AI Summary #
The host discusses the concept of “rich and anonymous,” where having a high net worth becomes a social liability due to the pressure to maintain appearances, impress others, and incur social debt. The host cites examples from business Insider stories about lottery winners who lost all their money after being subjected to constant requests for loans and favors from friends, family, and strangers.
The host emphasizes that measuring wealth is easy, but quantifying social debt, which includes obligations to others, can be more challenging. They share a story about NBA rookies who struggled with financial issues due to excessive spending on gifts for friends and family members they barely knew. One player noted that athletes often struggle because they don’t recognize the money as their own, but rather as “other people’s money.”
The host also discusses how buying nice things can lead to increased stress and annoyance, as people become overly sensitive to imperfections or damage to their possessions. They share their personal experience with a quiet car on an Amtrak train, where passengers who expect quiet become irritable when others don’t meet their expectations.
In conclusion, the host proposes that having a high net worth can lead to more social debt and decreased happiness due to the pressure to maintain appearances and impress others. They argue that eliminating social debt is key to maximizing enjoyment of one’s wealth and suggest that being “rich and anonymous” is the best position to be in.
Notable quotes:
- “The cost of a thing is the amount of what I will call life, which is required to be exchanged for it, immediately or in the long run.” - Henry David Thoreau
- “The best position to be in is rich and anonymous.”
Actionable advice or conclusions:
- Recognize that money can become a social liability if not managed carefully.
- Be mindful of social debt and avoid excessive spending on gifts or favors for people you barely know.
- Prioritize eliminating social debt to maximize enjoyment of one’s wealth.
- Consider the concept of “rich and anonymous” as a desirable state, where wealth is used for personal fulfillment rather than social pressure.
AI Transcription #
Welcome back to the podcast.
I am home from a much needed vacation.
Thanks for your patience while I took a couple of weeks off.
But we’re back.
And today I want to talk about a topic that I’ve been thinking about a lot in the last couple years.
And I’m going to call it rich and anonymous.
And you’ll see where I’m going in a second.
I’ve always had this kind of crazy idea that there is actually an ideal net worth for everyone.
There’s an ideal net worth after which money not only stops bringing pleasure, but it becomes a social liability.
And that number, that ideal net worth is probably lower than most people think.
Business insider recently ran a story a couple of weeks ago of lottery winners who lost all of their money.
And people love these kind of stories because of the Satan throw that is involved here.
And if you go through it, a common denominator of the stories is that lottery winnings have a very high degree of let’s call it social debt, which I would describe as friends and families and strangers who feel entitled to ask and beg and steal your money in a way that leaves the lottery winners don’t only broke, but socially exploited.
One of the lottery winners in the story, she explained the quote, after winning $3.9 million, Miss Adams found that she no longer had the privilege of privacy.
I was known, she said, and I couldn’t go anywhere without being recognized.
Now, a subtle problem with money is that assets are very easy to measure.
But liabilities can be hidden.
Measuring your lottery winnings is very simple.
In this case, it was $3.9 million dollars down to the penny.
But how do you measure losing your privacy?
Or the nagging doubt that some of your friends only like you for your money?
That is way harder to figure out.
I wouldn’t spoke to a group of NBA rookies.
I think I’ve told this story before, but it’s a good one.
I’m going to repeat it here.
The topic was how to avoid the tragedy of athletes who make a fortune in their 20s and are bankrupt by age 30.
It’s a shockingly high percentage of professional athletes who lose all of their money.
And one of the players during this meeting, benched something that I thought was so important.
He said, most outsiders think that athletes go broke because they spend all their money on jewelry and fancy cars.
And sometimes that’s true.
But the most common cause of athletes going broke was social debt.
This athlete said, quote, when you grow up in poverty and then you’re making $10 million a year when you’re 22, that is not your money.
He said, that is mom’s money and dad’s money and grandma’s money and cousins money and friends money.
Because you can’t tell all those people, I got my money.
Good luck to you all.
It just doesn’t work like that.
So buying themselves a mansion was not the problem here.
It was buying a modest house for their fifth cousin whom they’ve never met before, but they felt obligated to help them.
That’s what pushed the athletes to bankruptcy.
Shack many years ago told this great story that I love about when he made his first million dollars who was actually before he was drafted in the NBA and he got an endorsement deal for a million dollars and he described what happened next.
Here’s what he said.
So I go and get a black Mercedes because that’s what I always want to black Mercedes and some nice wheels.
God is like one 50 right to check and I come home.
My father’s like, that’s nice.
Where’s mine?
I was like, you know what?
You made me here.
I am jump in.
So we ride to the guy on one another, same one I got.
So they go 300,000 out there.
So we get home and my mom was like, oh, that’s nice.
I don’t want one that big on little.
So I go get my mom one.
There’s 500,000 right there.
So now I got to get suits for the drive.
I got to get jewelry.
I got to get earrings.
You know, I got to buy I got to buy the Alpine pullout deck.
So when I go to the club, I got to win me.
I got to get the alarm that calls the beeper and the phone.
So a couple days later, I got to call from the bank and he said, you know, the rebank statements.
I was like, yeah, I learned in the school.
So as I was reading it, I was 80,000 in the hole and I was looking.
I was real embarrassed.
Now these might seem like rich people problems.
And of course, these examples are but social debt creeps up everywhere for ordinary normal people.
I used to ride the Amtrak train from Washington, D.C.
to New York all the time.
And the train, if you’ve been on it has a quiet car, which is a special section where everyone is supposed to be quiet so that you can sleep or get some work done.
And people use the quiet car because they want peace and serenity.
But it was astounding how often it backfired on people.
Because when you expect quiet, you become ultra sensitive to the slightest noise.
So if somebody in the quiet car speaks in more than a hushed whisper, the entire car plunges into a state of deep irritation.
And it’s not uncommon for people to be like, hey, shut up, you’re in the quiet car.
And I would bet that the people sitting in the quote unquote, peaceful quiet car actually have higher blood pressure.
They are actually more stressed and annoyed than people in the normal loud car.
And I think a similar thing often happens when people buy nice stuff.
Like for example, you probably didn’t mind when your old car was dirty and dinged up.
But now that you bought a nicer car, you can’t stand it when it gets muddy.
And you lose your mind if somebody scratches it in the grocery store parking lot.
Or for example, maybe when you bought a new bigger house, you thought you would be happier.
But then you realized that the reason you wanted a nicer house was to socially compete with other people who had nice houses.
And once so once you’ve got a nice house, you just started dreaming about even nicer homes.
And once you accept that having the nicest home in your social group is actually your goal, it becomes not only in obsession, but a game that you cannot win since the group that you compare yourself to just shifts with every salary increase you receive.
So my theory here is that the more money people have, the more social debt they tend to be burdened with.
Not everybody, but I think in general, that’s true.
The more money you have, the more social debt that tends to pile up.
Social debt being people around your social circle who are asking or expecting you to pay for stuff.
Or just rising expectations for the stuff that you own.
And the point here is not to say that you should avoid nice cars and nice homes because I like both of those things.
It’s just a realization that once money goes from being a tool that you can use to make yourself happy, to becoming a symbol of what other people measure you buy.
At that point, you are buried in a kind of social debt that is so hard to measure, but it has a very real impact on your happiness.
Henry David Thoreau once explained, quote, the cost of a thing is the amount of what I will call life, which is required to be exchanged for it, immediately or in the long run.
Many years ago, I did some consulting for a family that is worth $8 billion dollars.
That’s their net worth.
And if you Google their name, nothing comes up.
They are not on any Forbes list.
There are no gala photos.
There are no profiles.
There are no Wikipedia pages.
There’s nothing about them.
And that is intentional.
They did this on purpose because I think this family figured out what so many people failed to recognize that the way you maximize enjoying your money is by eliminating social debt.
This family had total freedom, total privacy, total independence.
They chose their friends carefully and they gave away their money anonymously.
That alone may have been their most valuable asset.
And it reminded me of what Naval once said.
The best position to be in is rich and anonymous.
That’s all for this week.
We’ll see you again next time.