3 Ways I Have Used Leverage to Improve my Net Worth

3 Ways I Have Used Leverage to Improve my Net Worth: This is my follow up to my article I recently posted: “The best way to make money with real estate – use leverage!” I wanted to show some of my own examples of where I have used leverage to make gains in net worth. If you’re looking for the best way increase net worth – you will need to learn to leverage your money. Saving your way to wealth is challenging but there are other ways. Can you increase net worth through savings? Sure. However, using leverage is a sure fire way to expedite the process.

Now that we’re all caught up on what leverage is and how it works, we can get to the teaser in the title. Outside of the usual ways to use leverage, there are other ways.

Here are some of the things I have done before:

Leveraging my down payment for a rental property

When I purchased my first rental, I didn’t have the full amount to buy it outright. They were asking $152,000. At the time I had around $25,000 saved. Every mortgage person I spoke to said that I needed a 20-25% down payment in order to qualify for the loan.

So, I was stuck. Saving up $25,000 took a while and I didn’t want to wait all of that additional time to save up more money. The alternative was purchasing a cheaper property however in my area, they did not fare well (bad area, no appreciation, poor rental income).

I decided to partner up with someone (in this case, my father) to purchase the property. We would split the down payment amount in half. This meant that the deal was back on the table and I wouldn’t have to wait years to get started. The additional bonus is that I was teaming up with an experienced investor in the process!

Using creative financing to avoid PMI/escrow

Flash back to last year. My wife and I wanted to move to be closer to our families after moving an hour away two years ago. The problem once again – money. We had enough money to maybe put 10% down. The problem is that I wanted to avoid PMI for numerous reasons, mainly: increased monthly cost and when you have PMI, you need an escrow account. I hate escrow accounts, but that’s a different post!

After calling my usual mortgage brokers and striking out, I found one that was willing to entertain an idea I heard from Biggerpockets – could I use my 10% down payment and a home equity line on the property I was purchasing as my down payment? I would have more that 20% down (only 10% out-of-pocket) and I would avoid PMI and escrow.

Although reluctant at first, the broker agreed! The broker and I settled on a 10% down payment, 15% home equity line and 75% mortgage arrangement. We completed all the paperwork and the house was ours. We plan to pay down the home equity line as quickly as possible and then have a single mortgage.

Paying ahead on expensive debt for massive savings

Student loans and other debt. This one is a little different as most people do not think about paying off debt as “leveraging your money” but hear me out. Let’s take a look at my student loans from 1/12/2012

Can you increase net worth?

Taking a look at 1-07, we have $5,657.51 with an interest rate of 7.9% which is the highest rate of the bunch. That’s nearly 8%! If I let this loan go on for it’s full duration of 10 years, I would have been charged $2,565 in interest! That means my 5,657.51 debt really was $8,222.51.
After running these numbers, I realized that paying off these debts not only would improve my financial health and free up money every month but also allow me to generate a massive savings over time. So, off I went – taking every spare dollar and throwing it at the highest interest debt I could. From 1/12/2012, it took two years to pay off these loans. Between moving out, getting a new car and getting married – it wasn’t too bad!

Knowing what I know now, I really wished I found something like SoFI that I could have used to refinance my loans down to a lower rate. Battling through 8% interest is insane. I’m glad it is done now but I could have done it much more efficiently!


It is hard to improve your net worth and financial position without accelerating the process somehow. I admire the people in the Financial Independence movement who can save their way to freedom through multiple brilliant methods however for most of us, it would be very challenging. Leveraging provides most of us with a way to take a calculated risk to receive a much larger reward, which makes it the best way increase net worth.

If you found this article interesting and want to improve your understanding of your own financial position, consider signing up for an account with Personal Capital. Not is it free to use and safe but Personal capital lets you track your income, expenses, debts and investments all in one platform. I recommend it to everyone as a good first step towards financial health.

Did you like this article? Check out some of our others:

Investing in Real Estate Part 2: Analyzing Rental Property

How to Create Passive Income

How To Find Good Renters – 6 tips for success

What is the Best Affiliate Marketing Program for Beginners

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14 thoughts on “3 Ways I Have Used Leverage to Improve my Net Worth

  1. Thanks for sharing this article on using leverage to improve net worth. While I was familiar with the first two examples, I really never thought about the third – paying off your debt early to generate savings.

    Right now I’ve just completed a mortgage which will cost me almost 50% of the principal amount in interest over 25 years. So if I could some how avoid that I’d be saving a LOT of money.

    Thanks for sharing



    1. Money savings through early debt payments cannot be discounted! Think of how much you have saved yourself over the next 25 years?

  2. Good article! It is good to know different ways to increase your net worth. I am always afraid to let my money work for me. I am very frugal. but It is a good way to build more money. A rental property in a good area is always a good investment. Thanks for sharing your money making ideas I am always looking for advice in that area. keep up the good work

    1. Thanks Ruth, hopefully my article helped bolster your confidence in ways to improve your financial situation. Thanks for reading!

  3. That is some really interesting maneuvering you did there. Glad it worked out for you. Living with debt is really a burden and when you think of all the money going towards interest… it stings. Best thing is to not get into debt. Once you get there, it’s hard to get out. If you can leverage your way out and get rid of it, bonus.

    Thanks for sharing your personal experience. With the right advice, and the right opportunities you showed how it is possible to get it done. Hopefully an encouragement for those looking to do the same.

  4. This is a great post, It’s just what I was looking for. I’m doing some reading and research in buying real estate and rental properties. So first of the bat when you recommend sharing/splitting the down payment with someone. Is definitely added to an ideas list.I also learned some new things about paying ahead on debt. This definitely got me thinking more about savings and interest, Thanks for writing this post! Looking forward to reading more posts!

  5. Well done on all those financial feats! You deserve a trophy just for paying off those student loans the way you did. That’s unheard of nowadays! I hear financial advisers always saying that the path to wealth and financial independence is about finding ways to make your money work for you and it looks like you’ve accomplished that and more. I’m gonna need to check out Personal Capital. It sounds like a perfect money management tool.

    1. Personal Capital is easily one of my favorite tools. I really lets you map out your position and updates automatically, so you can focus on what you do best. If you’d like a link, I can give you my personal referral link from Personal Capital here:


  6. My husband and I could not afford to buy a house so we bought a 4-plex! I think this was a great example of leveraging our money. Because we had good, steady jobs, decent credit and low debt we looked like a good risk to buy whatever we wanted. We did not have money saved for a down payment however and we knew we could not reasonably afford a house in our very expensive local market here. They would have sold it to us but we could not honestly afford it.

    With my husband’s VA loan we could get a no down payment loan but we still knew we should not get a house. We were able to get a 4-plex and that has been a great investment. We live in one unit and rent out the other three so we live almost rent free. We were able to borrow from our parents for the earnest money and the coolest part…we could use our retirement savings for the “reserves” required for a large property like this. Normally we could never come up with the reserve amount required but I found out our retirement accounts counted! We never touched them, never took a penny out, but on paper they count. This is a good thing since we both work for our state government here in Alaska. We can’t easily access the retirement accounts anyway, but it works on paper and is legal and acceptable! So by leveraging my husband’s VA loan and a zero down mortgage, retirement accounts for the reserves and borrowing from family, we got a 4-plex!

    That opened up our eyes to the possibilities that exist in real estate. We hope to get a second building just as soon as we can. We are not in a position to do that yet but we will!

    Thanks for the idea of the home equity line of credit. I also need to get back to my continual fight to pay down credit cards too. We may need upgraded vehicles soon since ours are ancient so that is stressful. It would be better to have higher credit going into that.

    1. Oh wow! I wished I started that way! When I bought my most recent house, my wife and I were looking to get a duplex or triplex. Unfortunately, none of the ones available were worth the price they were asking. There is so much opportunity out there in real estate. Keep up the awesome work and thank you for reading!

  7. Thank you very much for this informative post.
    I especially love your third tip, which is to pay a debt on time and ahead to save on interest.

    Never gave that idea a thought before, but come to think of it, I realised how true it is after reading through this post.

    I better start working towards paying my debt off on time once and for all.

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