Drowning In Debt

I was rearranging my bookshelf recently and therefore spent way too much time reading bits and pieces that looked interesting, including a tiny handbook written by Paul Clitheroe and extracted from his bestseller “Making Money”.

He doesn’t completely dismiss the idea of debt, but if you’re going to borrow money it is absolutely imperative that repayment of that money coupled with the capacity to meet all interest costs as and when they fall due is critical.

As a matter of principle it is simple common sense that using someone else’s money to make some for yourself can work. I have a client who has a $200,000 line of credit (secured by a mortgage) which was used to invest $200,000. That investment has now grown to $324,000 in value even after meeting all interest costs over a nine year period.

I suppose you could call that “Surfing in debt”.