Why I Thought Debt Was The Best Thing Ever
I am going to tell you why I thought debt was the best thing ever. There were a few not ideal circumstances in my past that drove me into heavy debt.
Growing up, money and debt were never mentioned in my household. I watched as both my parents worked two jobs consistently. They did the best they could until I moved out on my own at 16 years old.
My father believed in the power of real estate. He said that real state was the best way to build wealth. My mother, on the other hand, was not on board with buying more properties. They house hacked a duplex for the entirety of their marriage, until their divorce.
My Story with Debt
Getting my first credit card, had me so afraid that I hid it under my mattress for months. The fear of not knowing how to safely use credit and being afraid of the numbers led me to not use the credit card for almost a year.
At some point, I got into the balancing act of making minimum payments. By living paycheck to paycheck, I understood what the majority of Americans understood at some point in their lives.
What I Learned From The Majority
I had broken through and made it to the lower middle class and surpassed my parents with only one job, yay! I must spend every penny I have on cool gadgets to show everyone my success, (very smart). Paycheck to paycheck is fine as long, as I have some of my credit limits available to meet with spending goals. If I did get into an emergency situation then I’d just defer to my credit cards just like the majority of people.
Did Anything Go Wrong With The Plan
Of course, things went wrong but I really didn’t have anyone I could talk to about money. When things came up I handled them to the best of my knowledge.
Need a new TV? Since we have no money for it, let’s put it on the credit card for now! Since we know we can always shift our money in a way to make the minimum payments. Of course, once I get some overtime, we’ll clear out whatever’s left on the credit card.
My First Awakening With Debt
My first awakening happened in the middle of 2014 when I realized I had nothing to pass on to my kids if I died that day.
I needed to be the first in my family to reach actual retirement and actually retire. I’d hate to have to be forced to quit because of old age or because of a debilitating disease.
I only knew of two people in my immediate circle that had actually retired. One of them lived a modest lifestyle and looked fulfilled as far as I could tell. The second person never even mention money but lived in a state of despair because of a lack of funds.
Somehow, while searching for a way to retire someday and a way to leave a legacy for my children, I came across a website called Bigger Pockets. Eventually, the Bigger Pockets podcast led me to read “Rich Dad Poor Dad,” which flipped my whole world on its head.
The first concept that stuck with me throughout the whole book was “If I had to choose between being poor and being rich I’d rather be rich.” The second was that “Most People choose to be poor by not even trying.’’
Those two quotes proved to me that even though I came from a poor background, I didn’t have to stay there. I didn’t know anyone that was rich in any of my circles. Except for Rich Dad of course.
After commuting for 2.5 hours per day for months while listening to the Bigger Pockets podcast, the master plan was starting to formulate in my head. That’s the reason that I went into 900k of debt in 4 years
Using Debt As The Master Plan
My new friends Joshua Dorkin, Brendon Turner, and Rich Dad led me to the conclusion that I needed to build assets at any cost. Up to this point in my life, most of my endeavors had failed.
Ventures like going to college and failing out, twice. I also walked away from a house that I could not sell for two years during the great recession. I also had to file for bankruptcy in 2011. We can talk about those experiences in some future posts.
As far as I knew, assets equaled real estate and that was it. You start off by buying as much real estate as you can, using as much debt as the bank will give to you. Once you have “ASSETS” you do whatever it takes to keep those assets, no matter what. During the next 30 years, I will pay off the mortgage with the rental income.
With the mortgage paid off, I can retire and start living the life that I deserve. I can also leave a legacy for my children. Not a bad plan if I do say so myself, but it was full of holes. Looking back now that’s where my debt journey really began.