Americans Are Divided on Whether You Can Be Wealthy While in Debt: Here’s What the Experts Say
Written by
David Nadelle
Edited by
Jenna Klaverweiden
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We are conditioned to think that all debt is bad, made to feel bad about borrowing and taught that achieving freedom can be done only through eliminating all liabilities using the most aggressive means possible.
According to a recent LendingTree survey, 34% of Americans believe that you can’t be considered wealthy while you have debt. Of the 66% who believe it’s possible to be rich while you owe money, 31% feel that the debt has to be tied to a mortgage.
There is such a thing as good debt, and it doesn’t necessarily need to be mortgage-related. The rich know this, and understanding how to use borrowing wisely can make you very wealthy indeed. The critical factor isn’t the presence of debt, but the type of debt, its cost and what it’s being used for.
Also see what “wealth” means for Americans in 2025.
Being Wealthy and in Debt Is Common
“The idea that wealth and debt are mutually exclusive is a common misconception, particularly for those who view all debt as a negative,” Mark Gelbman, financial advisor and owner of Strategic Wealth Solutions, told GOBankingRates. “However, for many wealthy individuals and businesses, debt is not seen as a liability, but rather a powerful tool used to increase wealth.”
For many well-off people and companies, balancing wealth and debt is not only feasible but also typical and frequently an advantageous financial circumstance. “Debt and wealth go hand and hand actually, but most people can’t wrap their heads around this because we have been programmed to think of debt as a dirty word,” said Joe Camberato, CEO of National Business Capital.
Using Debt as Leverage
“More than 7 in 10 Americans are in debt. The wealthiest aren’t in debt. They use debt,” Howard Dvorkin, CPA, an advisor and author, as well as chairman of Debt.com, told GOBankingRates. “Instead of using cash, they leverage their assets by borrowing against them.”
Dvorkin also provided an example of leveraging debt. “So for instance, they might put up their real estate holdings as collateral on a loan at 4% interest, then invest that money in government bonds at 4.75%,” he said. “They’re then guaranteed to make money.”
Paul Ferrara, senior wealth counselor at Avenue Investment Management, agreed. “Wealth and debt can coexist, but what distinguishes the two is the utility of the debt (what it’s used for) and its structure (how it’s logistically developed),” he said. “A person with $10 million in net worth with a $2 million mortgage on a ‘sheltering, appreciating’ property is in a profoundly better prospect than someone with the same liability attached to depreciating asset liabilities or lifestyle spending.”
Knowing the Difference Between Good and Bad Debt
There is crucial distinction between good and bad debt — between debt that has the potential to increase wealth and that which costs money.
“Mortgages and business loans that generate income are obvious examples [of good debt], but personal loans can also be wealth-building tools when used strategically,” said Darren Burgess, the owner of Yup Loans, an online loan introduction service.
Burgess also highlighted leveraging debt in real estate. “Real estate is where debt really shines as you’re basically using the bank’s money to buy or improve something that goes up in value over time,” Burgess explained. “Personal loans help with down payments, home improvements that boost property value or consolidating high-interest debt to free up cash flow for investments.”
And what about bad debt? “Bad debt would be taking on debt to purchase things that depreciate in value or provide no financial return,” Gelbman said. “This could be things like high-interest credit card debt for daily expenses, a new vehicle car loan or a lavish vacation you cannot afford.”
Reducing Your Tax Liability
Lastly, any financial discussion simply can’t be completed without addressing potential tax implications. Surprisingly, when it comes to debt, the interest paid on some, such as business loans or mortgages on investment properties, can be tax-deductible. This lowers the actual cost of borrowing, making it a more prudent financial decision than using after-tax money.
For the financially savvy, debt is not a sign of trouble (nor a “personal weakness,” according to Gelbman) but a strategic tool used to build and manage wealth, cut tax payments, and lower overall borrowing costs.
“There’s certainly a world where one can be both wealthy and in debt,” Gelbman said. “For many of the world’s richest people, strategic borrowing is a cornerstone of their wealth-building strategy. The key is not to avoid debt altogether, but to understand its purpose and use it to acquire assets, not liabilities.”
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