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People get really stressed out about money. They cry over it. Lose sleep over it. It even makes marriages fall apart.

There is a solution to money stress. And no—the solution is not having more money.

Lots of times, more money causes more stress, not less. In the sage words of The Notorious B.I.G., “Mo’ money, mo’ problems.” The people who stress about money with $10,000 in the bank would stress about it with $1,000,000 in the bank.

Let me dispel the myth that the source of money stress is “not having enough.” Nobody is stressed because they can’t afford the $1,000,000 house they want. Nobody is stressed because they can’t afford a $1,200 pair of shoes, or a Lexus, or jewelry, or whatever.

People don’t stress about having a lower standard of living than they might want. They stress about the possibility that they might have zero. And even then, what they’re really worried about is what other people would think if they had zero. (Corollary: Plenty of people without any money at all don’t stress about money.)

Really, the two major sources of money stress are debt and risk. You can eliminate both.

Escape the Debt Trap

People borrow too much—mortgages, car loans, etc.—and they have a big monthly headache. All of their income goes to paying down debt. There is not much left over, and not much savings.

If you lose your job, the merry-go-round stops. You get hurt in a car accident, the merry-go-round stops. People in this precarious situation are acutely aware of their precarious situation. It is stressful, knowing that it could all end at any moment.

The other reason people stress about debt is because they’re upside-down on it. For example, you might owe more on your house than it is actually worth, and you would have to pay the bank if you needed to move.

That is a big source of stress. People feel trapped. They are trapped.

I have known people in strong financial positions who’ve been reduced to tears over debt and the fear that something might go wrong. That is a pretty terrible way to live.

Debt is the source of stress. So… if you want to eliminate it, eliminate debt! It really is that simple. Instead of passively paying the minimum on your debt every month, introduce some austerity into your life, set aside some cash, and start hacking away at the principal.

It will make you feel better, I assure you. It will make you feel like you are taking action to address the problem. And if you work at it, you will eventually free yourself from debt, and you will free yourself from any stress that’s related to debt.

The goal here is not to get rich. The goal is to feel no stress. Again, there are billionaires who stress about money—usually because of debt. If you have no money stress, you are better off than those billionaires.

Escape the Risk Trap

If your investment portfolio declined 50% in value, would it cause you stress?

Silly question—of course it would. This happened to me during the financial crisis. My net worth was cut in half. My Lehman Brothers stock vaporized, and I lost some money on my investments. It stressed me out.

I was still wealthy by most people’s standards. But getting cut in half did not feel good. There was nothing to be done about the Lehman Brothers stock, but if I’d had a more conservative portfolio, I would have had less stress.

Take a look at your investment portfolio. If there is even a remote chance that it could drop by 50%, it is time to eliminate some risk.

This is the main reason I recommend The Awesome Portfolio, with 20% stocks, 20% bonds, 20% cash, 20% gold, and 20% real estate. These are the asset allocations that will allow you to sleep at night.

If your portfolio is 100% stocks, you have too much risk. If your portfolio is 80% stocks, you have too much risk. If your portfolio is 60% stocks, you have too much risk.

If you’re speculating on cryptocurrencies, or meme stocks—if you’re speculating on anything with money you need to pay your bills, you have too much risk.

Are you stressed because the stock market has dropped around 20% this year? If the answer is yes, then you have too much risk.

All I Care About

Believe it or not, I’m not in the money business. I’m in the happiness business. If you make a lot of money, but you are miserable, you haven’t won anything. If you eliminate debt, and you minimize risk, you will be happy. That is all I care about.

Getting rich is great, but it is simply extra credit.

Jared Dillian