Point of Clarification

I think I might have misled others in my previous post so it’s important that I set the record straight. I hope I have not influenced anyone the wrong way when I encouraged people to be in debt.

For me, I consider borrowing money into two types. There is irresponsible borrowing and responsible borrowing.

When you buy a 50” plasma TV on installment at 20% interest that’s irresponsible borrowing. When you borrow money to buy a $30,000 dollar car, when you can make do with a $6,000 Japanese import that is irresponsible borrowing. When you use your credit card to buy designer clothes and only pay the monthly minimum payment that is irresponsible borrowing. In other words if you borrow money to buy something that will not generate income and only puts you more into debt as a result of interest payments, that is being irresponsible.

If I loan money to buy a rundown house with the intention of renovating it and then either reselling it or having it rented, then that’s responsible borrowing. Because even though I’ll be paying interests on the mortgage, I am still in a position to make more money from the investment. If I borrow money to buy a van to start a “food on wheels” business, that’s responsible borrowing (provided of course you've made a feasibility study that it will make money). On a larger scale, if I borrow money to open a Jollibee franchise in my hometown in Pampanga, that's not a fantasy. It's a probability. And it's borrowed money that won't be wasted.

The type of borrowing I’m advocating is only the responsible type. Borrowing for the sake of borrowing is folly. Paying interests for borrowed money that doesn’t generate income is not being clever. Kung gusto mo ng plasma TV, pag-ipunan mo, huwag mong utangin. Use your credit cards, but always pay the amount owed in full para walang interest. Lakasan niyo ang loob niyo na mangutang especially if it is for income generating ventures. It's a benefit/cost thing. If you think the benefits will outweigh the costs, go for it, mate!