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How the Wealthy Use Debt (Vs. the Middle Class)


This week’s question from my portal “The Neagle Code: Directions for Life” comes from someone who wishes to remain anonymous.

Whenever I want to do something, I have a tendency to look at the budget, see what money I have, and ask, “Can I afford this right now?” If I can’t, then I’ll turn to debt—a credit card, bank loan, etc.

Over the last couple of months, I’ve started to see our cashflow go down. I found myself getting more excited about using debt than going out and creating the wealth to get what I want. But it feels like that’s “letting myself off the hook.”

Do you have any advice on how to reverse this? It’s like the law of polarity—instead of going into debt to do the things I want, how do I create the wealth and income to pay for those things?

First of all, let’s understand that the correct use of debt can move us forward to the goal.

The question shouldn’t be, “Can I afford this now?” The question should be, “Do I need this right now?” That’s not based on the money in your account—it’s based on, “Do I need this in my business right now?” That’s what I would look at first. It’s either a yes or a no question.

If yes, ask yourself—“If I need it, what’s the best way for me to pay for this? If I use debt, I free up incoming cash. So it gives me more options.”

Ask yourself:

  • Do I need to have cash freed up?
  • What is my financial situation looking like?
  • Is this a tight time where I really don’t want to use all the cash that’s coming in?

Not using the incoming cash might be the best strategy. It’s a strategy to be used to win.

The other thing is… the more money you make, the more you should be making your money work for you.

Your money should out-work whatever the cost of your business is.

If you need something in business, look at how you’re going to pay for it, then manage it from there.

If you talk to really successful people, almost all of them will tell you, “Don’t use your money. Your money should be working for you. Use somebody else’s money.”

Because if you’re smart, you can make more on your money than what it’s costing you to use someone else’s.

As far as “getting excited about using debt”—I think it’s fine that you’re getting excited about it. It allows you to expand your resources. Because it’s a tool—it was created to do that.

The problem is, most people think about debt, not in terms of using it to build their business or increase their income—they think about debt as a necessity. They think, “I don’t have any money. So I have to go into debt to pay for something.”

That’s how the middle class uses debt. That’s not how wealthy people use debt.

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