You are previewing The Value of Debt: How to Manage Both Sides of a Balance Sheet to Maximize Wealth.
O'Reilly logo
The Value of Debt: How to Manage Both Sides of a Balance Sheet to Maximize Wealth

Book Description

A new vision of the value of debt in the management of individual and family wealth

In this groundbreaking book, author Tom Anderson argues that, despite the reflex aversion most people have to debt—an aversion that is vociferously preached by most personal finance authors—wealthy individuals and families, as well as their financial advisors, have everything to gain and nothing to lose by learning to think holistically about debt.

Anderson explains why, if strategically deployed, debt can be of enormous long-term benefit in the management of individual and family wealth. More importantly, he schools you in time-tested strategies for using debt to steadily build wealth, to generate tax-efficient retirement income, to provide a reliable source of funds in times of crisis and financial setback, and more.

  • Takes a "strategic debt" approach to personal wealth management, emphasizing the need to appreciate the value of "indebted strengths" and for acquiring the tools needed to take advantage of those strengths

  • Addresses how to determine your optimal debt ratio, or your debt "sweet spot"

  • A companion website contains a proprietary tool for calculating your own optimal debt ratio, which enables you to develop a personal wealth balance sheet

Offering a bold new vision of debt as a strategic asset in the management of individual and family wealth, The Value of Debt is an important resource for financial advisors, wealthy families, family offices, and professional investors.

Note: The ebook version does not provide access to the companion files.

Table of Contents

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Dedication
  6. Foreword
  7. Acknowledgments
  8. Introduction
  9. Part 1: The Value of Debt in the Management of Wealth
    1. Chapter 1: Strategic Debt Philosophy: An Overview
      1. How This Book Can Add Value to Your Life
      2. The Five Tenets (or Action Principles) of Strategic Debt Philosophy
      3. Chapter 1: Summary and Checklist
    2. Chapter 2: The Basic Idea: Limiting the Costs, the Impacts, and the Duration of Financial Distress
      1. Risk of Financial Distress
      2. The Direct and Indirect Costs of Financial Distress
      3. The Impact of Financial Distress: Five Levels
      4. The Duration of Financial Distress
      5. The Four Indebted Strengths: A First Look
      6. The One Thing You Must Consider!
      7. Chapter 2: Summary and Checklist
    3. Chapter 3: Strategic Debt Practices: An Overview
      1. Understanding and Taking Advantage of Strategic Debt Philosophy
      2. Achieving and Maintaining an Optimal Debt-to-Asset Ratio
      3. Calculating Your Debt-to-Asset Ratio
      4. Should Your Primary Residence Be Included in Your Debt Ratio?
      5. When to Pay Down Your Debt, and When Not To
      6. Advanced Practices and Scenarios
      7. Chapter 3: Summary and Checklist
  10. Part 2: The Assets-Based Loan Facility
    1. Chapter 4: The Value of an Assets-Based Loan Facility (ABLF)
      1. What an ABLF Is and How It Works
      2. The Many Advantages of Having an ABLF in Place
      3. Why Virtually Every Company Has a Line of Credit
      4. Surviving Storms and Other Natural Disasters
      5. The Criticality of Being Proactive and Assessing Risks
      6. Family Finances: First Bank of Mom and Dad; Elder Care Bridge Loan
      7. Taking Advantage of Opportunities and Distressed Sales
      8. Average ABLF Usage and the Win-Win-Win Scenario
      9. Chapter 4: Summary and Checklist
  11. Part 3: Scenarios for Success
    1. Chapter 5: Long-Term Wealth Amplification through Capturing the Spread
      1. The Basic Concept: Inherent Risks with Great Potential Rewards
      2. Three Key Factors to Consider
      3. Some Scenarios for Capturing the Spread
      4. Synching with Your Investment Strategy
      5. Chapter 5: Summary and Checklist
    2. Chapter 6: Holistic Financing of the Expensive Things You Need and Want
      1. A Better Way to Buy: In the Company of Holistic Financial Thinkers
      2. Four Principles When Financing the Purchase of a Desired Item
      3. A Better Way to Purchase a Vehicle (or Almost Anything Else)
      4. Purchasing a Second Home: Pluses and Minuses
      5. 100 Percent Financing: The No Down Payment Real Estate Purchase Option
      6. Chapter 6: Summary and Checklist
    3. Chapter 7: Generating Tax-Efficient Income in Retirement or Divorce
      1. Introduction: Three Goals (and Some Disclaimers)
      2. An Opening Scenario for No Taxes in Retirement
      3. Borrowing Versus Selling to Access Your Money
      4. A Better Alternative to a Familiar Story
      5. Tying It Back to Capturing the Spread
      6. Revisiting Tax Issues
      7. Making Use of Strategic Debt Strategies and Practices in Divorce
      8. Chapter 7: Summary and Checklist
    4. Chapter 8: Conclusion: What This Book Is Really About
      1. What We Hope You Have Taken Away
      2. Strategic Debt as a Financial Engine over the Decades
      3. Paradoxes of Plenty: Some Surprises in Maintaining an Ideal Debt Ratio
      4. Investing in the Future: A Cautionary Reminder
      5. A Final Thought
      6. Chapter 8 Summary: A Recap of the Book’s Significant Lessons
  12. Part 4: Appendixes
    1. Appendix A: The Varieties of Debt
    2. Appendix B: Strategic Debt Practice for the Young and Those with Limited Assets
    3. Appendix C: No Guarantees: Limiting the Risks of Investing in a Crazy World
    4. Appendix D: Some Examples of Ideal Debt Ratios
  13. Glossary
  14. Bibliography
  15. About the Author
  16. About the Companion Website
  17. Index