The Greatest Secret Between Debt and Wealth

Learn the secret of the wealthy and how they start each day with a bonus while those in debt are subservient to their master.

There is a secret seldom spoken of by the financially independent. Those in the know can hear echoes of the secret periodically in the utterances from great financial leaders like Charlie Munger when he said the surest way to get in financial trouble is with the three Ls: liquor, ladies and leverage. Then Munger’s buddy, Warren Buffet, laughs about the comment in an interview saying Charlie was joking about the first two; it’s leverage where all the trouble lies.

Did you miss the secret? Unless you are loaded (financially, not with liquor) there is a good chance the greatest secret of wealth whistled past your left ear unnoticed.

Here is the secret for those who missed it:

When you are in debt the clock works against you. Every morning when you wake—weekends, holidays, sick days, birthdays and work days—you are already behind. The mortgage, credit card, car loan, et cetera, all tacked on interest the second after midnight. Long before you rolled out of bed and poured your first cup of coffee you need to work to pay the interest before you have money for food, clothing, shelter or entertainment.

Here is the secret if you weren’t paying attention:

Saddled with debt the clock works against you. Tally up all your debts and calculate the interest accruing daily. Now you know why it’s so hard to get ahead. It isn’t your wage; it’s you! You forgot to do the math and now the universe is teaching you a valuable lesson. If you survive. More on that in a moment.

Here is the secret if you were distracted by the bright lights:

If you have no debt you start each day with a clean slate. You owe nothing to anyone as you start your day. You still need to take action to cover your daily needs, but at least you are not behind before you start.

The secret again is:

Without debt, but with investments, interest accrues to your account before the coffee is brewed. Dividends were earned, wealth created.

The secret again:

Investments in interest baring accounts build slowly, yet daily. Investments in index funds means virtually every purchase by every man, woman and child added something to your nest egg. Each sale added to the coffers that pay you dividends. Each sale adds value to the companies you own in the index fund. Each sale is part of the wealth creation process.

In case you missed it, the secret is:

Without debt and a load of investments you have millions of people on your payroll managed by some of the brightest and most educated people in the world. They work hard for a salary. They work hard making you rich!


***In debt you are a slave; without debt you’ve broken the chains and ripped open the shackles and threw them into the abyss.

Without debt you are free; without debt and in possession of wealth, each day is yours to use as you chose.***


Pay attention! I will repeat the secret one last time:

Debt turns you into a slave! Every day you owe your master. Every day! He is a cruel, heartless master. When the clock ticks past midnight the interest for the day ahead is due.

Only those without debt and in possession of investments are free! Those with wealth are free to live each day as they choose. They can build or create more value or take time to reflect on a life well lived. You can share it with family and friends. Without a harsh master demanding your soul you can walk any path you choose. Any path.


I could go on for another 2,000 words, but it would be to no avail. This doesn’t need a long story. The message is short and simple. Even a child can understand it. It requires the poison of mass media to brainwash you into wanting more than you need on a short term of slavery, ah, easy payment plan.


Copy this post and paste it on the refrigerator door so you see it first thing in the morning.

Paste a copy on the bathroom mirror so you can read it as you brush your teeth.

Carry a copy in your pocket close to your heart.

Never forget the message. Read it again and again until it is internalized. Only then is the ultimate secret of wealth personally yours.


Now you know the secret:

1.) Get out of debt.

2.) Invest constantly in broad-based index funds.

3.) Live the life of your choice.


Now that you know the secret you are free. Perhaps for the first time in your life.

Wealth Building Resources

Personal Finance is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Finance is free?

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to skyrocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. Quickbooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

A cost segregation study can save $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

Keith Taxguy


  1. Ken@thehumblepenny on April 12, 2018 at 8:30 am

    Keith, great post! Very raw!!

    The best way someone described to me the effect of debt on their life was – “debt makes you blind. It makes you blind to opportunity.”

    I tell people this everywhere I go.

    Oh and I’ll keep sharing the secret too.

  2. Gee on April 12, 2018 at 8:45 am

    I like the secret ‘remember’ message! I will never forget.

    • Keith Taxguy on April 12, 2018 at 8:56 am

      Somebody found my secret message! I love adding that kind of stuff to my work.

    • Katy on April 12, 2018 at 12:35 pm

      After the third randomly bolded letter I was sure there was some sort of pattern 🙂

  3. Andy on April 12, 2018 at 8:57 am


    Love this article. It’s simple and gets straight to the point. I agree we must keep this message in front of us. The media is hammering us online, tv, radio and wherever else that material status is the ultimate destination. Thanks again. I made these mistakes early in life but thank goodness I caught it early enough.

  4. Jason@WinningPersonalFinance on April 12, 2018 at 9:27 am

    I hear you, Keith. Still, I disagree that paying off the debt right away is the right move for everybody.

    I have a mortgage and no other debt. If I paid it off, I still would not have the cash to be free. For now, I’m paying the minimum on my mortgage and using the leverage to invest. This is a calculated bet that over time, my index funds will outperform the 3.625% interest rate on my mortgage. Hopefully, this decision will minimize the time until my net worth is high enough that I’m truly free. At that point, I’ll seriously consider paying off the mortgage all in one shot.

    • Keith Taxguy on April 12, 2018 at 9:34 am

      Jason, I should have said net debt, as in more debt than investments, but it doesn’t roll off the tongue as nice. Debt in and of itself isn’t bad. It is an obligation that makes sense as working capital for businesses and even in personal life. I understand many people need a mortgage. If the rate is low enough, plowing the excess payment into investments is a sound strategy.

      Your point is correct. I just wanted to keep the flow of the post and to keep it short, something I tend not to do. Mark your calendar! The Wealthy Accountant was brief! who’d a thought?

      • MB on April 12, 2018 at 11:40 am

        Great post like usual.

        Interesting point regarding net debt. I would think with your recent decision to pull money out of the stock market that you would lean towards other vehicles like paying off the mortgage.

        • Keith Taxguy on April 12, 2018 at 11:48 am

          I do lean toward paying off debt even if not the most efficient financial move. I also leave open the door open for facts and circumstances where some readers may have a valid reason to have a modest amount of debt. My preference is to go debt-free. However, if working capital is needed or a modest mortgage would be easier to manage I wouldn’t lose sleep over it. In the end my premise in the post is correct. Debt is a harsh taskmaster and interest keeps sucking you dry until retired, which is an interesting word to explain the disposition of debt. It is really hard to retire until all debt is first retired.

          • MB on April 12, 2018 at 12:10 pm

            Good points. That’s where I lean re debt.


  5. Keith from Rockville on April 12, 2018 at 9:30 am

    “The rich rules over the poor, and the borrower is the slave of the lender.” Proverbs 22:7. Said over 2,000 years ago. True then, true today and is the number one reason why we paid off our mortgage early and are debt free. Thanks for telling others this important message!

    • Katy on April 12, 2018 at 12:38 pm

      You aren’t wrong but I believe it was around 3,000 years ago. Which is probably even more impressive.

  6. Robert on April 12, 2018 at 10:07 am

    Great post Keith, you must be burning the midnight oil as you are writing and it the final days of the tax season. Thank you for putting it together.

    • Keith Taxguy on April 12, 2018 at 10:11 am

      Robert, it was about midnight when I wrote this. You’ll also notice the brief nature of this post (compared to my other work).

  7. Debt Free Dr. on April 12, 2018 at 10:07 am

    Hi Keith: You hit the nail on the head! Being COMPLETELY Debt-Free is like no other feeling in the world. Anxiety, stress and worry withers away as debt is paid off. Great information.

  8. SavvyFinancialLatina on April 12, 2018 at 10:13 am

    What are your thoughts on paying off the mortgage versus investing more in a taxable brokerage (Vanguard S&P 500)?

    • Kenneth on April 12, 2018 at 10:46 am

      I paid off my house about 5 years ago, and remain debt free. I could have taken that money and invested in the S&P 500 or some index fund, and trounced my 3.5 percent mortgage rate, no doubt. But the feeling I get every day, of owing nothing to anyone, is worth the money. At the time I made that decision, I had no idea the bull market would just keep going and going, like the energizer bunny. It just as well could have crashed, and I would be in angst that I could have been debt free instead. The investments and savings I have now, are working for me every day. My current income outside of investments, is enough to pay all my bills, yet allow for more savings and investing.

      Just keep investing, and when you are retired, take out 4.5 percent per year. William Bengen, the creator of the 4 percent safe withdrawal rate rule, now says 4.5 percent is the new safe withdrawal rate. Do not be troubled when the market crashes, which it inevitably will. Your investment dollars are STILL working for you, every working stiff in America is working for you. See this 90+ year history of Bull and Bear markets – it will give you some comfort that any bear market will eventually be overcome by the next bull market:

  9. LeoLin on April 12, 2018 at 10:29 am

    This is the perfect message that I needed to hear today! I have been making great progress paying off my school loans, but then I hit a bump of frustration at the beginning of this year and my progress has slow down to me just paying the minimum. I needed to be reminded why I was go fired up to knock out this debt in the first place!

  10. Matt on April 12, 2018 at 11:10 am

    Thoughts on paying off car loan-$25,000 monthly payment of $425 at 4.00% versus paying off student loans-$28,000, monthly payment of $260 at 6.15%?

    Great post by the way. Motivating.

    • Keith Taxguy on April 12, 2018 at 11:18 am

      Student loans have a lot of bad attributes. They are hard to discharge if the worst comes to pass. SL interest is still deductible for many people. The SL interest is higher so I want it gone yesterday. I’d pay off the SL as fast as possible and pay the regular payment only for the car.

      Now let me put on my Dave Ramsey hate for a moment. Why the heck do you have a $25,000 auto loan when you have $28k in SL?!!!! I agree with Dave on this one. Sell the vehicle and buy something you can afford without a loan. Better yet, channel Pete Adeney (Mr Money Mustache) and bike until the debt is destroyed. Only when you have cash without any other loans can you afford more car.

      Sorry for the brutal response, but it was necessary. You’ll thank me someday.

      • Matt on April 12, 2018 at 8:23 pm

        Appreciate the response and straightforward anewer.

  11. Life Of FI MD on April 12, 2018 at 12:52 pm

    What a post! So simple and yet so profound. Out of the thousands that read and understand it, how many will actually do something with it?!?! That is why I LOVE your call to action! Put it on your mirror, put it on your fridge, put it in your wallet! Get out of debt people and start making passive income!

  12. Dave on April 12, 2018 at 8:12 pm

    Excellent post Keith!

    “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

  13. Sam on April 12, 2018 at 10:18 pm

    Hey Keith, I’ve been following your posts for a while now. It’s a great point you make about staying away from debt or paying it off. I’ve been fortunate enough to come out college debt-free thanks to my dad. Most of my other friends have entered and left college with debt to carry and this would be a good read for them. Would you share some of the index funds you invest in?

    • Keith Taxguy on April 13, 2018 at 9:56 pm

      All Vanguard funds:

      70% S&P 500
      30 International

      I rebalance every year.

      • Andy on August 28, 2018 at 6:50 am

        Love the simplicity of your portfolio.

        Vangaurd Total World here.

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  17. Richard on June 20, 2018 at 8:59 am

    Just found your blog and this article made me calculate something just for giggles, but I wish I hadn’t. I decided to figure out how many hours I have to work each day just to pay my taxes, SS, Medicare and mortgage interest. I found that 1.8 hours of my day is spent negating these expenses. I have fairly low income and a small mortgage which I am aggressively paying. I imagine that some of my higher paid coworkers with many debts are probably spending over 4 hours/day just getting to the point where they can pay for food.

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