Two Types of Debt

Good Debt and Bad Debt

The way you have learned about money has been generally influenced by two, contrary influences.  Firstly, your parents told you “if you can’t afford to pay cash, don’t buy it“.  Secondly, the Government and big business have been telling you to go into debt to buy goods and services, pay the taxes on them, and end up with higher mortgages, so you have to work harder and longer, paying more and more income tax along the way.

You make your money by going to work, pay the tax FIRST, and then you spend what is left.  The problem with this is that you get to spend only the money that is AFTER tax dollars.  However, there are many ways to make your ENTIRE income work for you, and Equanimity Concepts will show you how.

In essence, what we are going to do is change the way you think about money.  The way you have been educated toward finances is the way the Government wants you to think and, if you stay in that mind set, your hard work will make everyone else prosper, while you suffer.  It’s time you worked smarter, not harder!

As unbelievable as it sounds, just 5% of the people in Australia control 95% of Australia’s wealth!  So, to become a part of that exclusive 5%, you need to be “re-programmed” about money.  Let’s become a part of that 5%, not the 95%!

Consumer debt, whether it be home loans, personal loans, car loans, boat loans or credit cards, is bad for you.  You are constantly bombarded in the media about consumer debt. “Use the equity in your home to buy that car, boat, holiday etc“.  The banks make billions of dollars each year from this type of debt.  It also stimulates the economy.

These concepts should be taught in schools all over the world.  But, the Governments will never let that happen, because then more people will take control of their own destinies, rather than be programmed to spend, spend, spend.

Not only will we educate you to the dangers of bad debt, we will go much further, and show you that there is actually a type of debt that is good for you.  We call it “constructive debt”.  Investment property loans, for example, provide you with the finance to build wealth over a period of time by giving you the ability to acquire investment property that you may have never thought possible, and build your wealth via solid bricks and mortar.

You need to get involved in constructive debt.  Constructive debt is good.  It is debt that helps you create wealth long term.  Investment loans for property and loans for shares (not that I would recommend shares), give you the ability to make more money by using leverage…using the bank’s money to make you money!

The fastest and safest way to become a millionaire is to buy a million dollars worth of Real Estate and wait for it to double in value. We’re not saying you should buy a million dollars worth of Real Estate right now.  What we ARE saying is you should think differently towards money.  Think outside the square you live in.  Unless you change the way you think NOW, you can’t possibly benefit later.  You need to PLAN for the future.

Let’s begin.

We’ll use the following hypothetical example to explain how our system works. 

Let’s say you have an existing home loan of $250,000, with an interest rate of 7.5%.  At the moment you are paying $426 per week towards that loan.  At the current rate, you will pay off this loan in 25 years.

Your home is currently worth $500,000.  You earn an annual salary of $70,000.

So, you buy an investment property for $315,000.  The bank lends you all of the money to cover the entire purchase price, along with all of the other costs, including solicitor’s fees, stamp duty… EVERYTHING, so you do not have to put in any money of your own.  You therefore borrow $331,591, using the equity in your own home.

Now, the thing that needs to be understood when you buy an investment property is that there are two forms of income.  Not only do you get Rental income, but you also get something called “Negative Gearing”.

The next page explains Negative Gearing.