When it comes to financial freedom, most people find themselves starting from one place: debt. Whether it’s credit cards, auto loans, student loans, or just the cost of living, debt can feel like a never-ending cycle. So how do you manage debt while building wealth? That’s exactly what we’re diving into today.
Americans are carrying more debt than ever before. Credit card balances alone have surpassed $1.16 trillion for the first time in history. With our modern “subscription lifestyle,” where small recurring payments add up quickly, it’s easy to lose control of your cash flow. Most people are told to pay off debt first and then start saving. But that strategy can keep you stuck in the same cycle. We believe in something different start saving while paying down debt. Even small contributions to your savings now can be the difference between breaking the cycle or staying trapped in it. The truth is, without savings, you’ll always rely on more debt when unexpected expenses come up. And life always happens. Having a pool of money you control helps prevent future debt and gives you financial breathing room.
One major reason people stay stuck in debt is because they don’t have access to their own money. If every dollar you make is going toward paying off credit cards, you’re not building any safety net. When an emergency hits, the only option is to go back into debt.
It becomes a cycle: get out of debt, fall back in, and repeat. You’re never really getting ahead.
After COVID, we saw massive lifestyle inflation. Many people started spending more due to the influx of government money and now find it hard to adjust to rising prices. Doing a simple audit of your monthly expenses especially recurring ones like subscriptions can uncover hidden cash you can redirect toward savings or debt reduction.
Here’s a staggering statistic: over 80% of the U.S. dollars in circulation today were printed in just the last four years. That means the value of each dollar has decreased dramatically. It’s harder than ever to get ahead using outdated financial strategies. If all your income is going toward debt payments, you’re not saving. If all your income is going toward saving, your debt continues to grow because of interest. So what’s the solution? You need a hybrid approach pay down your debt while building savings. This combination gives you the flexibility and control to stop relying on credit and start financing your life on your terms between Good Debt and Bad Debt.
One of the first steps in taking control of your finances is analyzing the type of debt you carry.
Good debt typically helps you grow or build wealth, like a mortgage or business loan. Bad debt, like high-interest credit cards or consumer financing, generally adds no long-term value. The goal is to keep the good debt and eliminate the bad. Not all debt is bad, and not all debt is good. Being able to tell the difference is key. Every time you buy something, you’re financing it whether you realize it or not. You either borrow and pay interest, or you pay cash and give up the ability to earn interest. That’s called opportunity cost. So even when you pay in cash, there’s a hidden cost: you lose the potential growth of that money. Understanding opportunity cost can help you make smarter choices about how you finance your lifestyle and major purchases.
Ask yourself, “Does it feel more efficient to finance this and keep control of my cash, or should I give up that cash and reduce my liquidity?” More often than not, using someone else’s money (in a controlled, smart way) can be the better choice especially if you keep your own money working for you. Leverage is the concept of using the least amount of your money to control the greatest amount of assets. It’s how the wealthy grow their wealth faster and more efficiently. If you can maintain control of both the debt and the asset, you’re in a position to grow. That’s the power of smart leverage. You’re building an asset with one hand, paying down a liability with the other, but you never give up control of your money in the process.
This approach lets you save, borrow, and grow wealth at the same time. Your dollars become more efficient doing two or even three jobs at once. It may sound counterintuitive, but it’s how real wealth is built.
Traditional financial advisors often focus on assets under management meaning they want to help you grow your investments. But what if you don’t have savings yet? What if you’re still in debt? Most advisors will tell you to pay off debt first, then come back when you’re ready to invest. But that doesn’t help you now.
Our approach is different. We work with you from where you are. Whether you’re able to save 5%, 10%, or 20% of your income, we help you get started and adjust your plan as your situation improves. You can start building savings now, even while you’re still paying down debt. You don’t have to wait until your finances are perfect to start improving them. You just have to start.
If you want to learn how to apply these debt management and wealth-building strategies to your own situation, visit our website at tier1capital.com and schedule your free strategy session.
We’ll help you:
- Evaluate your current debt
- Find inefficiencies in your cash flow
- Create a plan to build savings and pay off debt—simultaneously
You don’t have to keep struggling with debt. There’s a better way, and it starts with making your money more efficient.
Thank you so much for reading, and remember:
It’s not how much money you make. It’s how much money you keep that really matters.