Lending money is not only for those who do not have enough. Many high-income people also go into debt, they just do it in a different way. Therefore, below, we share four loan rules that the rich tend to follow and that you could imitate.
1. They use debt as a tool
Rich people are not afraid of going into debt. However, they generally do not resort to loans to spend more than they have or because of a lack of savings for unforeseen situations or without a plan to cover their expenses.
On the contrary, rich people often use debt as a means to increase their wealth. For example, they may apply for a loan to buy a business if they think they can increase their profits.
They can also borrow to finance a business they want to start.
2. They make credit cards pay you instead of them paying them.
People with resources often use credit cards. However, instead of paying interest to banks, they earn rewards by charging up all their purchases and then paying them off in full to avoid owing interest.
By accumulating rewards and never paying credit card interest, people with resources increase their wealth through their relationship with the card company instead of becoming poorer.
Many wealthy people even sign up for cards with large annual fees, but they do so to take advantage of the valuable benefits those cards offer, such as concierge service, flight or hotel upgrades, and more.
3. They do not borrow for depreciating assets
In general, people with resources understand that it doesn’t make sense to borrow to buy something that will decrease in value over time instead of increasing it.
Borrowing to purchase items such as vehicles, consumer goods, food, or vacations often results in a higher cost and therefore a waste of money. Unless what is being acquired with a loan increases wealth in the long term, it is not worth paying additional interest to finance it.
4. They make lenders work for your business
Finally, rich people do not simply accept any loan that is offered to them on the terms that the lender wants to grant them. They often make lenders work for their business.
This could mean doing something as simple as looking at different quotes before deciding which bank or credit union to take a loan from. Simply comparing offers allows them to choose the company that offers them the best deal, rather than simply choosing a financial institution they find first.
Rich people sometimes take this process even further. They can apply for rate discounts or other special loan benefits, especially if they have a relationship with the lenders and can take advantage of that to get better loan terms.
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