If you're struggling to understand how you own a car/ house/ excavator even though you borrowed money from the bank to pay for it, here's a 2min explainer without any accounting jargon...
There's two sides to every purchase you make.

1. How you get the money (sources)
2. How you spend the money (uses)

Sources: salary, side hustle, bank loan, drug trafficking, OnlyFans

Uses: houses, cars, excavators, Birkins, garden chair for Midrand apartment
Once you source the money, the money is yours to use. Whatever you buy with the money, you own.

If you borrow 100k & buy Louis Vuitton, it's still your handbag.

If you use your own money to buy a house using cash, you own the money (source) and you own the house (use).
When you borrow money, the person/ institution lending it to you wants to make sure you can pay it back.

To make sure they check your income levels, credit history, run affordability tests & whether you support Arsenal.

They also have one last protection - called security
Security isn't ADT or Trellidor - it's what happens if you can't pay back the money!

If you lose your entire salary in Dogecoin & can't pay your home loan, the bank will intervene & try to sell your house to get their money back.

This is the where sources & uses intersect.
When it comes to sources of money, each source only cares about being paid back. Whether it's a friend/ bank/ mashonisa

You could take a loan for a million bucks, then borrow a million from a friend & pay the bank off - the bank will never contact you again

(Unlike Netflorist)
Sources & Uses is a tool used heavily in M&A ++ financing deals in investment banking.

It helps show what you need to pay back & the value of the stuff you're buying. It can get a bit complex on some deals but the concept stays the same.
This is useful whenever you're faced with a "do I own this?" question & don't want to call up your CA friend & hear about IFRS (also because they're annoying as fuck)

Most times you own the stuff you buy (use), you don't always own the money you used to buy stuff (source)

[END]
My goal is to make everything finance related accessible

If there's ANY finance topics/ concepts (basic or complex) you need me to break down using no jargon - feel free to post them & I will thread 🚀🚀

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Don Petty Cash

Don Petty Cash Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @iamkoshiek

10 Sep
that first salary has the potential to make/ break you financially - for many people it decides their first car, apartment, amount to save/ invest & overall quality of life
if you look at entry level vehicle prices, cost to rent apartments in big cities & general living expenses - there's not much variance across base costs

It all starts to hinge on the size of that first pay cheque
The worst part of jobs with a sharp earnings trajectory (where you start low & get bumped up) is the interest cost on debt usually outstrips salary increases

So if you're doing articles & take on tons of debt, it can take forever to get out of the hole
Read 8 tweets
10 Sep
Currently testing a couple of cannabis opportunities, hit me up if you want to try some product. Here's the link for early access Altvest opportunity drops: bit.ly/altvest
my boy @Sibusiso gave up IB to focus on the weed business, he will be helping us assess quality opps

give him a shout for any industry specific/ market research info you need
2001: "well, my portfolio has a few internet companies"
2021: "I'm invested in crypto, cannabis & penguin NFTs"

what a fucking time to be alive 🔥🔥🔥
Read 4 tweets
8 Sep
Kylie Jenner's IG pregnancy announcement clocks 69.4m views in 11hrs

For context, PSG Messi+ Man Utd CR7 official IG announcement video view counts combined? 31.9m
FIFA22 about to put Kylie Jenner in the Ultimate Team
just remembered, there's a Kylie thread... of course there's a thread
Read 5 tweets
7 Sep
how does he do it?
this man's tweets have preceded a price drop 8 out of 8 times perfectly

that's better hit rate than Mia Khalifa, Meek Mill & Soulja Boy
you vs. the guy she told you not to worry about
Read 7 tweets
17 Aug
It's easy to be a Twitter justice warrior fighting fast fashion/ Shein by adopting the moral high ground & being an evangelist for ethical consumption

Overlay the impact of wealth distribution, privilege, accessibility & emerging market purchasing power - it's far more complex
To the people fighting against child labour:

Have you ever worn a rich cashmere knit perfectly crafted from the tiny expert hands of a kid in India?

Try one.
Organically sourced fresh produce, humane meat & free range eggs are all great buzzwords to throw around.

They're also generally fucking expensive.

For you, food might be an item where you're privileged to make a discretionary purchase. For most people it's about survival.
Read 6 tweets
5 Aug
The world will move past you if you spend time obsessing over elaborate plans & never pull the trigger on anything.

Start building. Fail fast. Sharpen the game plan. Repeat.
Many people are hesitant to build in public. There's really no better way to build.

You have thousands of people essentially working for you for free doing product testing, offering useful feedback & helping you build a machine. Use them. In fact, sweat them.
Whether it's that podcast, YouTube channel, small business, website, anything you build on Day 1 will look VASTLY different in T+6 months.

You're married to nothing except the best outcome. Rigidity suffocates innovation. Be fierce in the pursuit to change shit up.
Read 4 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

:(