BORROWED
Morgan Housel opens The Psychology of Money with the story of a janitor. Ronald Read pumped petrol and cleaned floors in Vermont, and when he died in 2014, aged ninety-two, he left about US$8 million to his town's hospital and library. Housel sets him beside a Harvard-educated banker who borrowed against a mansion and went bankrupt.
The two men carry the book's argument, which Housel puts in one line: "Doing well with money has a little to do with how smart you are and a lot to do with how you behave." It sits closer to my own argument than anything else on my reading list. That's why it comes now, before I tell the rest of my debt story.
Housel wrote it as twenty short chapters, each one a story with its lesson tucked inside. A chapter fits a PMV ride from Gerehu to Waigani, or a lunch break.
The chapter closest to my own story is called Reasonable > Rational. Housel argues that a plan a person can keep beats a perfect plan they drop by March. When I cleared my debts, I paid the smallest bill first, a photographer's invoice, because one less bill kept me going. The maths favoured the highest interest rate. My behaviour favoured the smallest bill and motivated me to persevere until I closed the last payment plan.
Another chapter, No One's Crazy, travels well to the Pacific. Housel writes that your own experience of money is a sliver of what has happened in the world, yet it shapes most of how you think money works. Sending money to family for haus krais instead of building an investment portfolio looks reckless from a finance writer's desk in Sydney. It makes sense inside the life that produced it.
The book has its limits here. Most of Housel's compounding stories run on the American share market, one of the doors I found shut from PNG on Day 16.
My verdict. This is the book on my list for anyone who has bounced off the maths, because it starts with the person and leaves the spreadsheet for later. Housel gives me the why, and Pape gives me the system.
TOMORROW
A question about the money you keep to yourself.
Best
Amanda
P.S. What’s your view on today’s newsletter? Did I miss something out that you’d like to share? Write to me, [email protected]. I may not get back to you, but I will try to read what you send in.
IMPORTANT NOTE
Wild Money is general information only, drawn from my own experience and research. It isn't financial advice, and nothing in it is a recommendation to buy, sell, hold or manage money in any particular way. What worked for me won't necessarily suit you. Please seek advice from a licensed financial adviser before making decisions about your own money.