How to be "debt-free" yet enjoys Leverage?

[Dennis Ng]

If you read any Personal Finance books from all bookstores, one "recurrent" advice they have is "be debt-free as soon as possible". I have seen many people after reading such books quickly pay off all their debts, including Housing Loan, which to me is actually unwise.

They forget that there is GOOD debt and there's BAD Debt. Bad debt is any debt on consumption. Thus, to me car loans, personal loans, credit card debt are ALL bad debt and a person should avoid such debts or aim to pay them off as soon as possible.

Actually, if there's a way you can be "debt-free" and yet enjoy the benefit of leverage that debt provides wouldn't it be better? It can be done, let me show you how.

Personally, my Housing Loan is $x amount. What I have in cash is more than $2x. So am I debt free? Actually on a NETT basis, I am. However, I'm "retaining the Housing Loan debt" becos it makes financial sense to do so. In my opinion, the problem is most people only have a limited knowledge and finance and debt but they just stick to concepts such as "be debt free as soon as possible" without looking at the issue deeper.

They never think deeper, such as how you can "be debt-free" but still enjoys the "Leverage" that debt provides (just like what I'm doing). Isn't that better? It's likely having your cake and eat it too.

Not doing what I am doing is "shortchanging" yourself.

It's possible. I have done it. I have helped some of my clients do it as well. (Most clients just find it hard to change their mindset to "apply" what I share with them).