You must get into as much debt as possible!
Yes, you heard it right! You must leverage other peoples money to get into as much debt as possible.
We have been conditioned that debt is a bad thing, and yes some debt certainly is a bad thing.
If you haven’t bought any true assets, and you’ve borrowed money to purchase a boat, a caravan or a brand new car that you really didn’t need this is bad debt and isn’t a good thing.
A true asset provides you with income and appreciates in value over time.
Now back to leveraging good debt.
You’re probably thinking that your owner occupied property is good debt.
In reality this is still bad debt, it’s not generating you income and it’s actually costing you money every week and all expenses are not a tax deduction due to not creating income.
Focusing solely on paying down your owner occupied debt is not going to help you build wealth.
Sure into retirement you’ll own your home outright but this will still leave you relying on the pension into retirement.
This means you must get your hands on as much good debt as possible.
Leveraging other people’s money(the banks) to purchase the largest wealth base you can is key.
You are increasing your wealth base through good debt that is generating income and growing in value over time.
But what about all that debt?
Inflation will devalue your debt over time, that debt level will be worth less tomorrow then it is today.
The exactly the same as your cash sitting in the bank will be worth less tomorrow than it is today.
Again another reason why you need to use this cash as a deposit and leverage other peoples money to purchase income generating assets.
Play the game and stop losing to inflation.
Now these assets that you purchase if done correctly will appreciate strongly in value over time.
What that means is that even holding this debt as interest only and not paying this down will still increase your overall loan to valuation ratio.
This will decrease your risk level over time as your properties increase in value.
The banks will view this the same way and overtime you’ll be able to obtain interest rate discounts, only improving your cashflow over time in combination with rental income growth on your income generating assets.
If you’re truly committed to improving your financial future you must get comfortable with good debt.
Good debt will catapult you forward.
Bad debt will catapult you backwards.
The choice is yours.