One of the biggest differences between people who build wealth and those who stay stuck financially is how they see and use debt. It’s not just about borrowing money—it’s about why you’re borrowing it and what you’re doing with it.
Let’s break this down in a simple way.
The Poverty Game: All Debt Is Bad
When you’re playing the poverty game, the thinking is simple: debt is bad. And in that context, it kind of is. Why? Because you’re usually using debt to buy things that lose value the moment you own them.
Common types of bad debt include:
- Car loans
- Personal loans
- Credit cards
- Buy now, pay later services like Afterpay
All of these fall into the “bad debt” category—because they’re used to buy liabilities. Liabilities are things that don’t make you money. In fact, they often cost you more money over time.
For example, if you buy a car on finance, you might pay thousands in interest. By the time you’ve finished paying it off, the car is worth way less than what you paid. That’s the poverty game in action—using debt to buy things that go down in value.
The Wealth Game: Debt Becomes a Tool
Now let’s flip it.
In the wealth game, debt becomes a tool—something that can actually help you build financial strength. Why? Because instead of buying liabilities, you’re using debt to buy assets.
Good debt is used to purchase:
- Investment properties
- Income-generating assets
- Things that grow in value over time
Assets increase in value. That’s the key difference.
When you use debt to buy property, you’ve now got something that can:
- Grow in value over time
- Earn you income
- Help pay off its own loan
So instead of you working to pay off debt, your asset is doing the heavy lifting. And that’s a massive shift in mindset.
Changing Your Thinking Around Debt
This mental switch is one of the biggest shifts people need to make. It’s going from “I’ll never borrow money” to “I’ll borrow to buy the right things.”
It’s understandable—many of us have been raised to avoid debt at all costs. No credit cards, no personal loans. That kind of thinking might protect you in the short term, but it also keeps you stuck.
If you want to build wealth, you’ll eventually need to use good debt. It’s how people build property portfolios. It’s how they grow their assets. And it’s how they let the market work for them over time.
The trick is using it strategically.
Bridge to the Top
Here’s the takeaway: in the poverty game, avoid debt. In the wealth game, embrace it.
This is how you build your asset base. It’s how you reach financial freedom. It’s how you climb the mountain and stay there.
So don’t be scared of debt—just learn how to use it properly.
