The 10 Million Dollar Dream

Good DebtA few years ago my Dad told me that he’d set a new goal. He wanted to owe the bank $10 Million Dollars.

I nearly choked on the freshly baked chocolate chip muffin I’d been devouring.

Why in the world would you want to owe the bank $10 Million dollars, Dad? I thought you were trying to retire!!”

He went on to explain that it wouldn’t be $10 million dollars in debt from living life extravagantly. If he and Mom just spent the money going on cruises, buying nice cars and eating at expensive restaurants while accumulating that sort of debt load, that would be bad debt. But, his intention was not to get into bad debt. It was to get into good debt.

The concept that any debt can be good can be a tough one to wrap your head around. We’re taught that when you owe someone something you should pay it back as quickly as possible. And, in general, debt comes with a negative stigma. And, in many cases, it should. Debt that is accumulated for the purchase of “stuff” is not good debt.

But, when you take on debt carefully, only accepting debt attached to an asset that will generate cash to cover the cost of that debt then that is good debt. In the case of real estate investments and their associated mortgages, it’s debt that someone else is paying for through the rent they pay. It definitely qualifies as good debt!

So back to my Dad’s $10 Million dollar dream …
I’ve heard Donald Trump say, “If you’re going to think, you might as well think big.” In my Dad’s case he realized that it is going to take the same amount of time to pay of $1,000,000 in investment property debt that it will take to pay off $10,000,000. He said to me:

“It’s going to take me 20 years to pay it off whether it’s $1,000,000 or $10,000,000 so it might as well be $10,000,000.”

In other words, if he’s going to wait 20 years for his assets to be paid for by his tenants he might as well be waiting for a $10,000,000 pay day instead of just a $1,000,000 pay day.

AND – the incredibly rewarding part of his plan is not just that he is thinking big and challenging himself at a time in his life when most people are content to roam the golf course and play the slot machines at the casino – it’s that the properties he started buying a few years ago in pursuit of his $10 Million dollar debt dream have gone up in value substantially and are creating a VERY nice cash flow that helps him pay for his living costs today!

I’m also working hard to follow in my Dad’s footsteps. So when my Dad recently said to me “Julie, you and Dave are in way more debt than we were at your age” I know he is proud of what we’ve been able to achieve and is complimenting us on our progress!

I encourage everyone to take a lesson from my Dad and his $10,000,000 dream:

  • It’s NEVER too late to start making your dreams come true – so what’s holding you back? Plan your plan and starting working that plan today.
  • Make sure you know the difference between good debt and bad debt. Get rid of your bad debts quickly (or better yet, don’t take on any bad debts if you can!) and grow your good debts quickly yet carefully. It’s only good debt if someone else is paying it off for you!
  • If you have to wait 20 years … you might as well make the pay day a good one!

If you liked this article check out Julie’s 10 Simple Tips for Wealth Creation.

Published on August 27th, 2009

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