I avoid debt like I was taught. So why are the borrowers getting ahead?

• A loan stays the same number while prices and wages rise, so inflation makes it lighter every year.
• That's why people who borrowed to buy a home have often ended up ahead of people who saved in cash and waited.
• But debt magnifies losses as much as gains. Borrow too much, for the wrong thing, or at a rate that can jump, and the weapon points at you.

You were probably raised to see debt as something to avoid, and for credit cards that's still good advice. But look around and something doesn't add up. People who stretched to buy a small apartment ten years ago are often better off than people who carefully saved and waited. That can feel unfair, even a little dirty, as if they cheated. They didn't. They understood one rule of the current system: when money keeps losing value, borrowing to own something that holds its value works in your favor.

Let's make it concrete

Priya and Lukas earn the same salary, about $4,000 a month. Priya buys a small apartment with a fixed-rate loan and pays $1,000 a month. Lukas rents a similar place for $1,000 and saves in cash, waiting until he has enough to buy.

Ten years later, Priya still pays $1,000 a month. Her salary has gone up to around $5,000, so a payment that once took a quarter of her pay now takes a fifth. And every month, she owns a little more of her apartment.

Lukas's rent has gone up to $1,250. His savings grew a little, but apartment prices grew faster. He's further from buying than he was ten years ago, and he did nothing wrong.

But not all debt is equal

Now Priya also borrows to buy a new car. The loan stays the same, but the car starts losing value the day it leaves the dealership. The same goes for a phone or a TV: next year there's a better one for less. If you borrow for something that loses value, you lose twice: once on the interest, and once on the thing itself.

So the question isn't "Should I borrow?" It's "Will what I'm buying still be worth something when I've paid it off?"

When the weapon points at you

Priya's story works because three things went right. She borrowed an amount she could carry, at a fixed rate, and she never had to sell at a bad moment. If any one of those goes wrong, the story ends differently. People who bought at the 2021 peak with variable-rate loans saw their payments jump when rates rose in 2022, and some had to sell for less than they owed. Debt doesn't care that you meant well.