My goal is to die a billion in debt and have a two billion in assets to show for it. Debt is a “tool” that to many people do not understand how to use. I bought three investment properties for a total of $900K and now three years later they are worth $1200K. I had debt of almost $450K and through the rents on the properties, I have pocketed some profits and paid the debt down to $420K.

Now compare that to no debt. A single property purchased for $450K would have appreciated around $112K. Pretty good. But by taking on debt by $450K is now worth $780K, up over $330K… thank God for debt.

Before college, I earned $20K a year. After getting my accounting degree and CPA certificate, I was earning over $40K within four years of college and several hundred “K” with eight years of college. If I had no taken on debt for college, I would not have retired at age 48 and been well off. The key is what are you “borrowing” for? Are you borrowing to get the skills for a high paying job that you have the underlying abilities to do… or are you borrowing to “consume” a wonderful college experience. Did you look at debt as a tool to make a profit or as a way to pay for college.

I invest in the stock market and often borrow on margin. I pay around 5% interest, I earn around 8% a year these days (more under Trump since the market has done so well). But because of debt at around one third of my portfolio, my leveraged return is almost 10% a year… thank God for debt.

I don’t borrow on credit cards… no one is good enough to profit at those interest rates… I used them for the miles, but not the credit. I do borrow to buy my cars because the interest rates are so low, it better to use my money to invest in the market.

But if you are using debt to “fund” your lifestyle then you are crazy… whatever it takes, you need to avoid that. It is better to live with your parents then to borrow to have an apartment. It is better to buy a used car, then to borrow if you don’t have the cash. Debt is a “tool” and if you don’t use it right, it can hurt you.

What is true is that studies show their are “savers” and “spenders” in the world. If you are a spender, then debt can be like heroin to addict. If you are a saver, chances are you weight the “cost of money” against the profit you expect to make from it. Sadly most Americans are “spenders”.

But complaining about debt is akin to asking the government to run your life. There are only two alternatives to having the right to use debt wrong… first, eliminate borrowing by people that can’t handle it (so if someone wants to devise a test and if people fail they are unable to borrow money, then good luck)… second option is to make you a ward of the state… give them all your money and let them manage your life… but keep their hands off of me… someone’s failure to manage money well is not a reason to force me into that paradigm…

Why are young people willing to incur without a corresponding asset debt. Is that really the failure of American institutions… are they institutional “parents”… Should people not be allowed to borrow until they have “grown up” as measured by some index of their ability to be financially responsible…

I do think part of the blame lies with our “liberal” education system that fails to emphasize the consequences of behaviors… but then again if someone is suggesting that a “liberal” education that ignores preparing people to be responsible adults financially is a problem… then I agree…

There are some people who through no fault of their own are experiencing hard times… but those are not the majority who simply make bad decisions…