A baseball bat extends our reach and provides immense leverage when it connects with a fastball… every now and then there’s a home run. When it comes to buying a home or a car, a loan leverages our reach beyond resources at hand. We need to qualify for credit, and if approved the resulting commitment lets us enjoy something we could not obtain any other way… as long as we keep up with the payments. Investors leverage their real estate deals and they buy stocks on margin, hoping for that home run where a relatively small cash commitment reaps a profit bonanza. A baseball player who strikes out in two-thirds of his or her times at bat is a champion with a .333 batting average, but a borrower who misses a few payments is a poor credit risk. Leverage works both ways, and careful coaching can make the difference between win or lose before signing loan papers or stepping up to the plate.
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