You finance everything you buy. You either pay interest to someone else (typically a bank) for the use of their money or you borrow from your future by giving up the ability to earn interest on your savings when you pay cash. It’s not just what you pay for, its how you pay for it. How you finance major items like cars, weddings, college etc. can have a major impact on the amount of wealth your family is able to retain or transfer away. In this video, Blake looks at the three ways to finance major purchases:
- The Debtor – makes payments to the lender.
- The Saver – makes payments back to themselves to get where they were before the purchase, giving up the interest their money would have earned.
- The Wealth Creator – saves and uses other people’s money to maximize efficiency by allowing their savings to earn uninterrupted compound interest.