Jakarta, Armfalcon.com – The author of the book Rich Dad Poor Dad, Robert Kiyosaki, reveals a method of making a profit on his website, namely by using debt or loans. But is it true, this “definitely” works?.
“The new money law requires debt if you want to be rich. The condition is that the debt must be good debt,” wrote the man who also wrote a book entitled ‘The Cash Flow Quadrant’.
According to Kiyosaki, bad debt is a loan that is used for liabilities, such as paying off cars and vacations, because this is not a priority need and its value shrinks over time.
While good debt is used to buy assets that provide cash income to personal pockets every month. These current loans, for example, loans for investment property, venture capital, and others.
It can be said that good debt is actually only in a business context, but as good as a loan is, there will be risks that arise and have the potential to erode our profits, especially if the business or business that we are running does not meet expectations.
Therefore, before applying for debt, do the following things
Have an emergency fund of 12 x monthly expenses
Every entrepreneur certainly has a fluctuating income, so it would be better to be prepared beforehand by preparing an emergency fund equivalent to 12 times your monthly expenses.
An emergency fund will certainly help you secure finances when your business plan doesn’t go smoothly.
Remember that when your income is depressed due to business risks, expenses for living expenses will still be there.
Without sufficient emergency funds, you may be forced into debt for the necessities of life.
If a business can be funded by customers, that’s better than going into debt
How do customers capitalize on our business? Doesn’t business capital come from retained earnings, loans or injections of funds from investors?
You must be familiar with the business model through the purchase order (PO) or down payment (DP) system.
With this, the customer can pay an advance that you can use to produce goods or work on projects requested by the client, before they finally make the payment.
With this, your business cash funds will remain safe. You also will not be burdened financially with this business debt.
Get to know your ability to pay off the debt
Before borrowing, it is very important of course for you to know how your financial ability is to pay off these debts.
If you yourself are still unsure about your business, then don’t even try to take out a loan just because you saw or heard that other people were successful because of this.
Know your goals in applying for a loan, and make sure you can indeed pay off the loan.
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