Eventually, I would love to be debt free in my life and business, and pay for everything with cash. I work towards that goal every day. I am getting closer to a debt free life and business, but I am not there yet, and for now, debt exists in both my life and business.
Which means, if I am going to have debt in my life and business I want it to be a healthy and helpful relationship between me and my borrowed money.
What does a healthy relationship with debt look like?
One important factor is making sure that you, as much as possible, avoid using Reactive Debt, and focus on only using Proactive Debt.
What is the difference between Reactive Debt and Proactive Debt?
If you are making a decision to use debt and borrowing that money at the same time (or within a few hours or even days), chances are you are using Reactive Debt.
If you are feeling pressured, and like there is no choice but to borrow money, you are probably using Reactive Debt.
If you have time between (I like to use at least a week) when you think of using debt and actually borrowing the money you are probably using Proactive Debt.
If you are using debt but don’t feel pressured, or like you HAVE to borrow money, you are probably using Proactive Debt.
Let’s look at each type of debt more closely…