Like most other Floridians, I did not grow up here. I grew up in land far, far away with far less humidity. So, I tend to look with awe upon some of the ways that plants just “magically” grow around here. Will I ever get used to ferns like this just randomly growing out of tree trunk? I hope not – I actually hope I always look with a bit of wonder at the “air plants” that seems to grow almost magically on tree limbs.
Seriously, aren’t these things amazing? We had a huge air plant fall out of a pine tree almost two years ago. Since then, we have kept it in an empty flower pot (no dirt or water) next to our front door. It’s still alive! How does this happen?
So what does any of this have to do with debt and wealth creation? Well, it all comes back to the strangler fig.
What’s A Strangler Fig?
If you’ve never heard of a strangler fig tree, don’t worry – I had never heard of it until I moved to Florida. But you’re in for a treat, because they are a heck of a neat plant. Strangler fig trees start out like the ferns and the air plants in the picture above. Just a few leaves or a tiny branch or two poking out of the spines of a palm tree. Although they can grow on LOTS of different types of trees, one of the most common places to find them is growing out of palms since it’s so easy for them to take root in the spiny bits that stick off the trunk of a palm tree left over from the palm froms that have died and been removed.
The strangler fig takes root in the palm and starts to grow. But instead of staying small and manageable like the air plants or the ferns, before you know it, the strangler fig can be as tall or taller than the palm tree. As it reaches up to the sky, the strangler fig continues to wrap its trunk around the trunk of the palm tree while at the same time the strangler fig is cutting off the sun from the palm.
Sure, it took a few years to get to this point, but now the palm tree is in trouble. It’s not getting the sunlight that it needs, and might also be having trouble getting all the water it needs from the soil as the strangler fig is requiring more and more. After a while, it gets to be too much for the palm – and it dies. But since the strangler fig can’t really grow without anything to climb, when the palm dies, the strangler fig starts to have trouble too! It might stay alive for a few more years as the rotting palm tree trunk wrapped within its own trunk dies away completely, but it’s not going to have a long life.
What looked like a pretty symbiotic relationship between the palm tree and the strangler fig is no more, and they both end up dead over it. Not really a fun ending, huh?
You Said We’d Be Talking About Debt And Wealth Creation, Not Plants…
Okay, I’m getting there. Like the strangler fig and the palm tree, debt and wealth creation can have a pretty symbiotic relationship. In order to buy all of our real estate portfolio over the last three years, we took on a good chunk of debt. Without that debt, we wouldn’t have been able to make those purchases at a time when real estate prices were at historic lows and interest rates were, too! So that debt is a large part of why our current net worthis doing as well as it is. That debt helped us to create wealth for ourselves over the past few years.
We could keep borrowing – heck Wells Fargo wanted to loan us another $100K – but like the strangler fig, when left to grow without bounds, debt can manage to kill the wealth that it helps to create, too.
The key is making sure you keep it well under control. If you find yourself with a strangler fig growing out of a palm, it doesn’t have to be the end of the palm tree. Just trim the strangler fig. Never let it get big enough that it chokes out the palm. They can BOTH grow to greater heights as long as the strangler fig is not allowed to grow bigger than the palm.
See the similarity with debt and wealth creation? A bit of leverage (debt) can help you along the path to wealth creation – but letting it get too ahead of you… well, let’s just hope we can all learn the dangers of being over leveraged from the Queen of Versailles. [For what it's worth, we haven't yet seen this movie since it hasn't come to our area, but I really want to see it!]
What do you guys think? Can debt and wealth creation work symbiotically, or are you a purist that never wants to use debt ever?
Bonus questions: Had you ever heard of a strangler fig before today? And if you’ve seen Queen of Versailles, tell me it’s worth looking forward to since I have no idea when it’ll get here! (Or on video…)