Recently, a friend told me I was doing it all wrong.
Not investing wrong. Not saving in the wrong account. But wrong in the very way I was approaching wealth building.
Building wealth, he explained, has nothing to do with saving or being careful with your money. It’s about debt. That’s how Elon does it. That’s how all of them do it. So why would I be doing anything else?
I tried to offer the counterargument. After decades of talking about money with people, I had responses ready to go.
He wasn’t going to have it. As far as he was concerned, I was the one who was dead wrong.
The conversation stuck with me, and not because I minded losing it (which I always do). But because he isn’t gullible. He’s a sharp guy who reads things and thinks about them. He’d just picked up an idea that’s everywhere right now. A version of the truth that has the pieces in the wrong order.
There’s a whole genre of this on your feed at the moment, and if you’re in your forties or fifties or sixties, you're probably getting it even more frequently.
The pitch: the wealthy don’t earn and save like you do. They borrow. They never sell, so they never pay tax. They live off loans against assets that keep growing. So they spend money while making money.
It even has a name. Buy, borrow, die.
Parts of it are true at the very top. Almost none of it transfers to a household making $85,000 and trying to catch up, and the versions packaged for regular people are some of the most expensive financial products in existence.
Look at the Order of Those Words
Buy. Borrow. Die.
Borrowing is step two.
You cannot borrow against an asset you don’t own. For example, if you don’t have equity in your home, you can’t take out a home equity loan. Equity secures the loan. Every version of this pitched to a working family inverts the sequence, telling you to borrow in order to acquire assets, which is precisely backward from what happened to the people in the story.
Step one is ownership. Step two is leverage. There is no version where step two comes first.
Elon Musk can pledge Tesla shares against debt because he owns those shares by building Tesla. Larry Ellison can pledge Oracle stock because he founded and built Oracle. The borrowing is a tax technique applied to wealth that already exists. Nobody at the top used it to get there. They use it once they are there.
What the Research Says
Rather than argue with influencers, I’d rather use the best data we have.
Three economists (Matthew Smith at Treasury, Owen Zidar at Princeton, Eric Zwick at Chicago Booth) built wealth estimates from administrative tax records instead of surveys, published in the Quarterly Journal of Economics in 2023. Two of their findings matter here.
At the top, wealth comes from private business ownership and public equity. Not leverage. Not clever borrowing. Ownership of companies.
For the bottom 90%, retirement and housing wealth account for almost all wealth. Retirement accounts and home equity. That is the American wealth machine for nearly everyone in this country.
There’s a third finding I keep coming back to. The households holding the largest share of American wealth aren’t billionaires at all. The group between the 90th and 99th percentile holds more than either the top 1% or the entire bottom 90%. Not private-jet people. Dentists, contractors, two-teacher households who owned a home and funded a 403(b) for thirty years.
Which changes the target. The reachable version of wealthy in this country got built by people doing ordinary things for a long time. The billionaire path isn’t a path; it’s an outcome a handful of company founders arrived at.
Being Honest About the Top
I’m not going to tell you buy-borrow-die is fake, because it isn’t entirely.
Ellison has pledged billions of dollars of stock as collateral. Musk has pledged Tesla shares. Documented facts.
It’s also contested. In a CNBC interview in May 2026, Jeff Bezos called the strategy a myth and said he pays tax on the stock he sells. Whether he’s right about the broader practice is a live argument, not a settled one, and I’m not going to pretend otherwise.
There’s a political fight wrapped around all of this too, with proposals to tax unrealized gains and competing methods for calculating what the very wealthy actually pay. People disagree about whether the current treatment is fair. I’m not taking sides on that here.
The Four Traps
What does worry me is how the myth of “Buy. Borrow. Die.” is how it is encouraging ordinary families to borrow money in ways that are likely to undermine reaching their goals.
401(k) loans
The most common, and the most misunderstood.
You’re not borrowing against the asset, you’re borrowing from it. The money leaves the account and stops compounding while it’s out. You pay yourself interest, which sounds clever until you notice you’re paying yourself interest on money that was already growing.
Then there’s the part nobody knows until it happens. Leave the job, and the loan comes due. If you don’t repay it, the plan offsets the outstanding balance against your account, and that offset gets treated as a distribution: ordinary income tax, plus a 10% penalty if you’re under 59½.
There’s one piece of mercy in the rules. Since 2018, once the offset happens, you have until your tax filing deadline for that year, including extensions, to come up with the money and roll it into an IRA to undo the tax hit. Often that’s a good deal longer than people expect.
Notice what it requires, though. It requires you to have the money. Which, if you just lost the job, is the entire problem.
HELOCs as an emergency fund
A home equity line of credit (HELOC) is not an emergency fund, because it isn’t guaranteed to be there.
During the credit crunch of 2008 and 2009, lenders froze and reduced home equity lines, and they did it exactly when people needed them. Not a hypothetical. It happened to a lot of households at the worst possible moment.
The billionaire’s collateral doesn’t get called. Yours can. And that means one of your greatest assets can go away in a heartbeat.
Margin loans and securities-backed lines
Same shape, different asset.
A margin call forces you to sell at the worst possible moment, the one outcome the entire strategy is supposed to prevent. It works at the very top because the loan is a rounding error against the collateral. So much cushion that no realistic market drop triggers anything.
On a $60,000 portfolio there is no cushion. The math that makes this safe for a billionaire is the same math that makes it dangerous for you.
“Infinite banking” and whole life insurance
Pitched as “be your own bank,” and marketed harder than the other three combined. I want to be fair here rather than dismissive.
Whole life is a real product that does a real job for a narrow set of people, mostly around estate liquidity and lifelong dependents. It is not a wealth-building engine. Commissions run heavy and front-loaded. Surrender charges commonly last ten to fifteen years, so your money isn’t really yours for a decade. Independent analyses have generally found long-run returns in the low single digits, though the number moves a lot depending on the policy and the assumptions. And if you borrow against the policy and don’t repay, it can lapse and hand you a taxable event on top of the loss.
If someone found you to sell you this, take that as information.
The tell across all four
Every one of these is a technique for managing wealth you already have, presented as a technique for creating wealth you don’t.
Someone is selling you the exit strategy as the entry strategy.
Once you see it, you’ll see it everywhere.
To Be Clear, Not All Debt Is a Trap
I don’t want to leave you thinking debt is the enemy, because that’s not what I believe and it isn’t what the four traps have in common.
There’s a real distinction between borrowing that buys you something productive and borrowing that buys you something consumed. A mortgage on a house you live in for twenty years. A loan for equipment that lets your business bill more hours. Financing a work truck that generates the income to pay for itself. That debt has a job, and the job is measurable.
The four traps above aren’t productive leverage. They’re borrowing against an asset you already own to chase a return that has to beat the cost of the loan plus the growth you interrupted. Sometimes that works. Usually it doesn’t, and when it fails it takes the underlying asset with it.
Productive leverage builds something. Consumption leverage moves money around and hopes.
(I’ve written more about this in Good Debt vs. Bad Debt, if you want the longer version.)
The Boring Version, With Numbers
Two households, both 45, both sitting on $30,000 in a 401(k).
Household A watches the Instagram reels and acts. They pull a $15,000 loan from the 401(k) to fund what the video called a cash-flowing asset. Year three, the job ends. The loan offsets. They owe income tax on the balance plus a 10% penalty, and they can’t roll it over, because they just lost their income. Call it $4,000 to $5,000 gone to tax and penalty, on top of $15,000 that spent three years not growing and then left permanently.
Household B does nothing interesting at all. They add $250 a month.
Run both to 65 at a modest return, and Household B ends up roughly $150,000 ahead. It gets there without needing a single thing to go right.
Why This Works on Smart People
I keep thinking about my friend, and I don’t think what happened to him was stupidity.
The Instagram version is seductive because it tells someone who feels behind that there’s a shortcut they were never shown. It’s flattering. It reframes why you’re behind: not that you had less to work with, but that you were kept outside a secret.
A much kinder story. Just not the true one.
Here’s the true one, and I’d argue it’s kinder still. The boring path is the actual path, the research backs it, and the people who look effortlessly wealthy mostly owned something and held it for thirty years. The largest share of American wealth sits with households who did exactly that.
Not a scolding. If you’ve been worn down by the sense that everyone else knows something you don’t, it ought to be a relief.
And the mechanism is available to you. Retirement accounts and home equity are the documented wealth machine for the bottom 90%. Not a metaphor and not a consolation prize. The actual thing, sitting right there, asking for nothing more exotic than time and contributions.