Teaching a Debt Perspective to 12-Year-Olds

A few weeks ago, my buddy and former HBS classmate, Allan, asked me if I’d like to give a talk about my debt pay-off to the youth group that he leads at his church. I was intrigued and asked who the audience would be. “About a dozen young men, ages 12 to 18.” I became both very interested and very intimidated at the same time. What a great time to talk to them about debt! Young people should hear this message sooner rather than later. But also, what a difficult time to talk to them about debt! Will they listen and pay attention? Can they relate? How the heck do I effectively talk to them about debt without getting too simplistic and general?

Well, I literally just got back from giving the talk, and I couldn’t be happier with how it went. The group of guys was extremely engaged and super sharp. They asked a bunch of really good questions at the end, and it felt like they really understood the very complex message that I was trying to express to them. One of them was even jotting down some notes during my talk and came up to me afterwards to ask for some advice. I think I’ve planted a seed with some of them and I’m glad I  took Allan up on his offer.

What follows are the slides and the script that I loosely followed.

This is one of those adult topics. This is one of those “how the world works” topics. When I was growing up, I always wanted to know how the world worked. Allan wants to make sure you’re exposed to this kind of thinking. He wants to make sure you know how the world works. Today you’re going to get one of those rare glimpse into how the world works and we’re  going to talk about a very adult topic: money. 

What is perspective? Perspective is like a point of view. When you were a one-year-old, you had the point of view of a one-year-old. You only cared about your naps and eating and having a clean diaper. You weren’t really interested in current events, or international news, or anything like that.  A dog has the point of view of a dog. It only cares about naps and eating and and playing.

Your current perspective as 12 to 18-year-olds is much different than the one you had when you were one. It’s the result of what you experience, read, see on TV, hear about from your parents and teachers. It changes as you go through life.  Today, I want to try to change your perspective and get you to think about certain things a little differently.

You already know this is a fact. This is not the secret. How do you know that success is important in our society? One way to answer that question is to ask yourself what you get pressured to do well on. Grades? Sports? Every time your parents ask you how you did on a test, they’re asking if you were successful.Why? Because success is important. Every time your parents cheer for you while you’re playing a sport, they’re cheering for your success because success is important.

Every time your parents ask about your performance, they’re asking about your success, and they’re sending you a signal that success is important.

We automatically consider somebody successful if they have a lot of cool stuff.

Something that we do automatically is something we do without thinking. A perspective is automatic. We take our experiences and what we hear from our parents and see in advertising and in TV shows and movies and we start making snap/automatic judgments about people.


Here’s an advertisement for a very expensive watch. This advertisement helps shape your perspective that somebody is successful if they have a lot of cool stuff.

This advertisement is saying: Eli Manning is a very successful football player and he wears a Citizen watch. Are you successful like Eli? Then you can wear this watch, too. Buy this watch.

Citizen couldn’t care less about whether you are or are not successful enough for this watch. They just want you to want this watch, and they use Eli Manning to make it attractive.

These kinds of advertisements that associate successful people and cool stuff are all over the place. We’re constantly being bombarded by them. Seeing so many of them makes you think that a person is successful if they have cool stuff; it shapes your perspective.

Let’s pretend these two guys are twins. We’ll call them Bob and Ted. Who has his life under control? Who has all the answers? Who’s the more successful one? Let’s say they’re both friends of your father and they come to the house from time to time, or you see them at church. Who would you want to get homework help from? Who would you want as a coach? As a teacher?



So the perspective that most people have about success is that being in possession of a lot of cool stuff means the owner of those things is successful.

Another common perspective most people have is that a lot of cool stuff will make us happy.

Why do we think that? Here’s an advertisement for a gaming system that helps shape your perspective that people are happy if they have a lot of cool stuff.

This advertisement is saying: These kid are happy because they’re playing WiiSports. Do you want to be happy? Then you should buy WiiSports.

These kinds of advertisements that show happy people enjoying something that a company is trying to sell you are all over the place. Seeing so many of them makes you think that cool stuff really will make you happy.


Ok, so thanks to what we hear from adults and see on TV and in advertising, we have a very basic perspective: Being successful, which is extremely important, will lead to cool stuff, which will lead to happiness.

Is there anybody who disagrees with the logic of this statement? It sounds pretty reasonable, doesn’t it?

Now, let’s say everybody in this room is an adult. You’re 18 years old. You’re not successful yet and, just like everybody else, you want to be happy. You also want to show people that you’re successful—you want to give off that vibe, have that image. But you don’t have any money. What do you do?


Well, you can borrow money to buy cool stuff.

Is it difficult to borrow money? Not at all. Banks love to lend people money. You don’t have to pay it back quickly. Banks accept repayment over a period of months and even years. There are lots of different ways to borrow money. Has anybody ever borrowed money from their mom or dad? It’s kind of like that… 

When I was 26, I wanted to appear successful, and I wanted to be happy. So I went out and bought a house, furniture for the house, a couple of cars, and a motorcycle. Did I look successful?

I owed the bank $90k, and that wasn’t even including my mortgage. I created a façade that I was successful. I fooled you. You had this perspective that I was successful, but I owed a ton of money to the bank. I hadn’t actually done anything to deserve those things. I didn’t pay for them with my own money.

Which of these guys is successful? Bob, who owes the bank $1M to pay for his stuff? Or Ted, who has his house and car paid off and has $500k in the bank?

Society—advertising, what we see in the movies, on tv, etc.—has trained you to automatically perceive that anybody with cool stuff is successful, when in reality, they might be trapped under a mountain of debt.

Here’s a broader question. Why are we defining success so narrowly? Because it’s what we’ve been taught. We’re supposed to get good jobs and be really good at them and accumulate a lot of stuff and be happy.
Do you know what’s interesting? There’s a group called Alcoholics Anonymous designed to help alcoholics recover from their alcohol addiction. There’s a recovery group for almost every single type of addict. But there’s not a recovery group for wealth addicts, people whose every thought is consumed by the need to get richer and richer. Why not? Because our society embraces that kind of addiction. We think it’s a positive thing. So people who are literally suffering from this affliction are being lauded and praised by our society for their gumption rather than being treated for their sickness.

Let’s teach ourselves something different. If we were to put as much work into making a positive difference in this world as we do accumulating cool stuff, what kind of a world do you think we would live in?
How do you perceive success?

Which twin do you think is actually happier? Bob, who’s basically living paycheck-to-paycheck to pay for his huge mansion and fancy car? He knows that if he loses his job, he will lose his house and his car. Do you think he sleeps easy at night? Or is Ted the happier one? He could quit his job tomorrow and go on a summer vacation for five years and enjoy his freedom.


Here’s a broader question: How do you define happiness? Studies have shown that lottery winners will experience elation when they win the lottery, but they’ll eventually return to their original state. Think back to this past Christmas about a month ago. You were probably super excited to open your presents.

Remembered how happy you were to play with or use your gifts for the first time? Where are those gifts now? Are you as happy using them now as you were the first time?

No material thing can ever bring somebody a lifetime of happiness.

How do you perceive happiness?


The answer is no. Moving from a house into an apartment was awesome. For a month. Then I got used to it. Driving that convertible was awesome for a couple of weeks, then I got used to it. Same goes for the bike. I bought these things thinking they would make me a happier person, and they did temporarily, but never permanently.

The truth is that money doesn’t really buy happiness. And borrowing money to buy things for happiness…?

That will make you absolutely miserable. Owing money to the bank truly is a prison sentence. You don’t have as many options when you owe money to the bank. If you don’t pay the bank the money you owe it, they will take away your stuff. And when they run out of stuff to take, they’ll take most of your paycheck and give you whatever’s left over.

I realized I had limited options when I owed the bank  $90,000. I felt trapped. I had this tremendous IOU. It felt like I had limited options. If I lost my job, I would be in big trouble until I found another one. I was living to work, but I wanted to be working to live.


So I had this epiphany, this breakthrough. My perspectives on success and happiness changed. I decided I didn’t care if people thought I was successful or not. I decided I wouldn’t expect cool stuff to make me happy. I sold off the extra car and the motorcycle. I shared my house. I stopped spending money on stuff for seven straight months. I decided to create my own happiness.

A Level 1 perspective is extremely basic.

A Level 2 perspective is slightly more advanced in that it acknowledges that actual real success is necessary to owning stuff free and clear, without any burdensome debt.

A Level 3 perspective is even more advanced because it shows that hard work is a critical ingredient for success which will lead to cool stuff.

A Level 4 perspective goes one step further and shows that owning cool stuff doesn’t lead to happiness. We’re responsible for our own happiness.

A Level 5 perspective is the most advanced perspective. Hard work leads to success, but not necessarily financial or career success, but success that you define on your own terms. It also doesn’t advocate for “cool stuff,” but normal stuff because cool stuff shouldn’t be the end game, the motivator.
The five rules of a level 5 perspective are:

1. Love yourself. Don’t measure your self-worth based on what you own.
2. Create your own happiness. Don’t expect stuff to make you happy.
3. Say no to IOUs. Live within your means. Don’t borrow money to buy cool stuff.
4. Be free. Save money for an emergency fund and retirement.
5. Have an impact. Define success on your own terms.

Jose Mujica is a level 5 leader. This is a man who could have a mansion and 42 servants. Instead he has a small house and a dog. He doesn’t care if he looks unsuccessful in the eyes of society. He knows that the mansion and servants won’t make him happy.

Most people we know probably don’t look up to Jose.

Is there anybody who doesn’t think Jose looks happy? I actually think he looks very  content, which is even better than happy. 


I’ve shared my perspective with people on my blog. Here are some emails I’ve received from visitors that I thought you might find interesting.

source: http://nomoreharvarddebt.com/2014/01/29/teaching-a-debt-perspective-to-12-year-olds/