What stops people

Ordinary_Joe

I'm curious again.

I've been on this forum for a short while now and I've seen how debt is making a mess of peoples lives. Also I've seen people put in some serious effort to get out of debt which is truly commendable because the self discipline required.

Having read some books on the subject my thinking changed from a the usual route out of debt though manging my existing resources. My "new" thinking is that you have to find ways to generate sufficient money to eat into your debt and to get rid of it that way.

The book I read Rich Dad Poor Dad which set me on this path says that you need to generate as much money as possible and hold onto as much as possible, primarily through running your own business.

Now that seems to make sense in that it turns the problem on its head and approaches it from a different angle.

My question is - does this approach make sense to other posters on here and if so, what stops you from doing that?

lynzpower

Great idea BUT

1. setting up a business usually means getting into debt
2. it usually means laying out for something, even if its only PAYG credit
3. A lot of people have no sufficient skill to run own business _ me included!
4. running own business is what has brought a lot of people here in the first place, it aint a walk in the park

just my thoughts

Pobby

Lynz.totally agree.I believe that 2 out of three new business close within the first 3 years.

DontDoDebtKids

Hi Joe,

I have also read that book. I'm quite a big fan as it's a simple message but very true.

The guy talks about how you shouldn't rack up the debt in the first place by buying "liabilities", instead buying "assets" which give off income with which to buy luxuries. Most people don't do this!!!

The trouble most people have is that, when they realise they have to do something about it, they don't have any free cashflow to generate money with. In fact, they usually end up using all of their money to service debt payments. Too late!!!

Once you're not quite "at bottom", i.e. have started and succeeded in paying off some debt, you can start doing things. Most people do quite a lot of the following (and I'm sure that there are things I have forgotten or don't know about):

- Matched Betting (can earn you up to £10k a year tax free)
- Mystery Shopping (£25 to £40 a go)
- Premium Bonds (better than the lottery)
- Stoozing (though not so much any more)
- Cashback credit cards

Now, these are things that quite a lot of DFW's do I've noticed.

What they can't do, which RDPD advocates, is invest. Investing is something you need to learn about and, more crucually, you have to dip your toe in the water first and be prepared to lose money. DFWs don't want to lost money they can be putting towards their debt.

Once you're free of debt, learning to invest is fun and can be profitable. If you're in debt and your investing goes wrong, you get more stressed!!! Bad!!!

It's generally accepted logic that if you pay off your 29.9%, 14.9% or even 9.9% loan or credit card, you will be in a better position than if you save it or invest it, as you are guarantees to "make" that interest rate on your money.

Also, you shouldn't really invest money in the stock market if you can't afford to LEAVE IT THERE FOR THE LONG TERM. It's almost better to be prepared to lose all of your money that you invest - at least to start - if you can do that then you've got the right mentality to invest. Then you have to stick at it!

So the best advice to DFWs seems to be: 1) Pay off your debts first; 2) Invest your money.

How you pay off your debts allows for some creativity, but high risk investments....sounds a bit like gambling to me!

DontDoDebtKids

Another thing: most of the corporation things he talks about are true in the States, but not so much here.

Ordinary_Joe

lynzpower wrote:

Great idea BUT

1. setting up a business usually means getting into debt
2. it usually means laying out for something, even if its only PAYG credit
3. A lot of people have no sufficient skill to run own business _ me included!
4. running own business is what has brought a lot of people here in the first place, it aint a walk in the park

just my thoughts

Thanks for that. Couldn't it be argued though that for some these things may be true depending on the business model chosen but for others these are mental barriers put up by some so they don't have to truly consider what the options are for a way out of the situation.

Please don't think I mean to be horrible because I certainly don't. In part I'm trying to work out what we let us stop doing what we need to do given the desperation of our situations (of that makes any sense).

Part of my thinking came from three books, one of the others being Anthony Robbins - Awaken teh Giant Within. he argues that peoples actions are driven by two mental states which are basically comfort and pain. He also believes humans try to avoid pain and gravitate towards comfort. He further argues that where people don't stop carrying out actions that bring them pain it is because they don't beleive the pain is sufficient for them to take the opposite behaviour and take the actions which get them away from pain.

Now this makes some sense to me but I'm genuinely interested what others make of it.

Broken_hearted

Working for yourself is hard and if you have to take time off through illness you don't get payed.

lynzpower

Now interesting

Id give my eye teeth to set up a business and ive done the plans and Ive looked into funding etc. Fair dos. But if it goes perasaped, which lets face it 2out of 3 businesses do then Im up the creek with nada. So where I am is comfortable, but its a roof over my head and the wolf pretrty much away from the door.

Whats wrong with being comfortable? Surely thats what most of us want in the long term anyway?

Iriahm

hi, ive just set up my own business and until it is secure I have a full time job. i work every night on the business sending off the stuff, answering website enquiries etc etc. i take weekends to go to trade shows etc.

i have probably spent about £3k of my own money that could (should?) have been spent on reducing my debt. I got £7k of funding from princes trust to do it.

I have never felt so motivated to do anything so right. My goal: pay off all debts as fast as possible and make the business as sucessful as possible. If you have done your research, know you niche, know you've got good advisors and are passionate about suceeding then you will.

my sisters don't want to work for themselves, preferring the comfort route. That, as Lynzpower says, works for them.

oakdale_minx

I'd love to run my own business, but for me, Ithink the barriers are:

lack of funding to set it up (although I did read once - don't leave your full time job until your new business it stable enough financially)
Lack of income whilst business is being set up (I pay all the bills myself)
Fear of failure and the debt it may bring
Lack of business start up skills (although I guess there are ways of learning them from organisations nationally)
Not really knowing what kind of business to start up
Lack of confidence
and I guess, not having the balls to do it generally!

Annie_Fanny

Iriahm wrote:

hi, ive just set up my own business and until it is secure I have a full time job. i work every night on the business sending off the stuff, answering website enquiries etc etc. i take weekends to go to trade shows etc.

I think this is absolutely the correct route if you are setting up your own business.

One of my friend's is starting up her own business and she is being pressured by some of the funders to do it fulltime but she says no way and is taking the route that Iriahm is doing. Why risk a fulltime income if you don't have to?

I don't see why you can't have 'comfort' and minimise the 'pain' of a business start-up - it's probably similar to the myth of the suffering artist. Just because you are setting up in business doesn't mean you have to suffer, ok you may have to make some sacrifices but you don't have to get into massive debt.