Amazingly, it’s possible (in fact easy) to build net worth by taking on debt! This may sound counterintuitive, but it is a mathematically proven fact that debt, used properly, can have a huge impact in building net worth. Everybody knows that in order to grow their retirement savings, they need to save money, preferably on a regular basis. People typically save for retirement in some sort of retirement vehicle such as a 401(k) or an IRA. Conventional wisdom teaches that putting away money into savings and allowing it to grow over time results in a large retirement nest egg.
While this is mostly true it’s only a part of the retirement puzzle. It’s not savings that is the most important aspect of generating a secure retirement, it’s net worth. Net worth is simply assets minus liabilities. For most people, it is the sum of their financial assets minus their debts and other liabilities. The reason that net worth is so important in terms of financial security in retirement is that a relatively large retirement nest egg alone does not guarantee a financially secure retirement.
Case in point: John , a recent retiree, has $300,000 in retirement savings. He also has $200,000 outstanding on his mortgage and $45,000 in other debts including credit card debts. While John’s retirement savings are substantial, he will have less on a net basis after taxes as he withdraws those retirement savings. Because he has relatively large outstanding debts, including his mortgage, his monthly expenses will be more than he has available income after retirement. It is easy to understand that John will not have a carefree retirement, as his net worth has been reduced by the amount of his outstanding debts.
Unfortunately, many people when entering retirement age are carrying entirely too much debt. With the high cost of living throughout the United States, it’s easy to see why this is so.
However, there is a little-known way to use short-term debt to grow net worth that absolutely guarantees virtually anyone a rich, secure retirement! The Mortgage Magic System makes this information available in a simple financial planning tool that provides instructions for using debt to grow net worth, and a clear, mathematically proven system roadmap that virtually anyone can follow.