Bad debt, good debt, money, human nature, & a studied philosophy

Recently, I’ve noticed a surge in conversations around debt in the media. As someone who has extensively researched this topic, applied the debt method firsthand, and approached life through a Christ-like lens, I want to share my personal perspective on debt.

If you had asked me two years ago, I would have confidently told you that I’d soon be carrying a significant amount of debt--probably multimillions. I knew that saying this would unsettle my family, given the negative connotations they associate with debt, but I didn’t care because I had done my homework. Their experience with debt was riddled with financial traps, but I knew that not all debt is created equal. The kind of debt I had in mind was entirely different.

Back then, I was focused on leveraging debt to acquire assets. The idea was simple: use debt to purchase an asset, then let that asset pay down the principal of the loan. Sometimes, that asset could even be used as leverage to acquire more assets, creating a cycle where each asset would essentially pay for itself. Over time, with appreciation and growing income from these assets, your financial position would improve dramatically. In one of my earlier writings, I said,

“You would be able to take your money right now and utilize it as if you have 3x that amount.”

I stand by that statement. It’s true--when used correctly, debt can multiply your financial potential.

However, I’ve come to realize that my approach to debt has evolved. My 15-year-old self was fully on board with taking on debt, as long as it was “good” debt. I saw no problem in acquiring large sums because I was confident in my strategy and still remain just as confidently naïve. But now, I take a more measured approach as I’ve grown older. I still believe in the power of debt, but rather than endlessly acquiring it, I now advocate for acquiring debt over a set period, then shifting gears to pay for things in cash while paying down existing debts. Once those debts are cleared, I would take on more debt.

This is, in my opinion, the smartest route for me. It allows me to balance heavy financial growth with long-term stability, something I value more now than I did a few years ago. I’m not claiming this is the “right” way for everyone to manage debt, but it’s the right way for me at this stage of life, and I would like to get everybody’s ideas about it and I know that some people could seriously draw from it as my favorite thing about finances is not black-and-white Beyond a certain level and happily this is the level I’m discussing on.

This is mainly because of three things I saw in James in the bible talks about this exact thing being our arrogance when it comes to life using the example of profit and money: (James 13 - 16 ESV) Number two is the false sense of security and control money gives and how the borrower is a slave or to put lightly servant to the lender.

discussing the arrogance behind certain financial decisions, particularly in business, it becomes clear how dangerous it can be to adopt a mindset where we think we have absolute control over uncertain outcomes. This often happens when individuals or businesses convince themselves that they can take on any amount of debt--no matter the size or type--because they believe it will lead to greater profits down the line.

The reality is that business investments are unpredictable. There are no guarantees that they will yield the returns we expect, let alone generate enough income to cover the lifetime of the debt incurred. Entering into long-term financial commitments, especially those involving multimillion-dollar debts, often stems from a misplaced sense of security. Whether it’s faith in our own abilities, the abilities of others, or the perceived stability of the venture itself, we convince ourselves that profits will continue to roll in. This is where arrogance plays a role--believing that we can commit to such an uncertain future without considering that the ground could shift beneath us at any moment.

It’s a risky proposition to acquire significant amounts of debt, even if your current profits make it seem manageable. Just because you’re generating a monthly profit today doesn’t mean that circumstances won’t change tomorrow. Yet, we often fall into the trap of thinking we can predict and control the future, assuming nothing will go wrong. This mindset can be incredibly dangerous.

I want to clarify that I’m not condemning people who think this way or accusing them of being reckless or irresponsible. Instead, I’m highlighting how arrogant it can be to believe that we can make such long-term commitments without truly acknowledging the uncertainty and lack of control we have over the future. It’s all math and a good amount of cash flow. Makes anything possible but a good amount of cash flow makes anything possible. something I now consider when I go into these kinds of debts.

Once a debt is acquired, the borrower is tied to it, responsible for making monthly payments to maintain their livelihood and lifestyle. This obligation strips away certain freedoms--such as the option to stop working--because, no matter what stage of life you’re in, that debt requires servicing. For younger individuals, taking on a long-term loan might make sense, given the time they have to manage it. But as you get older, say in your 60s, the question becomes more pressing: Will I even be able to manage this business or work enough to pay off this debt?

These kinds of questions--about longevity, capability, and future viability--start to arise as time progresses. The harsh reality is that, unless you find a way to eliminate that debt without fulfilling the obligation, you’re tied to it for life. While you might imagine a future where you can sell off the business, delegate tasks, or even retire comfortably, the burden of debt ensures that you can’t truly stop working until it’s resolved. And if you’re the one most qualified to run the business or if you’re indispensable to its success, a downturn in revenue can lead to a much larger crisis, as profitability declines alongside your assets.

Here’s my approach: I plan to acquire debts over the course of (example) three years, but only for assets that generate income, so these aren’t “bad” debts. They will bring in a healthy cash flow each month. After these three years, instead of continuing to accumulate debt, I’ll shift my focus to paying down the principal on my existing loans. I’ll either pay them off entirely or reduce them significantly over the following three years. Once those debts are eliminated or well-managed, I can then consider reacquiring debt for future ventures.

In some ways, this might seem contradictory. On the one hand, I acknowledge that debt can be a powerful tool that opens up significant opportunities. On the other hand, I’m cautioning against the arrogance that often accompanies debt--this false sense of control we think we have over unpredictable outcomes. My approach is about being strategic and measured: pay off what you owe, then re-enter the market with a clearer financial slate and less risk.

I recognize that in business, risk is inevitable. But there’s a big difference between taking calculated risks and being reckless. Success in business often hinges on our awareness of human nature and the world we live in--factors that, despite our best intentions, we can never fully control.

To end I am no stranger to spending the amount when all you got is that amount. Never forget I’m a business owner at the end of the day. jumping off into the unknown happens on the daily. Risk is our thing. But even people criticize Jamie Dimond for his approach with JP Morgan. I didn’t model what I’m doing after him, but I did take it as I’m not crazy to think of this idea and to implement it into my life, so hedge fund managers I don’t wanna get cooked, but I’m always down for a discussion. Anyway, Never will I think that I know it all, educate me if I made a mistake or didn’t consider something, nevertheless, I feel like this is a more balanced approach to this method of acquiring debt and leveraging your own debts to make yourself more money without submitting entirely to our nature. I can go further into the topic of our nature and why we view money the way we do but it should be common knowledge that money usually ends up distorting reality or it teaches us we can make our own reality real.