Kevin O’Leary says he hates debt, buys everything in cash — but 1 famous YouTuber suggested it’s only because he has ‘so much money now.’ Here’s Mr. Wonderful’s response

However, Stephan argued that it’s probably easier to avoid debt if you’re already fabulously wealthy. O’Leary has an estimated net worth of $400 million thanks to successful business ventures and investments. Unlike the typical American worker, he doesn’t need to rely on personal loans and credit cards to make ends meet.

But O’Leary’s surprising response highlights how dangerous debt can be, even for some of the wealthiest people.

Debt is risky regardless of wealth

Substantial wealth isn’t necessarily a shield against the downsides of leverage. O’Leary says many of his wealthy peers faced bankruptcy in their 40s because “they didn’t respect debt.”

Lifestyle creep, where living expenses outpace income growth, can ultimately lead to unsustainable levels of debt. O’Leary explains that instead of buying income-generating assets like stocks and real estate, many of his high-income peers “were buying boats and cars and watches and getting divorced; They loved their lifestyle, they went to zero.”

Indeed, many successful entrepreneurs and celebrities have faced financial ruin because they overleveraged. Godfather director Francis Ford Coppola confirmed on the Howard Stern show that borrowing money to fund his unsuccessful movie projects led him to bankruptcy three times. Rapper Curtis Jackson III, also known as 50 Cent, filed for Chapter 11 bankruptcy in 2015 after struggling to pay off his various loans.

These cases highlight how extraordinary success and substantial earnings can be quickly overshadowed by the reckless use of credit. In other words, you can’t out-earn bad decisions. Instead, it’s better to monitor and tightly control your personal leverage.

How to measure and reduce your borrowings

If you have debt, measuring it against your income is a good way to judge how risky it is for your personal finances.