Is Being Debt Free a Requirement for Financial Freedom?

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In the financial realm, there’s often talk about the power of being debt free. However, we like to focus on financial freedom instead. Debt is not inherently evil—in fact, it can serve many purposes. 

Those who subscribe to certain financial gurus love to proclaim that being debt-free is the epitome of freedom. But we tend to take the opposite approach: debt can be an incredible tool for wealth building. From a real estate investing approach, not all debt is bad debt. 

We don’t want to waste time focusing on paying down low interest debt when we could instead use that money to build wealth. Using credit to purchase real estate can be incredibly beneficial. For us, all of our real estate investments accrue a minimum of 10-12% return on investment. It's all about determining which rates are higher.

For example, if you have a  credit card with 22% interest, you will likely want to consider paying that off as quickly as possible. But if you’ve purchased a property with a HELOC that has a 4% interest rate, and your rental is making more than 4% ROI, you’re still making money. 

Not to mention, in this scenario, your tenant is paying off your debt. It all comes down to evaluating these products. Long story short, there is never a one-size-fits-all approach to finances. Just because a guru preaches something, doesn't mean it's right for you. You have to assess financial products, and determine if they are worth it to help you meet your goals.

For our family, being debt free does not equal being debt free. For us, achieving financial freedom means having all of our expenses covered, regardless of a paycheck. That's why we created the Freedom Cheat Sheet. It's a free PDF you can use to calculate how much passive income you'd need every month to cover your expenses, whether you have debt or not!

 In the financial realm, there’s often talk about the power of being debt free. However, we like to focus on financial freedom instead. Debt is not inherently evil—in fact, it can serve many purposes.