Introduction: Debt

Debt weaves into the everyday fabric of our Canadian lives. In the modern global economy, debt plays a crucial role for everyone including governments, small and large businesses, and individuals and families alike, as it enables them to meet financial objectives and manage cash flow effectively.

For governments, debt is often used to finance large infrastructure projects, social programs, and other public services that contribute to economic stability and societal well-being.

In modern-day capitalist society, Businesses rely heavily on debt to invest in expansion, research, and development, allowing them to remain competitive and drive innovation for all to benefit and prosper.

Similarly, individuals and families use debt to purchase homes, fund education, buy cars and cover unexpected expenses, leveraging it as a tool to achieve personal financial goals to live a more fulfilled lifestyle.

While the use of debt entails certain risks, it is often necessary to stimulate growth and ensure the smooth functioning of the economy, business or family within the framework of modern financial systems.

Debt is often viewed as a financial burden by individuals and families due to its potential to create ongoing stress and limit financial freedom. It is true that when debt accumulates, it lead to monthly payments that consume a significant portion of income, leaving less available for essential needs or maintain a lifestyle that we are accustomed to living and leave very little or no savings for future needs and long term goals.

High interest rates can exacerbate this issue, making it difficult to pay off the principal and often leading to a cycle of borrowing to cover existing debts.

Additionally debt can seep into our health as well, the anxiety associated with unpaid debts can impact mental health, causing sleepless nights and strained relationships. The fear of default, low credit score or possibility of consumer proposal/bankruptcy adds to this burden, making it challenging for individuals and families to envision a stable financial future.

Ultimately, while debt can serve a purpose, its heavy weight can hinder personal and financial well-being.

In 2016, when I arrived in this wonderful country, a chance encounter with a money changer's sign changed my life. It inspired me to make it my life mission to use the 35+ years of enterprinal experiences to demystify and explain the complexities of today's financial system to my fellow Canadians and start this mission to change peoples lives as a movement. This is my contribution to the society as well as to those individuals and friends who has helped me achieve my goals without a selfish interest.

Read all about it in this web page OUR ORIGIN STORY: Why Did We start the Mentorship Program?

Debt: A double-edged sword

Debt can indeed be a double-edged sword, offering both opportunities and risks. On one hand, it can provide individuals and businesses with the necessary capital to invest and grow, purchase homes for families, or fund higher education for students and scholars, potentially leading to greater financial stability and success.

However, on the other hand, heavily reliance on debt can lead to overwhelming financial burdens, especially if income decreases or expenses unexpectedly rise leading to financial issues, health issues and relationship problems leaving unpleasant life experience for many.

This precarious balance of an appropriate Debt means that while debt can catalyze progress and open doors, it requires careful understanding, management and a strategic approach to avoid falling into a cycle of repayment that can stifle long-term aspirations which I call it as bad debt.

Imagine wielding debt like a masterful tool, rather than shouldering it as a heavy burden. The art and science of using debt to your advantage, however, lies not just in its use, but in dancing on the fine line where debt amplifies your financial possibilities instead of dragging them down.

This Knowledge Article about Mastering Debt Harmony embark through the Hexavisionary Framework’s pivotal second step: Debt Harmony Tactics, where you empower "how understanding and managing debt" can unlock your financial potential along with how to achieve the desired outcome through free mentorship program specially designed to empower everyday canadians with modern financial concepts and strategies to achieve total financial freedom.

By the end of this section, you'll gain a clear insights and understanding of:

• The different types of debt in Canada and how they are structured and function differently so that you are able to know "what to look for while choosing a debt."

• The ripple effects and impact of how interest rates are calculated (simple vs compound) and its significant impact your total repayment cost. This allow you to know "where to look for results in debt."

• How to harness and use good debt effectively to letting it propel you towards prosperity and work for you, rather than against you. This allow you to know "what results to look for while managing Debt."

Ready to demystify the Canadian debt landscape? Let’s delve in..

3 Universal Laws of Money

In the journey towards financial freedom, understanding the 3 Universal Laws of Money is essential. These laws act as guiding principles to help you make smart financial decisions and manage your assets and debt effectively.

If you have not understood the founding principles of how money works, I encourage you to understand them before you understand how debt works. For more details on the topic, explore the articles linked here

Three Universal Rules of Money: The immutable laws that transforms your resources.

Our framework is designed with those rules in mind and the five Canadian pillars of investment which determine how much you will end up keeping.

Good Debt vs. Bad Debt : Transform your debt perspective

Harnessing the good debt is beneficial. Debt is not inherently bad; it depends on how it's used. Smart debt, like your ultra low cost mortgage debt, investment loans to get more tax refunds or interest free student loans as long as you are studying (while your own money is growing compounding in high growth investment account) etc., can be your ally, propelling you towards creating wealth.

“The Set of the Sail” Described by Jim Rohn

The same wind blows on us all; the winds of disaster, opportunity and change. Therefore, it is not the blowing of the wind, but the setting of the sails that will determine our direction in life.

“It is the set of the sails, not the direction of the wind that determines which way we will go.” ~Jim Rohn

Good debt is typically used to acquire assets that can increase in value over time and reduce your current tax liabilities. This is how few rich people end up paying very little or no tax by borrowing their own assets and making the cost of borrowing tax deductible as well.

On the flip side, bad debt sports high interest and lacks value – think credit card splurges, high-interest consumer loans that don't provide lasting value.

Eliminating bad debt is crucial to achieving financial stability, whereas harness the power of good debt for wealth generation towards total financial freedom.

Debt Harmony and Other People’s Money (OPM)

In Debt Harmony Tactics, we introduce the concept of Other People's Money (OPM) as a crucial tool for financial success. OPM means using borrowed funds (debt) to achieve desired results in other words to make more money than what you have to work for you and increase the efficiency of money at work.

This unique perspective and strategy is used by all entrepreneurs, businesses and even the major corporations like Microsoft (Microsoft has $107.3 billion in its coffers, but it owes $45.4 billion) , Google, Meta, and Amazon, which take on debt despite having largest cash reserves on planet earth, more than some countries combined together, why? -

Why do companies flush with cash still carry debt?

Individuals, Most Businesses and even Large corporations often use debt for several strategic reasons:

• Capital for Growth: Debt allows companies to access funds they might not have otherwise, enabling them to invest in new projects, expand operations, or acquire other businesses. 1

• Tax Benefits: Interest payments on debt are tax-deductible, which can reduce the overall tax burden for the company. 2

• Leverage: By using debt, companies can leverage their investments, potentially increasing returns on equity. This means they can achieve higher profits without diluting ownership through issuing more stock1.

• Low-Interest Rates: When interest rates are low, borrowing becomes more attractive. Individual and Companies can lock in low borrowing costs and use the funds for various strategic initiatives. 3

• Maintaining Cash Reserves: Even high networth individuals as well as profitable companies might use debt to maintain their cash reserves for unexpected opportunities or challenges. 4.

However, managing risk is vital. The key to using OPM effectively lies in understanding different types of debt, reducing risks, and ensuring you only take on debts that enhance your financial position.

Conclusion

In summary, achieving Debt Harmony is essential for achieving financial freedom. Understanding the types of debt, their implications, and how to leverage OPM effectively can pave the way to a prosperous financial future. This article serves as a foundational resource for anyone looking to grasp the nuances of debt management in Canada.

Quick recap of your Total Financial Freedom Journey:

1. Keep More of What You Earn

2. Pay Only The Right Amount of Tax

3. Multiply Your Wealth With Uninterrupting Compounding

4. Never Lose Your Principal Invested

5. Work with a Mentor who has your best interest at heart

If you and any questions answered regarding your unique situation you can consult with us at no cost to you. Click here to book a 30 minute video meeting

Here are a few options for your next step:

- Explore more content on financial independence by checking out our timeless financial wisdom knowledge base Here or Blog Posts Here

- If you are ready to change the financial outcome and learn more about what we discussed here than Sign up for our upcoming webinar on retirement planning and financial freedom by following this link below and choose which master class is most suitable for your current situation. Every single person we have mentored started by attending our master class.

Explore Our Masterclasses to Secure Your financial future and Build Inter-Generational Wealth.

The future is yours to shape. Start today with Hexavision—because your financial freedom isn’t just a possibility, it's a plan.

We are here to help you achieve the following

- Financial freedom strategies for Canadians

- Provide a no cost personalised Roadmap to financial independence

- Holistic financial planning for Canadian Executives and Professionals

- Building generational wealth for financially secure future

- Passive income strategies for professionals and Business Owners

- Tax and Wealth conservation for executives

- Mentorship to help you Achieve early retirement in Canada

Request a consultation to receive personalized advice from one of our experienced licensed financial Professional here.

Online Meeting with Sunny Kochar - 30 Minutes Video Call.