Do You Need Debt to Reach FIRE? How to Use Leverage to Build Wealth

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 12 November 2024

⏱️ 58 minutes

🔗️ Recording | iTunes | RSS

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Summary

Is paying off debt or investing (and potentially using more debt) the best way to reach FIRE? The average American has $104,215 in mortgages, student loans, credit cards, and other debt. Where do YOU stand? If the end goal is FIRE, you need a game plan for your debt, in which case this episode is for you! Welcome back to the BiggerPockets Money podcast! Not all debt is bad. When used responsibly, it can be a powerful tool that allows you to buy appreciating assets and hedge against inflation. Today, guest co-hosts Kyle Mast and Amanda Wolfe join our panel to share their thoughts on debt. We’ll share how much debt we each have (ranging from zero to millions), how our philosophies on debt have evolved, and how debt can ultimately help you reach FIRE. But that’s not all. We’ll also discuss the types of bad debt that could derail your FIRE journey and the investments you don’t want to be stuck with during an economic downturn. We’ll even get into the most important financial protection against debt risk—savings and reserves—and why these funds should grow proportionally to your debt! In This Episode We Cover Paying off debt versus investing (and which strategy is best for FIRE) Why well-leveraged debt is one of the best long-term hedges against inflation The types of debt that could propel you toward an early retirement “Bad” real estate investments you don’t want to be holding during a market downturn The most irresponsible uses of debt (that you should avoid at all costs!) Why you should always grow your savings and reserves in tandem with debt How much debt WE have (and how our opinions on debt have changed) And So Much More! Links from the Show Mindy on BiggerPockets Scott on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Join BiggerPockets for FREE Email Mindy: [email protected] Email Scott: [email protected] BiggerPockets Money Facebook Group Buy Scott’s Book “Set for Life” Find Investor-Friendly Lenders Pay Off Student Loans or Invest in Real Estate: Which Makes You Wealthier? Connect with Kyle Amanda’s Website (00:00) Intro (01:23) How Much Debt WE Have (06:15) Paying Off Debt vs. Investing (13:46) Starting Your FIRE Journey (21:51) Debt Strategy 101 (31:38) “Unreasonable” Debt (38:23) Bad Real Estate Investments (46:48) Key Takeaways (50:18) Connect with Kyle and Amanda! Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-580 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	It goes without saying that Americans are in debt.
0:03.0	The average debt in America is $104,215, which includes mortgages, car loans, credit card
0:09.7	statements, and student loans.
0:11.9	Debt peaks at age 40 to 49.
0:15.5	And the largest percentages of the average consumer debt balance are mortgages.
0:20.7	And I think a lot of people on the
0:21.8	fire movement ask themselves, what should I do with this debt? And what debt should I be taking on?
0:27.5	We're going to cover all of that in today's episode so you can avoid the common pitfalls getting in your way.
0:33.5	Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen, and with me as
0:38.6	always is my quarter panel co-host, Scott Trench. Thanks, Mindy, great to be here together.
0:43.5	You and I make 50 Cent. Did you know, actually, 50 Cent has some great life and financial
0:48.9	wisdom to impart on folks. I think there's two quotes in particular that stand out there. One is if you die
0:55.6	in an elevator, make sure you press the up button. And perhaps the more relevant piece of advice
1:00.6	that 50 cent has is get rich or die try-in. So go check him out for more financial wisdom like that.
1:06.5	You can find his albums on Spotify and anywhere music is sold. All right.
1:11.1	With that, Bigger Pockets has the goal of creating one million millionaires.
1:13.7	You're in the right place if you want to get your financial house in order because we truly
1:17.0	believe financial freedom is attainable for everyone no matter when or where you're starting,
1:20.5	whether that's with 50 cent or with several million dollars in debt.
1:25.6	Today, we're so excited to be joined by Amanda Wolfe and Kyle
1:28.8	Mast, who I'm sure everyone is familiar with. If you have been listening to the Bigger Pockets
1:32.7	Money podcast for some time, it's great to see both of you guys today. Great to be here.
	...

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