RULE 37: Don’t Borrow Money Unless You Really, Really Have To

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Mr. Femi Awoyemi, Accomplished Accountant & Founder, Proshareng.com


It’s so important that I will repeat it: don’t borrow money unless you really, really have to. And even then don’t. Not unless you are borrowing off someone who is lending it interest free, no strings, not secured against your house, no potential for messing up friendships - and that sounds like cloud cuckoo land. Ha, there is no such thing as free money (or a free lunch).

If someone lends it, 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.
The plus is usually financial (i.e. 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. 
“When you are starting a business, advisers often say it’s OK to borrow off people you know because they are willing to support you etc. But the novelist Jilly Cooper says she is wary of lending money to friends as it is terribly difficult to see someone at Christmas and give them a hug knowing they owe you £10,000”.

Payoff your loans and debts before you do anything else. It’s the only way to get rid of the plus. I know, I know, lots of people borrow money to start their own business and then go on to  make millions and what am I talking about-- we all have to borrow, don’t we? Do we? I have a friend who started his own business with three friends. They all put in £500 and ran the business for 15 years. Then they sold it for £43 million. Yep, and not a penny borrowed. The upshot was they had to share with no one - and at times like this you don’t want to share, no matter what your parents said about how we all should learn to share.
I have another friend who borrowed heavily to launch his business, which he successfully sold for £8 million. But nearly every penny of that went into loan repayments and interest. He was left with very little and, having not learnt his lesson, proceeded to start another business with capital raised by money loaned from the City. But he says he has learnt a lot because this time he’s only borrowed £3 million. Ho! ho!!!
When you are starting a business, advisers often say it’s OK to borrow off people you know because they are willing to support you etc. But the novelist Jilly Cooper says she is wary of lending money to friends as it is terribly difficult to see someone at Christmas and give them a hug knowing they owe you £10,000. Personally I would find it hard to hug someone who owed me a lot less than that!
12 People you must not borrow from.
Try not to borrow from:
• Your parents
• Your children
• Other people’s children
• Friends
• Lovers
• Passing strangers
• Loan sharks
• The City
• The banks
• The credit card companies
• Offshore investment bankers of any sort
• Me
From The Book; The Rules of Wealth by Richard Templar
(Read Rule 38 of Rule of Wealth tomorrow on Asabeafrika)


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