Investor vs. Borrower: A Mental Model for Life

Hello and welcome to the Curiosity Chronicle, a weekly podcast where I provide actionable ideas for you to build a high performing, healthy, wealthy life. Today's podcast is brought to you by AG1 by Athletic Greens, my all in one morning routine in a single daily scoop. Seriously, this stuff replaced an entire cabinet of supplements for me in just that one scoop. There's a reason I've been taking it almost every single day since 2011. To find out why, go to drinkag1.com Sahil and take advantage of a limited time offer. Now onto today's Investor or A Mental Model for Life in simple terms, a mental model is a way to think about the world. It is a tool, a lens through which you can simplify, evaluate and make decisions in real time as you walk through life. In my experience, the most useful mental models are broad and dynamic, meaning the user can leverage them in a variety of contexts and situations. I occasionally develop and battle test a new mental model that creates such profound value in my life that I feel compelled to share it with all of you. Today, I'd like to share one such mental model that has the potential to impact how you think about your foundational actions and behaviors. Investor versus Borrower when faced with any key decision, you effectively choose one of two potential characters. Investor long term thinker who is willing to delay gratification, makes an investment that may sacrifice short term pleasure for a larger, more meaningful reward in the long term or borrower short term thinker who is unwilling to delay gratification, takes out a loan to experience pleasure in the short term, even if that means paying a steep price in the long term. The power of this framing comes from understanding the role of compounding and the impact it has on our envisioned future self. The investor makes an investment. An investment compounds with a positive rate of return into the future. Even with a low rate of return. That investment, whether financial, physical, relationship, or anything else, is worth much more. At a date in the future, our future self cashes in on that value. The borrower takes out a loan. The loan provides upfront pleasure but comes with a catch interest. The interest accrues on top of the original value of the loan. Even at a low rate of interest, the value to be repaid has ballooned. At a date in the future, our future self is stuck with the bill. Entrepreneur and investor Naval Ravikant refers to uphill decisions as the choice to take the more difficult path in the short term. His logic is that the path with more short term pain is typically the one with the largest potential for compounded Long Term Gain the core principle behind this mental model is simple. The best things in life come from investing from making the decision to do something difficult or painful now. If in order to reap the rewards of the compounding later. Most of the decisions that feel good now will feel bad later and most of the things that feel bad now will feel good later. Applications of Investor versus Borrower I have observed a variety of applications of the mental model. Time Decisions Procrastination is the most common manifestation of the borrower mindset. When you procrastinate, you take out a loan in the form of free time now, but you have to pay for it later. When your future self is stuck with the bill in the form of stressful last minute work. Embrace being an investor. Make an investment of your time today and execute a higher quality output devoid of the time crunching stress we so often force ourselves to experience. Relationship Decisions in all relationships we'll be faced with the need to have difficult conversations to address issues, cut tension or remove someone out of our life. These conversations represent a classic example of upfront pain for long term gain. They are an investment that pays off in the form of improved relationships and mental health for your future self, but it is much easier to be a borrower to avoid them or put them off for a later day. When you do so, you take out a loan that accrues interest and eventually must be paid. Time rarely solves anything when it comes to relationships. Invest now or regret it later. Health decisions. Your physical and mental health are perhaps the most obvious arenas where choosing investor over borrower is essential. When you choose short term pleasure in the form of inactivity, social media, doom scrolling big binge drinking or anything else, you are taking out a loan with a steep payback in the future. When you default to the investor mindset, you choose the short term pain in the form of physical activity, time away from your phone and healthy consumption that has compounded long term benefits. When it comes to your physical and mental health, you'll never regret being an investor. Financial Decisions this is a direct and clear application. When you choose to buy something you cannot presently afford by using credit cards or buy now pay later tools, you are taking out a loan that eventually has to be paid. You get the thing you want today, but at a cost. Like most borrower behavior, this is okay in moderation, but it can quickly reach a tipping point so be wary finding your ideal ratio. The investor versus Borrower mental model is one that I find myself coming back to over and over again in my own life When I'm faced with a key decision, I ask myself two Am I an investor or borrower? What would an investor do? Here? My goal to have a high ratio of investor to borrower behavior. Note that the goal is not 100% compliance with the investor mindset. That would leave no room for some of the fun, pleasurable short term activities and decisions that add texture to life. Every now and then I want to sleep in order that large ice cream or splurge on those Taylor Swift concert tickets I can't quite afford. Find the ideal ratio of investor to borrower behavior. Consider how your present actions are impacting your future self and embrace your point of balance. I'd love for you to spend some time thinking about this mental model this week. Are you more of an investor or a borrower? How can you adopt more investor behavior and limit your borrower behavior going forward? What is your ideal ratio and balance point? Reply to the email or tweet at me aahilbloom and I'll do my best to get back to everyone. That's all for today's piece. I hope you enjoyed it. I hope you learned something and I hope you'll share it with others. As always, until next time, stay curious friends.