Strategic Debt Leverage as Financial Growth "Cheat Code"

The Color of Money | Transformative Conversations for Wealth Building · December 24, 2025 · Listen to Original Episode →

Original Title:

TL;DR

Leveraging debt strategically for business or asset investment, rather than consumer spending, is the "cheat code" to financial growth, enabling tax avoidance and wealth accumulation.
Understanding and managing credit utilization below 30% and ensuring on-time payments are foundational, preventing the "brutally expensive" costs associated with poor credit.
Failure is not a final destination but a critical data-gathering process that provides essential lessons for improvement and redirects individuals toward their goals.
Learning the "language of finance," including debt structures like bankruptcy and asset-backed loans, is crucial for operating effectively within the economic system.
Hard assets serve as a primary hedge against inflation, appreciating in value as inflation rises, offering a more reliable investment than speculative ventures.
Personal development and cultivating grit are essential intangibles that school systems often neglect, yet they are vital for navigating financial obstacles and achieving success.
The "buy now, pay later" trend, especially with services not reporting to credit bureaus, creates hidden debt burdens that can lead to future financial instability.

Deep Dive

Will Roundtree argues that credit is a critical financial tool that, when properly leveraged, can accelerate wealth building rather than hinder it. He emphasizes that understanding and mastering credit is essential, as poor credit is "brutally expensive" and limits opportunities for renting, purchasing vehicles, and acquiring housing. Roundtree challenges the common advice to avoid all debt, positing that strategic use of debt, particularly for business or asset acquisition, is a "cheat code" for financial growth and tax avoidance. The core implication is that a shift in mindset from consumer debt avoidance to strategic debt leverage is necessary for significant financial advancement, a concept largely absent from traditional financial education.

The practical implications of Roundtree's insights begin with tactical credit improvement, focusing on fundamentals like on-time payments and maintaining low credit utilization ratios below 30%. He stresses the importance of understanding one's true take-home pay to prioritize essential bills tied to credit scores. Beyond repair, Roundtree advocates for credit coaching, emphasizing that simply fixing a score without understanding its mechanics leads to repeated financial missteps. This highlights a systemic issue where financial literacy is insufficient, leaving individuals vulnerable to the very traps they sought to escape.

Roundtree's broader argument extends to the power of failure as a learning mechanism and a catalyst for growth, a theme explored in his TED Talk and book Full-Time CEO. He contends that fear of failure prevents action, and that perceived failures are actually data points for improvement. This perspective is crucial for entrepreneurs and investors who must navigate uncertainty. The implication here is that a cultural stigma around failure, particularly in financial contexts, inhibits resilience and innovation, preventing individuals from developing the grit necessary for long-term success.

The conversation culminates in the "cheat code of debt," where Roundtree explains how affluent individuals leverage debt to acquire assets and avoid taxes. He contrasts the high cost of consumer debt, often exacerbated by buy-now-pay-later services that bypass credit reporting, with the strategic use of debt for income-generating assets like real estate. This underscores a significant disparity in financial knowledge, where understanding debt as a tool for wealth creation is exclusive to a select few. The ultimate takeaway is that mastering the "language of finance," including strategic debt utilization and understanding asset appreciation, is not taught in traditional education but is paramount for achieving true financial independence.

Action Items

Audit personal credit report: Identify 3-5 key areas impacting score (e.g., utilization, payment history) for targeted improvement.
Create personal budget: Calculate real take-home pay and assign dollars to credit-tied obligations (mortgage, car) first.
Analyze debt leverage strategy: For 1-2 potential investments, calculate potential ROI and debt servicing capacity.
Draft personal failure resilience plan: Identify 3-5 past setbacks and document lessons learned for future application.

Key Quotes

"I often tell people the greatest cheat code in life to grow financially is understanding how to leverage debt."

Will Roundtree argues that understanding how to leverage debt is the most effective strategy for financial growth. This perspective challenges conventional advice to avoid debt and suggests that strategic use of debt can be a powerful tool for wealth building.

"I just learned that having bad credit is brutally expensive."

Will Roundtree explains that his personal experience in Las Vegas revealed the significant financial disadvantages of poor credit. He highlights how bad credit leads to higher costs for essential services like renting an apartment and purchasing a vehicle.

"So the first thing I always say, we have to get out of denial. Secondly, we have to understand what credit is. I think that consumerism has kind of put a black cloud over credit by making it seem it's just this tool to get you in debt. No, it's a tool that you need to get through life."

Will Roundtree emphasizes that overcoming denial and understanding the true nature of credit are crucial first steps. He posits that credit is not merely a tool for incurring debt but a necessary instrument for navigating life's financial landscape.

"So I often tell people that the dollar you work for is the most expensive dollar to make. And here's why. For every dollar you work for, 30 cents goes to the IRS. So now that dollar is only worth 70 cents. When I borrow a dollar, I pay zero taxes on that. So my dollar stretches further when I can put it or invest it in something that can make me a return."

Will Roundtree explains that borrowed money can be more financially advantageous than earned money due to tax implications. He highlights that money earned through work is reduced by taxes, whereas borrowed money, when invested, is not subject to immediate taxation, allowing it to stretch further.

"People when they say, 'Oh, I'm scared to fail,' the first thing I say is, 'How can you be scared to do something you're already doing?' Because if you haven't gotten to where you've been plotting on your vision boards for the past 10 years and every December 31st you're cheering saying, 'This is going to be my year,' if you have not accomplished any of those things, you're already failing."

Will Roundtree challenges the fear of failure by pointing out that inaction itself is a form of failure. He suggests that if one's goals remain unachieved despite aspirations, they are already experiencing a lack of success, making the fear of future failure less impactful.

"The one thing to hedge against inflation is hard assets, period. Because as inflation goes up, those assets go up as well. They appreciate."

Will Roundtree asserts that hard assets are the most effective means to protect against inflation. He explains that as inflation increases, the value of these assets also rises, providing a hedge against the diminishing purchasing power of currency.

Resources

External Resources

Books

"Credit is King" by Will Roundtree - Mentioned as a resource for understanding credit.
"Full Time CEO" by Will Roundtree - Mentioned as a resource detailing his journey and business failures.
"How to Survive and Thrive" by Will Roundtree (co-authored with the founder of Reebok) - Mentioned as a book detailing his journey through obstacles.
"Think and Grow Rich" by Napoleon Hill - Mentioned as a book read for entrepreneurial principles.
"How to Win Friends and Influence People" by Dale Carnegie - Mentioned as a book read for entrepreneurial principles.
"The Creature of Jekyll Island" by G. Edward Griffin - Mentioned as a book about the Federal Reserve and the creation of the debt system.
"Rich Dad Poor Dad" by Robert Kiyosaki - Mentioned for the concept of leveraging money that was not worked for.

Articles & Papers

Ted Talk on the Power of Failure by Will Roundtree - Mentioned as a talk about failure as data and a learning opportunity.

People

Will Roundtree - Financial strategist and financial literacy pioneer, first black educator to go viral for credit education online.
Daniel Dixon - Co-host of The Color of Money podcast.
Julia - Host of The Color of Money podcast.
Terence Howard - Mentioned in relation to his assertion that 1+1=3.
Dave Ramsey - Mentioned in relation to his teaching that one should not borrow anything and pay cash for everything.
John Maxwell - Mentioned in relation to a coaching event.
Ryan Leak - Mentioned in relation to a coaching event.
Napoleon Hill - Author of "Think and Grow Rich."
Dale Carnegie - Author of "How to Win Friends and Influence People."
Robert Kiyosaki - Author of "Rich Dad Poor Dad," mentioned for concepts on debt and wealth building.
G. Edward Griffin - Author of "The Creature of Jekyll Island."

Organizations & Institutions

Home Team Inspection Service - Sponsor of the podcast, offering home inspection services.
Keller Williams Realty LLC - Affiliate mentioned in relation to the podcast's disclaimer.
Federal Reserve - Mentioned in relation to the creation of the debt system.
Reebok - Mentioned as the company whose founder co-authored a book with Will Roundtree.
IRS - Mentioned in relation to taxes on earned income.
GM - Mentioned as an example of a company where people can be laid off.

Websites & Online Resources

hometeam.com - Website for Home Team Inspection Service.
Amazon - Platform where Will Roundtree's books can be found.
Audible.com - Platform where Will Roundtree's books can be found.
YouTube - Platform where Will Roundtree has a channel and where the podcast is available visually.

Other Resources

Credit Utilization - Mentioned as a component of a credit score that impacts it.
Payment History - Mentioned as a component of a credit score.
Inquiries - Mentioned as a factor that can drop a credit score if too many applications are made.
Hard Assets - Mentioned as a hedge against inflation.
Restructured Debt (Bankruptcy) - Mentioned as a type of debt structure used by wealthy individuals.
Structured Debt - Mentioned as debt leveraged to buy assets or make money.
Unstructured Debt - Mentioned as the debt structure used by 97% of Americans, involving consumer purchases.
Affirm Payments - Mentioned as a "buy now, pay later" service that does not show up on credit reports.
Klarna - Mentioned as a "buy now, pay later" service.
Personal Development - Mentioned as a powerful aspect of life and finances.
Poverty Mindset - Mentioned as a hindrance to financial growth.
Consumerism - Mentioned as having put a "black cloud" over the concept of credit.
Financial Survival - Mentioned as a state from which people are taught to operate.
ROI (Return on Investment) - Mentioned as a key factor in deciding whether to leverage debt for an investment.
Hard Asset - Mentioned as a recommended first investment when using credit.
Commodity - Mentioned as a type of asset that can be invested in.
Grit - Mentioned as a quality needed to survive and thrive.
Perseverance - Mentioned as a quality needed in society.
Bankruptcy - Mentioned as a stigma in the black community, but a business tool used by wealthy individuals.
Debt System - Mentioned as having spawned from the Federal Reserve.
Taxes - Mentioned as debt servicing for the banking system.
Inflation - Mentioned as something that hard assets hedge against.
Personal Loans - Mentioned as a type of debt that can help get out of a bind.
Line of Credit - Mentioned as a type of debt that can help get through a bind or invest.
Interest Rates - Mentioned as a factor that traps people.
Collection Account - Mentioned as something that may not be fixed by simply paying it.
Charge Off - Mentioned as an event that impacts credit.
Autopay - Mentioned as a method to ensure bills are paid on time.
Credit Score - Mentioned as a number that impacts financial opportunities.
Network Marketing - Mentioned as an introduction to entrepreneurship for Will Roundtree.
Personal Development - Mentioned as a key takeaway from network marketing.
Entrepreneurship - Mentioned as a path Will Roundtree took after being laid off.
Real Estate Portfolio - Mentioned as an asset that can be leveraged with debt.
Student Loans - Mentioned as a type of debt that can be paid off.