Harvard Professor Reveals the Worst Thing To Do with Your Money

Summary

In this insightful discussion, happiness expert Arthur Brooks explores the complex relationship between money and happiness. He highlights that while debt and material possessions can lower life satisfaction, investing in experiences, time, giving, and saving can significantly enhance happiness. Brooks emphasizes the importance of delayed gratification and living within one's means for a more content and fulfilling life.

Takeaways

• 📉 Debt negatively impacts life satisfaction, with student debt, car debt, and credit card debt being particularly detrimental.
• 💸 The belief that more money will significantly increase happiness is often misguided, as our expectations about money's impact on happiness are frequently out of sync with reality.
• 🔑 There are five things one can do with money: buy stuff, buy experiences, buy time, give it away, or save it. Four of these actions can bring happiness, while one (buying stuff) typically does not.
• 🎁 Giving money away can actually make individuals feel richer and more effective, leading to increased problem-solving abilities and earning potential.
• ⏰ Buying experiences, especially with loved ones, creates lasting memories and is a source of happiness that outlasts material possessions.
• 🕰️ Purchasing time, such as hiring help for chores, can free up time for more meaningful activities and contribute to overall happiness.
• 💰 The act of saving money and making progress toward financial goals is a source of happiness due to the human desire for progress and achievement.
• 🚫 Spending money on consumption when one does not have it, especially through high-interest debt like credit cards, is a significant happiness killer.
• 🤔 The idea that paying off the highest interest debt first is not always the best strategy; sometimes, the psychological burden of debt affects happiness more than the mathematical approach to debt repayment.
• 💼 Spending time with a boss is identified as a common source of daily unhappiness, highlighting the importance of work-life balance.
• ❤️ Investing in faith, family, friendships, and work that serves others are key components of a happy life, emphasizing the importance of love and connection.

Q & A

What is the correlation between student debt and life satisfaction according to the transcript?

The transcript suggests that student debt lowers life satisfaction, indicating a negative impact on an individual's happiness and well-being.

How does car debt affect life satisfaction according to the discussion with Arthur Brooks?

Arthur Brooks explains that car debt has a detrimental effect on life satisfaction, describing it as 'tanking' happiness, which implies a significant negative influence.

What is the impact of credit card debt on life satisfaction as mentioned in the transcript?

The transcript states that credit card debt is 'catastrophic for life satisfaction,' suggesting it has a profoundly negative effect on an individual's happiness.

What does Arthur Brooks suggest about the relationship between giving money away and personal wealth?

Arthur Brooks suggests that people who give more money away tend to get richer, implying that generosity may be associated with increased wealth.

What is the connection between giving money away and problem-solving according to Arthur Brooks?

Arthur Brooks explains that when you give money away, you become a problem solver, and this change in mindset can lead to increased effectiveness and potentially higher earnings.

What does Arthur Brooks believe are the five things one can do with money?

Arthur Brooks identifies five things one can do with money: buy stuff, buy experiences, buy time, give it away, and save it. He suggests that four of these actions can bring happiness, while one (buying stuff) does not.

How does Arthur Brooks describe the psychological impact of debt on individuals?

Arthur Brooks describes debt as a psychological burden, likening it to carrying a heavy backpack, which hinders one's ability to run a race, symbolizing the struggle to achieve happiness and progress.

What does the transcript suggest about the relationship between experiences and long-term happiness?

The transcript suggests that experiences, especially those shared with loved ones, contribute to long-term happiness more than material possessions, as they create lasting memories.

What is the 'happiness death' as described by Arthur Brooks in the context of financial decisions?

The 'happiness death,' as described by Arthur Brooks, refers to the act of spending money on consumption when one does not have it, leading to debt, which in turn snuffs out happiness.

How does Arthur Brooks view the concept of saving money in relation to happiness?

Arthur Brooks views saving money as a path to happiness, as it represents progress and security. He suggests that every dollar saved contributes to an individual's happiness.

What is the significance of the 'happiness 401K' concept mentioned by Arthur Brooks?

The 'happiness 401K' concept signifies the importance of investing in life experiences and relationships early on, similar to investing in a retirement account, to ensure long-term happiness and well-being.

Outlines

00:00

💼 The Impact of Debt on Happiness

The first paragraph discusses the negative effects of various types of debt on life satisfaction, emphasizing that student debt, car debt, and credit card debt significantly lower happiness. The speaker introduces the idea that giving away money can paradoxically lead to wealth and happiness, as it changes one's mindset to become more of a problem solver. The conversation then shifts to an interview with happiness expert Arthur Brooks, who is introduced as a social scientist, professor, and author. The focus is on understanding the relationship between money and happiness, and the speaker encourages viewers to engage with the content by liking, subscribing, and sharing the video.

05:00

💰 The Misguided Pursuit of Material Possessions

In the second paragraph, Arthur Brooks explains that humans have an evolutionary tendency to accumulate possessions as a status symbol, which is a misguided approach to happiness. He suggests that buying stuff is not the path to happiness, but rather, experiences, time, and giving away money are more effective. Brooks shares a personal anecdote about choosing between a beach vacation and buying a couch early in his marriage, illustrating the lasting value of experiences over material goods. He emphasizes that experiences with loved ones create enduring memories, while material possessions are quickly forgotten.

10:01

🌅 Prioritizing Experiences and Giving

The third paragraph continues the discussion on how to spend money to achieve happiness. Brooks highlights the importance of buying experiences, especially with loved ones, and the value of using money to buy time by outsourcing tasks, allowing for more meaningful activities. He also stresses the joy of giving money away, explaining that it not only benefits the recipient but also changes the giver's mindset, leading to increased effectiveness and earning potential. Brooks shares research showing that those who give more tend to become richer, suggesting a positive feedback loop between generosity and financial success.

15:02

🏦 The Benefits of Saving and Avoiding Debt

In this paragraph, the conversation turns to the benefits of saving money and the dangers of spending beyond one's means. Brooks explains that saving money and making progress towards financial goals are deeply satisfying, activating the brain's reward pathways. He contrasts this with the negative impact of debt, which he refers to as 'happiness death.' The speaker and Brooks discuss the psychological burden of debt and the importance of being debt-free for overall life satisfaction. Brooks also mentions the progress principle, which states that making progress in one area of life can lead to improvements in other areas as well.

20:03

🤔 Understanding the Psychology of Money and Happiness

The fourth paragraph delves into the psychological aspects of money and happiness. Brooks discusses the concept of delayed gratification and the cultural tendency towards immediate satisfaction. He emphasizes the importance of knowledge about one's own emotions and happiness in making better financial decisions. Brooks argues against the common misconceptions that material consumption and borrowing are paths to happiness. The conversation also touches on the idea that debt, especially consumer debt, is a psychological burden that can hinder overall life satisfaction.

25:04

💼 The Role of Salary in Happiness

In the fifth paragraph, the discussion focuses on the relationship between salary and happiness. Brooks references a study that shows different generations have varying expectations for the salary needed to feel happy and less stressed. He explains that these expectations are often based on speculation and are not grounded in reality. Brooks suggests that living within one's means and understanding the true cost of avoidingable unhappiness are key to achieving contentment. He also mentions that the actual amount needed for life satisfaction is often less than people think, and that the pursuit of ever-increasing income does not necessarily lead to greater happiness.

🌟 Investing in Love and Relationships for Long-term Happiness

The final paragraph wraps up the conversation by discussing the concept of a 'happiness 401K,' where Brooks suggests that investments in faith, family, friendship, and work that serves others are crucial for long-term happiness. He emphasizes that love is the core investment that leads to a fulfilling life, regardless of whether every moment feels enjoyable. Brooks concludes by encouraging viewers to focus on love and meaningful relationships as the foundation for a happy life, rather than solely on material wealth.

Keywords

💡Life satisfaction

Life satisfaction refers to an individual's overall contentment and happiness with their life. In the video, it is discussed in the context of how different types of debt, such as student debt, car debt, and credit card debt, can negatively impact one's life satisfaction. The script emphasizes that eliminating debt can lead to a significant increase in life satisfaction by reducing financial stress and providing a sense of financial freedom.

💡Generosity

Generosity is the act of giving freely without the expectation of return or reward. The video highlights the positive effects of generosity on happiness, suggesting that when individuals give money away, they not only solve problems but also experience an increase in their sense of effectiveness and attractiveness. The script mentions that people who give more money away tend to get richer, possibly due to the enhanced problem-solving mindset that generosity fosters.

💡Debt

Debt is an obligation to pay a sum of money at a future date, usually accompanied by interest. The video script discusses various forms of debt, such as car debt and credit card debt, and their detrimental effects on life satisfaction. It suggests that being in debt is akin to a form of 'happiness death,' as it creates a burden that can lead to unhappiness and hinder progress in life.

💡Progress

Progress refers to the act of moving forward or improving one's situation. In the context of the video, making progress, especially in the form of saving money and reducing debt, is associated with increased happiness. The script explains that humans are evolved to find satisfaction in making progress toward goals, which can include financial stability and security.

💡Delayed gratification

Delayed gratification is the ability to resist the temptation for an immediate reward in favor of a later reward. The video discusses the importance of delayed gratification in achieving long-term happiness and financial stability. It contrasts the 'get rich quick, get happy quick' mentality with the benefits of patiently working towards goals and enjoying the process of progress.

💡Happiness expert

A happiness expert is an individual who has extensive knowledge and understanding of the factors that contribute to human happiness. In the video, Arthur Brooks, a social scientist and professor, is introduced as a happiness expert. His insights on the relationship between money, generosity, and happiness provide a foundation for the discussion in the video.

💡Empower study

The Empower study, as mentioned in the script, is a research initiative that asked Americans about their salary expectations for feeling happy and less stressed. The study is used in the video to highlight the disparity in salary expectations among different generations, with Millennials expecting a higher salary for happiness compared to other age groups.

💡Neurological effects

Neurological effects refer to the impact of certain activities or behaviors on the brain and nervous system. The video touches on the neurological benefits of experiences over material possessions, explaining that experiences are more likely to be remembered and cherished, thus contributing positively to happiness. The script also mentions the positive neurological changes associated with giving and making progress.

💡Financial burden

A financial burden refers to the stress and strain caused by the weight of debt or financial obligations. The video script discusses how debt can be a psychological burden, comparing it to carrying a heavy backpack, which can impede one's ability to enjoy life and achieve happiness.

💡Happiness 401K

The term 'Happiness 401K' is a metaphor used in the video to illustrate the concept of investing in one's happiness over time, similar to how one would invest in a retirement account. The video suggests that those who invest early in their happiness, through love and meaningful relationships, are more likely to experience increased well-being as they age.

💡Love investments

Love investments refer to the emotional and relational investments one makes in their life, such as nurturing faith, family, friendships, and work that serves others. The video concludes with the idea that these love investments are crucial for long-term happiness and should be prioritized for a fulfilling life.

Highlights

Student debt, car debt, and credit card debt negatively impact life satisfaction.

People who give more money away tend to get richer and experience a change in mindset.

A study by Empower reveals varying salary expectations for happiness across different generations.

Material possessions do not bring long-term happiness, unlike experiences and giving.

Our brain's evolutionary tendency to seek status through material goods is misguided for happiness.

Buying experiences with loved ones creates lasting happiness and memories.

Spending money to buy time and reduce stress can increase happiness.

Giving money away can make individuals feel more effective and potentially earn more.

Saving money and making progress towards financial goals is a source of happiness.

Avoiding debt is crucial for long-term happiness and financial stability.

The psychological burden of debt can significantly lower life satisfaction.

Mortgage debt is less likely to lower happiness compared to other forms of debt.

The feeling of making progress in life, including financial progress, contributes to happiness.

Spending beyond one's means and accumulating debt can lead to a decrease in happiness.

Arthur Brooks emphasizes the importance of delayed gratification for long-term happiness.

The concept of a 'happiness 401K' suggests investing in love and relationships for future well-being.

Investing in faith, family, friendship, and service to others can lead to a happier life.

Arthur Brooks' latest book 'Build a Life You Want' co-authored with Oprah Winfrey discusses happiness.

Transcripts

[Music]

student debt lowers life satisfaction

car debt tanks life satisfaction credit

card debt is catastrophic for Life

satisfaction we've been seeing this for

years and years people who give more

money away they get richer what happens

is when you give money away you become a

problem solver and your mind changes a

recent study from Empower asked

Americans how much their annual salary

needs to be for them to feel happy less

stressed Millennials locked in at 525

and the deal is that you think that with

more money you're going to be a lot

better off that's something that's

really out of sync because we have those

expectations about what money's going to

buy with our happiness and it doesn't it

turns out there's five things that you

can do with your money four of them will

bring you happiness and one won't your

brain is telling you to do the one thing

that won't bring happiness the worst way

the worst thing you can do that brings

you no satisfaction and lowers your

happiness is

[Music]

to and and

done what's up guys George camel here

and today I've got a very special guest

on the channel happiness expert Arthur

Brooks More officially he's a social

scientist and professor at the Harvard

Kennedy School and the Harvard Business

School where he teaches courses on

leadership happiness and social

entrepreneurship and because he does the

most he's also a columnist at the

Atlantic where he writes the popular

weekly column how to build a life he's

written 13 books and his latest is a

number one New York Times bestseller

called build a life you want the Art and

Science of getting happier co-authored

with Oprah Winfrey yes that Oprah Oprah

can do anything going to add that to my

summer reading list and today I have the

distinct privilege of nerding out with

this brilliant man about the

intersection of money and happiness but

before we get started let's get click

happy with those like And subscribe

buttons and share this video with your

friends like Oprah because I want to

write a book with Oprah 2 here's my

pitch getting over the hump one camel's

journey to writing a book with Oprah

pretty meta right I'm thinking forward

by Gail obviously we all have big

dreams and sometimes it's better not to

dream that dream all right let's get to

my conversation with Arthur

Brooks Arthur it is such an honor to

have you here how you doing I'm doing

great how are you we built this whole

studio just for you well thank you are

these all my books they're all books

that you've either written or read I

assume especially the textbook of

medicine from 1928 yeah that's I did

right what your favorites

I'm aging well this is amazing we got a

lot to cover you ready to get into it

I'm ready we did our research here first

of all I love your work in the Atlantic

thanks you did a piece called why you're

better off not borrowing and I was doing

jumping jacks because of what we teach

around here here's what you said want to

buy happiness wait until you have the

money can you talk about what you found

about how debt affects happiness yeah so

it's really clear I mean there there's

there's a lot of I'm an economist by

background but I but I study you know

the science of happiness and so the

putting those two things together one of

the things that I teach my students and

I talk about a lot is the ways that you

can buy happiness it turns out there's

five things that you can do with your

money you can buy stuff you can buy

experiences you can buy time you can

give it away or you can save it those

are the only things you can do with your

money right four of them will bring you

happiness and one won't your brain is

telling you to do the one thing that

won't bring happiness which is to go buy

stuff

[Music]

more why is our brain that wrong because

we're evolved in that way so humans were

evolved we're we're we're kin based

hierarchical tropical species Homo

sapiens now some of that we're going to

get Beyond like we invented coats so we

don't have to live in tropical places I

live in Boston which is the world's

worst weather it's fun agreed you know I

can live in a house that has heat Etc

but I'm not going to get away from this

hierarchical kind of kin based species

and so the result is that we have this

natural evolv tendency to want to rise

in the hierarchy how do you do that by

signaling how do you signal by actually

being able to to to to to have more

stuff than you need to survive the way

that you display that that's the reason

people have five watches why in the heck

do you need five watches because you can

and if you can what that suggests to

potential mates for example and to

people who might want to understand if

you're the alpha or the beta in your

tribe is they look at all your stuff and

say huh George has got more watches than

he needs clearly he should be able to

have 75 children this is kind of what

your brain is doing now of course that's

anachronistic you don't know that you're

doing that but it's about status and

success status and success and and and

then you try to connect the dots inside

your brain by saying well since I want

that it must be that I really enjoy that

and then you say if I get that better

car my car is fine but if I get that

better car I'm going to really enjoy it

a lot and it's going to make me happier

and then it doesn't you're like I guess

I needed a better car that makes sense

to me so you're telling me that the

louder the car the higher the truck the

more primitive of a species they're

they're trying to attract mates this is

what we're doing this is what our brain

is giving these particular signals but

we never quite figure it out now once

you know that you're going to notice it

and you have a Fighting Chance of

changing your behavior wow yeah so

that's the whole point now the other

four actually do authentically bring

happiness but those aren't our tendency

buying experiences with people you love

that's really important now experiences

they cost money depending you can walk

in the park with your beloved and and it

might be free except time but if you

want to go to Cancun it's going to cost

you some dough right but if you're going

to spend the money do that and and do it

with somebody you truly love because

then you'll remember it forever we think

that stuff is permanent and experiences

are evanescent they're impermanent it's

exactly the opposite you'll forget the

stuff and you won't forget the

experiences I learned this by the way in

in a in a very real way I'm a social

scientist but I'm I'm living in a

laboratory environment called my life

cuz I studied best experiment and you

know I've been married 33 years 32 years

ago my wife and I were having this

knockdown drag out fight ironically

about how to how to celebrate our first

wedding anniversary and the reason was

because we had no money we had just

immigrated to the United States from

Spain and and my wife didn't speak

English yet and and I was working this

very basic job I was in school was my

late 20s but I was in college just

trying to you know get my life together

and and we had just enough money to

borrow or beg or whatever to do one or

two things we could go to the beach for

3 Days on our to celebrate our

anniversary or we could use the same

money to buy a couch and we didn't have

a couch and so my wife who's Spanish

she's all about the beach and I'm a

Thrifty practical American so I'm like

the couch we'll have it forever so

you're thinking utility she's thinking

fun the beach is over in 3 days man the

couch is forever I mean it makes perfect

sense so we're going back and forth

Beach couch Beach finally finally we

compromise and and we go to the beach

and that's why I've been married 33

years but took me but but my point is

that we thought about that recently and

we got the couch six months later right

because we had the money and got the

couch I don't remember the couch I don't

remember what color it was gray blue but

I remember that Beach vacation

everything that we did because we were

in love and we still are so your

experiences with the people that you

love are truly permanent and I could

explain the Neuroscience of how you

store those and and reconstruct those

memories over and over again goes into a

a folder in your brain it goes into a

series of folders in your brain actually

you reconstruct the memories and every

time you do that it frames up the

current context of your life the couch

nothing who cares it's a couch but the

beach vacation with your beloved no joke

that's number one number two is you buy

time and spend it wisely for example you

know if you don't like cutting your and

you've got a little extra cash spread

the love and hire somebody to cut your

lawn you just created a job that's a

really a lot of Americans are very

snoody about that or they're kind of oh

that's classist you know that's an

elitist H someone yeah but that's nuts

yeah it's it's the best thing you can do

if you've got extra money to to hire

somebody to clean your house and by the

way pay them fairly and pay them a fair

wage and do it honestly and do it

legally super important but then don't

waste the time don't Fritter it away on

Instagram that's stupid because that's

just a waste of your time spend the time

in something meaningful reading a book

that you want to read going for a walk

in the country spending the time with

the with the person that you love that's

the second way you're truly buying

happiness and you're cting your job

third is to give it away give it to your

something in your community something

that really speaks to you and it'll give

you Joy we get so much Flack for this I

tell people hey in the budget 10% should

go to giving and they go this guy's an

idiot why is he telling people to give

away their money F it's counterintuitive

to do that but what is the science

behind the happiness and joy well it's

it's not even behind that I mean we can

even talk more mechanically about how

that works so I've been tithing my whole

life I'm I'm come from a Christian

background and my dad was a tither and

and one time I asked him when I was you

know coming of age I said dad before or

after taxes right and he's like I tithe

before taxes I'm like Dad after taxes

what's wrong with you and he's like just

in case just in case I get up there and

like it's like I don't care about the

system said St Peter and and the with

the keys to heaven anyway it's a really

important thing and one of the things

that I've shown in my research going way

back this goes back 25 years in my

research is that the more you give to

charity the Richer you get and what do

you find yeah yeah you find that in

subsequent years when you give a dollar

to charity you on average there's about

A1 60 that comes back to you in

subsequent years now I was thinking when

I first saw this got to be the hand of

God nah it doesn't make sense I didn't

believe it actually I thought there was

something wrong with my data and then I

was working with this psychologist I'm

an economist I was working with a

psychologist he says no we've been

seeing this for years and years people

who give more money away they get richer

and they make way more money back than

that which they give away and I'm like

is this you know the the wheels of you

know this isn't like a Karma thing like

you get you give what you get it's not

one of those what happens is when you

give money away you become a problem

solver and your mind changes you become

a more effective person people who solve

problems and give their money away are

people who feel more effective and they

earn more money and I talked about the

Practical side I could tell you about

you know how it makes people think

you're better looking I've got data on

that wow yeah yeah it's unbelievable

women find men more attractive when

they're seen to be giving in volunt give

a big tip at the end of that dinner they

go man that guy's good looking I like

now of course evolutionarily it says I

should this he's got enough money you

know he's he's got he's got extra money

so there's a piece that's Financial if

he has the money to be a generous Giver

that's attractive on its own but what

you find also is that that people who

are already in couples women find men

more attractive even if they're already

in a couple if they been married 25

years your wife likes you more when she

sees you being charitable toward others

that's there's a lot of laboratory

evidence that suggest that using human

participants in these experiments so

that's giving money away but you got to

find something you got to do the work to

find out what animates your soul to

figure out what you want to give to and

last but not least that's one two and

three that'll buy happiness here's the

biggie

put your money away and save it every

dollar you save will buy happiness for

you and the reason is because we're

evolved to make progress human beings

don't get that much satisfaction from

arriving at a goal but making progress

toward a goal you know I've done a lot

of research over the years on you know

why people are so happy when they're on

a diet and the reason is because the

scale goes down and it's well worth not

eating what they like because the scale

going down is a daily reward we're

making progress is that own drug in a

sense it is it is incredibly rewarding

and it actually satisfies the

dopaminergic pathways I mean the the

dopamine Pathways give you an

anticipation of reward and that

anticipation is really the it's the

sweetness of life well we've been

helping people get out of debt for

decades now and there's something about

that sacrifice when you're knocking out

you're doing the debt snowball method

smallest to largest balance you free up

a payment and it it seems to change

their physiology and give them more

agency over their life other areas they

start to lose weight their marriage is

better they're communicating more so

that's amazing that's the progress

principle that's how it works when

you're making progress in one part of

your life you start making progress in

all parts of your life now the better

way to do it is to not be in debt in the

first place and just start making

progress toward a bolus of savings

because what that says is life is going

to be more secure later I'm going to

leave more for my kids I'm going to be

able to buy a house without a mortgage

at some point or maybe I mean how

wonderful is that kind of thing but but

even if you are in debt getting out of

debt will give you the same progress

principle the problem the the worst

thing that you can do with your money

the worst way the worst thing you can do

that brings you no satisfaction and

lowers your happiness is to spend it

when you don't have it for consumption

in other words buy something you don't

have the money for that's just fun for

you right now so for example running up

your credit card bills is the stupidest

thing you can possibly do now I get it

sometimes there's like a moment of

desperation you got to put groceries on

your credit card okay that's not what

I'm talking about I'm talking about like

I don't know man I can't afford this

vacation to Cancun right now but you

know what I'll pay it off over the next

6

months okay if you do it with your

beloved that's good enough I guess even

worse than that would be I want to buy a

big screen TV and put it on my credit

card and pay that off over the next 5

months worse worse worse is I'm going to

buy an $85,000 truck oh boy and I'm

going to put it almost all on credit and

I'm going to pay it off over the next 5

years $600 a month that is insanity

because the truck enjoyment will wear

off very very quickly and 5 years from

now is still eating away at you and

you're not making progress you're going

backwards and if progress brings

happiness regress brings unhappiness

that's the reason that debt that debt is

a form of Happiness death M I love that

happiness death it's the best way to

Snuff out your happiness I got to tell

you this conversation is making me very

happy and the other thing that makes me

happy is saving money it feels really

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all right back to the conversation well

we we found you know as people make

these decisions the car depreciates in

value financially they're underwater on

the car so there's this long-term stress

that ends up happening they end up

calling the Ramsey Show saying how do I

get out of this at the time it seemed

like a good idea so a lot of this points

to the the concept of delayed

gratification um and instead of the get

rich quick get happy quick I just want

it now which is our entire culture how

do people sort of shift away from that

into that delayed gratification building

the habits over knowledge is power

knowledge is power about your own

emotions and about your own happiness

this is the reason I teach happiness

because I want people to have the

knowledge and I've found that when

people understand some of the science

like I talk about the blah blah blah you

know the science in the brain and the

neurom modulators and all this stuff but

when people have a little bit of that

they're like huh I understand me so

don't make the two biggest errors when

it comes to money which is thinking that

consumption of stuff will bring you

happiness and that borrowing is somehow

okay those are the two big errors and

when you combine those two errors you're

you're in big trouble and you wind up

calling the ramsy show how do you argue

against the math cuz here's what we get

on the show and on this channel people

say well George it makes sense to pay

off the highest interest first and why

would I pay off my low interest mortgage

when I can make more by investing the

money and so they want to argue about

staying in debt because of the math no I

understand how the math works and as an

economist I can if you're rich enough

you actually might want to keep your

2.85 mortgage even though you can afford

to pay it off and then put more money

into the market I get that if you're

rich enough the problem is if you're not

what happens is that the debt that you

have especially Consumer Debt is a is a

is a burden it's a psychological burden

and when you have a psychological burden

it's like you're carrying an enormously

heavy backpack and trying to run a foot

race you need to actually be free you

need to be psychologically free and the

best feeling you can possibly get and I

say this on the basis of somebody who

studies behavior and this is about

happiness not about sheer economic

calculations is not having the burden of

having somebody have a piece of you you

need to be free it's the most amazing

feeling when you have can you imagine

having zero debt in your life you owe

nobody anything I I remember telling my

my my father taught me this he said debt

is a form of slavery now there's certain

cases where it's it is logical you're

just not going to have enough money to

buy a house and you want to be a good

member of your community and you want to

raise and there's a a very fluid market

for mortgages and okay fine but there

aren't that many other cases where

you're and by the way if you're paying

rent you're not making progress and if

you're paying a mortgage at least a

little tiny piece of the house is

becoming yours and so that's one of the

reasons that the research shows that

Mortgage Debt is the only kind of debt

that doesn't lower happiness ah it

actually doesn't lower happiness unless

it's too big unless it's become to you

can't the payment well you can AF even

if you can't afford the payment if it's

such a big thing that you're worrying

about it every month then it's going to

lower your life satisfaction quite a lot

student debt lowers life satisfaction

car debt tanks life satisfaction credit

card debt is catastrophic for Life

satisfaction so that's the important

thing to keep where have you been all my

life this exactly what I needed you

smart you very smart well we're we've

both lived in Boston for a long time

yeah you you grew up in Boston 20 years

and so I moved out of there I got to the

South a happier place I've lost it uh my

parents are Middle Eastern and so I

didn't really accumulate the Boston

accent as quickly as my Irish Italian

Catholic friends yeah yeah are they are

your parents from from Lebanon uh Syria

okay mom and dad from Egypt there you go

I got the Syrian side clearly I'm like

an albino Middle Eastern well the the

Syrian and you're raising a Christian

home yes Arabic Baptist nonetheless okay

so there you are so like all good things

all entrepreneurial things all smart

things in America you dig a little tiny

bit you're going to find a Middle

Eastern Christian in there hey I like

this guy well being that we both spent a

lot of time in Boston why does everyone

from Boston seem

unhappy that's a shtick part of is a

stick I mean cuz they love it they'd

never leave so I'm like well they're not

unhappy enough to leave yeah no similar

with any big city you know New York it's

a very just like you just got to muscle

your way through the day you have to you

have to B part of the shtick is that

everything sucks and you're stupid

anyway that's my view but it's also one

of the things that we find in the

science of happiness that one of the

greatest barriers to happiness and that

actually brings unhappiness which is not

the same happiness and unhappiness are

processed largely in different

hemispheres of the brain so they're not

opposites and we have both kinds of both

negative and positive emotions in

response to threats and opportunities in

the environment one of the greatest

stimuli for negative emotion negative

affect in our lives is is is

aggravation and so people will say to me

sometimes like will I be happier if I

cut my commute and move closer to my job

the answer is no but you will be less

unhappy

if you do that because commuting is the

number one activity not involving other

people that people do that brings that

that brings unhappiness to their life

you want to know what the number one

interaction with another person that

brings unhappiness to people's lives

every day is what's that spending time

with your

boss that's the number one unhappiness

provoking interaction in the average

person's day spending time with your

boss that is why I don't know if I can

agree with that Dave Ramsey I would love

hanging out wuss seriously but work is a

is a source just like finances can be a

source of unhappiness yeah well a lot of

people in the you they're miserable at

their jobs and they're wondering why

they're not making good money and why

they can't make Financial progress It's

all kind of tied together a lot of it is

tied together and a lot of it has to do

with the way that they're designing

their lives um and so life design is a

lot of what I do emotional

self-management is a lot of what I do

and again the secret is in the science

you know once you understand what's

going on between your ears then you can

manage yourself a lot better you can you

can change your habits and once you

change your habits you can actually

start passing on these ideas to other

people and that's the real gift is when

you become a happiness teacher that's

powerful um let's get into salary and

happiness cuz we've done a lot of

content around here about salery and

happiness celery is part of it our

writer wanted us to have celery and I

said Arthur he's a he's a he's a

professor at Harvard we can't have

celery salary jokes and now that I know

you enjoy this I regret not having C hey

man I'm turning 60 next week and uh I'm

all about plays on words that are

incredibly annoying that's perfect I am

looking forward to 60 now because this

is I am this is kind of what I'm going

to do for the rest of my life it's like

Dad jokes and grandpa jok that reminded

me of a thing and so I'm just going to

talk about it for like an hour that's

amazing and they're like Grandpa's going

crazy guys he's finally lost it now for

an openmouth nap he's on the celery

salary train again it's amazing I love

this guy uh recent study from Empower

asked Americans how much their annual

salary needs to be for them to feel

happy less stressed gen Z said 128k Gen

X 130k Boomers 124k Millennials clocked

in at

525k what is going on here what what why

is it with Millennials are so much

higher and is there actual correlation

between salary and happiness so yeah

when people are asked to speculate on

the amount of money that would be enough

cuz that's really what it is it's not

about happiness it's about having enough

be comfortable comfortable what that

means is to not be B

that's really what it comes down to all

of those how much would you need to be

happy are really questions about how

much would you need to not be unhappy

and the sources of the unhappiness of

the aggravations that come because

you're worried about money or you're

feeling pressure for money that's really

what it comes down to and so people are

speculating on man how much would I need

so I'm not feeling kind of out of sorts

I'm not thinking about money all the

time it's not living in your head

rentree exactly right and what you find

is we do know what that number is but

the speculative number isn't very

meaningful because according to the data

it's almost 40% more than you have and

so that's a moving Horizon and the

reason is because they're not watching

the ramsy show and trying to live within

their means if you live within your

means your Horizon's not going to change

but if you don't live within your means

in other words you're going to go to the

hilt and what you can spend to be

comfortable is always going to be 40%

out means you'll never achieve it

because it's always what's the magic

salary more and that's no way to live

but if you're living within your means

then then then it's sweet and that's

really why this is so critically

important get out of debt don't spend

beyond your means you will live a

happier and less unhappy life bottom

line is what it comes down to now how

much do people actually need if they

live within their means and the answer

is less than you think the answer is

less than you think even with inflation

and all the rent going up yeah I mean

with the okay I mean index it for

inflation if you want but there was a

very famous study in

2005 that was that was um was actually

put together by two economists at uh at

Princeton that looked at how much people

needed to max out in their life

satisfaction and what they found is

$75,000 a year now of course if you're

in New York San Francisco versus

Nashville versus Tupelo Mississippi I

mean different you know it relative so

really it really is relative but the

whole point is it's less than you think

why because you get above that threshold

of avoidable unhappiness problems where

your kids are getting fed you're able to

make the rent um you're able to go to

the doctor you're able to do all the

stuff and that stuff's not bothering you

anymore and anything above that is not

really going to wipe out that much more

unhappiness if you're living within your

means now maybe it's 250 maybe it's 400

and there's new research out there from

a guy at Penn um named Matt

Killingsworth who's a great researcher

who says that it's actually a higher

number here's the really interesting

thing about it it does get flat at a

relatively low Pace people evaluate

their lives as much better with more

money but don't feel it so this is a

funny thing this is a fun on paper they

go I'm happier they they say I should be

happier but I'm not so this is a weird

thing where I valuate my life and I'm

like that's a lot of money yeah yeah my

life is really really good but I feel

crummy what's the deal and the deal is

that you think that with more money

you're going to be a lot better off and

so when you find that you're actually

pretty prosperous you judge your life as

being really good but your mood balanc

and your level of anxiety don't match

that that's something that's really out

of sync because we have those

expectations about what money's going to

buy with our happiness and it doesn't

unless so we think my life will be

perfect and then it's still my life

should be perfect my life should be

perfect but it isn't perfect and that's

a cognitive dissonance that people are

struggling with an awful lot when you

can make when you can understand the

science that we're talking about here

you can marry these things up and be at

peace and that's one of the great

secrets well I'm going to end with this

idea that you wrote about called this

this happiness 401K you've said half the

population tends to get happier after

age 65 or 70 the other half starts to

become unhappy and I love this quote as

well from you your well-being is like a

retirement account the sooner you invest

the greater your returns will be are

those two things coinciding the people

who invested earlier they're on the

upper trory and the ones who don't thr

back down it's that simple it's how you

it's what you invested in your life and

again you can it's a metaphor for what

we actually do with our budget you know

if you inv invest intelligently and you

know early on more growth stocks and

later on more bonds and having more in

cash and such that such that when you're

older you're stable and secure and and

not worried that's great but the same

thing is true with the Investments that

you make in your life and there's four

Investments you need to be thinking

about over the course of your life your

faith your family your friendship and

your work that serves other people

that's what it comes down to and what

that really really comes down to the

bottom line on that maybe the best last

word is that when I talk about those

things I'm talking about love of the

Divine and love of your family and love

of your friends and the love that you

express to the whole world whether you

enjoy it every single second or not to

the way you earn your daily bread it's

love love love and more love your

Investments are love Investments and if

you do that you're going to be on the

upper trajectory for the rest of your

life all you need is love I can't think

of a better ending hey man this is so

fun I I could talk to you all day I want

to be you when I grow up but

unfortunately I don't think I'll ever be

a Harvard Professor you'll always have

that hair too hopefully by the way

you're GNA when you grow up and you're

my age you're going to still you know

will I still have this if I had it I'd

be president of the United

States you know what that means guys

2028 it's my year baby if you were the

president what's the first thing you

would do I I I'd buy a mini fridge

Arthur is such a pleasure make sure to

check out all of his work his books

they're all incredible you're a genius

and thank you for supporting the work

that we're doing here with the than for

doing this you're helping a lot of

people to be happier and I think we need

a happiness revolution in this country

and all you're doing here at Ramsey

Solutions is at the center of that

Revolution I appreciate that so much and

I will aim in and retweet that all or

reexit all day long right on thank you

so much Arthur

pleasure man I am happy to have had that

conversation and I am sad that it is

over what a delightful human being so

grateful for Arthur and his time with us

today be sure to check out his books

from strength to strength and the newest

one build the life you want among many

others I'll also drop a link below to

his piece in the Atlantic on why you're

better off not borrowing be sure to read

that and if you like videos of me having

a conversation with other smart humans

check out this next video with two of

the biggest personal finance YouTubers

out there just spr from Minority mindset

and Humphrey Yang definitely worth a

click I'll drop a link in the

description as well thanks for watching

we'll see you next

time on to the next read

Robert dairo