The Value Of Debt: How To Manage Both Sides Of A Balance Sheet To Maximize Wealth, by Thomas J. Anderson
This particular book has a couple of obvious agendas, and while I did not have a problem with either of them, it is worthwhile to discuss them openly so as to let the potential reader know if either of them are dealbreakers. The first of these agendas is to promote a view of one’s own personal balance sheet as if one was a company, seeking to use one’s assets in order to have smart debt that reduces tax liability and that provides very low interest rates because the loans are themselves organized in such a fashion as to be ordinary and thus not risky for banks. Similarly, the book is written in order to serve a particular approach to borrowing money called an Assets-Based Loan Facility (ABLF) which provides a lot of capacity for borrowing that remains unused, but which capacity itself can allow for considerable flexibility in how to deal with opportunities for investment as well as personal disasters. Not all people will be either temperamentally suited or will have the sort of resources to approach their personal finance like a business, but those who are will find much of interest here and may wish to read other books by the author.
This book is a relatively short one, even with its four appendices it is still between 200 and 250 pages and a quick read at that if you have an interest in this sort of material. The book begins with a foreword, acknowledgements, and introduction. After that the author discusses the value of debt in the management of wealth (I), with chapters giving an overview of the philosophy of strategic debt (1), the basic idea of limiting costs, impacts, and duration of financial distress (2), as well as an overview of strategic debt practices (3). The author then moves on to discuss the Assets-Based Loan Facility as a means of debt management (II), with a chapter on the value of such a facility (4). After that the author explores various scenarios for financial success (III), including obtaining long-term wealth amplification through capturing the spread (5), holistic financing of the expensive things that the reader presumably needs and wants (6) , the generation of tax-efficient income in case of retirement or diverse (7), where alimony is far better on a tax basis than child support is for the person paying it, as well as a conclusion that discusses what the book is really about (8). After that there are four appendices that discuss the varieties of debt (i), strategic debt practice for the young and those with limited assets (ii), limiting the risks of investment (iii), and some examples of ideal debt ratios (iv), after which the book ends with a glossary, bibliography, information about the author as well as the book’s companion website, and an index.
This book is really aimed at what we would consider the middle class or upper middle class reader who owns a home, and who has at least some interest in entrepreneurial thinking on the personal level. The author works from the understandable and praiseworthy assumption that it is noble and good to not pay any more taxes than one has to based upon the rules that are set up by government, and that people can gain a great deal of personal profit from thinking of their own personal business as a business with income streams and expenses and capital investments and the like. The author notes that a certain amount of a certain type of debt is ideal and that there are mistakes that are often made by people in either seeking to avoid debt altogether and thus avoiding its benefits or being over-leveraged and thus vulnerable to downturns. The book demonstrates the value of debt and the way that it drives the production of wealth for those who are wise and shrewd enough to use it well, operating under the assumption that the author and the reader are both at least capable of being that shrewd and that the reader has no moral objections to financial shrewdness in principle.