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Question
Kindly simplify debt (loans) and credit and how they can be used to create wealth.
Answer
Debt, often in the form of loans, is borrowed money that you need to repay with interest. It can be used to create wealth when used strategically.
Imagine debt and credit like tools in a financial toolbox. Debt is like borrowing a friend’s car – you get to use it, but you have to return it with a bit extra (interest) for their trouble. If you use it to drive for a ridesharing service and earn more than the cost of borrowing, you’ve created wealth.
Let’s say you want to buy a fancy car but don’t have enough cash. You take out a car loan, which is a type of debt. Over time, the value of the car can decrease, but you’re also paying down the loan as you make monthly payments. When you eventually sell the car, you might still make a profit, and that’s wealth creation through debt.
Now, credit is like your financial reputation. It’s what your friends think of you when they decide whether to lend you their car or not. If you’ve always been reliable, they’re more likely to lend it to you.
With a good credit score, you can borrow money at lower interest rates when you need it, which saves you money. For example, let’s say you want to start a small business. You can use a business loan, which is debt, to get it off the ground. With a good credit score, you’ll likely get a lower interest rate, which means you’ll have to pay back less. If your business succeeds and generates profit, you’ve just used credit and debt to create wealth.
Like any tool, you should be cautious. Just as you wouldn’t borrow all your friends’ cars at once, you shouldn’t accumulate excessive debt. The key is to use debt and credit thoughtfully like a skilled craftsman uses tools to build something valuable.
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Question
How do I prepare for the holidays with the way prices of food items keep increasing at an alarming rate? I want to celebrate with my family in plenty. Is there a way to curb the effect of the increased prices of food items?
Answer
In our country, the holidays are a big deal, and we know how to celebrate with our loved ones. But, just like in many places around the world, the increasing prices of food items can be a concern. I have some suggestions with which you can curb these effects while making the holiday season joyful.
One thing you can do is communal cooking and sharing. You can invite your family members to come together and prepare dishes in bulk. It’s a way of not only saving money but also strengthening social bonds. You can all gather together in the same kitchen, chopping, stirring, and sharing recipes. It’s a beautiful example of togetherness during the holiday season.
You could also explore local markets for fresh and often more affordable options. Nigerian markets are vibrant and offer a wide range of affordable, fresh produce. Don’t forget to buy in bulk – it can save you money in the long run, especially for non-perishable items. You can also buy early and preserve the food items. If going to the market is not your thing, don’t worry there are services that could help you with that at the same affordable rate, even better than what you’d get at a supermarket. Check this out.
If you have access to a bit of land or even a small balcony, consider growing your own veggies and herbs. It’s not only cost-effective but also a fun family activity. This not only helps in saving money but also ensures you have access to fresh, organic produce.
I hope these tips help you and your family enjoy the holiday to the fullest!
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