Gift Economy Offers Multiple Ways to Repay Debts

"Debts of gratitude," paid with goods and services, can be a good option for clients on fixed incomes.

By Peter Neuwirth

Author’s Note: This is the second in a series of essays on the six foundational principles of holistic financial wellness that I describe in my book “Money Mountaineering.” As we look at our personal financial balance sheets, we have many obligations that might be satisfied by money. However, like many of the assets we have received, other liabilities can be satisfied by providing goods and services that may not be measurable in dollars but can be meaningful.

Principle #2: Debts of Gratitude

My neighborhood in the old West End of Santa Rosa, California, 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. In some cases, my neighbors live in houses that are owned by family members who reside in different towns.

Many of these neighbors come to me for financial advice. Among the more difficult questions they ask me is what to do when the material things in their lives break and need to be fixed so that they can 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, what is required is an expanded view of what they need and what they have to offer others.

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 getting on in years. He relies 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, and Linda has accumulated 50 years’ worth of antiques and collectibles that these days have 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.

Keeping the lights on with home-cooked meals

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.” 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. As a result, are only too happy to pay off their “debts of gratitude” by coming by and assessing what work needs 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 has 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. The din of power tools, late 1960s music and happy voices emanated from the little green house down the block, beginning early in the morning and lasting until well past sunset.

We are participants in the gift economy

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. “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.

Peter Neuwirth, FSA, FCA, has held actuary leadership positions at a number of consulting firmsCurrently 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. He is the author of “What’s Your Future Worth?” and “Money Mountaineering” 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 Santa Rosa, Calif.


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