The Leverage Secret Most People Miss
My friend Dave Ramsey preaches living debt-free. While I respect Dave, I fundamentally disagree with his approach. When I say I’m a billion in debt, I’m not confessing a financial failure—I’m revealing a wealth strategy that has worked for decades.
This strategy isn’t about drowning in consumer debt. It’s about controlling billions in assets by using other people’s money. It’s called leverage, and it’s how the wealthy play a different game than everyone else.
Here’s how it works in practice:
- Instead of using $1,000,000 of my cash to buy property, I put in $200,000 as a down payment and borrowed $800,000
- The property generates rental income from tenants
- That rental income covers the mortgage payments
- I maintain ownership and control of an appreciating asset
- The tax code provides deductions for mortgage interest and depreciation
The beauty of this system is that I’m not personally paying back the loan—the property is. The tenants are. Meanwhile, I get the cash flow, own the asset, and watch it appreciate over time.
Breaking Free from the Scarcity Mindset
Most people are stuck in what I call the “scarcity trap”—scrimping, saving, sacrificing, delaying, and deferring. They believe the only way to build wealth is to accumulate money slowly over decades. This mindset keeps them playing small.
I play a different game altogether. My approach focuses on utilization, not just accumulation. It emphasizes control, not just ownership. This distinction is crucial for anyone seeking to accumulate substantial wealth.
When done correctly, strategic borrowing creates a win-win-win scenario:
- The bank wins by earning interest
- The tenants win by having a place to live
- I win by multiplying my wealth without tying up all my cash
This approach enables me to manage a significantly larger number of assets than I could if I relied solely on my own capital. It’s how I’ve been able to scale my wealth exponentially rather than incrementally.
The Tax Advantage Most People Never Use
The tax code is designed to incentivize certain behaviors, including specific types of borrowing. When I borrow against appreciating assets rather than selling them, I avoid triggering capital gains taxes. The loan proceeds aren’t considered income, so they aren’t taxed.
This strategy allows me to access the value of my assets without the tax consequences of selling them. It’s perfectly legal and available to anyone who understands how to use it.
The wealthy don’t just earn differently—they borrow differently. They use debt as a tool rather than viewing it as a burden. This perspective shift alone can transform your financial future.
Changing Your Relationship with Debt
I’m not suggesting everyone should immediately go into massive debt. Strategic borrowing requires knowledge, skill, and the right investor DNA. Not everyone is cut out for real estate investing or other leveraged investment strategies.
What I am suggesting is that you stop believing the lie that you need only your own money to get rich. The path to significant wealth rarely involves just saving your paycheck. It involves understanding how to use financial tools—including debt—to your advantage.
The next time someone tells you all debt is bad, remember: the wealthy don’t avoid debt—they master it. They understand the difference between destructive debt, which drains your wealth, and strategic debt, which builds it.
Are you ready to stop playing by the rules designed to keep you financially average? The first step is changing how you think about debt. It’s not inherently good or bad—it’s a tool. And like any tool, its value depends entirely on how you use it.
