Debt as a Tool: How Leverage Actually Builds Wealth

Monthly Money Man on September 4, 2026

Over the last few weeks, we’ve climbed through this debt series together. You learned to spot when debt crosses from tool to trouble. You learned the difference between good debt and bad debt. Today we finish the climb by looking at something most people never get taught: how debt, used on purpose, actually builds wealth. There’s a word for that. It’s called leverage.

I sat across from a lot of families in my advisor years who flinched at the word “debt” — or “leverage,” once they learned it meant the same thing. That’s not an accident. A lot of us were taught, sometimes loudly, that all debt is dangerous. But debt used to grow your own wealth has a name, and it isn’t a bad word. It’s leverage.

Once you understand it, you’ll never look at a mortgage statement the same way again.

What Leverage Actually Means

Leverage is borrowing money to acquire something that grows in value or produces income, using a relatively small amount of your own cash to control something bigger.

Here’s the plain-English version: you put down $40,000 on a $400,000 house. The bank puts up the other $360,000. If that house appreciates 3% next year, you don’t just gain 3% on your $40,000 — you gain 3% on the full $400,000. That’s leverage working for you.

The same idea shows up in a business loan that lets someone buy equipment that pays for itself in revenue, or a student loan that unlocks a career earning far more than the debt cost. In every case, the debt is a tool that lets you control something bigger than your cash alone could buy.

Where You’ve Probably Already Used It

You don’t need to be an investor to have used leverage. Most Ascenders already have.

  • Your mortgage. If your home has appreciated since you bought it, leverage already worked in your favor — even if you never thought of it that way.
  • A business loan for equipment or inventory that generates more revenue than it costs. The debt pays for itself and then some.
  • Student loans tied to a real career outcome. If the degree led to income that outpaces the loan, that’s leverage doing its job.

Notice the pattern. In every good example, the debt is attached to something that either grows in value or grows your income. That’s the test.

Debt Isn’t Bad Every Time — Here’s the Proof

I recently came across a number that surprised even me: roughly 1 in 4 homeowners with a mortgage rate around 3% are paying extra toward that mortgage every month.

I get the instinct. Money isn’t just math — it’s emotional. Debt especially carries weight that a spreadsheet can’t capture. Paying it off feels like relief, like control, like proof you’re doing the right thing. That feeling is real, and it matters. But mathematically, paying extra on a 3% mortgage is often the wrong move.

If your mortgage is costing you 3% and the stock market has historically returned 10% or more over time, every extra dollar you send to the mortgage is a dollar that could have earned the spread — the difference between what you’re paying and what you could be earning.

That’s not a guarantee, and the market doesn’t move in a straight line. But it’s the clearest example of why debt isn’t automatically the enemy. A cheap mortgage sitting quietly in the background while your money grows elsewhere is leverage doing exactly what it’s supposed to do.

So Where’s the Line?

A few weeks ago, we talked about a 10% threshold as a rough way to flag debt that’s becoming a problem. I want to be careful with that number today, because it’s a guide, not a rulebook. A 9% loan isn’t automatically fine, and an 11% loan isn’t automatically a disaster. The real question is bigger than any single percentage:

Is this debt helping you climb toward your summit — or is it just weighing down your pack?

A mortgage on a home you can afford, at a rate lower than what your money could earn elsewhere, is leverage. A loan for something that doesn’t grow, doesn’t produce income, and stretches your monthly budget thin is a liability wearing a leverage costume. The rate matters. But what the debt is doing for you matters more.

Now What?

You don’t need to take out new debt this week. You just need to see the debt you already have with clearer eyes.

  1. Pull out your list from the last two weeks — the one where you labeled each debt good, bad, or straining.
  2. For every “good” debt, ask: is this attached to something growing? A home, an education, an income-producing asset.
  3. If yes, you’re not carrying debt. You’re using leverage. Let it keep working quietly in the background.
  4. If a “good” debt isn’t actually attached to growth, relabel it honestly. That’s useful information, not a failure.

That’s the whole series in one sentence: debt without the purpose of helping you grow toward your summit is just weight. Debt with a purpose is a tool.

This article is for educational purposes only and does not constitute personalized financial advice. Please consult a licensed financial professional regarding your specific situation.

Good Debt vs. Bad Debt: Not All Borrowing Is Equal

Monthly Money Man on August 28, 2026

A few weeks ago we talked about the 10% line, and last week about picking your payoff method and actually sticking to it. If you’ve been doing that work, good — you’re climbing. But I want to slow down for a second, because there’s a piece of debt talk that gets oversimplified almost everywhere else you’ll read about it.

You’ll hear a lot of finance voices tell you all debt is bad. Pay it all off, avoid it forever, never touch it again. I understand the appeal of that message — it’s simple, and simple sells. But it’s not true, and treating it as true can actually cost you money and opportunity. In fact, a lot of the wealth-building you see around you — the rental property down the street, the small business that grew into something real — was built using debt as a tool, not avoided because of it.

The real question isn’t “debt: yes or no.” It’s good debt vs. bad debt — understanding what each dollar you owe is actually doing for you.

What Makes Debt “Bad”

Bad debt has three things in common: it’s used to buy something that loses value, it usually carries a high interest rate, and it doesn’t build anything that pays you back over time.

Credit card debt on things you’ve already consumed — vacations, restaurants, clothes you’ve since donated — is the clearest example. So are most personal loans taken out to cover a shortfall rather than an investment. The car itself isn’t inherently bad debt, but a car loan on a vehicle that’s depreciating fast, at a rate that eats into your monthly cash flow, edges toward bad territory the more it strains your budget.

The test I’d give any client: is this debt working for you, or are you just working to pay for it?

What Makes Debt “Good”

Good debt has the opposite profile: it’s usually lower interest, and it’s attached to something that either grows in value or grows your income over time.

A mortgage on a home you can comfortably afford is the classic example — you’re borrowing at a fixed rate to hold an asset that’s historically appreciated, and every payment builds equity that’s yours. Certain education debt fits here too, when it leads to a real increase in earning power, though this one deserves a careful eye since not all degrees pay off equally. Business debt used to grow a company that’s already generating revenue is another example — you’re borrowing against future income you’re confident will materialize.

The common thread: good debt is a tool you picked up on purpose, not a hole you fell into.

The Line Isn’t Always Where You Think

Here’s where I’ll push back on the “good debt” label a little, because it’s not a free pass. A 3% mortgage payment that’s still eating 45% of your take-home pay is straining your climb even if the interest rate looks great on paper. Good debt can still be too much debt. The category tells you how the debt is structured — it doesn’t tell you whether you can afford it.

So the real framework is two questions, not one:

  1. Is this debt attached to something that grows in value or income? (Good debt vs. bad debt)
  2. Is the payment sized so it doesn’t choke my monthly cash flow? (Affordable vs. not, regardless of category)

A debt needs a yes on both to actually be helping you climb.

What This Means for Your Next Move

If you’re carrying a mix — which most people are — here’s the order I’d want you thinking in:

First, attack anything that fails both questions: high rate, depreciating purchase, straining your budget. That’s your credit card balance, most likely. This is exactly what the avalanche and snowball methods from a couple weeks back are built forif you haven’t run your numbers yet, the debt payoff calculator will lay out your fastest path.

Second, leave good debt alone if it’s affordable. Don’t rush to pay off a 4% mortgage early at the expense of your emergency fund or retirement contributions. That instinct feels responsible, but it’s often not the highest-value move you can make with that money.

Third, if a “good” debt is straining your cash flow anyway, treat it like a budget problem, not a debt problem. That might mean a smaller car next time, not panic-paying down the loan you already have.

This Week’s Climb

You don’t need to restructure anything today. You just need clarity on what you’re actually carrying.

  1. List your debts again — you may already have this from the payoff plan work.
  2. Label each one: good, bad, or “good but straining my budget.”
  3. Circle the bad debt. That’s still your priority for extra payments.
  4. For anything labeled “good but straining,” ask honestly if the real fix is the debt or the monthly budget around it.
  5. Leave the truly good, truly affordable debt alone. Let it keep doing its job quietly in the background.

Not all debt is a mountain you need to tear down. Some of it is part of the trail. Knowing the difference is what lets you climb with a clear head instead of blanket fear.

See you at the top.

This article is for educational purposes only and does not constitute personalized financial advice. Please consult a licensed financial professional regarding your specific situation.

The Debt Plan: How to Actually Stick to It

Monthly Money Man on August 21, 2026

You don’t have a debt problem. You have a finishing problem.

If you’re like most Ascenders, you’ve started a debt payoff plan before. Maybe more than once. You made the spreadsheet, you felt the rush of motivation, and then somewhere around week six — a car repair, a kid’s birthday party, a “we deserve this” dinner out — the plan quietly died. Not because you’re bad with money. Because the plan wasn’t built for real life.

This month, we’re building one that is. A real debt payoff plan you can actually stick to — not the one that looks best on paper, the one that survives contact with your actual, chaotic, wonderful life.

The Method That Actually Sticks

Here’s where most debt advice goes sideways: it leads with math. Pay off your highest-interest debt first, they say. Mathematically, that’s called the avalanche method, and it will save you the most money in interest over time.

The math nerds will tell you to pay off your highest-interest debt first — and they’re not wrong. But if you’ve started and stopped a debt plan before, the method that gets you to the finish line beats the method that’s 2% more efficient on paper.

That’s why, for most people just getting their footing, I point them toward the snowball method instead: list your debts smallest balance to largest, ignore the interest rates for a minute, and throw every extra dollar at the smallest one until it’s gone. Then roll that whole payment into the next smallest. And the next.

Researchers at Northwestern’s Kellogg School actually studied this, and it’s not just a feel-good idea — people who knock out small balances first are significantly more likely to finish paying off all their debt than people who chase the “optimal” interest-rate order. A quick, real win in month one does something a spreadsheet can’t: it proves to you that this time is different.

Is it the most mathematically efficient path? No. Is it the path most likely to still be running in month eight, when life throws its next curveball at you? Yes. And a plan you finish beats a plan you abandon, every time.

(If you’re the type who genuinely loves a spreadsheet and wants to see exactly what the interest-optimized order looks like for your specific debts, our free debt payoff calculator will run both methods side by side so you can see the trade-off in real numbers — link at the bottom.)

The One-Page Debt Plan

You don’t need software. You need one page. Here’s what goes on it:

1. List every debt, smallest to largest. Balance, minimum payment, interest rate. Yes, even the store card you’re embarrassed about. Especially that one.

2. Find your “extra” dollars. Look at last month’s spending and find $50, $100, whatever you can find without white-knuckling it. This isn’t about deprivation — it’s about direction. Every dollar just needs a job.

3. Attack the smallest balance. Minimum payments on everything else, extra dollars all go to debt #1.

4. Snowball it forward. When debt #1 hits zero, its entire payment — minimum plus extra — rolls into debt #2. Your payments don’t shrink as debts disappear. They grow. That’s the whole trick.

5. Put a date on the page. Not a guess — do the math on your current pace. A real date turns “someday” into a destination you’re actually walking toward.

That’s it. One page, five steps, and you can build it this weekend at your kitchen table.

When Life Blows Up Your Plan Anyway

Here’s the part most debt advice skips entirely, and it’s the part that actually matters.

If you’ve been reading along, you know this has been a hard stretch around here — a big family trip, the loss of my father, getting my oldest ready for college, all stacked in the same few weeks. In our last article, “When It Rains, It Pours“, I wrote about what happens when several financial pressures hit at once. The truth is, life doesn’t pause your debt plan to let you catch up. It just keeps happening.

So build this into the plan from day one: some months, you won’t hit your extra-payment number. That’s not failure — that’s the plan meeting real life, which is exactly what it’s supposed to do.

When a rough month hits, don’t scrap the plan. Just pay the minimums, protect your emergency fund, and pick the extra payments back up the next month you’re able to. A debt plan that bends without breaking is a plan you’ll actually still be using a year from now. That’s the whole goal.

What Sticking to It Looks Like This Month

You don’t need to overhaul your finances this week. You need one page and one decision.

This month:

  • Write out your one-page debt plan using the five steps above.
  • Pick your smallest balance and decide exactly how much extra you can send it.
  • Set a recurring reminder for the same day each month to check your progress — not to judge yourself, just to look.

That’s the climb. Not a sprint, not a 30-day transformation. One page, one payment, one month at a time.

Ready to see the numbers for yourself? Head over to our free debt payoff calculator to plug in your own balances and watch both the snowball and avalanche paths play out side by side — so whichever way you go, you’re going in with your eyes open.

Credit Card Travel Rewards: How to Fly and Stay for Free

Monthly Money Man on June 19, 2026

Why Points Changed Everything for Our Family

Part 3 of a 4-Part Summer Series

Last summers ago I flew my family to Costa Rica for around $30 a person — one way. The return trip wasn’t much more.

That wasn’t a mistake. It wasn’t a glitch. It was the payoff of a system I’ve been building for years.

I’ve visited 36 National Parks across the country with my family. We’ve done hundreds of hikes. This isn’t a hobby I dabble in — it’s a real part of how we live and travel. And I’ll tell you honestly: without a strategic points system, and without Chase being at the center of it, a lot of those trips simply wouldn’t have happened. The flights that got us there would have cost too much. Points changed that.

I’m part of a points community, I’ve taken courses on this, and I want to give you the clearest, most honest introduction I can.

But first — a rule. The most important one in this entire article.

The Rule That Makes All of This Work

Credit card travel rewards only work if you follow one non-negotiable principle:

Never spend money you don’t have.

If you carry a balance and pay interest on it, the math falls apart completely. A 20% interest rate will erase every point you’ve ever earned and then some. Points are not a reason to spend more. They are a reward for spending strategically — on the purchases you were already going to make anyway.

If you’re currently carrying high-interest credit card debt, bookmark this article and come back when that’s handled. This system is not for you yet, and that’s okay. The climb is still the climb.

But if you pay your balance in full every month? Keep reading. Because what I’m about to show you changes the math on travel entirely.

How Credit Card Travel Rewards Actually Work

Here’s the concept in plain English.

Every time you swipe a travel rewards credit card, you earn points. Groceries, gas, utilities, school supplies, eating out — the spending you’re already doing every month. If you have kids, you know how fast that adds up. A family spending $3,000–$4,000 a month is earning a significant pile of points without changing a single spending habit.

Those points accumulate in your account. And instead of cashing them out for a small statement credit, you trade them for something far more valuable — flights, hotel stays, and travel experiences at a fraction of the retail price.

The trick isn’t spending more. It’s spending what you already spend, more strategically.

Airlines and hotels would rather have your points than an empty seat or room. That’s the leverage you have. Use it.

Which Card to Start With

I’m going to make this simple because you don’t need to compare seventeen options. You need one good card to start.

Start here: Chase Sapphire Preferred — $95 per year

This is the entry point and the right move for most Ascenders. For $95 a year — about $8 a month — you get access to Chase Ultimate Rewards, one of the most flexible and valuable points currencies in the travel world. Points transfer to major airlines and hotel partners, and the card earns at a strong rate on dining and travel purchases.

If one trip offsets $95 in value, the card has paid for itself. That threshold is very easy to clear.

When you’re ready to go further: Chase Sapphire Reserve — $795 per year

I know. That number sounds alarming. Stay with me for a moment.

The Reserve is built for people who travel at least once a year — and when you look at what it actually gives you, the $795 stops feeling like a cost and starts feeling like an investment.

Here’s what comes with it:

Chase automatically reimburses your first $300 in travel purchases every year. And they use the word “travel” loosely — if you ever leave town for any reason, you’re likely triggering it. That’s $300 back before you’ve done anything.

You get a Priority Pass membership, which gets you into airport lounges worldwide. Our family has eaten full meals in airports for free more times than I can count.

You receive elite status with a major rental car company — better vehicle selection and reduced rates automatically.

You earn points at a higher rate than the Preferred card, meaning every dollar you spend works harder.

Rental car insurance is included domestically, so you can decline the counter upsell with confidence.

And you get travel delay insurance. I’ve filed two claims on mine. Between the two of them I received about $850 back for disrupted travel. That alone nearly covered a year’s worth of fees.

When you add it up — a sign up bonus often worth between $1,000 and $2,000, the $300 travel credit, the free airport meals, the rental savings, the insurance, the higher points earn rate, and more benefits that I am going into on this article— most travelers come out ahead of the $795. In some years, significantly ahead.

But start with the Preferred. Graduate to the Reserve when travel becomes a regular part of your life and you’re ready to maximize it.

Your Assignment Before Next Friday

Look at what you’re already spending every month. Add it up — groceries, gas, bills, dining, kids’ activities. If that number is a few thousand dollars and you’re paying with a debit card or a card that earns nothing, you are leaving points on the table every single month.

Pick one card. If you’re new to this, that card is the Chase Sapphire Preferred. Apply for it, use it for your normal spending, and pay it off in full every month without exception.

That’s it. You don’t need to optimize anything yet. You just need to start the clock on your points accumulating — because the sooner you start, the sooner your next trip gets a lot cheaper.

If you want to go deeper on points, two resources I personally use and trust: The Points Guy at thepointsguy.com covers the strategy side in serious detail. And if you want a community, search Travel on Points on Facebook — it’s free, anyone can join, and I don’t have any financial relationship with either of them. I just know they’ve made me better at this.

I could honestly spend an entire year writing about points strategy — there’s that much to cover. If this resonated and you want more of it, let me know. You can reach me directly at tony@monthlymoney.com — I read every message.

And if you’re not already on the Financial Friday list, this is a great time to join. Every article delivered to your inbox every Friday morning — free, no spam. Sign up at monthlymoney.com.

Next week we’re wrapping up the summer series with the Local Adventures System — how to build an epic summer close to home without a big travel budget. It might be the most practical article of the four.

You’ve already got the system. Now you’ve got the fuel for it.

See you at the top.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Credit card terms, fees, and benefits are subject to change. Please review all card terms carefully before applying.

The 10% Line: When Debt Becomes a Problem

Monthly Money Man on March 27, 2026

I’ve sat across from more people with high-interest credit card debt than I can count. Medical professionals, teachers, engineers—high earners who felt broke every month and couldn’t figure out why.

The pattern was always the same: decent income, reasonable expenses, and thousands of dollars vanishing every month in credit card interest.

One pattern I saw over and over: someone carrying $15,000 to $20,000 in credit card debt at 20%+ interest rates. That’s $3,000 to $4,000 a year—gone. Not reducing the balance. Just interest.

That’s the 10% problem.

Why 10% Is the Line

Interest rates above 10% aren’t just expensive. They’re actively draining your monthly money before you even get a chance to use it.

A mortgage at 6%? That’s financing an appreciating asset. A car loan at 5%? You’re paying for transportation you need. Those rates are manageable.

But credit cards at 18%? Department store cards at 24%? Personal loans at 15%? That’s not financing. That’s bleeding.

Here’s the math that matters: if you’re carrying $10,000 at 20% interest, you’re paying $2,000 a year just to keep that debt. That’s $167 every month that doesn’t reduce your balance, doesn’t build equity, doesn’t do anything except disappear.

You can’t save your way out of that. You can’t invest your way past it. You have to stop the bleeding first.

The Hidden Cost

The real problem isn’t just the money you’re paying in interest. It’s what that money could be doing instead.

Someone paying $300 a month in credit card interest? If they redirected that money to a Roth IRA instead—at 8% average annual returns—they’d build $180,000 over 25 years.

But they can’t. Because the interest payments come first. Every single month.

This is why I tell people: high-interest debt gets fixed before almost anything else. You get your employer match in your 401k (that’s free money you can’t recapture). Then you attack this debt. Aggressively.

How to Know If You Have the 10% Problem

Pull out your credit card statements right now. Look at the interest rate. It’s printed right there on every statement.

If it says anything above 10%, you have the problem.

Don’t look at the minimum payment and think you’re okay. That minimum payment is designed to keep you in debt for decades. Look at the interest rate.

Common culprits:

  • Credit cards: 15% to 29%
  • Department store cards: 20% to 27%
  • Personal loans: 10% to 18%
  • Payday loans: don’t even get me started (often 300%+)

What This Looks Like in Real Life

Let’s say you have $5,000 on a credit card at 18% interest. Minimum payment is $125 a month.

If you only pay the minimum, it’ll take you 23 years to pay it off. You’ll pay $4,300 in interest. Almost as much as you originally borrowed.

But if you threw an extra $100 a month at it—$225 total—you’d pay it off in 2 years and pay only $900 in interest.

That’s the difference between bleeding slowly for two decades and fixing the problem fast.

The Fix

I’m not going to tell you to cut up your credit cards and live on cash. That’s not my style.

What I am going to tell you: this debt gets priority.

In August, we’re going to dive deep into avalanche vs snowball methods, balance transfer strategies, and exactly how to attack this systematically. We’ll use the debt payoff calculator I built for you. We’ll map out your complete plan.

But right now, today, you need to know where you stand.

Add up every debt you have with an interest rate above 10%. Write down the total. That’s your number.

That number represents money leaving your life every month that could be building your future instead. It’s like carrying a water bottle with a slow leak—you’re losing resources drop by drop on every climb, and by the time you notice, half of what you needed is already gone.

We’re going to deal with it. But first, you have to see it clearly.

What You Can Do Right Now

I’m not going to give you the full debt payoff strategy here—that’s coming in August with detailed methods and the calculator. But if you have high-interest debt, you can’t afford to wait five months doing nothing.

Three things to do this week:

First: Stop adding to it. If you’re still using the cards that are charging you 20%+, you’re pouring water into a leaking bucket. Put them away.

Second: Pay more than the minimum. Even an extra $50 or $100 a month makes a massive difference. On that $5,000 example I showed you? An extra $100 cuts your payoff time from 23 years to 2 years.

Third: Call your credit card company and ask for a lower rate. Seriously. Just call and say “I’ve been a customer for X years, I’d like a lower interest rate.” It doesn’t always work, but when it does, you just saved yourself real money with a 5-minute phone call.

We’ll get into balance transfers, refinancing strategies, and the complete battle plan in August. But don’t wait to stop the bleeding.

Your Action Step This Week

Pull your credit card statements. All of them. Look at the interest rates. Add up the balances on anything above 10%.

That’s your 10% problem.

Write it down. We’ll come back to it in August with a complete battle plan.

See you at the top.