Copyright © 2017 by Thomas J. Anderson. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Names: Anderson, Thomas J. (Certified investment management analyst)
Title: The value of debt in building wealth / Thomas J. Anderson.
Description: Hoboken: Wiley, 2017. | Includes bibliographical references and index. | Description based on print version record and CIP data provided by publisher; resource not viewed.
Identifiers: LCCN 2016046388 (print) | LCCN 2016058654 (ebook) | ISBN 9781119049258 (pdf) | ISBN 9781119049265 (epub) | ISBN 9781119049296 (hardback)
Subjects: LCSH: Debt. | Loans, Personal. | Finance, Personal. | BISAC: BUSINESS & ECONOMICS / Personal Finance / Money Management.
Classification: LCC HG3701 (print) | LCC HG3701 .A635 2017 (ebook) | DDC 332.024/02–dc23
LC record available at https://lccn.loc.gov/2016058654
ISBN 9781119049296 (Hardcover)
ISBN 9781119049258 (ePDF)
ISBN 9781119049265 (ePub)
Cover Design: Wiley
Like many Americans, I have a complicated history with debt. In my 20s living in New York City, I spent more than I could afford, borrowing to fill the gap and running up my credit card. I was living above my means, digging myself into a hole of debt with no experience of knowing how hard it would be to climb out.
I couldn't get out of it on my own. Eventually, I met my future wife, and after we married, she pulled me out of my debt with her savings – not a great way to start a marriage.
Debt also helped me build my wealth. In the mid-2000s, when my wife and I bought our house, we took out the largest mortgage we could afford. What's more, the mortgage we took out was interest only. We had no plans to pay off our mortgage and we never have. Today, the house is worth more than twice as much as it was when we bought it (at least according to Zillow). And that money we saved by not paying down any principal on our mortgage, roughly $8,400 a year, or $96,600 by now has gone, in part, toward renovating the house. We have a new kitchen and a finished basement. Without that savings, we also likely wouldn't have felt comfortable maxing out our 401(k)s and contributing to our kids' college savings accounts.
I'm not sure exactly where I got the idea that it was OK to take out a huge mortgage and go for a home loan that – at least at the time – other people were saying was too risky. But I know at least some of the courage to do so came from Tom Anderson and the conversations we have had over the years, often late at night when we should have been talking politics or sports. We are fellow finance geeks.
