The average American is carrying $108,000 in debt right now. Larry Ellison is carrying $1.2 billion. The question Codie Sanchez asks out loud is the one most people have never thought to ask: why is one a crisis and the other a strategy? The answer, she argues, comes down to a single distinction that separates how wealthy people relate to their assets versus how everyone else does, and once you see it, the entire architecture of personal finance looks different.
The golden goose nobody sells
The foundational move is one Sanchez calls borrowing against assets rather than liquidating them. The Elon Musk Twitter acquisition is the illustration she reaches for first. Instead of selling Tesla shares to raise the capital he needed, Musk pledged $62.5 billion worth of shares as collateral and took out a $12.5 billion margin loan. He kept every share, every voting right, and every dollar of upside as Tesla climbed. He used his position as leverage rather than cashing it out.
For someone with $100,000 in a brokerage account rather than $62.5 billion, the math still holds. Selling $20,000 in stock to fund a new investment leaves $80,000 compounding, triggers a capital gains tax bill, and produces roughly $128,000 over five years at a 10 percent annualized return. Taking that same $20,000 as a securities-backed line of credit, what the industry calls an SBLOC, leaves the full $100,000 compounding. After paying 6 percent annual interest and repaying the loan, even if the borrowed money produces nothing at all, the result is approximately $135,000. The asset never got smaller. That gap widens significantly with time.
The risk side gets equal attention. A margin call happens fast when asset values drop below the loan-to-value threshold, and the bank sells holdings at the worst possible moment to protect itself, not the borrower. Tesla’s board was nervous enough about the exposure that it capped how much Musk could personally borrow against his own shares at $3.5 billion. Sanchez puts her own comfort zone at 20 to 30 percent loan-to-value for stocks and no more than 10 percent for crypto. She describes the gap between a loan and the margin threshold plainly: ‘the gap between your loan and margin is called sleep, and it will affect your actual sleep.’
Where business debt makes the billionaire math work
The second category is where Sanchez’s analysis gets most specific. She runs a direct comparison: $200,000 invested in the stock market at an 8 percent return produces roughly $170,000 at the end of eight years. That same $200,000 used as a 10 percent down payment on a $2 million business, financed with an SBA loan at an industry-standard 5 percent growth rate, produces $5.1 million over the same period. She describes that as more than 30 times the return of the S&P 500.
The worked example is a lawn care business in Texas asking $349,000, generating $325,000 in annual revenue and $144,000 in cash flow, a 44 percent profit margin. With 10 percent down ($35,000) and a 10-year SBA loan, the first-year debt service runs about $51,000, leaving roughly $93,000 in the buyer’s pocket. On a $35,000 down payment, that is a 265 percent cash-on-cash return.
Seller financing pushes the math further. Rather than routing through a bank, the buyer negotiates directly with the seller: 40 percent of profits until $375,000 is repaid, structured over seven years instead of ten. Same entry cost, no lender in the middle, and an additional $135,000 in pocket over a comparable window. Sixty percent of all business sales close with some version of seller financing, Sanchez notes, largely because retiring baby boomers want their businesses to survive, not close.
The SBA trap is the personal guarantee. If the business fails before the loan is repaid, the SBA pursues the borrower’s house, car, and any other assets. She flags a boat rental business on a listing platform as an example she would not touch: $150,000 asking price, $20,000 in revenue, $10,000 in cash flow, and a lakeside location that shuts down seasonally.
The extra $800 that feels responsible
On mortgage debt, the counterintuitive move is to stop sending extra principal payments and put the money elsewhere instead. A homeowner with a $400,000 mortgage at 5 percent for 30 years who throws an extra $800 a month at principal pays the loan off in 17 years and saves about $245,000 in interest. That same $800 a month invested in an index fund at a conservative 7 percent for those same 17 years grows to approximately $300,000, a $60,000 difference in the same timeframe. Stretched to the full 30-year mortgage window, that $800 monthly investment reaches roughly $975,000.
The broader frame is liquidity. Every extra dollar sent to mortgage principal gets locked inside the house and does not come out until the property is sold, refinanced, or borrowed against. The same dollar in a brokerage account or a Roth is accessible when a business has a bad quarter or a car dies.
The lawn care business in Texas, still on the market
The listing: $349,000, a 44 percent margin, and a seller who has not yet found a buyer willing to structure the deal the right way.
Buffett’s rule closes the framework: never risk what you have and need for what you do not have and do not need. The average person borrows to consume, works to repay, and borrows again because the payments keep growing. The cycle, Sanchez observes, can eat decades. The alternative is using debt to buy things that grow, produce cash, or hold value, and then borrowing against those things to buy more.
