Hello Sophisticated Spenders!
Background: Kanye West recently took to twitter to beg ask Facebook creator, Mark Zuckerberg for $1 billion. Kanye thinks Mark should “invest” in Kanye because-well, he’s Kanye. Then Kanye goes on to say he’s $53 million in personal debt.
Don’t Be Fooled By Kanye’s $53 million debt!
Smart people use debt as leverage.
Examples:
$30,000 in student loans to land a $100,000 job.
If I won a million dollars I wouldn’t buy a million dollar home. I’d put 20% down on 50 rental properties (worth $100,000 each) and own 5 million dollars worth of real estate.
Same concept works with buying businesses. a million dollars will yield 40% down on 25 $100,000 businesses. (You need to put 40% down to buy a McDonald’s)
He’s not broke!
[tweetthis]Debt does not = broke. Debt can sometimes mean you’re smart with your money and you’re using debt as leverage.[/tweetthis]
PLEASE don’t confuse this with credit card debt!
Do NOT carry credit card debt. The interest rates are high and chances are, you did not buy any income producing assets with said credit card (that you’re carrying a balance on, and paying unnecessary interest).
Let’s say Best Buy has (insert shiny new item) on sale for $100.
[tweetthis]Would you pay $130 for a $100 item? That is what happens when you do not pay your credit card bill in full.[/tweetthis]
I love that he shared the amount of personal debt he’s in.
Motzart was only 35 years old when he died and he died in LOTS of debt (source).
[tweetthis]I get it. I’m also from the south side of Chicago and we grew up not knowing a lot about money. @kanyewest[/tweetthis]
You don’t learn money management overnight.
[tweetthis]I’d love to chat/w (@kanyewest) about the importance of debt & how he used debt to create all his streams of income.[/tweetthis]
Because Kanye is not broke, he’s making money-lots of money.
How will he use this billion dollars? Leverage? Save a failing business venture? start a new business venture?
Was he smart with his debt? Is he using his credit for good?
What say you about the Kanye debt situation?
