One of the things that gives me great comfort about the health of the U.S. economy is our historically low household leverage. According to the Federal Reserve Board, household leverage is now at an 80-year low—a remarkable sign of financial discipline.

So let me be the first to congratulate you for not loading up on debt like so many did between 2000 and 2008, right before the worst financial crisis of our lifetimes!

Back then, people lost their jobs and massive chunks of their net worth because of too much leverage. I was one of them—I had two mortgages and ended up losing 35% to 40% of my net worth in just six months. It took a decade to rebuild.

After that experience, I promised myself: never again will I take on that much debt.

Households Can Better Withstand the Next Recession

Nobody likes a recession or stagflation. But with household leverage at an 80-year low, it’s highly unlikely we’ll face another global financial crisis like in 2009. Households are simply too cashed up to panic-sell. Instead, most will hunker down and wait for better times to return.

Thanks to this strength, I plan to use any correction as an opportunity to buy the dip—for both my retirement accounts and my children’s. With so much cash on the sidelines, we’re more likely to see V-shaped recoveries than drawn-out U-shaped ones.

Personally, after selling our previous rental, I’m sitting on ample liquidity in Treasury bills and public stocks I can sell and settle within days. And with a fully paid-off primary residence, there’s almost zero chance I’ll ever sell at a discount. Why would I, with no mortgage and no urgency? Around 40% of U.S. homeowners now own their properties outright.

Just imagine how much the stock market, real estate, and Bitcoin could surge if household leverage ever returns to 2007 levels. Risk assets would likely skyrocket once again. And based on human nature and our historical appetite for risk, I wouldn’t be surprised if leverage ramps back up, especially as interest rates continue to decline.

On top of that, millions of homeowners locked in rock-bottom mortgage rates in 2020 and 2021. The tappable home equity across the country is enormous compared to 2007, making another housing-driven crash highly unlikely.

The Only Good Type of Leverage

In general, the less debt you have, the better. But in a bull market, strategic leverage can accelerate wealth building. So what’s a financial freedom seeker supposed to do?

First, understand that not all debt is created equal. Consumer debt, especially from credit cards, is the worst kind of widely available debt. With average credit card interest rates north of 25%, you’re basically giving your lender a return Warren Buffett himself would envy. For the love of all that’s good in this world, avoid revolving consumer debt at all costs.

The only type of debt I condone is mortgage debt used to build long-term wealth. It’s generally one of the lowest-cost forms of borrowing because it’s secured by a real, usable asset. Being able to leverage up 5:1 by putting just 20% down to buy a home—and then live in it for free or even profit—is an incredible opportunity.

That’s why I’m a strong proponent of everyone at least getting neutral real estate by owning their primary residence. Hold it long enough, and thanks to forced savings, inflation, and mostly fixed housing costs, you’ll likely come out far ahead compared to renting a similar place. People like to say they will save and invest the difference, but most people can’t keep it up over the long term.

As for margin debt to invest in stocks? I’m not a fan. Stocks offer no utility, are more volatile, and margin rates are usually much higher than mortgage rates. If you’re going to use debt, at least tie it to something you can live in and control.

The Recommended Asset-To-Debt Ratio By Age

Here’s a useful framework to assess your financial health: a suggested asset-to-debt (liability) ratio, paired with a target net worth by age. The asset-to-debt ratio applies broadly, regardless of income.

The net worth targets assume a household earning between $150,000 to $300,000 during their working years, maxing out their 401(k), saving an additional 20% of after-401(k) income, and owning a primary residence. In short, aim for a net worth equal to 20X your average household income if you want to feel financially free.

After running the numbers and reflecting on real-world conditions, I believe most people should aim for a steady-state asset-to-liability ratio of at least 5:1 during their highest earning years to retire comfortably.

Why 5:1? Because having five times more assets than liabilities puts you in a strong position to ride out economic storms. Ideally, your debt is tied to appreciating assets—like real estate—not high-interest consumer debt. If your liabilities equal about 20% of your assets, you’re still benefiting from some leverage, without taking excessive risk.

By your 60s and beyond, the goal should shift toward being completely debt-free. An asset-to-liability ratio of 10:1 or higher is ideal at this stage—for example, $1 million in assets and $100,000 in remaining mortgage debt. At this point, most people are eager to eliminate all debt for peace of mind and maximum financial flexibility in retirement.

The peace of mind and flexibility that come with zero debt (infinity ratio) in retirement is hard to overstate.

Be OK With No Longer Maximizing Every Dollar

After selling my former primary residence—which I rented out for a year—I wiped out about $1.4 million in mortgage debt. Even though the rate was low, it feels great to have one less property to manage. Now, with just one mortgage remaining as I approach 50, life feels simpler and a little more manageable.

When my 2.625% ARM resets to 4.625% in the second half of 2026, I may begin paying down extra principal monthly. By then, I expect the 10-year bond yield to be lower, making paying down debt more appealing. While I might miss out on further upside if San Francisco real estate keeps climbing—especially with the AI boom—I no longer care about squeezing out every dollar with leverage.

I’ve built a large enough financial foundation to feel secure. These days, I’m optimizing for simplicity, steady income, and gradual appreciation—the kind that helps me sleep well at night. Chances are, once you hit your 50s, you’ll feel the same too.

The drive to maximize returns eventually takes a backseat to the desire for clarity, peace, and freedom with the time we have left.

Readers, what’s your current asset-to-debt ratio? Are you surprised U.S. household leverage is at an 80-year low? Do you think another recession as long and deep as 2009 is likely? And do you hope to be completely debt-free by the time you retire?

Optimize Your Leverage With A Free Financial Check-Up

One of the biggest signs of a healthy economy today is the fact that U.S. household leverage is near an 80-year low. If you’re working toward becoming debt-free and want to ensure your net worth is positioned for both growth and stability, consider getting a free financial analysis from Empower.

If you have over $100,000 in investable assets—whether in a taxable brokerage account, 401(k), IRA, or savings—a seasoned Empower financial advisor can help you assess your portfolio with fresh eyes. This no-obligation session could uncover inefficient allocations, unnecessary fees, and opportunities to better align your financial structure with your long-term goals.

A sound asset-to-debt ratio and clear investment strategy are key to lasting financial independence. Empower can help you stress test both.

Get your free check-up here and take one step closer to optimizing your financial foundation.

(Disclosure: This statement is provided to you by Financial Samurai (“Promoter”), who has entered into a written referral agreement with Empower Advisory Group, LLC (“EAG”). Learn more here.)

Diversify Your Assets While Reducing Risk Exposure

As you reduce debt, it’s smart to also diversify your investments. In addition to stocks and bonds, private real estate offers an appealing combination of income generation and capital appreciation. With an investment minimum of only $10, you don’t need to take out a mortgage to invest either.

That’s why I’ve invested over $400,000 with Fundrise, a private real estate platform that lets you invest 100% passively in residential and industrial properties across the Sunbelt, where valuations are more reasonable and yield potential is higher.

Fundrise also offers venture exposure to top-tier private AI companies like OpenAI, Anthropic, Databricks, and Anduril through Fundrise Venture. If you believe in the long-term potential of AI but can’t directly invest in these names, this is a unique way to get access.

Fundrise is a long-time sponsor of Financial Samurai as our investment philosophies are aligned. I invest in what I believe in. I have a goal of building a $500,000 position with regular dollar-cost averaging each year.

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They say timing is everything — and that’s a lesson I’ve learned the hard way.

Today, I’m building a startup I truly believe in. But the truth is, this journey didn’t start last year. It began more than 20 years ago — with a big idea, the wrong timing and some painful but necessary lessons that would shape everything I’m doing now.

How it started

In 2007, inspired by platforms like Craigslist and LinkedIn, I set out to bring a new kind of online platform to life. I had a strong concept, but not the technical skills to build it alone. So I partnered with a close friend who could fill that gap.

At first, we were excited. But over time, cracks formed — our visions didn’t align, our strategies drifted, and financial pressure mounted. Eventually, we had to walk away.

It was disappointing, even devastating. But I never stopped believing in the core idea. Instead, I paused to reflect on what went wrong, what I’d learned, and what I needed to do differently next time.

That reflection helped shape both who I am and how I operate today.

Related: When My Startup Failed, I Was Hopeless and Left in Tears. Here Are the Lessons That Helped Me Restart and Launch Three Successful Companies.

What I learned (the first time around)

• Learning never stops: Your best insights often come from others. Lean into your network — mentors, peers, even critics. Learning from others and sharing your own experience creates a powerful loop of growth.
• Be willing to adapt: Even with a great idea, you have to stay flexible. Whether you’re launching or scaling, being able to pivot when needed isn’t a weakness — it’s a survival skill.

Getting it right the second time

• Start with clarity: A shared vision is critical. Before launching, make sure you and your co-founder(s) are aligned on goals, roles, and long-term expectations. Misalignment early on will cost you later.
• Be honest with yourself and your team: Ask the hard questions up front: Why are we doing this? What problem are we solving? Who are we solving it for? If your answers don’t match, it’s time to regroup.
• Culture matters as much as code: Yes, you need technical talent. But you also need people who share your values, collaborate well, and grow with the company. Don’t underestimate cultural fit — it makes or breaks teams.

If you build it, will they come?

This time around, I approached things differently. I didn’t just assume the idea was good — I tested it. I asked:

Are we solving a real problem?
Does the market need this now?
What’s our unique value proposition (UVP)?
Why would anyone choose us?

Customer-first thinking became the foundation. Instead of building what we thought was valuable, we built what the market actually needed — and made sure our solution stayed relevant.

Getting tactical: what every founder needs to consider

• Do your homework: Understand your industry, track trends, study user behavior and know your competition.
• Create a strategy: Write a business plan. Forecast your finances. Know your funding options.
• Formalize the business: Register your company, get your EIN, licenses, permits, and build your legal foundation properly.
• Build the right team: Use your network to find people who align with your mission and culture.
• Sell the vision: Know your customer, refine your message and create a product or service they actually want.

Related: 10 Lessons I Learned From Failing My First Acquisition

Final thoughts

Be both sales-driven and market-aware. Know your audience — where they get information, what problems they face, what resonates with them. Your customer acquisition strategy should be informed by real data, not just instinct.

And most importantly, keep an open mind. Inspiration can come from anywhere — a conversation, a failure, a new connection. The more you listen, the more likely you are to spot those game-changing ideas.

Building something meaningful takes time. For me, it took over 20 years. But every setback, misstep and restart has made this journey — and this version of the startup — infinitely more grounded and more real.

Ready to break through your revenue ceiling? Join us at Level Up, a conference for ambitious business leaders to unlock new growth opportunities.

Fresh out of an unfulfilling finance career, Neil Hershman was looking for something different — something he could build with his own hands. That search led him to 16 Handles, a New York-based froyo brand he frequented as a customer.

Astrophysics degree in one hand, finance resume in the other, Hershman found himself behind the counter of his first 16 Handles franchise, sleeves rolled up and running the store from open to close.

What started as a side project quickly spiraled into something bigger. “Open and close, every single shift I was working,” Hershman says. “I was able to advance the business [and] bring in additional revenue to the point where the profit was so great that I decided to leave all my other projects and just focus on 16 Handles.”

At a time when other entrepreneurs were retreating, Hershman expanded. He started building new stores across New York City during Covid-19, when retail leases were cheap and competitors were shuttering. “Instead of getting scared, I was the one coming in and building,” he says.

Related: He Started a Business and Ended Up on the Brink of Bankruptcy. He Fixed His Mistakes – and Now Teaches Entrepreneurs What He Wishes He Knew When Starting Out.

Soon, he wasn’t just running locations. He was leading the entire company.

Since acquiring the brand from founder Solomon Choi in 2022, Hershman has led a nationwide expansion of the froyo chain from 30 to 150-plus locations. His unexpected journey from customer to franchisee to CEO gives him a unique edge in today’s crowded dessert market.

Hershman is behind some of the brand’s wildest flavors, ranging from Harry Potter references to “french fry frozen yogurt” (a play on McDonald’s frequently broken ice cream machines). “I am part of the customer base,” he says. “My family, my friends, everyone is part of the customer base. So it’s just ideas that we have.”

The results speak for themselves. “Our sales growth has been phenomenal, like when we launched french fry, or the Squid Games-inspired flavor, or the butter beer out of Harry Potter,” he says. “Our sales are up like 30-40% the week that we launched compared to prior years. So it really does make a difference.”

But building a thriving brand takes more than flavor. It takes trust, consistency and loyalty — not just from customers, but from the team. That’s why the first person Hershman hired was Lisa Mallon, who co-owned the Fairfield, Connecticut, location with her husband for 13 years.

“Who knows the brand better and believes in the brand more than people who have been successful with the brand?” Hershman says. “Somebody who’s got 13 years of running a store open to close and knows customer interactions and [what] customers want, how to make the best bang for your buck on this business.”

Related: Her Show Was Canceled – But the Setback Taught Busy Philipps a Powerful Lesson for Creators and Entrepreneurs

This strategy helps the brand stay consistent, which are the callouts Hershman appreciates most in customer reviews.

“We used to have one girl who ordered every single day, and it would always come through around the same time, to the point where when you heard the printer printing at that time, we knew it was her order and what to do,” he says.

One day, she left a five-star review with a picture of her froyo on her coffee table. “Love this place, great chocolate,” she wrote.

For Hershman, these few words were a source of encouragement. “Even though it feels monotonous that we’re packing the same order every single day, there’s somebody at the other end who all day is probably looking forward to this moment of opening up this bag,” he says.

Hershman stressed the importance of paying close attention to reviews, whether positive or critical.

“[Loyal customers] know what to look for best,” he says. “Those are really important for us as a franchisor to know what’s going on with our locations, and for store operators to know what’s going on in the customer’s mind.”

Related: This Local Bakery Has Lines Out the Door. Here Are the Secrets to Its Success.

Hershman and his team keep a close eye on review platforms like Yelp to help refine operations and build trust while keeping in mind that not every critique is a call to action.

For example, one of the challenges Hershman identified is not getting the full picture of a customer’s experience based on their review. “You just get the edges, so it makes it a little hard to use those reviews as a long-term decision maker,” he says.

Nevertheless, critical reviews can provide clarity, and good reviews can build credibility. Both are opportunities to grow as a business.

Hershman’s story is about seeing potential where others see plateaus and making truly special moments for customers, who will return for the consistent experience again and again.

After taking over as CEO and reimagining 16 Handles for a new generation, Hershman’s advice to entrepreneurs is simple but powerful:

• Obsess over the customer experience. From staple products to add-on services, everything can be improved to build trust and cultivate repeat business.
• Build customer loyalty at every turn. Reading and responding to customer feedback lets customers know their voices are heard.
• Innovate with purpose. Not every business idea will see the light of day, but focusing on constant improvement will keep your business competitive.
• See your business through the eyes of a customer. Spending time on the front lines can give you a fresh perspective on what’s working and what needs to be improved.

Listen to the episode to hear directly from Neil Hershman, and subscribe to Behind the Review for more from new business owners and reviewers every Tuesday.

Editorial contributions by Jiah Choe and Kristi Lindahl