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Debt vs Financial Leverage


I have been hesitant to write this blog post. Why? Mainly because people have perceptions and have a “keep up with the Jones mentally”. But if this post keeps one person from making a bad decision… like I have done before, then it is worth it. The more I teach and speak the more I come to realize this topic needs to be shared because so much of our nation and our mindset is, “If I don’t have the money I can ‘charge it’”, “if I don’t have the resources to start a business I will just get a loan” ,or “If I don’t have the money I can borrow and pay back later”. Please know that most of what I am about to write is from a business perspective, but I also think it carries over to our personal lives as well. Last year while speaking on this subject I had a lady wait to speak with me after the class. The first thing she said to me, with big tears in her eyes is, “I think I have got myself into debt and I am not sure how to pay it back, and I am on the verge of losing my marriage over the mess I have made.” My heart just ached for her. I know she was making the best decisions she could with the information she had at the time, not knowing there would be consequences later. I hope this post will provide a little more insight in order to avoid those unforeseen consequences down the road.


Let me start with some definitions. Debt to me is when you take out money to buy something without a specific reason or schedule to pay it back. Financial leverage is when you borrow someone else’s money with a specific plan and schedule to pay it back. You don’t want any kind of “debt”. Ever. And I say that with full disclosure that in the past I have had debt. I(we) have made bad/uneducated decisions and lost money, or better yet we wasted money. Would anyone else want to go back and change a financial decision they made or something that they bought?  Holla if I am not alone.


From a personal perspective we don’t buy anything (houses, cars, anything) unless we can pay for it in full. We started doing this about three years ago and it has changed our lives. Could we live a different life, with a brand new car every year, with a couple different houses in different locations?…yes. Just because we can do something doesn’t mean we should. You feeling me. Wants vs needs. We now ask ourselves, “Will this breathe happiness and allow more freedom or will this confine us?” Stress can kill you faster than most diseases. Why put yourself in a rat race? When you have debt someone else now controls what you do. You basically buy something that someone now owns and you make payments to them. Now, am I saying to not have conservative financial leverages personally? No! Purchasing a house, car, or making smart decisions that are within your means is not necessarily “debt”. It is financial leverage for your family. But there is a fine line there between debt and financial leverage.




From a business perspective cash flow struggles have been one of the biggest things I have had to learn. At STARTplanner we pay for inventory 90 days before we ever receive one cent of income. Financial leverage is when you make smart business decisions to invest in (marketing, branding, products) with a very specific marketing schedule and business plan to pay it back. And that means calculating to the penny how much it cost to produce each item, knowing what you will be selling the product for, and estimating what you will need in order to market and move that product. Here’s another example. If you are a photographer, financial leverage might be putting a new camera on a credit card and paying it back over the next couple months, during your busy season of course, because you already know you will have income coming in. This is when you use someone else’s money to make you a nice return.


There are always unknowns with entrepreneurship, and with life. But doesn’t it feel good when you have strict budgets, guidelines, and parameters to help guide you on your journey? Make educated decisions and don’t be afraid to seek counsel. There are experts in this field. Don’t get caught in the rat race. Create a life of freedom that you are happy in!



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