score isn't just a number it's your financial reputation it determines what kinds of loans you
qualify for what interest rates you get and whether you can buy a home or start a business you don't build good credit by avoiding debt altogether you build it by using debt the right way so you've got to take on small manageable debts and pay them off on time keep your credit card balance low the lower your balance compared to your total limit the better your credit score number 12 only finance a car if it helps you to make money now one of the first things that people do when they get a line of credit
is to finance a new car AO avoid that okay it's a trap a car loan can either help you to make money or drain your finances if that car pays for itself the loan works in your favor if it doesn't you're just adding debt for something that loses value a loan makes sense when you need that car for work if you're a real estate agent a contractor or ride share driver your income depends on having a reliable vehicle the loan lets you get the car that you need to keep on earning you qualify for tax
tax benefits because business use Vehicles can help to lower your taxes you may be able to deduct loan interest depreciation and fuel costs you need to keep cash available and paying for a car in full locks up money that you could use for better Investments a loow interest loan spreads out the cost while keeping your cash free for other opportunities if a car doesn't make you any money avoid that debt if it does Finance it wisely and let it work for you number 13 get tax breaks on your income and business loans with all of
these business and home loans you're racking up and all the money you're making your taxable income is going to Skyrocket and lucky for you certain types of debt come with tax benefits which means you can legally reduce your taxable income and keep more cash in your pocket like if you own a home you can write off the interest on your mortgage which lowers your taxable income if you've borrowed to grow your business is well the interest on that is also a tax deduction so your business pays less tax or if you finance a rental property
you can claim depreciation on the property's value even if it's increasing in price and again that will reduce how much tax you pay even when you're in a crunch and need money it's better to keep your stocks and assets and then take out low interest loans against those assets that'll help you to avoid capital gains taxes and keep your investment growing number 14 borrow money to invest use gains to pay it back and keep the profits now we're getting into the more experienced investors part okay so experienced investors don't just use their own cash to
invest no they borrow money to invest more it's called margin investing and if you use it properly it can amplify your gains if you don't know what you're doing though it can completely wipe you out so you have to be careful here here if you've got $10,000 to invest you can borrow another 10,000 from your brokerage and invest $20,000 instead of 10 if your stocks go up 10% you make $22,000 because you're investing double the amount the hope is that at some point you'll make enough to pay back the loan and then you're riding on
what you've made the risky part obviously is that if the market goes down your losses will double too if the losses keep piling up your broker can issue a margin call which means they force you to sell your stocks at a loss or deposit more cash so this is only for people who actually know what they're doing and who can afford to lose and number 15 if you need cash rather borrow against your assets or stocks instead of selling them the rich don't just use debt for tax breaks now they use it to avoid taxes
completely instead of selling their Investments and paying a capital gains tax they borrow against them a real estate investor who needs cash doesn't sell a building they take out a lowest loan using the property as collateral while it continues to increase in value a stock investor does the same instead of selling shares and paying taxes on the profit they borrow against their portfolio to fund a new Venture because loans aren't taxed they get access to money without triggering any capital gains taxes that's how they keep building their wealth while paying less in taxes overall so
Alexa if there are all of these opportunities available why don't more people use them well two reasons first of all many people just don't know what's out there or how to use them but now that we've given you the knowledge you have no excuses and the second reason is a lot harder all of this everything we talked about it takes discipline you need to be on the top of your admin expenses and income you need to be able to control your impulses because debt is a discipline problem okay if you want to dive into this
more we've got an exclusive daily session on our alux app that's all about the relationship between debt and discipline here's that QR code again to save you 25% off just in case you missed it I'll see you on the inside
