This guest post from William Cowie. William has contributed to, and other personal finance blogs, including his own, .

I owe, I owe

We’ve all seen this bumper sticker, haven’t we?

Other than singing the Disney song from “Snow White,” how does it make you feel? “Wouldn’t it be great if I didn’t HAVE to…?”

And isn’t that most people’s fantasy: not having to go to work? Other than most fantasies, this one is actually achievable.

How? The top line of that bumper sticker contains the first part of the answer: paying off all your debt.

The second part of the answer is less obvious. Even after paying off your debt, you will still have living expenses, such as utilities, gas, all kinds of insurance, food and others like those. With what do you cover those?

In life, there are only two sources of income: a job or investments. If you don’t want to work, the obvious solution is to transition from job income to investment income.

Sounds simple, doesn’t it? I thought so, too. I was wrong.

What I discovered after mailing my last car payment was nothing short of an identity shift. I’ll save the gory details for another time, but here’s where it ends up:

Whether we know it or not, all of us have to choose whether to be a debtor to an investor.

Which one would you rather be? To answer the question, let’s look at the two identities a little closer.


There are two basic ways of making a living: you receive income from a job, or you receive income from your investments. Economists would say all sources of income boil down to either labor or capital (investments).

When most people state their financial dream, a core element of that dream is “I don’t have to work.” Many don’t actually say that explicitly, but it’s always there. Some people want to work, others want to lie by a pool in Cancun and sip piña coladas.

An investor is someone who has that choice. A debtor is someone who hasn’t.

When you’re an investor you derive your income from money you invested. This simple definition has three elements:

  • You have money
  • You invest that money
  • Those investments produce an income from which you live


The superficial definition of a debtor is someone who owes money to someone else, but the true definition of a debtor is something deeper, a mind-set… an identity, if you will. The best way to understand this is to consider the debtors’ paradox: nobody likes owing money and making payments, yet millions sign up for this fate daily without a gun to their heads. And most people who sign up already have payments, and so ignorance (“Oh no! I didn’t know I was signing up for this!”) is not a reason people ensnare themselves in debt. Millions do it knowingly and willingly… and repeatedly.

Why? Why do people consign themselves to a fate they hate? It’s because they are debtors.

They are not debtors because they have debt. They have debt because they are debtors.

A debtor is someone:

  • who wants stuff without having to wait
  • who therefore elects to owe money to others
  • who therefore HAS to work to make the payments, and
  • who doesn’t want the responsibility of making serious financial decisions,

Most people will probably accept the first three parts of that definition barely bristling. The last part might be a little more contentious. “How can you say I have a car payment because I don’t want the responsibility for making serious financial decisions?”

Let’s look at that. The visible manifestation of being a debtor is “making payments.” Most people are good at making payments — the elaborate system of consumer debt wouldn’t exist today if the majority of consumers didn’t make their payments on time.

As years pass by, debtors get used to parceling their incomes into the various bills and payments they need to make, to the point where they tend to think of every major purchase in terms of “can I make this payment?”

And so, when Danny Debtor’s car payment ends, he buys another car, one with a new set of payments. Is this because the car he just paid off happened to just die on him? No, it’s because he’s used to making payments. If he had to stop making car payments, he wouldn’t know what to do with the money that went into the payment. Maybe I lived in Orange County for too long, but almost everyone around us had this mind-set. And that probably accounts for the popularity for car leases. (If you’re going to always be making payments…)

Figuring out what to do with the monthly car payment when there is no longer a debt can actually be unsettling and unnerving. It’s much easier to keep doing what we know to do, therefore taking on a new set of payments is a natural and easy thing to do. Without knowing it, debtors acquire an identity; it’s more than just a habit. Their identity is wrapped up in the two words “making payments.”

And to make the payments, a debtor needs a job to provide an income. What other way is there?

Which do you want to be?

Investors don’t have to work, because their income comes from their investments. Those who work do so by choice. Others sing the bumper sticker song because they have to work to make payments. (By the way, to whom do those payments go? Investors, of course. Think about that for a bit.)

Most readers here seem to agree getting rid of debt is a high priority. Once the debt is paid off, what will you do with the income you used to pay off the debt? Is there any other option but to become an investor?

You’d be surprised how many times I hear people say they don’t want to become investors. (And let’s just state for the record that an investor is not a Wall Street gambler. Holly Johnson is a perfectly fine investor without even thinking of Wall Street.)

Why do people say they don’t want to exchange their debtor identity for that of an investor? Here are four possible reasons:

I have no money to invest.

The money that went toward debt payments is a good start. If that’s not enough, save, sell as much of your stuff as you can, and earn more (preferably all three). There are as many strategies and techniques to save as there are rocks in the Rockies. Likewise, there are many strategies to sell stuff and earn extra income.

Listen to your response. If you find yourself presenting reasons why you can’t save, sell stuff, or earn more money, you are a debtor. An investor will find ways to invest, a debtor will find ways to remain a debtor.

A person is as a person does. (This was an “ouch” revelation to me.)

I don’t know anything about investing.

Investing is not rocket science. Millions of people less smart than you have figured it out; you can too. It’s not an overnight thing, but there are thousands of free resources online to teach you how to invest in real estate, stocks, bonds, anything that produces an income.

And you can start learning before your debt is paid off, so when the big day arrives you’re ready.

I don’t have time.

Let’s say I approached you to be the ghost writer for my new book. I’ll pay you $1 million for the project and I show you the money so you know this is for real. All you have to do is read off the questions and transcribe my answers. The project will last about six months and it will take you an hour a day, two days a week. For $1 million, would you squeeze out some time? Thought so.

Then you have the time to learn about investing, and to “do it.”

I’m afraid I’ll lose everything.

That’s a reasonable fear, but hardly a reason to not invest. It’s called risk, and you take it every day. You run the risk every day that your employer (any employer) will eliminate your job. Does that risk make you not get a job? No, you find a job with risks you can handle. You manage those risks with your knowledge, hard work, networking, and so forth. The same applies to investing. There will be a few investments that will do well, some that won’t. The wonderful thing about investments is you can recover, and even sell them any time. The moment they look like they might go south, sell, just like you find another job if you see your company’s about to go out of business.

If you are determined not to become an investor, you no doubt can find other reasons not to.

Who are you?

Here’s the bottom line: You are what you do and you do what you are. In personal money terms, you can’t be anything but a debtor or an investor. Investor is the identity with all the options and goodies. Like anything of value, it’s not cheap and it’s not fast… but it’s worth it. It’s more achievable than you might think.

But you won’t be motivated to learn until you change your identity.

Becoming an investor begins on the inside. Your identity shapes your actions, thoughts and choices. If you’re a golfer, you practice and read a lot about playing golf. If you’re a shopper, you track down deals… fearlessly, diligently and relentlessly. If you’re a recreational chef (like my wife), you are always on the lookout for a new flavor, cooking technique and recipe.

Likewise, being an investor starts with a shift inside. Like the shopper, you relentlessly track down investment opportunities, whether you actually buy or not. Like the golfer or chef, you track down articles, books and blogs about your interest, always with an eye to improving your game.

But you will do none of these things until you sit down and have a meeting with the mirror about who you are and who you want to be.

Once you make the shift, it will be natural to start learning and reading. In the beginning it might all seem foreign, but after a while it will begin to make sense. And when you enter the realm where you can start small, well, there’s nothing like the smell of impending freedom in the morning.

The only alternative is living paycheck to paycheck, car loan to car loan… singing the bumper sticker song.

So… do you think becoming an investor is optional?