August 14th 2025
When I was a kid, my parents opened up a snack bar in cottage country just inside the Highlands of Haliburton. It was my dad’s dream to break free from his employment situation and be self-employed. The venture didn’t work out to be particularly profitable, but that’s another story. I want today to share an incident surrounding that venture that sticks with me to this day. I think it holds a lesson for us all.
In developing the facility, it was necessary to get fresh water and since there was no municipal water available, we decided to dig a well. It was a relatively simple procedure. Concrete casings were placed in the ground and as the digging progressed, the concrete cylinders would sink down and another one would be added on top. Well, we got down about 20 feet and hit quick sand. I’m a pretty young boy. I was fascinated. Quick sand was the stuff of Westerns. Hollywood. I couldn’t believe it. So, of course I had to investigate. So, with my rubber boots on I descended the well until I hit bottom. And there it was. Quick sand. Best way I can describe it was to say it looked like grey putty. Kinda like wet talcum powder. So, I stepped down on top of it. And wouldn’t you know it. I was stuck. Not only was I slowly sinking, but when I was only 1” to 2” in I couldn’t budge my rubber boots. I could certainly see how a person could be dragged under. Fortunately, I had help being pulled out of my boots and up to safety.
I share that because to me that’s a lot like personal debt. You start treading gingerly but before you know it, you’re in and my friend you are going down.
I look around and it’s so easy to start getting into debt. Bad debt. I see signs for all sorts of things you can have right now and not have to start making payment till next year. So, hey. Why not? But sooner or later you have to pay the piper as they say. And along with your fixed commitments and money you need for life essentials, you just can’t keep up. It’s quick sand and you’re sinking. No wonder your parents told you not to go in debt.
But I’m also here to tell you not all debt is bad debt. And in fact, if you want to get rich in life, it’s very difficult to do without borrowing money. Generally speaking, if I’m going to buy something and it’s going to go down in value over time and it’s not going to generate revenue, I either don’t want to buy it or at least I don’t want to go in debt to acquire it. It’s bad debt. Of course, lots of things fall into that category. Food, clothing, even a car perhaps. But if you’re buying those things with borrowed funds, before too long, you’re in trouble.
On the other hand, why do I say debt is a necessary reality if you want to amass wealth? It’s the principal of leverage. Let me give you an exaggerated example.
Let’s suppose you have $500,000 cash that you want to invest. You know my feelings. Buy real estate. So, you can 
look around and find a residential property you can buy for $500,000. You’re debt free. You can rent it out and immediately it provides you with a positive income stream. That’s good. Or, on the other hand, with 80% financing (mortgage) you can buy five properties at $500,000 each. And you can rent them out. Now you won’t enjoy positive cash flow. All the rent will go to cover the expenses and pay off the mortgage. You may even have to throw in a few bucks from time to time. But eventually those properties are going to be paid off. Now instead of owning one property worth $500,000, you have five worth $2,500,000. (Actually, a lot more because they will have increased in value over time). And each of those five properties will be generating you positive rental income. A lot more income than you ever could have achieved if you hadn’t gone into debt.
Deferred gratification for sure. Your passive income is tied up for years as you service the debt. But you’ll end up much wealthier in the long run, both in overall net worth and in total cash flow, because you financed your investment. Debt. Avoid the quick sand, but not all debt. Good debt. It’s the key to wealth.