Donald Trump wants us to think he’s a billionaire because he has a number of pricey assets in his name. But in the real world, net worth has specific definition: your assets minus your debts. For example, if someone has five billion dollars in assets, but owes six billion dollars in loans, then that person is not a billionaire; in fact that person has a negative net worth, and every one of you reading this is technically “richer” than that person – simply by not being a billion dollars upside down. This brings us to the latest news about Donald Trump.
One consistent thing about people who are upside down financially: they never have enough cash on hand to buy anything, because as soon as income arrives, it goes right back out to service the debt. For the average person, this would mean being so deep in credit card debt, and so wiped out by the monthly minimum payments, the only way to buy anything would be to put it on a credit card and run up the debt even further.
For Donald Trump, this means having to take out even more loans in order to buy things that should be easily affordable for a wealthy person. When Trump (unsuccessfully) tried to take out a roughly billion dollar loan to buy the Buffalo Bills football team, this actually made sense. If Trump has a net worth of five to ten billion dollars, like he claims, he wouldn’t necessarily have a billion of it sitting around in cash at all times, so he would need to take out a loan to buy something that size. But if Trump were a billionaire, he would definitely have a measly $11.2 million sitting around at his immediate disposal.
Yet new financial disclosures reveal that when Donald Trump bought a house in Florida last year, he had to take out a long term $11.2 million bank loan, according to Reuters. Considering the 4.5% annual interest rate he’s paying, this is a financially terrible move.
Bill Palmer is the publisher of the political news outlet Palmer Report