The Value of Debt

Foreword xi Acknowledgments xv Introduction xvii Part 1: The Value of Debt in the Management of Wealth 1 Chapter 1: Strategic Debt Philosophy: An Overview 3 How This Book Can Add Value to Your Life 3 The Five Tenets (or Action Principles) of Strategic Debt Philosophy 4 Chapter 1: Summary and Checklist 14 Chapter 2: The Basic Idea: Limiting the Costs, the Impacts, and the Duration of Financial Distress 21 Risk of Financial Distress 22 The Direct and Indirect Costs of Financial Distress 23 The Impact of Financial Distress: Five Levels 24 The Duration of Financial Distress 25 The Four Indebted Strengths: A First Look 26 The One Thing You Must Consider! 26 Chapter 2: Summary and Checklist 29 Chapter 3: Strategic Debt Practices: An Overview 33 Understanding and Taking Advantage of Strategic Debt Philosophy 34 Achieving and Maintaining an Optimal Debt-to-Asset Ratio 37 Calculating Your Debt-to-Asset Ratio 41 Should Your Primary Residence Be Included in Your Debt Ratio? 43 When to Pay Down Your Debt, and When Not To 45 Advanced Practices and Scenarios 47 Chapter 3: Summary and Checklist 49 Part 2: The Assets-Based Loan Facility 53 Chapter 4: The Value of an Assets-Based Loan Facility (ABLF) 55 What an ABLF Is and How It Works 56 The Many Advantages of Having an ABLF in Place 59 Why Virtually Every Company Has a Line of Credit 61 Surviving Storms and Other Natural Disasters 62 The Criticality of Being Proactive and Assessing Risks 64 Family Finances: First Bank of Mom and Dad; Elder Care Bridge Loan 67 Taking Advantage of Opportunities and Distressed Sales 68 Average ABLF Usage and the Win-Win-Win Scenario 70 Chapter 4: Summary and Checklist 71 Part 3: Scenarios for Success 75 Chapter 5: Long-Term Wealth Amplification through Capturing the Spread 77 The Basic Concept: Inherent Risks with Great Potential Rewards 77 Three Key Factors to Consider 79 Some Scenarios for Capturing the Spread 83 Synching with Your Investment Strategy 93 Chapter 5: Summary and Checklist 93 Chapter 6: Holistic Financing of the Expensive Things You Need and Want 99 A Better Way to Buy: In the Company of Holistic Financial Thinkers 99 Four Principles When Financing the Purchase of a Desired Item 100 A Better Way to Purchase a Vehicle (or Almost Anything Else) 108 Purchasing a Second Home: Pluses and Minuses 111 100 Percent Financing: The No Down Payment Real Estate Purchase Option 117 Chapter 6: Summary and Checklist 119 Chapter 7: Generating Tax-Efficient Income in Retirement or Divorce 123 Introduction: Three Goals (and Some Disclaimers) 123 An Opening Scenario for No Taxes in Retirement 124 Borrowing Versus Selling to Access Your Money 125 A Better Alternative to a Familiar Story 127 Tying It Back to Capturing the Spread 128 Revisiting Tax Issues 130 Making Use of Strategic Debt Strategies and Practices in Divorce 138 Chapter 7: Summary and Checklist 143 Chapter 8: Conclusion: What This Book Is Really About 149 What We Hope You Have Taken Away 150 Strategic Debt as a Financial Engine over the Decades 153 Paradoxes of Plenty: Some Surprises in Maintaining an Ideal Debt Ratio 158 Investing in the Future: A Cautionary Reminder 162 A Final Thought 164 Chapter 8 Summary: A Recap of the Book's Significant Lessons 164 Part 4: Appendixes 169 Appendix A: The Varieties of Debt 171 Appendix B: Strategic Debt Practice for the Young and Those with Limited Assets 175 Appendix C: No Guarantees: Limiting the Risks of Investing in a Crazy World 185 Appendix D: Some Examples of Ideal Debt Ratios 209 Glossary 225 Bibliography 229 About the Author 231 About the Companion Website 233 Index 235