In 2003, when he was just 26 years old, Sam Dogen spent almost all of his savings on the twenty percent down payment for a $580,000 house in San Francisco. He spent the next twelve years obsessed with paying his mortgage off early. And twelve years later, in 2015, when he was 38 years old, he did that.
There are benefits to paying off debt early. Sam felt the relief of eliminating what was almost certainly his largest single piece of debt. He felt the pride of being able to manage that kind of debt responsibly. As a reward for his responsibility, he and his wife went on a month long trip to Asia followed by a two week trip to New York.
But there was a downside to paying off his mortgage early, he writes in an article for CNBC. He lost his motivation to take on calculated risks and work as hard as possible to grow his wealth. He took fewer consulting contracts. He worked twenty hours a week instead of sixty. He relaxed about pursuing passive income. Without the mortgage nipping at his heels, he just wasn’t hungry, anymore.
I don’t mean to pick on Sam here, but…
In 2003, when he was just 26 years old, Sam Dogen had more than $116,000 in savings that he could spend on a house in the most expensive housing market in the United States. By the time he paid off his mortgage, he and his wife at amassed a net worth of around $3 million. They could live comfortably off of their severance packages from their six-figure finance jobs and their $150,000 per year in passive income. In other words, they were rich. Extravagantly so.
And two things strike me about his article. First, that he mentions that he and his wife still didn’t feel financially secure. They were aiming to have $200,000 a year in passive income—in rents that they were collecting—before they had a baby. And this feeling of financial insecurity persisted even though they had no mortgage, could live comfortably off of the income that they had, and could take more than a month off to travel the world.
Second, that once the motivation of the mortgage was gone, Sam didn’t feel a drive to work and make more money. He was left just… enjoying life… and he sees that as a problem.
Again, I don’t mean to pick on Sam here, but there’s a certain bankruptcy of imagination here. In another article of his, Sam lets us know that he finds joy in writing, investing, coaching tennis, and—after they found their financial security—being a stay-at-home dad. But in his article about paying off his mortgage early, it seems like he can’t imagine a life that isn’t governed by the accumulation of wealth. The world is sitting at his feet and he is… bored.
And I know that he is not alone. For most of us, making money is a matter of survival. There are many people who work so that we can continue to live indoors, eat human grade food, service any debt we might have, and so on. Those of us who live in poverty are often working so that we have enough money to continue working: to keep uniforms clean, eat enough to have energy to work, afford transportation to and from work, and so on. Those of us who are comfortably in the middle class—those of us who are like me—work so that we can do all of that and enjoy some of the finer things in life. But we also know that an unexpected bill or the loss of a job could be disastrous. For many of us, the current pandemic and the associated economic shocks have proven that.
None of that, of course, is meant to say that we don’t enjoy our jobs. It’s just that the things that make money for us—not pocket money or ‘extra’ money, but the money that we use to pay the bills—are not and cannot be hobbies.
But there are also people for whom making money is less about survival and more about keeping score. The bills are paid. There is money left over. There is passive income. There is an incredibly early retirement. And once we are comfortable enough, the additional money is just points on a scoreboard. It’s just something that we can use to compare ourselves to our equally wealthy neighbors.
And I’m not saying that Sam is one of those people. But I am concerned that he might be tiptoeing in that direction. And why wouldn’t be doing that? We live in a capitalist society, which is to say that we live in a society that sees money as a good in itself and the pursuit of money as the highest of callings. And once you’ve committed your life to that idea—and once you’ve achieved the dream of having enough and more than enough—there is nothing left to do or to be.
And that is sad. Not because we’re bored; but because we are nothing more than our wealth and our drive to pursue wealth.