Take Dustin.

1. Dustin makes $40K per year.
2. He's buying a BMW 3-series for $42K.
3. He's gambling in Vegas, monthly.
4. He sticks to designer brands, shops at Whole Foods, and buys premiums on every-frickin'-thing.
5. Dude still lives with mama.

Flash-forward 10 years later...

What do you see?

• Dustin's still paying off debts.
• Dustin grows financially nowhere.
• Dustin still lives with Mother.

Debt makes you its bizatcchi; it keeps you in place, and cripples you and your company from rocking to the top.

How Companies Destroy Their Futures

Try diving headfirst into piles of debt by:

• Maxing credit cards.
• Buying only premium.
• Throwing money at unproven innovations.
• Throwing glamorous parties/gatherings/conferences.
• Spending $$$ where you don't have $$$.

Companies remain financially stagnant because they're financially stupid about how they spend money -- eroding their future opportunities.

They're at the mercy of changing interest rates, paying back much more than what they got.

If you're ever tempted to show off, simply remember the Forbes' 400 billionaires' biggest recommendation:

• Stay debt-free.

Win.

Debt = Steroids = Say NO!

Piling on debt is akin to taking steroids.

1. You might beef yourself up for a bit.
2. But, it'll destroy your future in the long-run.

The more you take on debt -- especially long-term debt, the more ka-ching you'll have to pay back in the future.

The result:

1. less money in the future
2. = less $$$ to invest in new opportunities
3. = stagnant growth
4. = ugly bottom line
5. = you cry.

Long-Term Debt = Bag Full of STDs

Remember, long-term debt sucks more than a $2 hooker:

1. You don't know how badly interest rates will kick your company's ass in X years.
2. You can't really predict future cash flow because rates can deviate dramatically, making your company the interest rates' b*#$%.

Thus, you can't plan for the future effectively.

Potential for rock star profits: Drained.

Just say NO.

"So Wait, Debt Always No Good?"

Some debt might be help; for instance, short-term debt can help you finance stuff quickly to satisfy a big customer order.

Rule of Thumb

A very rough rule to determine what's good/bad debt:

1. Take your profits from last year.
2. Calculate how many X months it'll take you to pay off total debt Y.
3. If you need more than a year = Bad.

But if you can, avoid debt.

Instead, grow revenues organically grow through your retained earnings (i.e. net profits), and you'll set your company up for one bright-frickin'-future to rock the world and its mother.

Debt. Boo.

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