Rule 38: Don’t Borrow Money Unless You Really Have to

Don’t personal debt unless you really, really have to. And even if you have to…don’t. John Adams famously said, “There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”

I want to even caution borrowing money interest free. Debt is slavery. Maybe borrowing $8,000 at 0% interest seems like a good idea. But let’s scale up this model of behavior. Would you borrow $8,000,000 at 0% interest? In the end, you still have to pay it back! Until then, your debtor owns you.

If someone lends you money, they’ll want it back-plus. And that plus is what kills most of us, stops us from becoming prosperous. It has to be nipped in the bud. And if it’s too late for that, then it needs to be severely pruned. We have to get rid of that plus…ASAP.

The plus is usually financial (that is, interest on the loan) and this is what usually cripples people. However, the plus can be emotional also—if you borrow from friends and family it can cause all kinds of other complications—it’s never ever simple.

Pay off your personal loans and debts before you do anything else. It’s the only way to get rid of the plus. We’re going to discuss more in the next course. I know, I know, lots of people borrow money to start their own business and then go on to make millions.So, what am I talking about? We all have to borrow, don’t we? Well, no. I understand business debt. We’re going to talk about that much, much later. But I’m talking about personal debt. If you can start your business without taking out debt, you won’t have to share the spoils.

When you are starting a business, advisers often say it’s OK to borrow from people you know because they are willing to support you, and so on. But don’t do take money from friends and family. It’s really uncomfortable for a person to hug you at Christmas knowing you owe them $10,000.

Try not to ever borrow money from:

• Your parents
• Your children
• Other people’s children
• Friends
• Lovers
• Acquaintances
• Loan sharks
• The government
• The banks
• The credit card companies
• Offshore investment bankers
• Me