Home Personal Finance 4 Borrowing Rules Rich People Follow but Others Often Don’t

4 Borrowing Rules Rich People Follow but Others Often Don’t

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Can you benefit from following these rules?

Key Point

  • Rich people borrow money in the same way as low-income people do, but in different ways by using debt as a tool to build wealth.
  • They also borrow for various reasons, such as getting rewards on credit cards that end up paying back more than they paid.

Borrowing money may seem like something you only do if you don’t have enough money, but that’s not true. There are many wealthy people who borrow money. They just do it differently than their less wealthy counterparts.

Of course, not all rich people have exactly the same money habits. But here are his four rules about borrowing that wealthy people tend to follow and other wealthy people often don’t.

Rich people are not afraid of debt. But they usually don’t borrow money to live beyond their income or because they failed to make it. save for emergency Or make a plan to cover the costs.

Instead, wealthy people tend to use debt as a tool to build more wealth. I may borrow money forThey may also borrow to fund start-up businesses or use margins for their businesses brokerage account Investing in more assets that help them build wealth.

2. Instead of paying to a credit card, pay to a credit card

rich people often use credit cardBut rather than paying interest to the card issuer, they collect rewards Invoice all purchases and pay the balance in full to avoid accruing interest.

By collecting rewards and never paying credit card interestWealthy people get richer as a result of their relationships with card companies, rather than getting poorer. many wealthy people High annual feebut they do so to take advantage of the valuable perks those cards offer, such as concierge services, flight and hotel upgrades.

3. Don’t borrow for depreciable assets

Rich people usually know that it makes no sense to borrow something that depreciates in value over time instead of increasing in value.

Renting for cars, consumer goods, groceries, vacations, etc. makes those purchases more expensive and wastes money. Unless you grow your wealth, it’s not worth paying interest to finance it.

4. Make lenders work for your business

Finally, rich people don’t just accept loans offered on terms the lender wants to give them.

This may involve doing simple things like shopping around to get various quotes before deciding which or which bank. credit union receive a loan from Instead of going to the first financial institution you happen to find, you can simply compare offers and go to the company that offers the best deal.

Wealthy people sometimes take this process further. They may request discounts on fees or other special borrowing benefits, especially if they have a relationship with the lender and can take advantage of it to get better loan terms.

Luckily, you can follow all these rules without being wealthy yet. Doing so will help yourself become rich over time.

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