Kanye West is back in the news, but not for the usual reasons. This time, it’s because he’s announced on Twitter that he has accumulated $53 million in personal debt. He’s clearly feeling stressed about it. And most likely, he’s feeling dramatically more stress than he’s letting on in his 140-character Twitter limit.
Should we be shocked? The sheer volume of $53 million in personal debt for one individual is sure shocking. But this is Kanye West, the husband of Kim Kardashian. And just considering at least the perception of a near consequence-free life he has lived, perhaps nobody should be surprised. He’s likely been surrounded for over a decade by people who tell him exactly what he wants to hear. They congratulate him every time he makes a promise, buys them a new toy, or projects to deliver something newer and shinier.
While we may pat ourselves on the back that we haven’t engaged in such financial hedonism, we should recognize that we often do the same thing to each other that West’s handlers have likely done to him. It’s almost as if the mere announcement of intention is, in and of itself, an actual achievement. It’s really not, but how often do we act like it is?
Destroying our friends by congratulating them: Whenever someone “buys” a new car or a new house, how often do we congratulate that person? In all likelihood, that person has made a massive debt commitment in order to procure the rights to use the car or the house. That person really does not own the item. So we’ve praised that individual for plunging himself or herself into debt to create the illusion of progress, at a future price of likely 30% more.
We’ve congratulated someone not for actually achieving something, but for nothing more than promising to pay off a new debt.
As long as we’re being honest, we Americans seem to love it and feed off it. The Federal Reserve Bank’s recent report on American personal debt sure suggests it. American households now have $14 trillion in household debt, and economists’ estimates are that 90% of American households are tapped out in debt. For some perspective on $14 trillion, the entire United States GDP is nearly $18 trillion.
We really have no way of knowing, but it certainly would be interesting to know how much of that debt was the result of the debtor expecting congratulations.
Destroying a business by congratulating them: In my work of turning around distressed businesses, I’ve discovered that one of the easiest ways a business can be destroyed is by creating a business budget on an Excel spreadsheet with arbitrarily added revenues. I’ve seen this happen in both the corporate world and in small businesses. When creating a budget, or even when giving next month’s revenue and profitability projection, promising that it will be much better acts almost like crack cocaine. After seeing the positive projection, most executives will give attaboy slaps to each other as if the projection were already a done deal. By the time the REAL numbers come a month or a year later, the euphoria of pretending is now forgotten, and everyone has moved on to the new reality.
But the practice that allowed it – congratulating for a deed not accomplished – is supported and will continue. Lacking is what actually turns the business around – the requisite changes in behavior implemented over the long haul that create real revenue and real profits that assure business success.
Kanye West is now reportedly reaching out to Facebook founder Mark Zuckerberg for an investment. We can only speculate that had Mr. West had been surrounded by people who cared enough to admonish him to avoid debt, he would have avoided personal debt that is now altering his lifestyle.
Our takeaway: Remember that promises of future achievements are not actual achievements themselves. Don’t be content until the deed is actually done!