Smart debt means borrowing at low rates to invest in higher returns. Taylor Swift mortgages property despite being a billionaire because a 5% loan beats keeping cash idle. Credit card debt at 20% to chase small gains is the opposite move.
April 2024
Over $1 billion
5% (mortgage)
10% or more
Around 20%
Why does Taylor Swift get a mortgage or take on debt when she's worth over $1 billion? She could easily pay cash and own her home outright, but that wouldn't be smart. This is the difference between dumb debt and smart debt. And if you don't understand this concept, you'll never be wealthy. Smart debt is when you're able to borrow money at a low rate. Like a 5% mortgage, the return on the debt could be 10% or more. So you're paying 5% but earning 10% sounds like smart move, right? But if you're using a credit card to invest, you're likely paying 20% only to get a 10% return. That's dumb debt. Celebrities are constantly getting low interest loans in order to invest in higher returning opportunities. Follow if you want to start using smart debt to become financially free.
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