The Value of Debt in Building Wealth: Creating Your Glide Path to a Healthy Financial L.I.F.E.

by Thomas J. Anderson

The book of financial wisdom that your future self will thank you for reading For many adults, 'debt' is a four-letter word--something that should be avoided but is all too often unavoidable. In The Value of Debt in Building Wealth, bestselling author Thomas J. Anderson encourages you to rethink that. You'll walk away from this book with an understanding of how you can use debt wisely to secure the financial future you envision for yourself and your family. Student loans, mortgages, lines of credit, and other forms of debt are all discussed in detail, with a focus on smart planning for those who are accumulating assets--and debt--now. Should you rent or buy? How important is liquidity? What is good versus bad debt? How much debt should you have? What debt-to-income and debt-to-asset ratios should you aim for? Fixed debt or floating debt? What's the best way of saving for college and retirement? These are big questions that deserve thorough answers because the choices you make now could influence the course of your life. This thought-provoking book will open your eyes to savvy financial strategies for achieving your goals faster and with healthier bank accounts. Explore strategies for smart debt management, explained by one of the nation's top financial advisors Gain an understanding of investment basics and key financial concepts you'll need to achieve your long-term goals Understand the risks of having debt and the potential risks of being debt-free Make financial decisions now that will maximize your wealth, freedom, and opportunity later This book is not about buying things you cannot afford. It is about liquidity, flexibility and optimizing your personal balance sheet. The Value of Debt in Building Wealth is full of ideas you can apply to your own situation--no matter what your current asset level. Read this book today and thank yourself later.

Genres: Finance, Personal Finance, Business, Audiobook, Economics, Nonfiction

252 pages, Kindle Edition

First published February 29, 2016

Reviews

[SeaRob · Rating 5 out of 5]

The author provides helpful ratios (worksheets) for income/assets/debts at four stages of financial life. He also recommends that individuals and families conscientiously use debt as a financial tool rather than focus on paying it off quickly.

Key Points:
* Avoid hazardous debt (non-working or high interest rate)
* Set and work towards specific financial goals directed by specific cash:income and later asset:debt ratios as you reach financial milestones
* Leverage low-cost working debt (student loans, house, etc.) to build cash reserves and long-term savings
* Consider treating debt similar to the way a corporation would (avoid fixed payments, interest-only)

An eye-opening read and well worth the time.

[Mirek Jasinski · Rating 1 out of 5]

While there might be valuable insights in this book (e.g. risk from overallocation of US portfolios to just two asset classes), they are obfuscated by the boring presentation. What can pass for lecture notes for a one-day airport seminar, does not deserve to be a book. I was misled by the title and expected something more clever from an author with his book-cover credentials.

[Ricardo Hernández]

A book that redefines debt as an essential instrument to build wealth. Through practical examples and interesting ideas, the author makes a compelling case to carefully think about how to establish long term strategies to capitalize debt through all the stages of financial life. Recommended for readers between 21-34 years, for all other it would be too early or too late to apply these concepts.

[Fardin Ab · Rating 3 out of 5]

This book conveys a very important financial lesson that bears important positive consequences for the reader. I learnt a lot from the book.

However, the book gets very repetitive most chapters repeat the content of previous chapters. I skipped more than half of the book.

[Nicole Dieker · Rating 5 out of 5]

This is the best financial book I've read in a long time. I wrote a longer review at The Billfold: https://thebillfold.com/the-value-of-...

Also, I got a comp copy from the author. But that didn't sway my review. I get comp copies of financial books all the time. This one blew my mind.

[MNBooks · Rating 4 out of 5]

I really enjoyed this book and did all the calculations suggested in the LIFE path. This book provides extremely helpful insight into your financial situation and showed where you have opportunities to do things differently.

I'm docking a star because the explanation of saving for kids' college was completely insufficient. The author suggests saving $50K if your child may go to a private school. Is he aware that many colleges already cost over $50k per year? I wasn't sure how to handle college savings in my calculations since I do consider that to be separate money :).

Overall, this was worthwhile to read and I finished it in just a few days. Despite all the new information, we still decided we will try to pay our mortgage off early--so ultimately this didn't grossly change our plans but did confirm we are basically on track with our finances. We just need to keep doing what we're doing and there was no new magic recipe for us :).

[Harrison Satcher · Rating 2 out of 5]

I felt this was not a great use of time/money after reading The Value of Debt: How to Manage Both Sides of a Balance Sheet to Maximize Wealth. If you're reasonably thoughtful you can easily apply the learnings from the original to earlier stages in a personal finance journey. This book just fleshed out what I already had gathered from The Value of Debt and made several predictions which look like they will not pan out.
Definitely pick up Value of Debt, though, interesting stuff to consider in there, even if you aren't going to apply it to your personal finances.

[Clare · Rating 5 out of 5]

I am a professional financial advisor and I found the wisdom of this book to be terrific. I also appreciate that much of the advice depends on an individual’s unique situation, liquidity needs, family/career, and interest rates, etc. As I review this book in 2018, we are in a rising interest rate environment and that would have a big impact on the choices that my clients should make. I appreciate that the author provides lots of equations so that we can adapt his information for different economic environments over time.

[Matt Backes · Rating 4 out of 5]

I actually found this one of the better personal finance books I've read in awhile. I think this is mostly due to it's refreshing perspective about how debt can be leveraged in your finances, and how to balance it with saving for investing and emergencies. The can basically be read as the antithesis of Dave Ramsey's view of personal finance, and in fact, I read this simultaneously with Total Money Makeover to be able to handle conflicting view points.

[Nedim · Rating 4 out of 5]

I find the idea insightful even though it is not applicable for me bacuse I do not live in the US. But to be honest, the style is very boring and you should know that this comment comes from an economics graduate! If you are interested in the idea, however cannot go on reading, just skim and do not bother to read all pages.

[Michael · Rating 3 out of 5]

Interesting book. He definitely is able to defend his positions. One has to be comfortable with debt to use this method. Especially enlightening for those starting saving for retirement later in life.

[Sheng-Min Huang · Rating 4 out of 5]

在現在低利率的時代，如何靠舉債致富，需要辨別債有分
1. 壓榨性債務
2. 功能性債務
3. 致富性債務
利用後續兩個債務來達到邁向 LIFE 的平衡航道

債務的比例要越來越低，方法是增加資產，而不是還債
淨財富 2~5倍，債務建議約 40%；淨財富 5~30倍，債務建議約 25%

心得：
債務觀點不錯，也給出大部分人可以依循的方法，不過內容含金量不夠，還不足以寫到一本書的內容。
理財新手看應該會收獲不錯，但已知用債務來投資的人來說就沒有亮點了。

[Brian · Rating 2 out of 5]

I like the premise because it supports what I'm doing, but I didn't "finish" because the sh-word came up a couple times, so I couldn't recommend it to anyone.

[Patrick O · Rating 3 out of 5]

Not exactly what I thought it would be. It talked more about mortgages than margin investing (con), but did emphasize the importance of liquidity and provided insight on that (pro).

[Emily · Rating 3 out of 5]

Super boring.

[Quan Bao Truong · Rating 4 out of 5]

A very good and easy to understand book about the importance of debt in building wealth.

[Matei Suica · Rating 3 out of 5]

Has some good ideas but mainly applies to the us and brings little about how general economical systems work and use debt

[Gulo · Rating 3 out of 5]

Written like a college lecture or financial seminar, this book is relatively short and to the point with clear procedures for those with an intermediate to advanced understanding of personal finance. The thesis is that debt can be a tool to grow wealth faster than paying off all debts as soon as possible or even strictly investing elsewhere - depending on the situation and the kind of debt. Some may be turned away by the dry delivery and emphasis on crunching the numbers or even the thesis itself.

[Alexander Eckinger · Rating 5 out of 5]

Good. Rigorous and well thought out.

[Korey · Rating 4 out of 5]

Opened my eyes on taking on more debt. But some of the repeated assumptions are flawed...and it's laughable that he made a big bet that the market would return flat into one of the biggest bull runs of all time.

[Carly · Rating 4 out of 5]

How do you even rate a financial book? This book was easy and quick to read and generally understandable. I've recommended it to people. All the information presented made sense. So I guess it was good.

I always think that I have no idea what I'm doing with money, but I was writing an email about this book to someone and realized I had an essay worth of thing to say with opinions on how they apply to my personal situation. I am my biggest under-estimator and at least part of what I learned from this book is that I should be more confident about my knowledge.

I borrowed the ebook from the library, and I think a physical book would have been better. I had to keep making the font size smaller to get the charts to display all the columns on the page. I also took it for granted that all the math in the book was correct, but if I had a paper copy I would have done the math in the margins to better understand it.

A final note, almost half the book is appendixes at the end, but you should definitely read them. They have a lot of interesting information not contained elsewhere in the book.

[Joni]

Good points, very repetitive

The book's basic point is capture the spread. I felt the content was very repetitive. You can read thru the LIFE framework and skip to the appendix, which had some good stuff.

[Ellen]

Billfold rec.