Debt: Good Friend, Bad Enemy

Introduction:

Welcome my friend,

Happy Weekend to you!

Hopefully, it means that you can find some time to rest and unwind from the week that was.

Actually, it's very easy to get caught up in activities due to a tight schedule, yet we can intentionally make out time to catch a breather.

After all, sufficient rest improves efficiency which makes it a good productivity hack in itself.

So enjoy your weekend if you can, otherwise, there's always another one to look forward to.

Before getting on with today's conversation, it's good we acknowledge that it's somewhat a sensitive one considering how people feel towards the issue of lending and borrowing.

However, this makes it even more important that we confront it.

As we'd agree, although difficult truths are usually unpleasant to accept in an instant, our awareness of them eventually puts us in a position where we're no longer comfortable doing the wrong thing.

So for that reason, we'd just have this conversation as if to point out lessons like they're some viable seeds spread across the field, well expectant for the impact they may yet yield in our lives.

Discussion:

Debt refers to what we owe.

This could be a sum of money, a kind gesture as in the case of gratitude and loyalty or an obligation as in an oath.

Whatever the case, a debtor has a commitment to pay back what is owed at the right time else there could be consequences.

Which makes it advisable for him to compare these consequences against those debt benefits themselves, looking to arrive at a reasonable conclusion on whether taking these debts is good or bad for him.

This is the basis for today's conversation.

■ Assessing Good Debts 

A good debt like a good friend can be the helping hand we need to get out of a situation immediately, allowing us more time to get ourselves together and gradually payback.

This is what health care and student loans do for us as we assess services that we normally wouldn't and then payback conveniently overtime.

It's the same as borrowing money from a friend or family to sort out a pressing need and then refunding on payday.

Through different scenarios good debts come in handy.

Another instance is providing us with more capital than we normally can access, as in the case of a businessman whose earnings from what he borrowed is enough to write off the entire interest rate on it.

From all of these, good debts can be reasonable last resorts, giving us that much needed safe landing momentarily.

■ How Good Debts Go Bad 

Regardless of the motive for borrowing it, all debts will lead to pain if anything goes wrong.

A loan invested into a bad business will still be repaid by the debtor because the creditor is only after their money, not excuses, no matter how genuine.

Quite simply good debts go bad when the debtor by virtue of circumstances within or beyond their control can no longer pay up for what they owe as at the agreed time.

So while behaviours like taking out credits to lavish on lifestyles above our paycheck are seen as the usual suspects of bad debts, all debts can go bad regardless of our good planning.

This is the reason why in business investors are mostly advised against taking up certain heavy loans as a form of risk management if things unprecedentedly go south.

■ Consequences Of Bad Debts 

In a real life story, a top bank executive took the lives of his family of four (4) children and his wife, before going on to kill himself.

Sadly yet unsurprisingly, investigators through the discoveries made concluded that his motive was due to a huge debt hanging over his shoulders to the tune of over half a million dollars.

Behind on all his bills and soon to be evicted from his home, this young father felt killing his entire family was an escape from a world that was caving in, destroyed by each decision that had led to those debts.

How wrong was he?

Truth is, not all debts may lead to such severe consequences yet they mostly come at a price.

Some of which include:

▪︎ Debts Steal Our Peace Of Mind 

It'll take a heart of granite to sleep peacefully when the deadline to a payment is within sight and we still don't have the means to meet up.

Being a debtor can also lead to anxiety as we begin to even feel threatened and pressured by mere phone calls having become used to our creditors reaching out for their repayment.

This isn't an ideal way to live.

▪︎ Debts Trample On Our Dignity 

Some creditors disgrace their debtors, treating them in very inhumane ways all in a bid to shame them into paying up what they owe.

This can cross the line sometimes.

Other times, it's the debtors themselves that feel ashamed for what they owe, since they see it as an incapability to make ends meet.

▪︎ Debts Destroy Our Reputation 

When our creditors can't trust us to pay up our debts they become reluctant to do business with us.

This can put off potential creditors because they're now skeptical of recovering their funds.

This is bad for business because we may miss out on opportunities that we could have simply taken advantage of had we accessed the required capital.

In this we learn that regardless of our best intentions and efforts, being unable to meet up with a payment gives us the reputation of unreliability in our business circles.

▪︎ Debts Can Lead To Setbacks 

The reason loans require collateral is so that the creditor can easily recover their resources in value even if not in cash.

Many people have lost everything they owned in one ‘business gone bad’ because they used all their other assets as collateral.

This is a huge setback that takes years to overcome but it's possible as long as we don't give up.

▪︎ Debts Usually Have Interest Rates 

Due to interest rates (which indeed is the catch for the creditors), we'd always pay more value than what we borrowed.

High interest loans are very cutthroat and should be dismissed as a poor financial decision.

■ How To Minimize Borrowing 

Having seen that debts can go bad despite our best intentions, the aim then is to avoid borrowing if we can.

For starters, this will mean living within our means which requires a disciplined lifestyle devoid of expensive addictions and unnecessary show off.

It'll also mean resourcefulness so that we're able to create the means to gradually build our business until it becomes big enough to finance its own scaling.

Most importantly, it could also mean looking to finance the business with other investors as partners working together to save each person's capital.

This can be better than bearing all the risk and reward alone when we finance it alone through loans.

■ Relationship Between A Promise And A Debt

Indebtedness is the feeling of having to make up for something.

Many times through our words we can become indebted to others having said we were going to fulfill a thing for them.

As men of honour we're to understand that our word is our bond so that we only say things that we mean rather than speaking for the sake of it.

When we make a promise, we become debtors until it's fulfilled so it's wise for us not to promise folks things that are out of our control.

■ The Ultimate Debt 

The debt of sin causes us to live through life in shame and guilt never really free enough to maximize our full potentials.

Sin separates us from the life of our purpose as we feel unworthy and insignificant to play our God given roles in the society.

This is why Jesus Christ came and paid it all for us, so that by simply believing in Him, we invite Him to stand in as a worthy substitute for our debt of eternal destruction.

What an awesome feeling to know that God finds us deserving of such love that makes a person die for another.

If God thinks us valuable, who else can say that we're not enough?

■ How To Behave As Creditors 

It's true that some debtors are cunning and manipulative but as believers we can learn to treat others with grace especially when they're genuine.

The responsibility of being a creditor comes from God who has given us abundantly so that we have enough to lend.

This means that we should do so in a way that's aligned with his character, learning how to forgive others of their debts because we know that God will multiply it with even more through other sources.

When we do this, some folks would think we're foolish and that they've used us, cheating us out of our money, yet we know deep within that we've merely paid it forward.

Summary:

Debt is an agreement to service past consumption with future production which in itself can be depressing especially when it means we no longer have much rewards to look forward to.

This is the reason we should limit it to only a last resort.

Now that we've seen that all debts can go bad, we're therefore advised to be smart about the amount of debt we take upon ourselves.

When we assume more debt than we can handle, we can be drowned by it.

Master Apprentice.

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