I don’t think debt is the enemy. I think not understanding how it works can be. Consider two women. At 29, one borrows $180,000 to buy an apartment building. Her tenants help pay the mortgage, and she gradually uses the income to acquire more properties. Twenty years later, those properties are paid off, generating income and giving her more financial freedom. The other woman borrows money, too. For a car, a wedding, and a lifestyle she wants to enjoy today. There’s nothing wrong with wanting those things. But the payments leave her with less money to save, invest, and build wealth over time. Same tool. Very different financial futures. This is what I find interesting about debt. It can help you build wealth, or it can consume the money you need to build it. Neither outcome is guaranteed. Property comes with risks, and borrowing magnifies both gains and losses. But understanding the difference between borrowing to acquire assets and borrowing to fund consumption can change how we make financial decisions. I think financial literacy is about more than learning to budget or pay off debt. It’s about understanding how money works so we can make choices that serve us in the long run. The goal isn’t to look wealthy. It’s to build wealth. And the more we learn, the better equipped we are to do that.
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10 Comments
Catherine
@ffcatherine · 16h
Using debt to create income makes sense but yes it does have its risk ie: in Canada in 2021 debt rates doubled sometimes eliminating cashflow.. But real estate is a long term strategy with ups & downs for sure ! I always say “use debt to fund assets never to find liabilities” when possible.
CAPS LOCK ON
@theanonymousinvestor · 16h
THE WEALTHY ALWAYS USE DEBT. DEBT ISN'T SOMETHING TO FEAR ESPECIALLY IF YOU ARE ACTIVELY WORKING ON BUILDING WEALTH! IF YOU HAVE VERY LITTLE MONEY AND A LOT OF DEBT, WELL THEN YEAH, THAT IS WHEN IT CAN BE PROBLEMATIC. I CURRENTLY CARRY SOME CONSUMER DEBT, BUT I HAVE A GROWING PORTFOLIO, AND I ALSO PUT MONEY TOWARDS THAT DEBT EVERY WEEK.
Green Gambit
@defive · 15h
$180K for an apartment building? In 1970s yes, but in 2026 hell nah!
Nicolle
@moneymeetslegacy · 15hEdited
Your posts always make me think! 🙌 Using debt as leverage to build wealth is a strategy that many wealthy individuals use effectively. However, an important consideration is understanding the risks involved. Leverage can be a powerful wealth-building tool, but when used incorrectly, it can also be financially devastating. For example, the Smith Manoeuvre. It can be an excellent strategy, but without understanding its intricacies, including how to properly track transactions, maintain the deductibility of interest, and manage investment risk, things can go wrong quickly. Investing borrowed money in highly volatile or speculative stocks only adds another layer of risk. Another point worth considering when people say, “the wealthy use debt to build wealth,” is that many wealthy individuals already have a substantial financial foundation. They’re not necessarily starting from zero. They often have existing assets, cash flow, and financial flexibility to absorb losses or weather market downturns. Just somethings for people reading to consider so they make informed choices on whether taking on debt for leverage is right for them and their circumstances.
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