My last post I shared whether if you were given 30,000 dollars to invest the money and pay off your debt later or pay off the debt immediately?
A friend of mine told me he would rather invest. He had two main reasons. One, he would rather own more assets against the pool of debt. His favorite investment vehicle was real estate with a tenant. This way the tenant paid off the mortgage and gave him cash to reduce his debts. Second, he said credit card debt is unsecured debt. He would call the credit card companies and negotiate. He would tell them I want to pay the debt back, but this is all I have. Would you want to reduce the amount and give me lower payments or accept a lump sum. Eventually, they all settled for the lump sum. Credit cards would rather accept something now than nothing later. They are a business. Negotiation can help you and I have never heard anyone mention this strategy.
My friend told me “Credit is a tool to help you improve your life. If it’s not helping you what’s the use of it?” He started with nothing and had loads of credit card debt when he was younger. Now he has sterling credit, owns a few rental properties and will routinely borrow money on his credit cards to buy an asset.
I can’t argue with his approach. It is riskier than what most would consider but it worked for him. He faced adversity and he drew on resources he didn’t know he had. I knew his story gave me a lot to think about. Hopefully my readers find it thought provoking also. What would those living outside the U.S.A do? My perspective is very much colored by the laws where I live.
Vijay @ smilingdad
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