In simple terms, a mental model is a way to think about the world.

It is a tool—a lens through which you can simplify, evaluate, and make decisions in real time as you walk through life. In my experience, the most useful mental models are broad and dynamic, meaning the user can leverage them in a variety of contexts and situations.

I occasionally develop (and battle-test) a new mental model that creates such profound value in my life that I feel compelled to share it with all of you.

Today, I'd like to share one such mental model that has the potential to impact how you think about your foundational actions and behaviors:

Investor vs. Borrower

Investor vs. Borrower

When faced with any key decision, you effectively choose one of two potential characters:

• Investor: Long-term thinker who is willing to delay gratification; makes an investment that may sacrifice short-term pleasure for a larger, more meaningful reward in the long-term.
• Borrower: Short-term thinker who is unwilling to delay gratification; takes out a loan to experience pleasure in the short-term, even if that means paying a steep price in the long-term.

The power of this framing comes from understanding the role of compounding and the impact it has on our envisioned future self.

The Investor makes an investment. An investment compounds with a positive rate of return into the future. Even with a low rate of return, that investment—whether financial, physical, relationship, or anything else—is worth much more at a date in the future.

Our future self cashes in on that value.

The Borrower takes out a loan. The loan provides upfront pleasure, but comes with a catch: interest! The interest accrues on top of the original value of the loan. Even at a low rate of interest, the value to be repaid has ballooned at a date in the future.

Our future self is stuck with the bill.

Entrepreneur and investor Naval Ravikant refers to "uphill decisions" as the choice to take the more difficult path in the short-term. His logic is that the path with more short-term pain is typically the one with the largest potential for compounded long-term gain.

The core principle behind this mental model is simple:

The best things in life come from investing, from making the decision to do something difficult or painful now in order to reap the rewards of the compounding later.

Most of the decisions that feel good now will feel bad later, and most of the things that feel bad now will feel good later.

Applications of Investor vs. Borrower

I have observed a variety of applications of the mental model...

Time Decisions

Procrastination is the most common manifestation of the Borrower mindset.

When you procrastinate, you take out a loan in the form of free time now, but you have to pay for it later when your future self is stuck with the bill in the form of stressful last minute work.

Embrace being an Investor: Make an investment of your time today and execute a higher quality output devoid of the time crunching stress we so often force ourselves to experience.

Relationship Decisions

In all relationships, we'll be faced with the need to have difficult conversations—to address issues, cut tension, or remove someone out of our life.

These conversations represent a classic example of upfront pain for long-term gain. They are an investment that pays off in the form of improved relationships and mental health for your future self.

But it is much easier to be a Borrower, to avoid them or put them off for a later day. When you do so, you take out a loan that accrues interest and eventually must be paid.

Time rarely solves anything when it comes to relationships. Invest now or regret it later.

Health Decisions

Your physical and mental health are perhaps the most obvious arenas where choosing Investor over Borrower is essential.

When you choose short-term pleasure—in the form of inactivity, social media doom scrolling, binge drinking, or anything else—you are taking out a loan with a steep payback in the future.

When you default to the Investor mindset, you choose the short-term pain—in the form of physical activity, time away from your phone, and healthy consumption—that has compounded long-term benefits.

When it comes to your physical and mental health, you'll never regret being an Investor.

Financial Decisions

This is a direct and clear application.

When you choose to buy something you cannot presently afford, by using credit cards or "buy now pay later" tools, you are taking out a loan that eventually has to be paid.

You get the thing you want today, but at a cost.

Like most Borrower behavior, this is *ok* in moderation, but it can quickly reach a tipping point, so be wary.

Finding Your Ideal Ratio

The Investor vs. Borrower mental model is one that I find myself coming back to over and over again in my own life.

When I'm faced with a key decision, I ask myself two questions:

• Am I an Investor or Borrower?
• What would an Investor do here?

My goal: To have a high ratio of Investor to Borrower behavior.

Note that the goal is not 100% compliance with the Investor mindset! That would leave no room for some of the fun, pleasurable short-term activities and decisions that add texture to life. Every now and then, I want to sleep in, order that large ice cream, or splurge on those Taylor Swift concert tickets I can't quite afford.

Lesson: Find the ideal ratio of Investor to Borrower behavior, consider how your present actions are impacting your future self, and embrace your point of balance.