David Bach

So those who have families with a lot of equity in their house, if the parents won't tap the equity, which most won't, but some are starting to tap that equity to help their kids buy their first home.

Eventually, when the parents pass away, the kids sell the property and then those renter kids turn around and buy their first house because they were able to inherit wealth from their parents.

That's how wealth works.

So let's go through good debt and bad debt, right?

It's a very simple conversation.

When you borrow money, you don't want to borrow money to buy things that go down in value, that you know are going to go down in value, right?

Like go into a store and buy $1,000 worth of clothes, put it on a credit card, walk out of that store and try to sell that clothes.

$1,000 of clothes is not even worth 100 bucks.

So you know I just borrowed money to buy something that I won't be wearing in two or three years and it's not worth anything.

That's bad debt.

When you borrow money to buy an asset,

which could be real estate, could be a rental property or the home you live in, or that when you're borrowing that money and there's an asset behind it, that gives you the potential as that asset grows, your wealth grows.

Now, there will be people that come on shows and say, well, your home is a liability.

It's not an asset.

That's correct to a point, right?

You have a home and now you've got a liability because you have to pay the bank interest.

But again, otherwise you're renting, that's a liability too.

And someone will say, yeah, but a home, it's riskier.

Homes, you can't get out of your house quickly.

If you have to move or you lose your job, then what are you going to do?