Elf on the Shelf founders used debt to turn a holiday gimmick into an empire. You can use their playbook to follow your own dreams

The Elf on the Shelf may be a popular sight around the Christmas season — but it wasn’t an easy path getting there.

This peculiar looking doll, which celebrates its 20th anniversary this year, is actually based on a book, wherein the elf “watches” kids for good behaviour leading up to Christmas. Kids believe that the elf reports back to Santa every night about who deserves to be on the naughty or nice lists.

But 2005 wasn’t so nice for the company’s founders. Bloomberg reports that this is when Carol Aebersold and her twin daughters, Chanda Bell and Christa Pitts, created the book The Elf on the Shelf: A Christmas Tradition paired with the doll. Neither publishers nor bankers wanted in.

“When you think about traditional financing models, banks don’t really look at a startup elf company as being investment-worthy,” Pitts tells Bloomberg (1).

The family was determined to get 5,000 copies of the book and toy made. So Bell took on credit card debt, Pitts sold her Pennsylvania home and their parents cashed in their 401(k) — an American equivalent to an RRSP — to make it happen.

Their debt literally paid off. The Elf on the Shelf empire has an estimated net worth of US$100 million, according to Bloomberg. As of January 2025, over 31 million Elf dolls, and their pets — yes, it’s a whole universe — have been sold around the world since their 2005 launch (2).

So how can you take a page from The Elf on the Shelf and use debt to build your own North Pole?

Naughty vs. nice debt

Though debt is generally frowned upon by most personal finance experts, some high-profile money gurus, such as real estate investing mogul Grant Cardone, see it differently. “While it’s true that too much debt can be a bad thing, it can be one of the most powerful tools in a real estate investor’s arsenal,” he wrote in a blog post.

He would know. His private equity firm, Cardone Capital, says that its assets are valued at over US$5 billion (3).

Cardone argues in his blog post that there’s “bad debt” and “good debt.” Bad debt is debt that doesn’t contribute to your future wealth growth, like paying off cars and credit cards. But good debt is “used to purchase assets that appreciate or produce income,” like real estate or investments.

Based on Cardone’s take on debt, The Elf on the Shelf founders accrued good debt when they decided to put their credit score, homes and 401(k)s on the line to create a company. Though not everyone creates a viral Christmas toy, Cardone does believe that good debt is one that attempts to produce income.

That said, you can also incur small debts to produce more income. For instance, you can spend a bit of money trying to start a low-level side hustle and see how far it gets you. The better it does, the more money you can put into it.

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Expand your money-making

Now that Elf on the Shelf has proven to be a success, the company put huge efforts into expansion to generate more wealth. On its website, The Lumistella Company — the parent company of Elf on the Shelf and run by Bell and Pitts — reports that it has over 100 licensing deals around the world across numerous categories “from sweet treats and sleep solutions to stage productions and collectible toys (4).”

Grant Cardone generated his wealth in a similar way: He used debt to start out investing in real estate), made his money back and then kept investing.

“Real estate is the best example of good debt because it has the potential to generate both capital appreciation and cash flow,” he says.

But if buying huge amounts of property seems out of reach, you can still get your piece of the fruit cake. One way is to invest your money in a real estate investment trust (REIT).

You can also buy shares of REITs just like you would with stocks. You receive a shareholder dividend from the rents collected on those REIT properties, from commercial and industrial to residential.

If all you want for Christmas is more money, “good” debt may be a way to get you there.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Bloomberg (1); The Hollywood Reporter (2); Cardone Capital (3); Lumistella Company (4)