Legend has it that Morgan Housel wrote a large chunk of the first draft of The Psychology of Money in the same format as every other financial advice book, but then he took a hard left turn and chucked that draft into the trash.

Housel had spent a large portion of his life breaking down complex financial topics into short blog posts, so why should writing a book be any different?

The result was a massive success runaway bestseller of a book that is changing the way everyone who reads it looks at their psychology around the topic of money.

With the weight of that accomplishment in mind, let’s take a quick look at five of Housel’s strongest points with respect to debt and collections.

Avoid Risk of Ruin

“The trick when dealing with failure is arranging your financial life in a way that a bad investment here and a missed financial goal there won’t wipe you out so you can keep playing until the odds fall in your favor.”

People don’t get themselves into deep financial problems because of one bad decision. It’s usually a series of unfortunate events where multiple mistakes compound over time.

One of the easiest ways to avoid this problem is to always make uncorrelated bets with your financial habits. This isn’t always easy, but avoiding the risk of ruin can dramatically increase your odds of actually doing so!

Understand Risk Relative to Needs and Wants

“There is no reason to risk what you have and need for what you don’t have and don’t need. It’s one of those things that’s as obvious as it is overlooked.”

Housel spends a significant portion of the book talking about the fact that we all need to do a better job of distinguishing between the things we actually need and the things that we want.

In one particularly interesting section, he notes how foolish it can be to risk things we need for things we simply want.

That sounds so obvious at first glance, but the more you consider it, the more you realize how profound the wisdom behind it truly is. There’s no need to take unnecessary risks for things we don’t need.

Resist the Urge to Impress Other People

“The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency. Keep this in mind when quickly judging others’ success and setting your own goals.”

It’s no secret that a large number of collections result from people overextending themselves financially in an effort to impress others. No one ever wins this game!

Whether you are gauging your own success or the success of those around you, material goods should never enter consideration. If they do, your judgment is not going to be sound.

Create and Manage Your Gap

“Learning to be happy with less money creates a gap between what you have and what you want–similar to the gap you get from growing your paycheck, but easier and more in your control.”

Another way to understand the difference between needs and wants is to use Housel’s concept of managing the gap between what one has and what one wants.

No matter what you have, if you can be happy with that and that alone, every other aspect of life gets instantly easier. Everything.

The flip side of that concept is that believing the next expense will create happiness is a road map that only leads to financial distress.

Control Over Time Equals Happiness

“Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.”

One of the core arguments Housel makes over and over again throughout the book is that the goal of money should be to buy control over your time so that you can spend that time doing things that add value to your life.

Like most of the ideas in this book, this is such a simple concept, but also one that we constantly allow ourselves to lose sight of. Don’t let that happen to you.

No matter where you find yourself today, these simple financial ideas can help you create change and build lasting happiness. Get started today, and don’t be surprised if you are in a much better place tomorrow!