Emotional Costs

I recently wrote on this article on Get Rich Slowly that "This is the cost of emotion - if you didn’t have that reaction, you could save money." In retrospect, I think that sounded more negative than it should have. In my article last week, Making the Most of Productivity, I put forth that we might want to look at our productivity in financial, emotional, spiritual, mental, and physical areas.

So let's look at the other side: FESMP (an abbreviation of the areas above) costs. As I said, emotion has a cost - in the example, people were willing to give the government an interest-free loan (paying extra taxes for a big refund) because they knew wouldn't manage the money as well. So because of this emotional soft spot (not being able to stay firm in saving that money), they paid in lost interest.

Another example, from the Seven Laws of Money: the author(!!!), a financial planner and author, saved $2,000 by borrowing $2,000 from another bank, putting it in a CD, and paying the loan back. He only lost a little bit, on the spread between the rates, but he's a financial planner, and that's the best he can do??? Emotional cost.

Then I got to thinking about it... People pay for membership in a gym - physical cost. People give money to their church - spiritual cost. People get sick and take days off of work - physical cost. People take holidays to recharge - mental cost. By spending money, we save in other areas, by spending in other areas, we save money. Think of staying late to get extra work done - you make more, but you cost yourself physically and emotionally.

Looking at it now, I can't see an example where 'mind' and 'emotion' aren't being used interchangeably. Should I have two categories or just one?

It would be a good practice to sit back and look at your 'wealth' in each of these areas, and the 'exchange rate' between them. It's interesting that, as we get low in one area, we are often willing to buy it at a premium, and as we get high, we are willing to sell at a discount. Think of the rich man in poor health, and what he'll be willing to spend to be healthy again, or the other extreme - the poor young man willing to work 70 hours a week to make lots of money.

• Where are you wealthy, and where are you poor?
  
• Are you balanced?
  
• If you made a pie chart with these five (four?) areas, what would it look like?

Are You the Average of Your Friends?

"You can judge a person by the company they keep." I've heard this before, but didn't understand it the way I do now... Now I've come across a very interesting statement - you are the average of your ten closest friends.

It was stated about income, but it applies to a lot more. Take a moment and think about your closest friends, and ask yourself the following questions:

1. Do most of them like to stay out late and/or drink?
2. What are their favorite TV shows?
   
3. Do most of them smoke?
4. Do most of them like to read books?
5. What cars do they drive?
6. What is their average income?

Since, for the most part, like attracts like, I think you'll be amazed at the similarities when taken as an aggregate. Now I think this works both ways - you attract people who have similar interests to you, and you influence them and they influence you. For example, if you went to bed at nine every night, how long would you stay close to people who partied until 2?

How about - how comfortable would you be hanging out with people who made 1/5th the money you did? Or didn't know how to handle money, and were deeply in debt, while you had half a million in the bank? Along the same line, if you were working on a new business idea, would you want to be around people excited for you and with helpful experience, or a group of people who kept finding reasons your ideas won't work?

In Alcoholics Anonymous meetings, they tell the members that they'll have to find a new group of friends. The ones they got drunk with aren't going to help them stay sober. Likewise, if you want to make strides in your personal situation, it's probably time to take a good look at the people around you. Luckily, it doesn't have to mean leaving friends. When I asked a friend about this, his reply was, "Heck no, I'm going to help make my friends wealthy too. Then I'll have my same friends, and I'll still be their average."

Some Things to Consider

• Are you the average of your closest friends?
• Do you like what you see in them, or do you wish they would change?
• Do you honestly believe you can improve while keeping to the same environment?
  
• What can you do to, as Gandhi put it, 'be the change you wish to see in the world?'
  

Making the Most of Productivity

This is an extended apology for not writing in almost two weeks.

I have been in a very tight situation financially, and it's making me look very closely at a lot of assumptions I have and things I do. I do believe that everything you do is an outgrowth of what you think you are. When we act in a certain way, it is in accordance with our values - no matter how we act. So by simply sitting back and watching your own actions, you can gain deep insight into your core beliefs. Which will give you the ability to affect those beliefs, automatically affecting change on how you act.

Therefore if I say I value money, but act differently, maybe spending too much, I show that I don't really value money. Action speaks louder than words... Therefore, as we currently are having money difficulties, I see the hint of a belief that interferes with being wealthy. And given my beliefs about money, that will not do.

Thus I have been focusing on the following question:

How much money did I make today?

This has been very powerful, as it forces me to look at each action, and decide what to do based on the return. I have been doing quite a few things that haven't given me the productivity I need to have right now. Thus it is time to change. By asking myself this, or a permutation without the word 'money', I have been able to cut out some things that haven't pushed me forward as much.

Blogging hasn't made me much money yet, so it got pushed back. My jobs - especially online - have been making money, so they got moved forward. Time watching my son has been distracting, so I cut back and made sure the time we spend is more special and personal. I think the quality has gone up in my interactions because of this. I've really appreciated time with the family the last couple days, partially because I've been creating less of it.

Thus the focus has been productivity - financial, emotional, spiritual, mental, or physical. I am working out a system to follow my successes and label my mistakes, like we have dollars for the financial side. See, money is easy. At the end of the day, if you have more than you started with - you are ahead.

What about physical health? What is the 'bottom line'???

Beliefs Can Literally Make Your Day

“You experience what you believe, unless you believe you won’t, in which case you don’t, which means you did.” This is from Harry Palmer of Avatar, who has an "interesting" history. Be that as it may, this is an excellent quote on positive thinking.

The underlying idea is that your beliefs create your reality. Now we have to look at 'reality' a little bit here... To borrow from ACIM, I'm going to use reality as the world we see around us, everything separate, and our eyes trusted; and Reality as a deeper truth of metaphysics - everything interrelated and requiring the perception of our intuition and feelings.

So, at the level of reality, your beliefs affect you, not the world. Even here, your beliefs change your perception of and your reaction to the world. Therefore work on your beliefs changes the world for you. Consider an example - 'I can't pay my bills'. If this is your belief, you miss possible opportunities to get out of debt. If someone presents you with an opportunity, the usual reaction is, "I can't pay my bills, how could I afford that!" Thus it has become self-fulfilling by closing your eyes to any other possibility.

At the level of Reality, we are a part of everything around us. If that is true, then we have a strong influence on the world, similar to the influence you have on getting your sister to turn on the lights for you. You ask, and she (probably) is happy to help out. Thus 'I can't pay my bills' attracts more bills to you; it tells money to stay away as this is what you're calling to. As long as you hold that belief, the world agrees. And as soon as you change that belief, the world agrees.

Which means whatever level you live at, beliefs control your reality. And you control your beliefs! By changing your beliefs, you can change your reality. Now, how do change your beliefs. Well, first you have to be aware of them. You can't change what you don't know about. Once you've found a belief, then you have to decide if it's helpful or harmful, and then decide if you want to lose it. Luckily, by looking at how you feel about your belief, you can see whether you want it or not. Notice how 'I can't pay my bills' makes you feel. How about 'everybody in this town drives crazy!' Or try 'this is a beautiful day, and I'm lucky to be here.'

As the adage goes, nature abhors a vacuum. It's nearly impossible, if not impossible, to drop a belief. It's much easier to overwrite one. That's why Affirmations are so popular. You (or a coach, partner, etc) find some belief that isn't working, turn it around into a positive affirmation, and slowly overwrite your initial belief. You can't believe that you are smart and stupid (for example) at the same time, so one will win out. Which one is up to you.

Your beliefs were given to you by trusted sources: parents, friends, teachers, life experiences. Can you be your own trusted source? Maybe, but it's harder. If your teachers told you that you were stupid, you're going to have to work hard to convince yourself otherwise. But you can. Do things you know you can do; challenge yourself a bit and see that you can do things you thought you couldn't; daily tell yourself how smart you are; have an experience proving you are smart; ask your friends to let you know when they see you do something smart. It'll take a while, and we're good at undermining our own efforts, but with work you'll do it.

Then you'll start to see the world differently - through 'smart' eyes. And you'll find all kinds of opportunities to show everyone how smart you are where you used to only see how stupid you could be. As Paulo Coelho says in his great book The Alchemist, the world wants you to succeed.

Should I Invest? #2: What Do You Believe?

Question #1 was about your timeframe. Question #2 is about your beliefs. To be a successful investor, you need to be cautiously optimistic. Optimistic because if you didn’t think there was a future, and a better one to spend your money in, you wouldn’t invest. Cautious because if there is any chance you could be wiped out, eventually you will be.

Investment = Sacrifice
You sacrifice something now, usually time or money, because you feel you will get something better in the future. You sacrifice living in this home, and let somebody else live there, so that you’ll have a paid-for home in the future for income or to live in. You sacrifice $1,000 of current spending money for the income it could produce, or the chance that it will be worth more in the future. This is often referred to as Return on Investment (ROI), and a 25% ROI means you’ll get back a quarter of your investment a year – and four years from now, you’ll have your original investment AND your money back out. But you must be optimistic that you will get back your money, and inflation won’t kill your profits, or why would you put off gratification?

The Meaning of Risk
If you have an investment that works 90% of the time, but has a 1% chance of costing you all of your money – you will go broke if you try it enough times. In a more normal world, if you win 55% of the time, and risk even 1/10th of your wealth, there is a 2% chance you’ll lose 5 times in a row – half your wealth! You must be cautious with your money! Warren Buffett’s famous two rules of investing are:
1. Never lose money.
2. Never forget Rule #1.

What Are Your Beliefs?
So what are your beliefs? Do you think the economy will get better or worse? What will the world look like in ten years? Twenty? Will the economy rebuild? Will businesses still be profitable? Will your life be better if you’ve doubled your money over the next ten years? Or will inflation cut money to less than half its value in that time? If you double your money, but the cost of living triples, you’re moving backwards. Take some time and think about these questions:
1. Will things get worse or better in the future? By how much?
2. Will there be inflation, deflation, or high inflation? (2-3% inflation is considered “normal”)
3. Will businesses still be profitable in the future?
4. Will your country’s economy and currency be strong in the future?

Should I Invest? #1: Timeframe

This is the first of a 3-part article. With the economy in what I've heard called 'the Sandpaper stage' (back and forth, rubbing out your savings), I've talked to a lot of people about when to get in the market, or whether to get out completely and take the loss.

To me, this begs a bigger question: Should you be in 'the market' at all? To which I have three questions. The first is: What is your timeframe?

****************

It has been said the market is long-term a weighing machine, and short-term a popularity contest. This means that a good company, over time, will show it's fundamentals and be valued for being a good company. Unfortunately, it also means that it could take a long time to show that value, and be all over the place in the meantime. This is why most stock charts look so jagged, up and down. It's also why Blue Chips look smoother - their value has been established, so there isn't so much debate on price. See an excerpt of Warren Buffet's view on this here.

In our current economy, I would say that, to be safe, you need a time horizon of at least five years to be reasonably confident that you'll get to the 'weighing machine' part. If you will need your money in less than five years, you might not want to count on fundamentals alone to choose your investments.

Some History
Look at a graph of the S&P 500 over the since the beginning of 2000: it was at 1527 on March 20, 2000; then dropped and climbed back to 1561 on Oct 8, 2007; then fell again since then, and is now at 827. Which means if you bought an S&P 500 index fund in early 2000, you would have spent 7 1/2 years getting back to your starting point, not even a profit. Who knows how long until this latest drop comes back? Forget five years - from 2000, you're looking at ten years at the least!

Question #1
So the first question to ask yourself is, "What is my timeframe?" Think about it seriously and write down when you'll be needing that money back. Only once you know that can you think about the next step, your belief about the future.

Thank You

I just finished reading here about a High School friend I haven't heard of since, well, High School. He wasn't a close friend (did I have those in High School?), but on hearing his name, I could instantly see his face, and that quirky fun smile. I could hear his voice. And, while I don't really remember any specific shared activity, he was definitely a good memory of school.

He just passed away last week. At the time I read about his passing, I didn't know who it was, and posted this in response:

Wow, congratulations for having a friend like that! It sounds like he really added to the quality of your life too.

I had a good friend pass away during my first year overseas. His memorial was a marvelous experience. We spent the whole time looking back at his life, all he’d done, all he’d touched, all his friends and family. He was mid-30’s, and had lived more than most people I know.

I guess I’m saying Sparky is where he is now. The memorial is for you and the people left behind. I hope you can help make that another lesson on how to live life for his friends. Compare this life with one of ’someday I’ll go do…’. Wealth is thoughts, not things, and it sounds like he was quite wealthy. Keep your memories of him, and share that wealth.

“Those that fear death are not living life.”

It's interesting how my thoughts changed upon realizing who it was. I still agree with what I wrote, but it's more personal now too. In some ways, it's more true. I don't spare a lot of thought for those now gone, but for my memories of them. As he lives on in my memories, that seems the place to put attention to honor the lessons.

I have had conversations with friends, deep discussions that have opened my eyes to new ideas, changed my mind, or otherwise affected my consciousness - driving down the road alone. We don't fully experience anyone: we make up our minds about them, build up a personality for them in our mind, and occasionally actually act like we're completely on the same page. So 'Sparky' is alive and well - in the minds of hundreds or thousands of people affected by him. That's certainly where my sadness and hurt are right now.

And my joy and appreciation for having known him, and remembering the time I did have with him. Thank you for letting me know you.

Selfishly Self-less

Dinosaur Comics is a personal favorite that I visit every day now. Ryan, they creator, is sharp, witty and quite wise. I find this comic particularly interesting…

I find it interesting because I think it is universally true. I don’t really believe in evil, and I think that all people are ‘hard-wired’, if you will, for good. I see it in the people around me, and I feel it myself. Here is one of the studies that show when we help people, it releases chemicals that not only make us feel better, they boost our immune system as well. The same happens for the person being helped, and random strangers that merely witness the act!

What we see as bad, or evil, is merely someone with a different viewpoint than ours. I’m sure most of the villains of our time thought they were doing good… And for some people they probably were…

Why do we open doors for strangers, let passing cars in, or help out someone in need? We are rewarded. That is true with everything we do, and some of the best rewards are positive feelings. I disagree with the comic that this is a bad thing. Everything we do, we do it because we are rewarded at some level. If we weren't rewarded, we wouldn't do it. This is a good thing.

Rewarded
Now that you know this, use it. When you're feeling down, help somebody. Allow people to help you, too. Say 'Thank you', and show appreciation to reinforce the good feelings. If you need someone's help, make sure you do your best to help them help you, and reward them with positive feedback and smiles. And make it a goal to help five people every day...

Book Review - Loving What Is

Loving What Is by Byron Katie was recommended to me when I was having a particularly stressful time around money. I’ve got to say that, while the money problem is still here, my ability to handle the stress has improved greatly – which gives me more opportunity to take control of the situation. And I really do have this book to thank to a large degree.

Byron Katie is a fantastic woman who really has a great view on reality. Basically, the crux of the book is that reality doesn’t cause our problems, it’s our expectations on reality and our reaction to reality that causes the pain. This mean our challenges are in our mind, somewhere we should be able to affect!

What Is Loving What Is?
Loving What Is is based around four simple intended to bring your thinking in line with reality, and thus remove the cause of our pain. The Four Questions are:
1. Is it true?
2. Can you absolutely know it’s true?
3. What happens when you believe that thought?
4. Who would you be without that thought?

Then comes what Byron Katie calls the turnaround – now that you understand what you thought, what is really there? It’s a chance to look more deeply into yourself, and find the source of that thought – probably another thought that would be more useful.

For example, “That idiot cut me off” is a variation of “People shouldn’t cut me off.” With the questions, it becomes:
1. Yes, of course it’s true!
2. Well, I guess not. I mean he did cut me off, so obviously at some level he SHOULD have…
3. When I believe the thought, I get mad. That doesn’t feel good. I don’t drive as safely either.
4. Without that thought, I would be still relaxed, driving safely down the road.

Now the Turnaround
People do cut me off, so what should I do? Let them! Then there’s no anger or danger, and I don’t care any more, so no negativity. Just slow down, relax, and drive safely…

It really does work – now there’s a little less negativity in your life. Next, you can apply it to family, friends, money, work expectations, and so on. Really, you’re learning how to handle when your expectations and reality don’t meet. Read Loving What Is for a lot more ideas and examples. Buy the book, so you can refer back to it, and check out the website here.

Living Well Rule #1: Know Yourself

It was really interesting. I had just gotten back from a trip through Greece and Turkey, and was looking over my pictures. I had picture after picture of the Blue Mosque, the palace in Istanbul, Bosphorus Strait, and the Parthenon. And here was one picture of me on a beach in Mykonos, a Greek Isle in the Aegean Sea.

I wondered why I had so many pictures of building, ruins, and famous places – and yet only one of this gorgeous beach. Had I forgotten to take pictures here? Obviously I had. And yet why?

It came to me slowly, through several conversations with friends over the next week. The other places were beautiful, and everyone was taking pictures of them, so I went along with the crowd. Not overly interested, I walked, half-bored, taking pictures of buildings that drew so many people year after year.

But the beaches and natural beauty of the Aegean Sea was breathtaking. I’ve realized that I’m a lover of the natural, the eternal. Man-made objects, no matter how spectacular, historic, and famous, just don’t have the same pull. Give me white, sandy beaches with a few tropical trees and I’m in heaven. A sunset over the sea, SCUBA diving amongst coral beds, or hiking to a distant waterfall – these are the things I want to experience.

And this knowledge of myself has been very good for the pocketbook. I have little interest in big, expensive touristy areas. Disneyland, or the Great Wall, or any famous building - I don't need to spend my money there.

I live at the beach, in a small town - and have all the natural beauty and free vacations I can handle. When I'm stressed out, I just grab my camera and watch the sun set. I go for walks on the beach with my family, or sit next to a stream.

So take the time to get to know yourself, and save yourself time and money most people spend chasing things they don't really want.

No News Is Good News - Your Mental Health Is Too Important to Read Bad News

Yahoo’s featured articles this morning when I got online the other day were:
1. Israel Air Strike – Over 200 Dead
2. Hawaii’s Oahu Island Has Massive Blackout
3. 9th Body Found in Shooting

Wow, and I can only imagine what the TV news was like. There was a fourth article about killing, but I can’t find it again. So that’s three articles about killing, and one only about a major inconvenience…

I don’t read any of these articles, of course. My mental health is too important to spend it on reading bad news. I’ll hear enough with headlines and in casual conversation over the day. But I write, and I invest, and I take care of my four-year-old. Why would I want to fill my mind with negative press? I’ve often read in the paper calls for more positive news, but that isn’t going to happen as long as we keep buying, and supporting their doom and gloom.

So I do something about it: no more reading articles online, no more watching the news on TV, no more buying newspapers – until they start writing things I want to read. Frankly, I don’t expect it to happen, so I’m just going to avoid the majority of the news for the foreseeable future.

Trust me, there’s still enough out there. I’ll still be getting most of the news. At least the big national and international, and the newsworthy local content. But I’m not going to fixate on the negative, spend much time on it, or look at it in a way that shows the media that they can make money off of it. Since the majority of their income comes from advertising, and that comes from subscription/hits/ratings, I will stay off their radar. I won’t buy a paper, click through a link, or turn on the news. One less reader, one less person their advertisers will reach…

Given the recent economic news, this is doubly true. Successful investors must be ‘cautiously optimistic’. If I’m not optimistic, why would I invest at all? There must be a positive future out there to be saving for. But overly optimistic leads to overly risky, so a certain level of caution must be kept – no irrational exuberance here! And news, with its drama and sensationalism, is anathema to cautious optimism.

My mental health is too important to read bad news. Instead of expecting the media to be concerned with my intake, I take it upon myself to monitor content. If you feel the same way, take responsibility to manage the amount of negative news you get. You can:
1. Get rid of your TV, or at least don’t watch news.
2. Don’t subscribe to any newspaper that doesn’t feed you the diet of news you want.
3. Get the headlines, but don’t click through links that aren’t for the type of content that stimulates you.

Desire and Discipline – What Motivates You and Gets You Out the Door?

I’m going to start with a story from Trading in the Zone by Mark Douglas. He talks about when he decided to take up running again, and how hard it was at first. Often, he’d let the TV or the weather keep him from his run. He wanted to be a runner again, and found he needed to discipline himself very strictly to keep running. He would set goals, and make himself go out daily to reach them. By the end of the summer, he had reached a big goal and was worried that he’d let down without new motivation. But a funny thing happened: he got up the next day, goal-less, and ran anyway…

It seems we have two main motivators: the carrot and the stick; greed and fear; desire and discipline. Call it what you will – you are either led or pushed.

What Mark Douglas talks about is moving from discipline – and pushing himself out the door each day – to desire. He then believed himself to be a runner, so he did what runners do: run. He didn’t need to push himself, so did it more often and with a more positive outlook in the process. In What’s Your Why?, I looked at building a future desire that would pull you forward. Once you know what you want, and you believe you deserve it, things become much easier.

What Motivates You?
So take the time to look at your motivators. Both desire and discipline will get you where you want to go, but one will be much more enjoyable. Let’s imagine two businessmen – one is worried about the economy and his financial security, and the other is excited about his new business idea and the possibilities success will open up to him. Which will make more money? Which would you rather be? Who will get up in the morning, happy to get started on the day? Who will talk about his business more, and find more possible ways of success?

How about you? Where are you?
1. Are you happy to get up each day, or do you have to push yourself?
2. Do your goals or resolutions excite you?
3. Would you like to continue to do what you do if you weren’t paid for it?

What Is Your Desire?
Discipline can be a great way to get started. But your passion, your energy, your creativity – comes from desire and doing what you love. If you’re already there, great. But if not, how can you make the move from ‘doing what you have to’ to ‘loving what you do’? Maybe you’ll have to look for a new circumstance in your life. But maybe you’ll find a way to love what you do, love the process, or just take pride in doing your job well. What is your desire, and how can you harness it?

Book Review - Paradox of Choice

It has been said that sometimes the fastest way to enjoy a book is to not read it. You look at the introduction, the table of contents, maybe read an interesting section or two and move on to your next book…

That’s exactly what I did with Paradox of Choice – Why More Is Less by Barry Schwarz. Don’t get me wrong, it’s an interesting premise. It’s just not really new to me. The book is divided into four parts: When We Choose; How We Choose; Why We Suffer; and What We Can Do. The first three were pretty obvious, and further backed up by comments in the final section. And I had already had the first three sections summed up by reading I’m a Stranger Here Myself by Bill Bryson and Trading in the Zone by Mark Douglas.

Part four confirmed my thoughts about the first three sections – and I do agree that we have too many choices in the US. And it certainly seems logical that it becomes harder to make a decision, leading to analysis paralysis, and then to buyer’s remorse when you hear someone else’s tale. So I didn’t need to be convinced, and What We Can Do was the section that really interested me.

So I was rather disappointed with what I found here. He puts forth 11 steps to lessen or cut out the suffering that too much choice can create, and I found most of them almost as negative as the problem and/or not going far enough. Let me write them in a somewhat less positive light than he did, then again in a more Aware manner afterwards:

1. Make it a rule to ignore most choices out there, as those choice probably aren’t much better than the ones you’ve already looked at. Probably…
2. Don’t limit yourself to the choices presented. Think outside the box if none of the current choices look that good. And they won’t since you’re ignoring most of them…
3. Learn to accept “good enough”.
4. Don’t try new things. Stick to what is “good enough” until enough friends tell you what you’ve been missing.
5. Don’t be willing to admit you could have chosen better.
6. Be grateful for what you have.
7. Don’t regret or relive past decisions. ( But what about, “Those who ignore the past are destined to repeat it.”)
8. Realize that your satisfaction will drop, so be ready for it.
9. Don’t expect too much.
10. Don’t talk to friends about their experiences – you’ll probably feel worse.
11. Learn to love constraints.

Ugh! Now, I worded those in a more negative way than he did, but that’s really his list, paraphrased! Is this really the best we can do? What about ‘Try all we can while we’re young, and learn what we like so we can be more discriminatory later’? Or, as promised, a more conscious, Aware list:

1. When choosing, follow your heart. If one choice seems superior, let that feeling guide you. (Perhaps test this for a while to develop your ability to sense your intuition.)
2. If no choice feels right, look for a deeper reason – either you will have to create your own choice, or you should not choose any!
3. Be satisfied with your choice. Allow it to be the best for you (in terms of value, cost, and time saved from agonizing over choices).
4. Practice an attitude of gratitude in all things – possessions, friends, your environment, etc.
5. Realize your wanting mind will create dissatisfaction. Know that this dissatisfaction exists only in your mind, and will not change based on your possessions.
6. Be delighted in your friends’ fortunes, not jealous. Share in their happiness, and you now have the happy experience without the expense!

To wrap up, the concept and lessons of the book are sound. I would definitely recommend a good skim at least. The book is certainly worthwhile for introducing its concept and putting together a new overall idea. But I have read most of the message before, and I think Barry Schwarz doesn’t go deep enough with his solution.