Not sure where you stand with your finances? Answer these 3 questions…

01 — Do I have debt? If so, does this debt bring in more money than what it costs?

Despite making $300,000+ per year, many high income earners still battle with debt because spending can always outpace earning. Credit card companies and banks also up their lending limit, allowing these top earners to borrow more and more money.

While debt is controversial and some financial gurus advocate for having zero debt, there are instances where borrowing money can be financially beneficial. However, most people don’t know how to differentiate between good debt and bad debt. As a result, they rack up piles of bad debt on cars, toys, and houses. And yes, personal residences can be BAD DEBT!

02 — If myself or my partner loses their income, would anything have to change?

In a booming economy like what we’ve had for the past 13+ years, it’s very easy to operate as if every everything will continue to go great. Only a small percent of people plan ahead of time for a family emergency, a life altering event, or a dramatic and sudden shift in their industry. If your family income were to drop by 50% for the next 6-12 months, what would need to change to pay the bills and get by? The more drastic the change, the less prepared you are.

03 — When the next economic recession hits, will I be hurt by it or in a position to take full advantage?

The last economic recession in 2008 devastated hundreds of millions of Americans. Debt was easily accessible back then and most Americans operated as if it would last forever. This is never the case.

The economy is cyclical and we’re currently enjoying the longest bull market (thriving economy) that the United States have ever experienced. However, much of this is based on an absurd level of debt, meaning this spending will need to be repaid at some point.

When interest rates go up and debt is too expensive to obtain, it will be time to repay our loans. This will cause a contraction of the economy. Millions of people will lose their jobs as many companies will have to downsize since much of their business will evaporate. Most people will be devastated yet again.

However, a minority of people like Billionaire Warren Buffet who have stockpiled cash, will be in an optimal spot to buy companies, real estate, and other assets on a steep discount. They did this back in 2009 and are primed to do this again in the near future. Will you be part of the minority who is ready to take advantage of this opportunity? Or are you a part of the masses that will be devastated, yet again?