Debt and Borrowing

There is debt that builds a life and debt that decorates one. A man who cannot tell the difference between the two will discover it eventually, and the lesson will not be gentle.

In the households I served, debt was spoken of the way one spoke of illness: quietly, privately, and only when absolutely necessary. A gentleman might carry a mortgage; he did not carry a balance on his tailor’s account if he could avoid it, and if he could not avoid it, he did not speak of it at dinner. The obligation was between himself and his creditor, and the rest of the world had no business knowing the particulars. This was not secrecy for the sake of vanity. It was discretion for the sake of dignity, and the distinction matters.

Your era has abandoned this entirely. Consumer credit has made it possible to purchase anything at any time regardless of whether one possesses the means, and the result is a generation of men who own things they cannot afford, displayed in homes they are renting from the bank, photographed for the consumption of strangers on the internet. The watch was financed. The holiday was charged. The automobile is leased. The appearance of prosperity has been entirely severed from the fact of it, and the monthly statements arrive like dispatches from a war no one intends to win.

Not all debt is equal, and this is worth understanding clearly. A mortgage is productive debt; you are borrowing to acquire an asset that will, in the ordinary course of things, appreciate in value and provide you with shelter while it does so. An education, if chosen with some care and directed toward a field in which people are actually employed, is productive debt; you are borrowing against future earnings that the education itself makes possible. These are calculated decisions, entered into with open eyes and a plan for repayment. They are not comfortable, but they are rational.

Vanity debt is another matter. A holiday you cannot pay for in cash is a holiday you cannot afford, and no quantity of photographs from the beach will offset the interest payments that follow you home. A wristwatch purchased on credit is not a timepiece; it is a small, elegant monument to impatience. Clothing bought on terms you must carry month to month costs more than the garment is worth before you have finished paying for it; the interest has eaten the value, and you are wearing the evidence of a poor decision.

The rule is not complicated. If borrowing allows you to acquire something that will generate value (a home, a skill, a business), it may be justified, provided you can service the debt without distress. If borrowing allows you to acquire something that will depreciate, amuse you briefly, and then require storage, it is not justified, regardless of how modest the monthly payment appears.

A gentleman’s relationship with money is private. He does not discuss his income at the table. He does not compare his salary with his friends. He does not announce his investments or lament his obligations to people who did not ask. But in the privacy of his own accounts, he knows exactly where he stands: what he owns, what he owes, and the distance between the two. He keeps this distance manageable, and when it narrows, he adjusts his habits before adjusting his borrowing.

This is not glamorous advice. It will not produce an interesting anecdote for a dinner party. But the man who follows it will sleep soundly, and the man who does not will discover, at three in the morning, that the ceiling has a great deal less to say than the figures running through his head.