Wet Paint

by Jim Stovall

There are several ways we can learn lasting and significant lessons.  Some people learn as an ongoing enjoyable part of life, while others have to learn everything the hard way.

If you find a painted wall somewhere around your home or office and put up a sign that says “Wet Paint,” without realizing it, you’ve created a perfect laboratory for observing human behavior.  If you simply stand by and watch, you will see human nature and the learning process take several forms.

Some people will come by, see your “Wet Paint” sign, glance quickly at the wall, and go on about their way.  These people are generally well-adjusted, reasonably trusting, and non-confrontational.  If you remove the “Wet Paint” sign, these people will often make it a point to avoid touching the wall for several more days and even go so far as to alert others that the paint on that wall may still be a bit wet, so they should be cautious.

If you continue your observations long enough, you will observe another kind of human behavior as it relates to your “Wet Paint” sign.  A person will come by, clearly see your “Wet Paint” sign, and immediately touch the wall to see if the paint is actually wet.  These are people who would not have touched the wall if you had not put your “Wet Paint” sign there in the first place.  Even though this person has damaged your paint job and gotten wet paint on themselves, if they come by later, whether your “Wet Paint” sign is there or not, they will actually touch the wall again and continue this same behavior for hours or even days until they learn, through their own experience, that the paint is no longer wet.

All of us have the potential of learning very valuable lessons each day.  Some people can learn by reading or hearing the words of others; other people need to observe the outcomes of other individuals; while many people have to learn the lesson the hard way every time or, worse yet, never learn the lesson at all.  While we may think these learning styles are innate or inbred, we actually have more control over how we learn and what we learn than we might realize.

In our ever more complex, fast-paced world, it becomes more critical than ever that we develop the ability to learn lessons from others who have gone before us.  You don’t want to be among the sorry souls that learn, the hard way, that the surgeon general’s warning about cigarettes or the pleas of financial planners to plan for your retirement years were valid.

With all of the multimedia opportunities around us and constant access to the Internet, we should be able to learn from others’ words or at least their actions without having to get a handful of wet paint every time.

As you go through your day today, commit to learning the most lessons you can in the easiest manner possible.

Today’s the day!

Minimize Meetings

by Jim Stovall

Every few days, I am asked to serve on a board or committee somewhere in the world.  I immediately reject virtually all of these requests, not because the opportunities or causes are not valid, but because many boards and committees tend to be inefficient, ineffective, and unproductive.

The lack of productivity does not come from the members of the boards or committees not being talented, committed, or dedicated.  The lack of productivity comes from the fact that boards and committees, by their very nature, exist to have regular meetings.

If we are to succeed in business or in life, we should never confuse activity with productivity.  Productivity is the constant progress toward a worthwhile goal, utilizing a well-thought-out plan.  Activity is quite simply any task that takes up time and creates work.  A hamster running around the wheel in his cage demonstrates great activity but no productivity.

I would be the first to admit there are times that a face-to-face meeting or the process of getting together a group of stakeholders is vital to success; but having the Monday morning meeting, the monthly committee session, or quarterly advisory board review are most often a recipe for wholesale ongoing activity with little chance of any meaningful productivity.

Never hold a meeting if a call will suffice, and never have a call if an email will meet your needs, and never send an email when doing nothing is likely to garner the same results.  This activity hierarchy should be used any time someone tries to corral a large portion of your productive time and turn it into a regularly-scheduled meeting which is virtually guaranteed to make you feel like the hamster running feverishly on the little wheel.

Following are some ways to stay as far toward productivity and away from activity as possible:

  • Reject all invitations to join a board or committee unless there is a specific, well-defined reason that you need to participate that will result in progress toward a meaningful goal which cannot be achieved any other way.
  • Avoid meetings by asking if you can participate via conference call or, better yet, send in your thoughts and input via email.
  • Unless otherwise compelled to do so by your employer, do not post your appointment calendar online where anyone can get to it.  Those huge blocks of unencumbered time where you were looking forward to being creative and productive can be gobbled up and commandeered by anyone in a meeting or committee frenzy.

As you go through your day today, define for yourself what is important, and avoid exchanging productivity for activity.

Today’s the day!

Mastering the Mental Game of Money

In this special September of guest posts from four noted authors and bloggers on money and life, you’re in for yet another treat.  J.D. Roth is an accidental personal finance expert. For over five years, he’s been writing about smart money management at Get Rich Slowly. He’s too humble to tell you himself, but his blog was chosen by Time magazine as one of “The Best Blogs of 2011.” 

He’s the author of Your Money: The Missing Manual (O’Reilly Media, 2010), the personal finance columnist for Entrepreneur magazine, and a regular contributor to Time’s Moneyland blog. Really, though, he just wants to write about travel, but he’s been kind enough to give us a synopsis of the most potent lessons he’s learned as a personal finance blogger.

***

Last weekend, I attended my twenty-year college reunion. In 1991, I graduated from Willamette University with a degree in psychology (and a minor in writing). I also graduated with debt. Not student loans—I was fortunate enough to have earned scholarships to pay my tuition—but something far worse: credit card debt. Yes, it’s true. I was one of those proverbial college students who was suckered into a life of debt by credit card offers in the student center. By the time I graduated from college, I had three credit cards, and was desperate for a job to make my payments on them.

And so it began. For the next five years, I accumulated more and more credit card debt, topping out at over $20,000 before I got fed up and cut up my credit cards. Even that wasn’t enough to stop me from spending. I borrowed from family and friends. I took out personal loans. By 2004, I’d acquired over $35,000 in consumer debt. It wouldn’t have seemed so bad if I’d used this $35,000 to pay for medical bills or to start a business. But I didn’t. I used the money to buy computers and comic books and other crazy stuff.

Getting Smart About Money

My story isn’t unique, and I know that. Lots of people make dumb mistakes. But when you’re living the dumb mistake, you feel all alone. You feel helpless. When you’re in debt, it feels like you’re drowning, like you’ll never make it to shore. Here we are in 2011, though, and things have changed. Seven years ago, I had over $35,000 in debt, and I was falling further behind every year. Today, I have over $35,000 in savings — and I pull further ahead every year.

How’d I do it? Well, I didn’t win the lottery, and I didn’t rob a bank. Instead, I spent several years making small, subtle changes. I learned how to live a frugal lifestyle, cutting back on the things I didn’t really need (like cable television). I discovered the debt snowball, a sort of mind game that allows people like me to finally pay off their debt instead of just wishing they had. I started to save for emergencies, for retirement, and for fun. I worked long hours to bring in extra income. All of this was hard work, but it paid off. In December 2007, I became debt-free, and I’ve remained so ever since.

Along the way, I’ve written about my progress at Get Rich Slowly, my personal-finance blog. I’ve shared my triumphs and my failures. Because let’s be very clear: I’ve made many mistakes over the past few years. Even today, I still do dumb things with money. These mistakes used to get me down, but that’s not true anymore. Now I know that the mistakes actually help me learn.

Lessons Learned

After more than five years writing about money, I’ve learned quite a bit just from personal experience. I’ve also learned by talking with my friends and neighbors, and from exchanging e-mail with hundreds thousands of readers. My financial education has come from their stories. What have I learned? Here are some of the most valuable lessons:

  • Money is more about mind than it is about math. Financial success is more about mastering the mental game of money than about understanding the numbers. The math of personal finance is simple — spend less than you earn — it’s controlling your habits and emotions that’s difficult.
  • The perfect is the enemy of the good. Too many people never get started putting their finances in order because they don’t know what the “best” first step is. Don’t worry about getting things exactly right — just choose a good option and do something to get started.
  • Do what works for you. Each of us is different. We have different goals, personalities, and experiences. We each need to find the tools and techniques that are effective for our own situations. There’s no one right way to save, invest, pay off debt, or buy a house — and don’t believe anyone who tells you there is. Experiment until you find methods that are effective for you.
  • You can have anything you want — but you can’t have everything you want. Being smart with money isn’t about giving up your plasma TV or your daily latte. It’s about setting priorities and managing expectations, about choosing to spend only on the things that matter to you, while cutting costs on the things that don’t.
  • Nobody cares more about your money than you do. The advice that others give you is almost always in their best interest, which may or may not be the same as your best interest. Don’t do what others tell you just because they hold a position of authority or seem to have a persuasive argument. Do your own research, get advice from a variety of sources, and in the end, make your own decisions based on your own goals and values.

What makes personal finance interesting to me is the personal side of it. We’re not robots. We’re not computers. We don’t make financial decisions based solely on logic. Instead, we allow passion and emotion to sway our decisions. Don’t believe me? What are your hobbies? How much do you spend on them? How is that logical? Do you have pets? Children? Do either of those make much financial sense? And have you ever loaned (or borrowed) money from a friend or family member? How did that work out? Was that a situation you evaluated solely with logic?

I feel fortunate to be debt-free today. I intend to remain that way for the rest of my life. But that’s not enough for me anymore. I want to help others become (or stay) debt-free. To that end, I’ll continue to write about money at Get Rich Slowly (and various other places around the web). There’s a lot of practical information out there about the nuts and bolts of personal finance, but I feel like there isn’t much written about the mental game of money. That’s too bad. Because ultimately, it’s mastering this mental game that’s most important.

The $30 Hotel and the Battleship Slumber Party

Continuing in this special September series[i], this week I have the pleasure of introducing you to Chris Guillebeau.  Chris is the most unassuming revolutionary I’ve ever met.  He’s soft-spoken and appears not to have a self-interested bone in his body, yet a couple-hundred-thousand people follow his every move online each week through his blog, “The Art of Non-Conformity.”  He lives the title—he quit high school and then finished his college degree in two years.  Still in his early-thirties, he’s traveled to over 150 countries in support of his goal to visit every country on the planet, educating his audience on travel and life every step of the way. 

Chris is the author of the book, The Art of Non-Conformity, and I love the way he describes the central message: 

You don’t have to live your life the way other people expect you to. You can do good things for yourself and make the world a better place at the same time. Here’s how to do it.

If  you don’t want to pay a dime for some of his wisdom, read the manifesto that kicked off his writing career—A Brief Guide to World Domination—or the sequel, 279 Days to Overnight Success.  And of course, read this post from Chris, written just for you!  

***

When I went to Vietnam several years ago, I was excited to find a local hotel that offered nice rooms for $25. An upgrade was available for $5 more. Sight unseen, I took the upgrade—and was glad I did.

My own balcony! Free soup for breakfast! And truth be told, for someone who usually lives in the Pacific Northwest, the air conditioning while visiting Southeast Asia was nice too.

When I came home, I told the story of my $30 room. Some people said, “That’s awesome!”

But others had a different take. “I wouldn’t feel comfortable staying in a place like that,” a friend of the family said. “Wasn’t there a Western hotel nearby?”

Well, yes, there was a Marriott—and it cost $270 a night.

Others were unhappy for a different reason: “Dude, you got ripped off!” a fellow student in my graduate program told me. “I paid $5 a night for a bed when I was there.”

Truth be told, I didn’t need the $270 Marriott, and I didn’t feel bad about the “overpriced” $30 room. I was happy to exchange the money I did for the experience I received; I walked away satisfied with the exchange.

On countless other trips around the world since then, sometimes I’ve paid next-to-nothing, and other times I’ve paid a small fortune. It all comes down to a question of mindfulness, something I believe is the most important skill of personal finance. You can learn about exchange-traded-funds or DRIP investing whenever you’re ready (and if you never learn, you’ll probably be OK). But if you get clear about what you value and how your relationship with money is intertwined, you’ll go far—no matter which tax bracket you find yourself in.

Discussions about frugality and values tend to get weighed down by competing values: “save money at all costs” versus “live a little.” Tim’s work on this blog, his radio program, and in The Ultimate Financial Plan is smarter than that. It’s all about deciding what you value—and making sure your spending relates to those decisions.

I enjoyed reading about Tim’s choice to spend the night on a battleship with his son. He probably could have had a better meal elsewhere, or he could also have saved the money for a distant future. Speaking for myself, I’m not so sure I would have enjoyed the battleship slumber party—but I think it’s clear from the post that Tim made the right choice for his family adventure. Don’t you?

***

Some things are worth the money and some aren’t, and these decisions will always be relative. I don’t need to pay $5 a night in Vietnam… $30 was just fine with me. Sleeping on battleships isn’t my style, but I can see why it would make a fun memory for a parent and child.

I’m not in the business of telling people what they should value—and thankfully Tim isn’t either—but I’d encourage you to think long and hard about what you value and how your money will be used in support of those values. The poet Mary Oliver might have put it best: “Tell me, what is it you plan to do with your one wild and precious life?”

Well? It’s your turn now, and your life.


[i] If you missed the last couple weeks, you might not know that to celebrate the release of my new book, The Ultimate Financial Plan, co-authored with Jim Stovall, I’m featuring guest posts from some of the bloggers and writers who’ve most inspired me of late.  If you didn’t see last week’s post by Derek Sivers on why he decided to give his $22 million company away to charity, it’s a read both humbling and inspiring.