Pete Neuwirth’s Money Mountaineering Holistic Financial Wellness Principle #2: Debts of Gratitude

By Peter Neuwirth, actuary, reverse mortgage expert and author, Money Mountaineering

This is the second in a series of essays on the 6 Foundational Principles of Holistic Financial Wellness that I describe in my new book “Money Mountaineering.” In this one, I want to talk about “Debt” in a more general sense. As we look at our personal financial balance sheets we have many obligations that might be satisfied by money, but many of those obligations were incurred through the receipt of goods, and services that are often not measurable in dollars and that the terms of repayment are far from clear. How to view these debts and how they affect one’s financial well-being is a very tricky issue and whole books could be written on the subject.

My goal here is to simply bring your attention to those liabilities and to both caution you against ignoring them, as default can lead to real financial problems, while at the same time recognizing that many of these liabilities can be satisfied using other assets at your disposal thereby contributing in a meaningful way to your overall financial well being.

Keeping the lights on with home-cooked meals.

My neighborhood in the old West End of Santa Rosa is filled with old houses in serious need of repair. Many of my neighbors rent these houses from landlords who take a “just in time” approach to the maintenance of their properties or in some cases live in houses that are owned by family members who live in different towns.

Many of these neighbors come to me for financial advice and among the more difficult questions that they ask me is what to do when the material things in their lives break and need to be fixed so that they continue to work and have the basics we all need to survive (shelter, light, heat and running water).

It turns out that my actuarial training and facility in financial analysis are of limited use in solving their problems. Instead, an expanded view of what they need and what they have to offer others is required.

My friend Linda lives down the block from me in a house that is well over 100 years old. While the foundation, plumbing, and electrical systems are not quite that old, the house is in sore need of renovation.

The house is owned by another family member – Grandpa Joe who lives 60 miles away and is, himself, getting on in years, relying on the already reduced rent that Linda pays him to supplement his small pension and Social Security.

It’s not that Joe and Linda don’t have material assets that theoretically could be used to make the house safe and livable again. After all Joe owns the house and has only a minimal mortgage outstanding while Linda has accumulated 50 years’ worth of antiques and collectibles that these days have a considerable monetary value. The problem is that converting those “real” assets into dollars is easier said than done, and when I looked at their situation, the numbers simply didn’t work.

However,  both Joe and Linda have many other assets that can be brought to bear on the problem. In particular, they each have many relationships that are extremely valuable. Specifically, Joe has many close friends who are skilled tradesmen (plumbers, electricians, carpenters, etc.) who are always looking for “side jobs”, and while Joe does not have skills that can be used here (he is a locksmith by trade), with these contacts, he was able to very quickly arrange for the house to be fixed. Many of these tradesmen have had their businesses helped by Joe and as a result, are only too happy to pay off their “debts of gratitude” by coming by and assessing what work is needed to be done.

For her part, Linda is a spectacular cook and her holiday dinners are legendary among those who have been lucky enough to have attended one. And good food is only part of the reason that an invitation to Linda’s house is so sought after. The history, art, and relics that fill Linda’s house are just as nourishing and tasty as the food she serves. Neither Joe nor Linda have the financial wherewithal to pay the cost of what typical home repair companies charge, but between the lunches, dinners, and stories that the two of them provide, the crews that come to work on the house always feel well compensated for the services they provide.

And so, having had to admit that some problems can’t be solved with actuarial analysis, I watched with fascination as a succession of vans and trucks came and went to Linda’s house while small crews of electricians, plumbers, and carpenters rewired the house, upgraded the kitchen and replaced doors and drywall throughout the house, while the din of power tools, late 60’s music, and happy voices emanated from the little green house down the block beginning early in the morning and lasting until well past sunset.

It’s one thing to look at a Gift Economy from a distance and consider it as a system that may or may not be a viable alternative to one based on free-market principles. It’s quite another to watch it in action. Many believe in the Gift Economy and are trying to design and implement one for communities and organizations. I applaud that effort and hope that such efforts succeed, but I also think that change like this happens from the ground up, and just needs to be recognized and encouraged to grow whenever it naturally arises.

The truth is that all of us already participate in a Gift Economy in our own lives, even if it only encompasses what we do for our own families and close circle of friends. We all give to those we care about and we all owe debts of gratitude to those who have given to us.

So how do we account for these “assets” and “liabilities” on the karmic balance sheet of life? I would suggest that we don’t even try to measure them, but instead that we simply recognize when such obligations exist and understand that evening the scales will take time, energy, and even sometimes “real” money, and that “investing” in giving to others will often yield a return that is far greater than any financial analysis will reveal.  In my opinion, the sooner we recognize that such non-monetary exchanges of value are taking place and consider the gifts we give and receive as part of our overall financial situation, the closer we will come to achieving true holistic financial wellness.

About Peter Neuwirth: Since graduating from Harvard with a degree in mathematics and linguistics in 1979, Peter Neuwirth has held actuary leadership positions at consulting firms including Aon, Hewitt Associates, Watson Wyatt Towers, Perrin, and Towers Watson. He also ran the actuarial firm Coates Kenney and spent a year at Price Waterhouse.

Currently a Fellow of the Society of Actuaries and the Conference of Consulting Actuaries, Pete regularly consults with the largest corporations in the world about their retirement plans with a focus on time risk and money. “These fundamental concepts shape our world,” explains Pete, who is a sought-after speaker for professional conferences, and is frequently quoted in national mainstream and trade publications.

After being asked too many times “What is an actuary, exactly?” Pete has written two books to answer another question: “How does an actuary think, and why does it matter?”

His first book, What’s Your Future Worth, is an accessible step-by-step guide to using the powerful concept of Present Value. Pete explains, “My goal is to help readers determine the value today of something that might happen in the future and evaluate outcomes that might arise from choosing one path instead of another.”

In his newest book, Money Mountaineering, Pete shares his views on the challenges we face to survive and thrive in a complex uncertain noisy and sometimes irrational wilderness. “I hope to help readers better understand the financial world they must live in and what they must do to make their way through it,” Pete shares.

Pete is also a senior consulting actuary for CapAcuity a member of the University of Illinois Academy for Home Equity in Financial Planning and the outside director at Rael & Letson. He is a longtime resident of Sana Rosa, CA. Learn more at