sanjay3) How the Rich Use Debt to Get Richer (While You’re Told to Avoid It)

If you were raised in a normal household, you probably heard the same three words over and over again: “Debt is bad.” Your parents told you to cut up the credit cards. Your teachers told you to save every penny. And society told you that being "debt-free" is the ultimate sign of success. But have you ever noticed something strange? The wealthiest people on the planet—the real estate moguls, the tech billionaires, the private equity titans—they don't avoid debt. They crave it.

While most people are drowning in debt that makes them poor, the rich are using debt as a specialized "fuel" to move 10 times faster than everyone else. Today, I’m going to show you the "Forbidden Math." I’m going to show you exactly how the wealthy use debt to get richer, and why the advice you’ve been following might actually be keeping you stuck.

Welcome back. Money isn't just a currency; it’s a tool. And like a chainsaw, if you don't know how to use it, it’s dangerous. But in the hands of a professional? It’s incredibly productive.

Before we unlock these strategies, hit that like button and subscribe. We’re deep-diving into the mechanics of wealth that they don't teach in school. Ready? Let’s talk about the "Good, the Bad, and the Strategic."

1: Assets vs. Liabilities (The "Direction" of Money)

The biggest mistake people make is thinking all debt is the same. It’s not.

If you borrow money to buy a $60,000 truck, that truck starts losing value the second you drive it off the lot. You’re paying interest on a "melting ice cube." That is Destructive Debt. But when the rich borrow money, they only do it for things that grow or pay them. They borrow to buy an apartment complex that pays rent. They borrow to buy a business that generates profit.

The Human Truth: Poor debt takes money out of your pocket. Strategic debt puts money in it. One is a weight; the other is a ladder.

2: The Power of Leverage (Other People’s Money)

This is where the magic happens. Imagine you have $100,000.

You could buy a $100,000 house in cash. If that house goes up 10% in value, you made $10,000. Not bad, right?

But the wealthy person takes that same $100,000 and uses it as a 20% down payment on a $500,000 property. Now, when that property goes up 10%, they’ve made $50,000.

They used the bank’s money to quintuple their profit. That is "OPM"—Other People’s Money.

The Wealth Shift: Leverage allows you to control a giant asset with a small amount of skin in the game. It’s how you turn a "decent" return into a "life-changing" one.

3: The "Cash Flow" Filter

Most people look at a loan and see a "Bill." The wealthy look at a loan and see a "Spread."

If a loan costs them $2,000 a month in interest and principal, but the asset they bought with that loan brings in $3,000 a month in profit—they don't care about the debt. Why? Because the asset is paying for itself and giving them a $1,000 bonus.

The Human Truth: To the rich, debt isn't a burden if the income is higher than the payment. It’s just the "cost of doing business."

4: The Tax "Secret" (The Buy, Borrow, Die Strategy)

This is something they definitely don't teach in high school. In many parts of the world, when you earn a salary, you get taxed heavily—sometimes up to 40% or 50%.

But do you know what isn't taxed? Debt. If a billionaire has $100 million in stocks, they don't sell the stocks to buy a mansion (because they’d pay massive capital gains taxes). Instead, they take a low-interest loan against their stocks. They get the cash, they pay no taxes on it, and they keep their stocks growing.

The Wealth Shift: Debt is the ultimate tax loophole for those who own assets.

5: Arbitrage (Playing the Spread)

Imagine I offered to lend you $1 million at 4% interest. You’d probably be terrified.

But what if you knew a guaranteed way to invest that money at 8%? You’d take that loan in a heartbeat. You’d pay the 4% back and keep the 4% difference—which is $40,000 of pure profit for doing nothing but moving money around.

The Human Truth: The rich don't spend their own cash because their cash is already busy earning a higher return somewhere else.

6: The "Cheaper Dollar" Theory

Inflation is a nightmare for savers, but it’s a dream for strategic debtors.

Think about it: If you borrow $1 million today, and inflation runs at 5% for the next ten years, that $1 million is much easier to "pay back" in the future because the value of the dollar has dropped.

You’re paying back the bank with "cheap" money, while the property or business you bought has likely doubled in value.

The Wealth Shift: Inflation transfers wealth from the people who save cash to the people who owe debt against assets.

7: The "Discipline" Barrier

Let’s be real for a second. Why are you told to avoid debt? Because for 95% of people, debt is a trap. Most people don't have the discipline to separate "spending" from "investing."

The rich avoid credit cards and high-interest car loans like the plague. They only touch debt when there’s a mathematical certainty of a return.

The Human Truth: You have to earn the right to use debt. If you can’t manage a $500 budget, you shouldn't be looking for a $500,000 loan.

8: Risk Management (The "Safety" Net)

Wealthy people aren't gamblers. They are calculators. They never use debt without a "Plan B." They keep cash reserves, they buy insurance, and they ensure their cash flow can cover the debt even if things go wrong.

The Wealth Shift: Using debt without a reserve is called gambling. Using debt with a reserve is called engineering.

The real secret isn't that "debt is good." The secret is that Financial Education is the only thing that makes debt safe. If you use debt to look rich, you’ll end up poor. If you use debt to buy assets, you’ll end up wealthy beyond your wildest dreams. The choice isn't about the money; it’s about the strategy. Stop fearing the tool and start learning how to use it.

This is a shift in mindset that takes time to sink in. If this video made you look at your mortgage or your loans differently, let me know in the comments. Are you using "Bad Debt" or "Strategic Debt"?

If you want to learn more about the specific assets the rich buy with this debt, make sure you check out my other videos. Hit the like button, subscribe, and remember: Don't just work for money—make the system work for you.

I’ll see you in the next one.