There’s always the ongoing debate in regards to how to handle one’s debt - especially for business people, not salary earners. If you’re earning salary, well, obviously you shouldn’t get into too much debt. But the other breed, the business people (who make up about 5% of the population) have different ideas when it comes to the whole debt issue. Some of us purposely get into a somewhat heavy debt, and inspire ourselves to pay it off.

This is not some crazy tactic. I’ve heard of many who did this - whether it be a mortgage that they couldn’t afford unless they made more money, or a luxury car, or any other items for that matter. Instead of thinking “Well I’m making this much so I’ll get a Honda.”, these people will say “Well if I’m stuck with a $800/month lease payment for an Audi, I’ll be encouraged to make even more.” and they go that route. It might bite you hard, but it’s definitely a gutsy way of handling it and it sounds quite cool to me.

I haven’t gone as far as going into a luxury car, but I did splurge a little bit when I moved to one of the most prestigious addresses you can have in Vancouver - False Creek North, or Yaletown. My apartment sort of lies in between the two. I have a water view from my living room, and I live very close to many of the great restaurants and parks in the neighbourhood. It wasn’t cheap for me - I had just turned 21 when I first moved. I’m going to be 22 in about a month.

Apart from that I have incurred other debts  - in the first year of my business, I had a slow period and I incurred a lot at that point. If I had lived a bit frugally the whole time, I’d be debt free by now, but I’m not. Instead, I lived up the life a bit, and I have almost the same amount of debt as I had in early 2007, but I have a much better lifestyle now. For example, I’m in the middle of blowing $2,500 on brand new furniture - I already got the couch, and I need to complete payment for my new bed and the mattress. It may sound extravagant for a young guy like me but I like to challenge myself and reward myself.

What’s the right way to handle debt? Play it safe, or play it ballsy like I did?

This entry was posted on Tuesday, September 11th, 2007 at 10:20 pm and is filed under Business Strategies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.