Debt and steroids are great – in the right situation. Responsible, well-managed, creative debt can catapult a business into great success. An asthmatic who’s just suffered an attack hears music when the doctor orders him a steroid called Prednisone. But drugs and debt are meant to alleviate a temporary situation. They are meant to be a bridge, not a residence.
Debt allows us to fast-forward our dreams. Debt can also be used to capture an opportunity when capital is scarce, which is important because most opportunities show up at the most inopportune times. Debt is toxic when we use it to bulk up our existence beyond our ability to maintain. Baseball players, fearful of becoming irrelevant, made the decision to extend their careers using steroids. The pressure caused them to harm their bodies and the effects can linger long after baseball.
When debt lingers too long, we believe our bulked-up existence is real and the $1 million home is our reality (when we really only can afford the $500,000 home).
Long term use of steroids and long term use of debt make us weaker not stronger.