The worst way to get introduced to debt is through student loans or mortgages. And unfortunately, this is how most people get introduced to debt today. How you get introduced to debt is a very important factor in growing rich. Debt and credit are necessary tools in the game of wealth. And if you hit off with debt on the wrong foot, life can become very difficult.

Why the Rich Borrow Money

The rich borrow money because debt is cheap. Or I should say, debt has been cheap for the last 2 decades. Interest rates have been zero or even negative in some places. Banks were almost giving money away. But not to everybody.

More money was given to those who already have it. It became very easy for the rich to get richer. This is why getting richer is never a problem. Getting Rich is the hurdle.

It is easier to make $2 billion if you already have $1 billion. But it is hard to make $1 million if you only have $1000. It is the way the system is designed. And if you think there is some person who designed it this way to make things difficult for average people, you are mistaken.

This is what life gravitated towards. If you start the whole system all over again with everything fair and easy, it will turn into what it is now in no time. Human beings are way more predictable than they think.

If you have money, it is easier for you to borrow money. And if borrowing money is cheap, why spend your money (that is in appreciable hard assets), when you can borrow against it? This is why the rich borrow.

Get into Debt Before You Need To

The secret to success in the wealth game is to understand the game. And the secret to understanding the game is to get in the game early. You have to know what game you are playing. Otherwise, you’ll be left with the short end of the stick.

This is why your first introduction to debt must not be out of need. Definitely not a student loan. If it is a mortgage, then it has to be an investment property. Never let your first encounter be based on a personal need.

You don’t really understand it until you have gone through it. As you go through the debt system, you can begin to think of ways to get creative.

It is worth it to pay that interest on a small amount (to you) just to see how it works out. This is how you learn how money works in a jurisdiction. And debt is money.

Let’s say you have $20k, you can take a debt of $2k. Just to go through the process and see how it really works. Make all kinds of requests just to see the response you will get. It also lets you know how long the processes take.

So, if you are moving to another country, you should test their credit/debt system. And in the process, make friends with the bankers. Don’t wait to be in a bind before you look to debt.

If you are looking into debt as your way out of a financial bind, you are already in a bad spot. And you can be certain that you will get the worst possible terms.

But if you had played around with the system and established a track record, you can walk into the bank (with a poker face) when in a financial bind and still get very good terms. A businessman once said he hunts down new banks to become their first customer and take out a loan as large as they can give. But the secret is that he doesn’t do it out of need.

Conclusion

Rich people borrow money because money is cheap. Banks give rich people money because the rich have the assets. The rich get richer on borrowed money.

The best way to get into this game is to get familiar with debt leveraging. It is highly uncomfortable for anyone who has never gone through the process before. So, taking debt money when you don’t need it, just to understand (and get familiar) with the process is worth it in every way.

Know the game you want to play. And play smart.

Cheers!