Cash is king, debt is dumb. This is a phrase, a statement that's thrown out a lot. My name is Caleb Williams, and I'm here in the studio with the one and only Jeremy Roodehouse. The purpose of why we make blogs about money and business is to help you live more intentionally, and this is a blog that we wanted to write as well as shoot in the studio to set the record straight and hopefully help you with this concept of cash is king, debt is dumb.
This came about because of our Wealth Key Workshop. Caleb and I, as we create all of this fun stuff, realized there are paradigms about wealth and money that influence why we do the things we do. One of our sessions addresses these deeply held paradigms, and one of them is the statement that cash is king, debt is dumb. This statement is often thrown out there without much thought to its true meaning.
Caleb asked me to explain the concept of "cash is king, debt is dumb." We hear this phrase and think we need to avoid debt at all costs. But let's examine this. In our workshop, I often hold up a dollar bill and ask, "What does it say at the top?" For those with keen eyes, it says, "Federal Reserve note." Caleb, what is a note? It's a debt instrument. So, when we consider the definition of money and currency, we see that currency is not a store of value; it's a debt instrument.
If that's the case, then we might need to reconsider the phrase to "debt is king and debt is dumb." What does this mean for our decision-making processes? If debt is king and also dumb, we need to figure out how to make debt smart.
We are playing a debt game, and if we don't understand how to play it, we won't fully command our financial household or business. The whole point is to retrain our brains to think about money differently. If debt is part of the economy that we operate in, how do we make smart decisions?
The big takeaway here is to challenge existing paradigms. Many people have shifted their lives for the better by reassessing these beliefs. For example, just today, a friend of mine, Dave, and I found that in a specific case, buying down the rate on a 30-year mortgage made sense.
In coaching relationships, we explore the nuances, relationships, behaviors, and math behind financial decisions. This approach helps us measure what matters and make informed decisions. As interest rates change, the financial landscape shifts, and we need to adapt by doing the math and feeling confident in our choices.
There you have it: Debt is king, and debt is dumb. The important thing is to think critically and make decisions based on thorough analysis and understanding.
Please share your biggest takeaway in the comments or with someone who might be interested in rethinking their views on debt.