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August 19, 2006
High Earnings Can Lead to Serious Trouble
I am here to speak to you from the voice of experience - Earning a fortune can lead to some big time financial troubles.
The problem begins with, say starting a business. Your business takes off, you buy stuff, expensive stuff. You might have bought into the idea that it is better to finance and have some cash in the bank than to purchase your expensive acquisitions outright.
I can tell you I chose the path of financing everything - My new cars, throwing big screen TV's and home theater equipment on credit lines.
My latest purchase was $24000 on a new travel trailer - This time I chose the pay cash option.
You see, sometimes these huge earnings from a highly successful business can drop rapidly leaving a serious cash flow problem at hand. This time, I have my expensive toy but should my business take a hit I don't have any cash flow problems as I have not taken on new debt.
In fact my research has shown me that my travel trailer will hold it's value for many years. Should I ever need the cash I can sell the trailer for close to my purchase price providing I maintain it well. Which I am doing.
I hope this can help a fellow high earning business owner in a financial decision - Even if your income is not at an incredible level the same idea should be applied to your purchases.
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