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How to win with debt

I realised something today. I realised that I’m in a situation that I’ve never been in before, and yet it’s a situation that I could never have seen myself in only a few years ago.

I realised that while I currently have about AU$65,000 in debt that’s spread over two countries (Australia and New Zealand), I also now have about AU$100,000 in assets. These assets outweigh my debts considerably, which is a new experience for me. I think my net worth is now about AU$35,000.

I have more debt than I’ve ever had in my entire life, and yet I feel strangely comfortable with it!

And then it suddenly dawned on me.

You win with debt when the value of your assets outweigh the value of your debt. This gives you the freedom to sell your assets and come out on top should you need to.

Naturally you should never get yourself into more debt than you can afford to pay, but if you manage it right, you can keep your head above water and win with debt.

Just ensure that your debt repayments don’t go above what you can afford to pay (taking into account all your other payments in life!), and that you have less debt than assets, allowing you to sell them to cover the debt if you encounter any financial difficulty.

In my past, I failed to understand this. I used to get into debt without having enough (any?) assets to cover the costs of the debts. I ended up getting in trouble because I didn’t have any assets to liquidate in order to cover the debts, and so I was really struggling.

It’s exciting to be in the situation I’m in now!

However, I’m going to get into more debt to compensate for old debt. I’m currently applying for a loan here in order to pay off the debts Deidre and I have in New Zealand. The interest rate here will be less than over there, so for the same amount of debt, we’ll be paying less for it.

This makes sense in more ways than one, because it also saves us the cost of regular international money transfer fees that banks on both ends charge (the thieves!). Our repayments will be less and the interest will be reduced, so we’ll be saving more money. Our liabilities will remain the same, but we’ll be able to manage it better.

Now to just find a bank to loan the money… My first attempt yesterday resulted in the bank saying they only loaned to people who have been working for at least 12 months. Fair enough, I guess, but I hope not all the banks are like that.

I’ll work with the law of attraction, as I have done for so many other things. I’ll keep you updated!

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