EP307: Financially Free or Debt Free?
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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.
On today’s show, Natali and I are sitting down to discuss why being financially free is more empowering than being debt free. We’ll talk about the benefits of being appropriately leveraged, and how to determine what types of debt are important to eradicate. You’ll learn about debt as a form of asset protection, and how to think of your finances as a balancing act.
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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. You have to assess financial products, and determine if they are worth it to help you meet your goals.
If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- How can debt serve as asset protection?
- Where does the word “loophole” originate from?
- How can you think of your debt as a teeter totter?
- How can you protect your primary residence?
- And much more!
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