Growing up, the two-dollar bill was an exciting oddity to me. I seldom saw them, so I believed them to be rare collectibles. I still have several today that I kept from birthday cards decades ago. It wasn’t until I had a bank account of my own that I learned you could simply walk into the bank and request them from the teller.
While still in circulation, and despite being twice as efficient to print as the $1 bill, the $2 bill remains relatively scarce. This may stem from decades of negative associations with bribery, election fraud, gambling, prostitution, and all around bad luck. Historically, the $2 bill would have benefited from a better publicist. Today, it just seems redundant. There simply isn’t a need for a denomination between the $1 and $5 bills.
While the bill itself suffers from financial dubiety, the face that adorns it practiced solid fiscal responsibility. As the United States’ third president, Thomas Jefferson is known for aggressively reducing the national debt.
Jefferson’s aversion to debt is widely documented. He viewed it as a threat to the new nation, stating, “… to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”
Jefferson recognized the significant opportunity cost debt carries. Opportunity cost is simply the value we give up when choosing one option over another. With debt, Jefferson identifies the assumed cost as liberty itself. This belief compelled him to reduce the national debt from $83 million to $57 million over his presidency.
We’ve strayed drastically from Jefferson’s debt mindset. U.S. national debt has ballooned from 8% of GDP in 1809 to 124% today. Consumer debt is so high that the average American is only a few weeks from personal bankruptcy in the event of lost wages. And yet, we keep finding creative new ways to go into debt. “Buy Now Pay Later” (BNPL) options, for example, now come standard wherever electronic purchases are made. Despite Jefferson’s warning, we eagerly trade liberty (financial independence) for servitude.
It would be hypocritical, however, to say Jefferson thought that all debt was irresponsible. Even Jefferson understood that opportunity cost means that if we give something up to take on debt, we also give something up to avoid it. In fact, one of his seminal acts as president involved assuming debt. In purchasing the Louisiana Territory, Jefferson borrowed money and issued bonds to fund the purchase. The important distinction is that he did this while simultaneously reducing total national debt.
Jefferson managed to walk the fine line between avoiding debt while using it responsibly. Had Jefferson focused singularly on eliminating debt, the U.S. would have missed out on possibly the greatest real estate deal in history. In the same vein, if Jefferson hadn’t been focused on drastically lowering debt, the U.S. may not have even been in a position to responsibly pursue the Louisiana purchase.
If George Washington would tell you to track and know where your money is going, Thomas Jefferson would tell you not to assume the cost of an opportunity you can’t afford. Don’t make fiscal responsibility as rare as the two dollar bill.
Have you evaluated what costs may outweigh the financial “opportunities” you’re pursuing? Are there opportunities you might be missing? Working with financial planner should help answer both. If you’re not working with a financial planner, consider scheduling an introductory meeting to get started today.
