Hey welcome back friends. In today’s video, I want to share with you how you can trade bad debt and trade it for good debt. Alright my friends. So, today we’re talking about how to trade bad debt for good debt. And some of your like, “I actually didn’t know that debt could be good.” Let me just walk you through it real quick. And then we’re going to talk about how you trade the bad stuff for the good stuff. First of all, understand that in this English language we have one word, debt. But it can be something positive or negative. It can be something good or bad. And what really determines whether it’s good or bad comes down to whether the debt makes you money or cost you money. So, for example, we all know that if I buy something with a credit card, some type of consumer something, that I’m going to lose money. if I buy a car, my car doesn’t appreciate value. It only goes down and value. There’s a number of debts that are out there that we can buy. And we get maybe the benefit for a certain period of time but we have to pay for the debt until it’s all wiped out. On the other hand, there are very very good debts. A good debt is something that makes you money. A good example of that would actually be real estate investing. A lot of what this channel is about. This would be I bought a home and I rent it out to somebody. And yes, it’s a debt. I have to pay the bank $1000 every month. But the people in the home pay me $1,400 every month. So, there’s like there’s $400 left over. That positive arbitrage. Well, that $400 every month and then the fact that the house appreciates in value or you maybe bought it with equity. It’s an asset. These are liabilities, these are assets. These cost you money, these make you money. So, if you’re watching this video, we’re talking about how do you trade this stuff for that stuff. And for me, to really share this with you, you need to understand something. You’re going to have to take one step backwards if you want to take 2 steps forward. I want to give you a very real examples from my life of what I mean by that? My wife and I, we got we got in a bad place financially. I was working full-time, going to school full-time. And my wife was trying so hard to keep us out of debt. And so, every penny that I made was going towards school and tuition and food. But we got to the point in our very very early marriage that even working full-time, I could not stay at a debt. And we were about to sign for some student loans. And my wife didn’t want to. So, we chose normal credit cards. I remember we had like a Juniper Sinclair credit card. And we had one other credit card. And we started going into debt. And I remember when we had our credit card debt hit $8,600. This made my wife really nervous because 1, we didn’t have $8,600 in the bank to just wipe out the debt. And every month, the debt was actually increasing. But not only was it getting bigger but we had to make a monthly payment. And it was a struggle for us to make the payment. So, debt started spiraling out of control for us. And it got heavier and heavier and harder to to get. When I bought my very first home at the time that I had this debt. I also had an asset. And I remember that because I had the house that was valued at a $150,000 and I purchased it for $110,000 that there was about a forty thousand dollar difference there. Now, that’s $40,000 on paper. What does that mean to me? After 12 months of owning the house, I went into the bank. It was a Wells Fargo. And I said, “Wells Fargo, this is what it’s worth, this is what I owe.” And you know what they said? “Hey, we’ll give you a home equity line of credit for $18,600.” A home equity line of credit. That basically says, “You could put up to $18,600 on this line of credit. And we’re just going to tack it on your mortgage because you have that much equity.” So, here I’ve got an asset. And it was tempting. I’ll call and my wife I said, “We could take this money, we could pay off the credit card. And then we would be out of debt.” In actuality, we would just be transferring this debt to this debt. And we’d be wrapping it at a lower interest rate. And I’ll be honest, it felt appealing at times. But that is not what we did. Instead what we did is we took another step backwards, so that we could take 2 steps forward. What we ended up doing was taking this home equity line of credit. And instead of paying off the debt, we ended up putting this into an investment property. Now, by the way. This was an investment property that had a value of $250,000 and I was purchasing it for $150,000. A hundred thousand dollar new asset of equity. But more importantly, this house every month kicked off a positive cash flow of $600 a month. What that meant was our mortgage was about a thousand dollars a month. But our people in the home were paying $1600 a month. So, there was $600 left over after the mortgage was paid every single month. What my wife and I decided to do was take the $600 and we started doing what? We started applying it to the credit card debt. And in a matter of time, we actually wiped out our consumer debt with an asset. You know, you’re going to get to a point in life when you’re going to have perhaps debts and assets. And at some point, you’re going to say, you know, “Let’s just clear the deck.” Like let me just make it really broad. Let me make really broad strokes here. Let’s just say that you’ve been working now for 10, 15 years. And let’s say that you have $50,000 of debt. And let’s say that you have $50,000 of assets. And there’s going to be a temptation. It’s taken us 10 to 15 years to get here. We got this bad debt and we have this asset. Let’s just eliminate the asset and eliminate the debt. And let’s wipe the slate clean. If you do that, you’re starting from nothing. Now, hopefully you learned your lesson and you won’t do consumer debt. However, there is a faster way. Instead, take this $50,000 a bad debt. And take this $50,000 asset. By the way, what I’m about to share with you, there’s a number of people that highly disagree with me. But this offensive play has worked out over and over and time and time again for me. And it’s my nature. So, I’m I just understand I’m sharing something here that not everyone’s going to agree with and it’s very polarizing. If I work so hard for this asset and also this debt, I’m going to take this $50,000 and I’m going to invest it. And if I put in something like real estate that in a period of time, I can double, let’s just say rule of 72, let’s say I’m getting a 15% R-O-I on my investment property. Rule of 72 says that, If you divide 72 by any compounding interest rate, it’ll tell you how long it takes to double. Plot your calculator. 72 divided by a 15% R-O-I means that I’ll double my money in 4.8 years. Let’s just say in 5 years. Well, in 5 years, my 50,000 has now turned into what? $100,000. So, now you’re thinking, “Kris, now I can take my hundred grand. I could pay off of the bad debt and have 50 grand left over to keep investing.” You could. But now you’re going to get into another interesting choice. Do you take this hundred grand? Let’s just say, theoretically you invest in at 15%. In five years later it was now $200,000. Well, now you can wipe out your bad debt four times. And you’re like, “Now, for sure I should do it. But five years later, 200,000 might be what? 400,000. And five years later it could be what? $1,000,000. So, now all the sudden. The question isn’t “Should I pay off my debt?” It’s “When should you pay it off?” The mistake that I see people make on a regular basis, is they’ll take the little if they got. They’ll eliminate the bad and then they’ll start over. But the reality is the things that you did to create this, you can re leverage and keep growing yourself and when do I eliminate my bad debt? When I have so much good debt. So many assets that I can do it without hurting my ability to invest. Without hurting my ability to grow. Now, I will tell you that this is very unique to my financial approach to life. And there is a balance in all things. But I will never, mark my words, I will never wipe out my ability to grow because of a debt. That’s called scarcity. That’s called living in fear. This approach is an approach of abundance. And ultimately man, I got to tell you. This stuff can kick your butt. Scarcity versus prosperity and abundance. Which is also why I teach on a regular basis. My life-changing-three-day course. Which is all about how do you stay in an abundant space, so that you don’t allow the very real things that it can hurt you to take you down. Because here, in my opinion, if I wipe out the good to wipe out the bad and I’m left with nothing, I lost. I didn’t win. I actually set myself back. So, the approach that I’m sharing with you is all about how you can trade bad debt for good debt. How do you do it? You double down, you get more good debt and use your good debt to eliminate your bad debt. That’s the best summary that I can give you. Use good debt to eliminate your bad debt. And that’s why I love real estate investing. And if you want to learn how to invest with me, have me as your mentor and actually help you learn how to do this, then all you got to do is subscribe to the channel and then click the link in the description below. Where you reach out to my team. We’ll contact you and share with you a specific game plan. That no matter where you live or where you’re at financially, we can show you how to get yourself in a position where you build your assets and you eliminate your debts.