Having debt isn’t necessarily a bad thing as long as you have a way to manage it and control it and reduce it to nothing. This principle can be applied, when you buy a house, start a business, etc.
Just because you don’t have 300k doesn’t mean you are not gonna get a house. Because chances are, long term, (well not sure about the US real estate market now) but if you were to purchase a house chances are you are borrowing from the bank, but once you have cleared this debt, it is still considered an asset.
And unless you are really unlucky, most of the time, over a long period of time, owning a home will pay off assuming property values increase and you might end up making more money than you would by working and saving simply by owning this asset.
Business’ works the same. The initial costs always leave you in debt at first but eventually they pay for themselves so long as they are profitable.
Leasing a car isn’t a bad thing. Especially if you can claim the taxes back from a professional corporation. Most cars depreciate in value anyways. If you plan to switch cars every now and then it might actually be more feasible to lease.
It frees up cash flow that can be used on investments that pay for the lease itself. It’s all about how you manipulate numbers. Not one system is better than the other so long as you come up ahead.
A lot of SMART people borrow money (does not work for everyone) from the bank to invest since the rate of return they get may actually be higher than the interest rate itself. How many ppl do that? Not sure. I think it is best to do if you actually know you can pay for it in the event of a loss.
I’ve borrow lots of money from the bank before to cover costs, coz I had so much money in investments that it would actually cost me more to take it out than the interest rate I was getting.
But when I do the math, overall it worked it that I was making money still. So I don’t buy into that whole having to save money thing and having to struggle etc.
Long story short, I didn’t end up having to remove my money from investments…still got my HDTV, fancy car, etc. and it took me like working a few months to pay off the bank loan and it still did not affect the gains I made from my investments so in fact I actually made more money than if I didn’t borrow money.
And it doesn’t only apply to me either. A lot of my classmates and colleagues once graduated out of dental school were like over 100,000 in debt. They didn’t suffer and had to eat ramen noodles, they paid off everything in a year or so of working.
Some were like $500000 in debt when they bought their practices but once their practices started making money, that amount were cleared no time.
Sometimes you have to take risks to make wealth. Just be smart.