Broker Check


February 24, 2022


By Peter T. Waldron

Managing Partner of Waldron Partners

“Human behavior flows from three main sources: desire, emotion, and knowledge.” – Plato

                The financial planning industry is truly a balancing act of desire, emotion, and knowledge, which is never more evident than when we explore the topic of debt. While there are many types of debt in the financial world, mortgage debt tends to be, in many cases, the main topic of discussion. The conversation has never been more top of mind than right now; people are refinancing, upgrading, and downsizing (for retirement). While everyone comes to the table with their own personal construct around making decisions, the goal of this article is to apply the words of Plato to decision making and financial planning.

One of the strongest emotions a human being can exhibit is desire, and with home purchases, this desire can fog good financial judgement. For example, it’s common to see people who want to own homes that are way outside of their purchasing power. While the monthly payments might be feasible, without considering their emergency funds and other short-, intermediate-, and long-term objectives, the probability of a successful outcome is less than viable. As mentioned, desire is a strong force; it is driven by our need to provide more for ourselves, our spouses, our children, and our family. While these are noble desires, they need to be grounded in what’s realistically possible.       

It’s often difficult to remain grounded in the reality of your financial situation once your emotions become part of the equation. Clearly, desire is an emotion, and, in this construct, emotion is considered a broader definition of the opposite of logic. It’s not that emotion is illogical; rather, the opposite, whereas, when the logical and fundamentally best outcome is presented the opposite decision is made. So, within that context, if you have picked your dream downsize home or first-time home, the question then becomes, do you pay cash or use leverage? Some people with the means will pay cash for the house, even though the logical outcome in a vacuum would be to fully leverage the asset (have the biggest mortgage), given a long-term period where interest rates are low and the stock market will bear long-term rates above the interest rate for borrowing. Again, the emotional decision would be to ignore the best outcome.

While it is logical to analyze the long-term outcome, the inverse issue arises for the knowledgeable (or logic-based) decision maker when they don’t take emotion into consideration. Some people don’t consider emotion at all when discussing money. But that can be a fool’s game, because emotion and money at times are a large source of instability. So if you use the same logic applied above (where you have low interest rates and long-term investment returns above the borrowing rate) and you don’t fully understand the emotions of your partner, the investment risks you are taking, the impact of an unforeseen event, or the combination of all these variables, the results could be catastrophic. This is not to say that logic is fallible; rather, the assumptions that are applied are fallible.

The naïve logic is to assume that everything is constant, including mortgages, homes, investments, and people’s emotions. The only way that we can interlace these various elements is to consider them all and test the impact of various scenarios. While this is only a temporary view of a situation, it is the constant reassessment of the data given ongoing changes in the original assumptions that guides someone to better conclusions over time. And while this is not a clear fact to everyone, it is the benefit of advice, planning, principled debate, and trust.

“What it lies in our power to do, it lies in our power not to do.” – Aristotle 


PLEASE CONTACT PETER WALDRON TO SCHEDULE A COMPLIMENTARY REVIEW OF YOUR FINANCIAL SITUATION: 925-786-7686 or – You can also complete a complimentary business owner survey – – The results of the survey will help you define your optimal exit plan.

Peter T. Waldron: California Insurance License #0E47827

Peter T. Waldron is a registered representative of Lincoln Financial Advisors, a broker/dealer, member SIPC, and offers investment advisory services through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor, Waldron Partners, 3201 Danville Blvd., Suite 190 PO Box 528, Alamo, CA 94507.  Waldron Partners is not an affiliate of Lincoln Financial Advisors. Insurance is offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors Corp. for its representatives and their clients. CRN-34555855-021721