Over the past year I've been reading about some big time entrepreneurs like Richard Branson, Robert Kiyosaki, Donald Trump, and others and one of the things that I've learned is how important it is to know how to manage debt. If you are one of those people who thinks borrowing money is bad I want to encourage you to think through it again. Understanding and managing debt is one of the most important skills a business person should have.
My friend Allison Trowbridge told me about this awesome organization! It's called Kiva and they allow you to give loans to small businesses in other countries! It's the coolest thing ever because you can see who you're giving a loan to and it tracks the repayment of it and then you can either take your money back or fund another business. Deyl has been working with another organization that works a little differently but I definitely like Kiva the best because it ads a story element to the transaction.If you click on that link you can see my profile and read the stories of the people I'm loaning money to and sign up yourself!
12 comments:
I usually agree and love your posts but I have to strongly disagree with you on debt being anything but bad. If your company is young, it enters into an unacceptable amount of risk which can destroy your ability to keep it afloat.
While I agree that being smart(er) with debt is preferable to being dumb with debt, there really is NO good debt. We are becoming a society that wants everything and wants it right now.
I believe that by maintaining a cash-only process, you have a much better chance of growing a young business and making it hugely profitable.
For great insight into NOT using debt as a tool, look to multi-millionaire Dave Ramsey (www.daveramsey.com).
Hey DJ, this is awesome.
That's a great reason to loan:
"I loan because: I've realized that it's impossible to do anything great alone - we all need the help of others and this is one way I can pass along what people have given to me."
I hope they add more people in need from my country (Argentina)... I'd love to help and see them succeed... things are so difficult over there.
Great post!
I have to disagree with Mr. Conner as well. For example, I have maintained my college debt while investing the money I could have used to pay it off. Though I could break even if I wanted to, it is financially sagacious for me to make a slight profit while maintaining my debt.
I also spent 4 years in South Africa where micro-loans were given to hard-working individuals (who were also given training re debt management). Not a single one of these entrepreneurs could have managed to support their family through a business initiative if they had not first started in debt. Even a free gift would not have worked, because it creates a sense of helplessness and dependency.
Well done, DJ. I continue to grow in the belief that is will be better business (and legal) policies and practices that will eventually change the world. Hard work and good will are great, but they are not going to help those who have faced generations of oppression. I look forward to starting a Kiva account myself!
that's great david !
I read in this moment secret book the "of a millionaire spirit" of
T.Harv eker, a super book! The principle of the millionaire spirit is
the sharing, and the gifts.
you rock !
c'est bon ça ! comment ça va ?
I just saw this on Oprah and was excited to check it out! The day I did, there wasn't anyone needing a loan though :( But I see there are now! What a great way to help them get started to support their families!
David,
I think my comment was misunderstood. I certainly never meant to make it a personal attack or put words in your mouth. I apologize for that.
I have seen so many people ruined by debt (even debt they thought was "good debt"). Businesses failing and marriages torn apart to name a couple. When the subject of debt comes up, it creates such a negative reaction from me. I am a very risk-averse person and I don't like what debt in any form creates. I think it can be hardest on start-up businesses.
There are only 3 things you can do with money: spend it, save it and give it. I think giving is one of the best things you can ever do with it. I applaud you, or anyone, for trying to help out others.
I worry that the art of never having debt has been lost somewhere in the last two decades. I have seen the power, stability and happiness it has brought to my family and business and just don't want to see others hurt. I think for all the successful people you see, people need to understand all of the people ruined by debt and make their judgments clearly. Without debt, all those payments we made to banks, schools and credit cards can be spent growing our businesses and helping others.
When crunching the numbers of debt, do not forget to factor risk into your equation.
Again, my apologies if I offended you with my first comment. I think the topics of debt and of charity are great subjects. Considering the large audience you have on this blog, I appreciate you bringing them up for discussion.
No worries and no offense taken I just wanted to make sure everyone understood that I didn't say that.
I agree with you that many people, businesses, relationships are strained by financial issues but I don't think the cause of that is debt - it's financial illiteracy. People don't understand money and they take advice from other people who don't understand it either.
I also agree with you about the risk factor and I think the biggest risk of all is to remain ignorant which so many people do. Everyone should go out and learn about money. Get some of Robert Kiyosaki's Rich Dad Poor Dad books and you'll learn a whole lot about how to make money work for you.
That's pretty sweet, so how do I sign up to get a loan from you? That way I can default and not feel bad :)
HAHA Todd!!!
Actually I checked and the organizations that govern each of these small businesses have never had a default! It's amazing!
I LOVE this. I think the thing to keep in mind is the difference between debt in our country and debt in other developing countries. Debt, in our country, is out of control. But think about our debt -- credit cards and cars... little to no return on the investment.
Kiva is helping establish businesses in countries that desperately need economic structure. The other option for these entrepenurers -- sell their families into slavery. A quick search on global slavery statistics revealed that in a Harvard International Review, conservative estimates were that 27 million were bonded slaves, and that realistic estimates were 10 times that number. Obviously there are other factors that are a cause of that staggering number. Debt repayment certainly plays a major part. However, I don't think Kiva is going to demand their first-born if they default.
While I strongly support the Dave Ramsey debt-free mentality...it really is a solution for Americans. Programs like Kiva, however, will change the world.
I wanna say that Prosper was the one that started the whole micro loan idea but I could be mistaken. Check it out.
www.prosper.com
People must do what works best their business. Some may need loans, while others do not.
Its not gonna be the same for everyone.
Hi DJ,
Thanks for the Kiva info...I'll look into it. Another great organization is the Grameen Foundation - http://www.grameenfoundation.org/ they do microfinance too and have been very successful.
Regarding managing debt, Robert Kiyosaki is the master and reading some of his books can give one a great understanding of investing and managing debt.
Check out the book: Rich Dad's Cashflow Quadrant - A book that is a start to Financial Literacy.
Thanks,
Garrett
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