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The Debt that Makes You Rich

By Edited Mar 8, 2016 0 4

Free yourself

There's an old wives' tale that you should get out of debt and get out of it as soon as possible. Like a lot of time withstanding theories, there is some truth to it but not the complete truth. Not all debt is bad. Actually, there is debt that is good for you . As a matter of fact, it is really hard to become wealthy without that kind of debt. Take a minute to swallow that one. Yes, you will most likely have to get in debt to become wealthy, but there is a clear distinction on what kind of debt. They are mostly called investment because that's exactly what they are, investments. The problem is that most people call bad debt investments too. Here are a few examples of common debt and wealthy debt.

Common debt:

  • luxuries for your house like sofas, TVs, electronics, ect.
  • A car that you personally drive for pleasure, not for business.
  • A house that you live in.
  • Vacations.

Wealthy debt:

  • Property you rent out
  • A car for business purposes
  • Real state to sell (not living in it)
  • Business endeavors

The clear different between Common debt and Wealthy debt  is whether they are bringing money into your bank account or not. That's the main reason a house that you are living in is not a debt that will make put you on the road to financial freedom. Yes, you can sell it for a profit if the market goes up, but what if you were to lose your job today? Would the house you are living in bring money every month into your bank account or take money away from it? What if the house market went down and you lost your job? Now the house takes money from your account and it's worth way less than before, so you are reluctant to sell it. 

Wealthy Debt

In contrary, property you are renting out to someone else brings money into your account every month regardless of how the house market is doing. That's the debt that makes you wealthy. Think about the monopoly game. The game is constructed around similar concepts. The point of the game is creating wealth by making financial investments. The investments involved in the game, and life, consist of business investments and real state investments. Donald Trump is continuously creating wealth in this way. Different variation of good debt and long-term investment helped John D. Rockefeller, Henry Ford and Steve Jobs; they all amassed wealthy debt. It eventually paid for itself and made them richer beyond their dreams. Think about that next time you are thinking of “investing” on the newest gadget. Is this really an investment or is this just a luxury you would like to have but could do without?




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Rich people think differently than the economically lower classes. Learn to think like a wealthy individual and you too will soon join the upper-class.

Work Smarter Not Harder

Do without the luxuries for a while so you can invest on the right kind of debt; the debt that will allow you to get all the luxuries you could ever dream of without the constant worry of the bills you have to pay. Do not just work hard. Work smart now so that you can reap the benefits later. Work on building the right kind of debt to place yourself well on your way to real to financial freedom.

Build So That You Can Wake Up To The view Of Your Dreams.

Wouldn't You Love To Wake Up To This Every Morning?

Wake up to the view of your dreams
Credit: creative commons


Jun 4, 2013 8:00pm
I'd like to point out to the reader's, if you don't mind, that working on the "right kind of debt" is not what you should be doing. Working on the right kind of debt payment plan is what you should be working on. If you are in the position to start building your nest egg beyond that 5%-10% 401k contribution, consider getting in debt only as your last resort. Donald Trump buys companies with cash. It's true that using debt as a catalyst for a business is what most people do starting out, however getting wealthy (and not just pulling in an income), very rarely comes from debt without an expert plan. Please plan before you go into debt!
Jun 5, 2013 8:45am
HI NU Law Student, I just wanted to thank you for adding value to the article. It benefits all of us and dig deeper into the concept. I'll try my best to reciprocate your insights and add value to your articles. Thanks
Jun 5, 2013 8:30am
Hi, NU Law Student
I don't mind you commenting or criticizing any of my articles. It only adds value to the topics and as you pointed out, there were some things I should have mentioned. I am not recommending people to blindly throw their money in the air and getting into unplanned debt. You should plan, test, and re-test those plans. Entrepreneurship is for those with high risk tolerance but it's educated, planned risk.
Also, with credit card interest as high as 20%, personal loans at 15%, fixed mortgages at 5% and student loans hanging around the same, it is easy to see how investing on eliminating your debt might be the best investment.

The interest rate you're paying on your loan becomes your ROI each month. It is hard to find investments that will IMMEDIATELY give you 15%-20% Return on investment each month, so working towards eliminating that debt might be your best option. I was merely stating that if you are talking about wealth, not just merely retiring and living good, you cannot do it by savings and 401k alone. You will have to take EDUCATED, planned risks and get into debt. Any entrepreneur and any self-made millionaire in business will tell you this.

Yes, you can live a good live with savings, 401k, and low risk, small investments but we're talking about wealth. Being rich is mostly associated with 7 and 8 figures. Wealth is mostly associated with 9 or more figures on your net worth but let's put it at 8 figures. Do you really think you can get there by savings alone? No, you have to go out there and look for opportunities, take those educated risk, plan them, test them, and work hard to make them happen. Not everyone want this. I have family members that are content retiring in Costa Rica with enough savings, a 401k, and social security. For me, that's not my end goal. That's what pushed me to build three business and what has led me to life off from passive income every month.It all depends on your end goal.
Thanks again for commenting and adding value to the article.
Jun 7, 2013 6:00am
As long as we select real estate wisely, I think it does give good returns. Thanks.
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