When I was still working in Corporate America, one of the executives used to say that he looks to hire salespeople who are basically up to their eyeballs in debt. “The best sales reps are the ones with the biggest houses and the newest cars!” he used to say, meaning that, since salespeople are typically paid via commissions, the ones with the largest debt are the most motivated to make money and would therefore close more sales for the company.
Employee Debt Is Good For Corporate America, Not For Employees
I don’t really miss anything about that corporate job (except for the benefits maybe), but I was recently reminded of that executive when I watched the movie Picture Perfect, starring Jennifer Aniston, on DVD. Certainly not a masterpiece, but I thought it was interesting that the boss in the film basically refuses to promote Jennifer Aniston because, unlike her colleagues, she’s not up to her eyeballs in debt. She’s free – no house, no car, no marriage – and as a boss, he doesn’t like that. He feels that he can’t trust a person like her to stay loyal to the company, because she can leave anytime – she doesn’t have that overwhelming fear that people who “own” assets experience, the fear of losing their assets, admitting they have “failed,” and giving up their lavish lifestyle.
Of course, this goes back to what Miranda said here a few weeks ago – do we really own an asset if we financed it with debt? It also raises the issue of how easy it is, in our culture, to become a slave to the rat race, to acquire more and more assets and to raise our standard of living so much that it’s very difficult to finance without working insane hours and losing our freedom. Is it really worth it?
Making Unpopular Choices
I used to know a couple here in the Bay Area of California who had made it a point to live within their means. This is of course a very unpopular choice – here and in many other urban locations in the US. They decided to work part time, leaving enough time to be with their children and do stuff other than work. Since they refused to get into huge debt, they had bought a very modest house – a tiny fixer upper, that they gradually fixed up on their own.
They didn’t have a large house or a big yard. They didn’t have many friends either – I suspect they were too “different.” They certainly weren’t in the habit of hosting dinner parties or renting a jump house for their kids’ birthdays. I myself was very guilty of occasionally feeling uncomfortable around them, of occasionally wondering about their choice to live in such a tiny, “unremodeled” house.
Unpopular, But Free
Until one day, one of them talked about it openly – how they were almost free of debt, how they were saving aggressively and paying off their mortgage, how they were planning to pay their mortgage off in less than a decade and have enough in savings to enable them to fully retire by the age of 50.
They had it all planned out, and it was all within reach. When I heard them talk about their financial future, I realized that despite leading a lifestyle that to me seemed unacceptable – living in a tiny old house, buying secondhand furniture and clothes, scrimping and saving on everything, they were in a better place than many of the people around them, those living in overpriced mansions and working 50 hours a week. THEY WERE FREE. Free from corporate America, free from the need to work long hours, free from excessive debt, and free from the overwhelming, constant need to repay a huge debt, to stay on top of your game, to keep looking like you have a lot when in fact you have so little.
Above all, they were free from caring about what others thought about them.
That day, I have learned a valuable lesson. I learned that big shiny assets and large salaries do not equal freedom. On the contrary, they can make us slaves to our jobs and place us on a path that we must stay on for years unless we make a conscious choice to downsize and drastically change our lifestyle. Isn’t it better not to get on that path in the first place?