Wealthy people pay off debt with investment profits and cash flow, not just paychecks. The speaker outlines two phases: consolidation, where you cut liabilities, then growth, where expanding assets lets you eliminate debt in chunks instead of over 30 years.
One of the things I learnt along my wealth creation journey is that profits are better than wages. Just paying down debt via principal interest or by monthly payments can be such a slow way to eliminate debt, and quite frankly, it's playing by the bank's rules. It's not playing by a wealthy person's set of rules. What the wealthy do when it comes to eliminating debt, they allow their assets, they allow their investment cash flow, they allow their profits to be able to eliminate debt along the way. So when we're thinking about eliminating debt within the portfolio, we've got to start to understand, well, what phase of the wealth creation journey are we at right now? Are we at the consolidation phase where we need to start eliminating debt? Or are we at the phase where our outcome is to grow our asset base and grow our income streams so that we can then use those assets, use those incomes, use our profits to pay down that debt in big chunks at a time? Much faster way of eliminating debt than simply paying like a principal and interest over 30-odd years.
