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Personal Finance column: The paradox of financial freedom

Danielle Howard
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As we drove from Arusha, Tanzania, toward our safari in the Serengeti, I was struck by the number of partially built, concrete block structures that dotted the roadside. Some looked like homes, whereas others looked like the stalls of stores where people set up businesses. In various states, some barely had a foundation going, while others had trees, or bushes growing inside them. I saw no one working on them. “How sad” I thought “people started building, then for some reason abandoned their project.”

I asked our driver and guide, Neale, why so many endeavors had been deserted. Silly, deluded American. He didn’t say that, but I felt it after he responded. “These projects aren’t abandoned, they are in process. As people save and have the money, they continue to work on them.” He shared that it usually takes a several years to build a simple concrete block home with a tin roof. Interest rates are too high (18 percent) and the banks don’t trust people to pay it back, so it is rare to get a loan for your home or business.

What I initially thought of as economic decay was actually sustainable financial growth.



What a dichotomy from the first world way of doing things. In 2008, we had beautifully built, fully functional homes that had been abandoned because they were built with credit that people couldn’t afford.

I am not suggesting we start building our homes one brick at a time, but we should take pause to consider the implications of our dependence on and craving for debt.

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How do we properly manage financial obligations? There are basically two types. There is debt used to purchase or create productive activities. Think of machinery for farming, tools for a carpenter, or computers for a business. Then there is debt used to consume. This is what the first world has become addicted to. Materialism and consumerism has a very dark side.

It is important to remember the repercussions of unrestrained consumer debt. It does not create new supply of anything. It is future consumption brought forward. This type of debt is not sustainable. Pulling your consumption forward to the present means you have to consume less later.

Once this type of debt is acquired, purchases that might have happened in the future won’t happen. When you reach a level of debt, whether individually or as a nation, growth and income languish. This is what we are seeing throughout the world today.

The international addiction to debt is one reason we continue to have market volatility. The 86th annual report from the Bank for International Settlements paints a stark picture. The BIS functions as a master hub for the world’s central banks. It doesn’t serve businesses, governments or individuals, so is beholden to none of them. Dry reading, but the commentary is somber.

Many individuals in third world countries aspire to our consumptive ways. Our guide, Neale, is not one of them. “People need to be happy, and understand simplicity. I am a content person.” Neale was working on his own home. He was looking forward to the time when he, his wife and his two kids would have a place that belonged to them. He would help his mother, and they would have a secure place to grow old. After safari, he was going to start on the plumbing. I no longer saw abandoned concrete structures. I took in the beauty of simple, but true financial freedom being built one block at a time.

Should we take a humility pill and learn something from observing a moderated way of life? We have the opportunity to make personal, lifestyle changes to avoid the abyss we are headed for. Ask yourself — how much is enough?

Danielle Howard is a Certified Financial Planner practitioner. Her office, Wealth By Design LLC, is in Basalt. Visit her at http://www.wealthbydesign4u.com. Advisory Services offered through Cambridge Investment Research Advisors Inc., a Registered Investment Advisor. Securities offered through Cambridge Investment Research Inc., a broker/dealer, member FINRA/SIPC. Cambridge and WBD are not affiliated.


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