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The Power OF Leverage

The Power OF Leverage

The power of leverage: Leverage comes in many forms One of the recognised forms of leverage is the leverage of borrowing money. Today we are aware of the severe problem of people abusing this powerful form of leverage, Millions of people struggling financially because the power of the consequences of the abuse of debt leverage, many people now fear this form of leverage, saying, ” cut up your credit cards, pay off your mortgage, and get out of debt”.

The power of leverage

I’ m chuckled “cutting up your credit cards only makes you miserable, and if you are abusive with the power of debt leverage, you definitely should cut up your credit cards, pay off your mortgage, and get out of debt. Giving a credit card to some people is like giving a loaded gun to a drunk, anyone who is near the drunk is in danger, including the drunk.

Instead of learning, fear the power of debt leverage they should try to learn how to use the power of debt leverage in their favour. There are two types of debt which are good or bad debt, good debt makes you rich and bad debt make you poor, most people are loaded down with bad debt and are proud to be debt-free, even to the point of being free of any good debt.

The power of liverage

If you want to be rich at an early age you must know about the power of leverage, and if you want to be retire rich you must be deeply in debt, debt that makes you rich and financially free. In other words, you have to use the power of leverage and don’t abuse this power nor live in fear of its power. Respect the power of leverage and use it wisely and cautiously.

The Leverage of your Mind

This is the secret of riches, the money will not make you rich, the most powerful form of leverage in the world is your mind which has the power to make you rich or make you poor. Just as someone can use, abuse, or fear the power of debt leverage, the same is true when it comes to your brain, a very powerful form of leverage.

Words are Leverage

Words are a powerful tool, tools of the brain. But just as you can use debt to make you rich or poor, words can be used to make you rich or poor. Rich people use rich words and poor people use poor words, your brain can be your most powerful asset if you use the right word or it can your most powerful liability. If you use the right words in your brain, you will become very rich. If you use the wrong words, your brain will make you poor.

It does not take money to make rich,

And

Getting rich begins with your words,

and words are free

 

How to Leverage Debt

After reading the earlier lines, you get some idea about what is good debt or bad debt here, I explain to you more. If you want to become rich or stay rich you have to understand both of them as you read earlier good debt makes you rich and bad debt makes you poor, but what is good debt and bad debt and how they both effects in the journey from nothing to everything. Don’t worry, I explain to you.

It is simple to understand, good debt means which puts money in your pocket and bad debt means which put out the money from your pocket. The problem with people in today’s world mostly use bad debt and they think which is good and they loaded with bad debt, not good debt which makes them poor. If you want to become rich you have to put good debt in your asset column and learn how to use the power of leverage, which makes you rich. You will be rich if you loaded down with good debt but if you want to stay rich, you need to learn how to use other people money. Yes, you read well other people money.

The power of liverage

Okay, I give you a hint to understand this, if you want to take a loan from a bank to invest in the stock market or mutual funds they never give you loan, but if you take a loan for real estate you get it immediately.

Suppose, Bank lend you a loan for real estate and you invest in real estate, you buy a house in $50,000 with a down payment $5,000/month for 10 months, after these all, You give that house for rent and tenants pay you $10,000/month, Now you pay the EMI of that house from giving rent and also you get $5,000 positive cash flow and you also get you money back which one you pay in down payment, Now the total money spend from your pocket is nothing because you use other people money and government money also,

I hope you got what I mean, I’ll explain to you later with more examples.

 

How to use Leverage To Getting Rich

If you want to use the power of leverage to get rich, you have to learn how to work less and earn more.

If you want to get rich,  use the power of leverage and don’t ask for a raise. Instead of asking for a raise, begin to ask how you can serve more people. In fact, if you are serious about becoming rich, you don’t really want a raise. If you get a raise, you are working for the wrong kind of money.

The power of liverage

In earlier lines, I shared how to become rich early by increasing your debt rather than trying to get out of debt, which is what most people try to do. The logic behind that thinking is that there is good debt and bad debt, and most people are loaded down with bad debt.

The same is true with income. Most people are not aware that there is good income and bad income, and most people do not become rich because they work hard for bad income. When you ask for a raise, you ask for an increase in bad income. If you want to retire young and retire rich, you need to work hard for the right kind of income.

There three different types of income, which are:

1. Ordinary income Ordinary earned an income are you working for money. This income comes in the form of a paycheck. When you ask for a raise, bonus, overtime, commissions, or tips, you’re asking for more of this type of income.

2. Portfolio income is generally income from paper assets such as stocks, bonds, and mutual funds. A vast majority of all retirement accounts are based on future portfolio income.

3. Passive income is generally income from real estate. It can also be royalty income from patents or for use of your intellectual property such as songs, books, or other objects of intellectual value.

Why Rich People Did Not Like Ordinary Income

For, rich people, the worst kind of income to work hard for was ordinary income. To them, it was the worst income for four main reasons:

1. It is the highest taxed income and it is the income with the fewest controls over how much you pay in taxes and when you pay your taxes.

2. You personally have to work for it and it takes up your valuable time.

3. There is very little leverage in ordinary income. The primary way most people increase their earned income is by working harder.

4. There is often no residual value for your work. In other words, you work, get paid, and then have to work again to be paid again. To a rich dad, there was very little leverage in working for ordinary income.

Why Rich People Liked Passive Income

Although they receive all three types of income, if given the choice among the three, they would take passive income all the time. Why? Because it was the income they have to work the least for, it is often the least taxed, and it consistently earned them some of the highest returns over a long period of time. In other words, they work hard for passive income because, in the long run, they work less and less, served more and more people, and earn more and more the older he got.

The leverage of money

50 percent Money

This called ordinary income, the income you receive from a paycheck, “50-percent money.” The reason is called it “50-percent money” was because, no matter how much money you earn, the government always takes at least 50 percent of it or more in one way or another. If you make $50,000 a year, then at least $25,000 may go to the government, most of it before you even get your hands on it (through withholding). Even after you receive that remaining $25,000, the taxing continues on. As most people know, you are taxed when you earn, spend, save, invest, and when you die. In fact, your taxes at death can be very high if you are not properly prepared for the event. As rich dad often said, “If you do not have a plan for your money after you die, then the government does.”

From a rich people point of view, it was not very smart to work hard and have the government take at least 50 percent of what you work hard for. (A few years back, the tax rate was even higher than 50 percent. While the rate has come down over the last few years, many of the tax loopholes have been taken away in order to compensate for the lowering of tax rates. The fact is, when rich people were in his prime earning years, they often called ordinary income “80-percent money” because that is how much the government took from highly paid people.)

Poor people did not know that there was a difference in the different types of income. And since they don’t know there was a difference, they work very hard for “50-percent money” and then bought a bigger house for the tax breaks that they never really got. Rather than finding out more about the different types of income.

20-Percent Money

Most people today are attempting to retire utilizing what my rich people called “20-percent money,” which is money from capital gains or appreciation of stocks and sometimes real estate. When you hear politicians say, “My opponent is giving a tax break to the rich,” they are often referring to some sort of tax break on investment income.

The power of liverage

Many people are financially smarter and not working so hard for ordinary income. Many people are asking for stock options that can be “20-percent money if the company succeeds. (A certain portion is treated as ordinary income, but the increase in value afterwards maybe “20-percent money.”) A stock option can also be worth nothing if the business does not improve its perceived value to the market. The point is that people are catching on to the tax advantages and the different levels of leverage of the different types of income. The growing gap between the haves and have-nots is because most people are not aware that there are different types of income, and they work hard for the wrong kind of income.

0-Percent Money

One of the reasons rich use this money because they utilized tax-deferred money and many times called “0-percent money.” Tax-deferred money is money from capital gains that is not immediately taxed and is deferred for as long as they choose to defer paying those taxes.

For example, I put down $5,000 and purchased a house for $50,000. Two years later, I sold it for $100,000. I had a capital-gains consequence of $50,000, but I chose not to pay the 20 percent in capital gains, which would have been approximately $10,000. Instead of paying the capital gains tax, as you would if you had made the same amount from a stock or mutual fund, I deferred my gains and rolled $55,000, which was $50,000 in gains plus our original $5,000 down payment, into our next investment.

The power of liverage

In other words, I had a 1,000 percent return in two years and paid no immediate taxes. I legally deferred our taxes and used what was technically the government’s money as a down payment on a larger apartment house for $330,000. I then used the bank’s money and some of the seller’s equity to help us finance the remaining $275,000 we did not have. Not only did I use OPM (Other People’s Money), I used government money to help me to become rich.

I hope, you understand how to leverage money to get rich.

How to Leverage time and make money

There are many ways to use the power of leverage because there are lots of different types of leverage, Now it depends on you which leverage you choose to become rich, but here I will explain you two important leverage which is important to make money or become rich, I;ll tell you how to use them and make money. First leverage is OPT ( other people time), If you use the other people time for your work, then you become rich as soon as you want.

Let me explain you with an example,
Suppose, you work 10 hours a day for 5 days each week, you earn $10/hour In this manner you earn $100 a day and $2000 in a month, but if you have a team of 10 members and they work same as you work in a day and a week then simply multiply your income by ten, Now you earn $20,000 in a month, Now you work less and less and earn more and more if you use the other people time.

The power of liverage

Another leverage is making a plan, If you have a plan then the chances of mistake will be less and this will increase your ability to make money, but it also depends on you, which plan you will be chosen. A fast plan or a slow plan which makes you rich faster or slower.

The idea of working all your life, saving, and putting money into a retirement account is a very slow plan. It is a good and sensible plan for 90 per cent of the people. But it is not a plan for someone who wants to become rich faster and wants to stay rich. If you want to become rich and stay rich, you need to have a plan that is far faster than the plans of most people. If you have a chance, see the movie Top Gun and watch the speed at which those young pilots had to fly and make life-and-death decisions. The capacity to handle speed was important to those young pilots because their lives depended upon the speed at which they handled speed. The same is true in life and business today.

The power of liverage

The speed at which you can change and expand your context in order to adapt to the changes in the business world today is critical to every one of us who wants to succeed and do well financially. The gap is no longer between the haves and have-nots. Today the gap that is changing the most rapidly is the financial gap between the middle class and the rich. Saying it bluntly, if you have a slow Industrial-Age plan, or context, you are being left behind financially—not by your peers, but by younger people with faster minds and more accelerated ideas.

This accelerating rate of change of contexts is why we have twenty-five-year-olds who are billionaires and we have fifty-year-olds still hoping to find a $50,000 a year job. The sad thing is that many of these same fifty-year-old peers of mine are still advising their kids to follow in their footsteps, riding the same slow train their parents rode on.

How Do You Create a Fast Plan?

Money is an idea. Adding onto this, There are fast ideas and slow ideas, just as there are fast trains and slow trains. When it comes to money, most people are on the slow train, looking out the window watching the fast train pass them by. If you want a faster way to become rich, your plan must include fast ideas.

The power of leverage

If we were to build a house, most people would first hire an architect, and the architect would work with you to create a set of plans. Yet when these same people begin to build their fortune or plan for the future, most people do not know where to begin, and they never design a financial plan for their lives. There are no blueprints to wealth. When it comes to money, most people follow their parents’ financial plan, and that plan is often to work hard and save money. Following that plan, millions of people then sit on the train to and from work and watch the limos, corporate jets, and luxury homes from the window of their train. If you don’t plan on spending your life gazing out the window of your train, plane, or car, stuck in rush-hour traffic, you may want to begin creating a faster financial plan.

The following are some ideas on how to begin to build and develop a faster plan.

1. Choose your exit strategy first.

I am often asked, “How do I begin investing?” or “What should I invest in?” My response to their question is another question, “What is your exit strategy?” And sometimes, my second question is, “How old do you want to be when you exit?” A professional investor always has an exit strategy before they invest. Having an exit strategy is an investment fundamental. That is why I said, “Always start at the end before you begin.” In other words, before you get into investing, you need to first know how, when, where, and with how much you want to exit. For example, if someone came to you and said, “What is the first thing you should do before planning a vacation?” one answer should be, “Well, where do you want to go?” Or if someone asked you, “What should I study?” the answer would be, “Well, what do you want to become after you graduate?” The same is true with investing.

Before deciding what you should invest in, you should first know where you want to wind up. That is why rich dad repeatedly said, “Knowing your exit strategy is an important investment fundamental.” Many people invest because they recognize that the company they work for or the government is not going to take care of them after their working days are over. Many people are investing today for their long-term financial security. While it is good that many more people are investing today, I am afraid many investors did not give much thought to their exit strategy before they began investing.

2. Create a plan that works for you.

I estimate that 90 per cent of the population follows the same plan. That is why more than 99 per cent of the population winds up below the affluent level. There are people who try and reach the affluent or rich level, but they fail to have their plan come true.

How Much Will You Have When You Stop Working?

This is the statistics from the federal government. Although the statistics are a few years old, I do not think the ratios or the dollar amounts have changed much. Using the benchmark of age 65 as when most people plan on retiring or exiting, the question is: How much income do you want when your working days are over? The government tracked people from ages 20 to 65 and found that, by the age of 65, for every 100 people: 36 were dead 54 were living on government or family support 5 were still working because they had to 4 were well off 1 was wealthy. These statistics appear to verify my earlier statement that most people seem to have a plan on working hard all their lives and retiring poor.

The power of liverage

 

Either they planned on retiring poor or they did not pay attention to their financial plan or their exit strategy. Looking at these statistics, the question is: When you are age 65, which group do you want or plan to be in when you exit? After looking at the government statistics, I realized that further distinctions needed to be made in order to obtain a more useful chart to determine one’s financial exit strategy. Taking these U.S. government statistics, I added further dollar distinctions to those statistics, based upon the year 2000 dollar valuations. Upon retirement at age 65,

 

 

The income without working falls into these categories:

  • Poor $25,000 or less per year
  • Middle class $25,000 to $100,000 per year
  • Rich $1 million or more per year
  • Ultra-rich $1 million or more a month

The power of leverage

The unfortunate reality is that only one out of 100 Americans will reach the affluent level or higher when they exit the workforce. Chances are that 36 out of 100 will be dead, as the government statistics state. These 36 will exit this earth prior to exiting the workforce. That means that 59 out of the 64 people remaining will exit below the affluent level. the level of rich people, Only five go beyond that level. One reason for this is a slow financial plan without a clearly defined exit strategy.

 

Conclusion

The leverage gives you wings to become financially free as soon as possible and stay rich, Once you learn how to use the power of leverage you will be the King or Queen and spend your life financially free but if you not then you struggle your whole life.

You read different types of leverage in above lines and there are more leverages are present accordind to you which leverage is most important for you tell me below.

  1. The leverage of mind
  2. The leverage of money
  3. The leverage of time
  4. The leverage of plan

If you know the another leverage which is important than one of the above tell me in comment section.

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