How to be happy and lead a meaningful life ~ Get Rich Slowly

How to be happy and lead a meaningful lifeOvercoming fear is one part of living life without regret. You do that by being open to new people and new experiences, and by acting even when you’re afraid. Another aspect of a rewarding life is learning to find happiness in your daily existence — and building upon that happiness to construct a meaningful life.

Today, in the second part of this limited series on mastering your life, I want to share what I’ve learned about how to be happy.

More than two thousand years ago, the Greek philosopher Aristotle wrote, “All knowledge and every pursuit aims at…the highest of all good achievable by action.” And what is that good? “Both the general run of men and people of superior refinement say that it is happiness, and identify living well with being happy.”

In the Nicomachean Ethics, Aristotle said that happiness is “the meaning and purpose of life, the whole aim and end of human existence.”

To some extent, a good life requires good fortune. Happenstance can undermine the well-being of even the most virtuous person. But Aristotle held that ultimately happiness isn’t a product of chance. You can allow misfortune to crush you, or you can choose to bear the blows of fate with “nobility and greatness of soul”. Although fate may play a role in your affairs, Aristotle believed that in the end, happiness depends upon yourself.

Modern psychologists agree.

The How of Happiness

In The How of Happiness, Sonja Lyubomirsky shares the results of years of research into what makes people happy. She’s concerned with “chronic happiness” (as opposed to temporary happiness), with people who maintain an elevated sense of well-being over time. Based on her work, Lyubomirsky believes:

  • About half of human happiness is biological. Each of us seems to have a happiness “set point” which accounts for roughly 50% of our level of contentment. Because this set point is genetic, it’s tough to change.
  • Another 10% of happiness is circumstantial — based on external factors. These include traits like age, race, nationality, and gender, as well as things like marital status, occupational status, job security, and income. Your financial situation is part of this 10% — but only a part — which means it accounts for a tiny fraction of your total happiness.
  • The final 40% of happiness comes from intentional activity — the things you choose to do. A huge chunk of contentment is based on your actions and attitude. You can increase your level of well-being through exercise, gratitude, and meaningful work.

Because circumstances play such a small role in your well-being — and because many of your circumstances are unchangeable — it makes more sense to boost your bliss through intentional activity, by controlling the things you can control while ignoring the things you can’t.

You can’t wait for someone or something to make you happy. Happiness isn’t something that just happens; happiness is a byproduct of the the things you think and say and do.

Just as you ought to become a money boss to take charge of your financial life, you ought to become a happiness boss to take charge of your emotional life. Believe it or not, you can control your emotional responses. It just takes a bit of knowledge and practice.

The Psychology of Optimal Experience

For fifty years, psychologist Mihály Csíkszentmihályi (pronounced “me-high cheek-sent-me-high-ee”) has studied human happiness and creativity. Much of his work has focused on flow, which is his term for “optimal experience”.

Here’s how he describes flow:

We have all experienced times when instead of being buffeted by anonymous forces, we [feel] in control of our actions, masters of our own fate. On the rare occasions that it happens, we feel a sense of exhilaration, a deep sense of enjoyment.

Our peak experiences don’t come during passive moments. Sure, we enjoy reading a book or watching Big Bang Theory or playing a videogame, but these aren’t the best moments of our lives. Instead, “the best moments usually occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something difficult or worthwhile.”

People are happiest when they forget their surroundings to focus on doing their best at something that challenges and interests them. In short, happiness is produced by total engagement in the pursuit of excellence.

We can experience flow during activities as basic as riding a bike or as complex as building a bridge.

Sometimes flow is achieved through physical activity. Athletes refer to this state as “being in the zone“. People achieve this state of bliss while climbing mountains, sailing boats, or swimming oceans. But even mundane activities like cleaning the kitchen or doing taxes can produce flow, if they’re done well.

Peak experience also comes from mental pursuits. Many computer programmers become so engrossed in their work that time streams past like water. I experience flow while writing.

Today, for instance, I’ve been deeply engrossed in editing this article. As I’m working, my mind is so active and so engaged that it almost feels euphoric. I’m happy. I can’t imagine wanting to be anywhere other than in front of my computer, writing about money.

I am in a state of flow.

For more on flow, spend a few moments to watch Csíkszentmihályi’s TED talk on how flow is the secret to happiness:

To learn more, pick up a copy of his book, Flow: The Psychology of Optimal Experience.

The Elements of Enjoyment

Walking throught the Peruvian AndesI’ve found flow while hiking in the Andes. I’ve experienced it while writing. I’ve achieved it while making boxes in a factory, while preparing a speech, and while mowing the lawn (for real!). Though each of these activities was very different, they shared some commonalities that helped me get “in the zone”. This made me wonder: Can happiness be somehow be cultivated? Turns out, it can.

During Mihály Csíkszentmihályi’s research into optimal experience, he discovered it’s possible for a person to gain control over the quality of their daily experience, to build enjoyment into even routine and mundane activities. His studies of diverse populations around the world have shown that our best moments contain at least one — and often all — of the following characteristics (some of which overlap):

  • A challenging activity that requires skill. Flow occurs at “the boundary between boredom and anxiety, when the challenge is just balanced with the person’s capacity to act.” To experience flow, you have to be doing something difficult — but not too difficult.
  • The merging of action and awareness. Because challenging tasks require full attention, “people become so involved in what they are doing that the activity becomes spontaneous, almost automatic.”
  • Clear goals and feedback. The vast majority of peak experiences occur during goal-directed actions bounded by rules, such as playing chess, programming a computer, or climbing a mountain. (Or, in my case, mowing the lawn.)
  • Concentration on the task at hand. To achieve optimal experience, you can’t be distracted. You have to be absorbed in what you’re doing. As you focus, order comes to your consciousness, which leads to contentment and joy. Fear and worry fade. You are fully present in the “now”. (This idea is the premise behind Eckhart Tolle’s massively popular The Power of Now.)
  • A sense of control. During the flow experience, you feel in control — or that you could be in control. More precisely, you aren’t worried that you might lose control, a state so typical of much of modern life. To achieve flow, you must believe that you’re able to influence the outcome of whatever it is you’re doing.
  • The loss of consciousness. During a peak experience, you lose sense of who you are. You become one with your environment, a part of a greater whole. You’re no longer aware of yourself as an individual.
  • The transformation of time. When you’re in the zone, the passage of time is altered. In some ways, it slows — minutes seem like hours. In other ways, it quickens — hours seem like minutes. You lose track of the clock. This “freedom from the tyranny of time [adds] to the exhilaration we feel during a state of complete involvement.”

That first point merits a closer look. To achieve flow, you have to find a balance between your abilities and the challenge of the task at hand. If what you’re doing is too difficult for your current skill level, you’ll become anxious. If the task is easy and you’re good at it, it’ll be a relaxing pastime. Here’s a graphical representation of the flow model:

Flow Model

According to Csíkszentmihályi, “The key element of an optimal experience is that it is an end in itself.” You might need to complete the task you’re working on for other reasons, but you’d do it even if it weren’t required. You’re doing it not for some future benefit, but because the task itself is so rewarding.

But here’s the thing: Flow doesn’t just happen. These optimal experiences can be encouraged and fostered. You can become happier by changing where you focus your attention.

Garbage In, Garbage Out

The objects and events around us exist in an objective world. They are what they are. Yet each of us experiences these objects and events in a different way. What happens outside must pass through the filter of your subjective mind before it enters your consciousness. You control what enters your consciousness (and, thus, what enters your awareness and memory).

You and I go to the movies. We watch the same film in the same theater at the same time. You enjoy it. You’re wrapped up in the story and moved by the performances. I leave the theater unhappy. “The kid in front of us coughed the whole time,” I complain as we walk to the car. “The seats were uncomfortable and the volume too loud. Plus, I don’t like Nicholas Cage.”

We shared the same experience — and yet we didn’t.

“Consciousness corresponds to a subjectively experienced reality,” Csíkszentmihályi writes in Flow. “A person can make himself happy, or miserable, regardless of what actually happens ‘outside’, just by changing the contents of his consciousness.” We choose what we experience, and we choose how we interpret those experiences.

This idea can be challenging to people who possess an external locus of control, those who believe that their decisions and life are controlled by chance or fate or greater environmental factors.

Csíkszentmihályi says that in order to achieve flow and happiness, we must actively create the conditions that lead to it. That means we must learn to direct our focus:

[Happiness] is not the result of good fortune or random chance. It is not something that money can buy or power command. It does not depend on outside events, but, rather, on how we interpret them. Happiness, in fact, is a condition that must be prepared for, cultivated, and defended privately by each person. People who learn to control their inner experience will be able to determine the quality of their lives, which is as close as any one of us can come to being happy.

The shape and content of your life depends on how you use your attention. People who master what happens in their heads tend to be happier than those who don’t — or won’t.

“While we are thinking about a problem we cannot truly experience either happiness or sadness,” writes Csíkszentmihályi. “Therefore, the information we allow into consciousness becomes extremely important; it is, in fact, what determines the content and quality of life.”

The bottom line? Garbage in, garbage out. If you allow yourself to think negative thoughts, your experience will be negative. If you want a positive experience, you have to accentuate the positive in all that you see and do.

We can make flow moments more common and become happier people by structuring our focus and attention to bring long-term improvements to the quality of our daily life. There are two primary ways to do this:

  • Change external conditions.
  • Change how you experience external conditions.

Each strategy is sound. But one is generally easier than the other. Which path you choose depends upon the situation.

Changing Your World

Sometimes the best way to boost your happiness is by changing the world around you.

Imagine, for instance, that you’re sitting at home reading a book. You’re comfortable except for one thing: You’re warm. Very warm. An external condition is causing you discomfort.

You could change the way you’re experiencing this condition (by removing all of you clothes, say), but in this case it probably makes more sense to change the condition itself by lowering the thermostat.

Or maybe you’re sitting in a restaurant writing a letter. Things are fine except that the place is too noisy, which is distracting. Your best bet is to change locations, to change your environment.

The trouble, of course, is that you have little control over the world around you.

My girlfriend was born and raised in northern California. To her, that’s the ideal climate. She’s lived in Portland for five years now, and she loves much about the city and the region. But she hates the climate. This is an external factor that’s beyond her control. As hard as she tries, she can’t make it rain less in Portland! (Francis Bacon once said, “Nature, to be commanded, must be obeyed.”)

When you reduce the size of your immediate environment — stepping from outdoors to indoors, for instance — you make it easier to control external conditions. You can’t reduce the outside air temperature, but you can cool a room or a building. Even then, exerting influence over your environment requires a great deal of effort and energy.

Usually, the most effective way to boost your happiness isn’t by changing external conditions, but by changing how you experience external conditions.

Changing Yourself

How I Found Freedom in an Unfree WorldNow imagine you’re reading in the park. It’s cold. The sun is out, but the air is chilly. You could head indoors, but you’re enjoying the lovely day. The solution is to change how you’re experiencing the world around you. Put on your jacket and some gloves. You haven’t altered your environment, but you’ve changed how you’re experiencing it.

Or maybe you’re backpacking through Europe, staying in hostels and cheap hotels. Sometimes it’s tough to sleep because the walls are thin and there’s nothing covering the windows. Light and noise threaten to keep you awake all night. Again, the best solution is to change the way you experience the external conditions. If you wear an eye mask and earplugs, you can rest comfortably despite the chaos around you.

Most people recognize that they have limited power over their physical world, but many cling to the belief that they can change the behavior of the people around them. In reality, changing others can be nearly as difficult. Writing in How I Found Freedom in an Unfree World — a book we’ll discuss at length in part three of this series — Harry Browne calls the idea that you can (or should) control what others do the Identity Trap.

He writes:

[You can’t] assume that someone will do what you’ve decided is right. You’ve decided it from your unique knowledge and interpretations; he acts from his knowledge and his interpretations.

You’re in the Identity Trap when you assume an individual will react to something as you would react or as you’ve seen someone else react.

If you’re unhappy with somebody, there are two options. You can attempt to change the other person, or you can change how you interact with that person. You’re almost always better off changing yourself — altering your expectations, accepting new premises — than you are attempting to change the other person.

Here’s Harry Browne again:

You could make everyone else be, act, and think in ways of your choosing if you were God. But you aren’t. So it’s far more useful to recognize and accept each person as he is — and then deal with him accordingly.

You can’t control the natures of other people, but you can control how you’ll deal with them. And you can also control the extent and manner in which you’ll be involved with them.

The paradox is that you have tremendous control over your life, but you give up that control when you try to control others. For the only way you can control others is to recognize their natures and do what is necessary to evoke the desired reactions from those natures. Thus your actions are controlled by the requirements involved when you attempt to control someone else.

People suffer a great deal of unhappiness because they assume that everyone wants the same things — or that they should want the same things. But each person is different, with her own knowledge, experience, preferences, and attitudes.

You can improve your quality of life by either changing your environment or by changing how you interact with your environment. Both strategies have their place, but one is generally much easier and more effective than the other. In most cases, it’s difficult or impossible to change the world around you. Attempting to do so simply leads to frustration and unhappiness.

But it’s almost always possible to change how you perceive the world around you. In fact, it’s this ability that contributes most to day-to-day contentment.

Permission and Control

As children, we’re conditioned to ask permission whenever we want to do something. You need permission from your parents to leave the dinner table or to go outside and play. You need permission from your teacher to use the bathroom.

Even as adults, we feel compelled to request permission. You need permission from your boss to leave work early. You need permission from your spouse to grab drinks with your friends instead of weeding the garden. You need permission from the city to build a shed in the backyard.

As a result, most of us have developed an external locus of control. That is, we subconsciously believe we need permission to do anything.

In personality psychology, the term “locus of control” describes how people view the world around them, and where they place responsibility for the things that happen in their lives. Though this might sound complicated, the concept is actually rather simple.

  • If you have an internal locus of control, you believe that the quality of your life is largely determined by your own choices and actions. You believe that you are responsible for who you are and what you are.
  • If you have an external locus of control, you believe that the quality of your life is largely determined by forces beyond your control, by your environment or luck or fate. You believe that others are responsible for who you are and what you are.

Most people respond to the system of rewards and punishments that has evolved in the culture that surrounds them. If your culture prizes material gain, wealth becomes important to you. If it emphasizes familial relationships, family becomes important to you.

But when you live like this — when you make decisions based on your social environment — the only happiness you can obtain is fleeting. As a result, many people suffer some degree of angst, of anxiety or dread. “Is that all there is?” we wonder, when we pause to reflect upon our lives. “Isn’t there something more?”

There is something more.

Lasting happiness can be achieved, but not by being a puppet whose strings are pulled by situation and society. To achieve long-term happiness (and meaning), you have to develop the ability to find enjoyment and purpose regardless of your external circumstances. You have to create a system of internal rewards that are under your own power.

If you’re unhappy, nobody else can make things better for you. You must make things better for yourself. Focus on the things you can control, and use that control to fix the other things that are broken. In this way, you’ll gradually gain confidence and greater control of your future well-being.

You live in a world of your own design. You have the power to choose. You create your own certainty. Life as you want to live, and do so without regret. Give yourself permission to do so.

Caveat: It’s okay to seek happiness by changing jobs or moving to San Diego. It’s not okay to steal your neighbor’s television or to drive on the wrong side of the road. Remember the Golden Rule. Enjoy your life without diminishing the ability of others to enjoy theirs.

Becoming Proactive

Julian B. Rotter developed the locus of control concept in 1954 as part of his social-learning theory of personality. Stephen R. Covey popularized the idea in 1989 with his best-selling The Seven Habits of Highly Effective People.

Like Mihály Csíkszentmihályi, Covey believes that we filter our experiences before they reach our consciousness. “Between stimulus and response,” he writes, “man has the freedom to choose.” Our self-awareness, imagination, conscience, and independent will give us the power to select how we’ll respond to each situation in life.

Covey says there are two types of people: proactive and reactive.

  • Proactive people recognize that they’re responsible for how they respond to outside stimuli. In Rotter’s terms, they have an internal locus of control. They don’t blame circumstances, conditions, or conditioning for their state. They believe their existence is largely a product of personal choice derived from personal values.
  • Reactive people believe their condition is a product of their physical and social environments. They have an external locus of control. Their moods are based on the moods of others, or upon the things that happen to them. They allow the outside world to control their internal existence.

To illustrate the difference between proactive and reactive people, Covey discusses how we focus our time and energy.

We each have a wide range of concerns: our health, our family, our jobs, our friends; world affairs, the plight of the poor, the threat of terrorism, the state of the environment. All of these fall into what Covey calls our Circle of Concern.

Within our Circle of Concern, there’s a subset of things over which we have actual, direct control: how much we exercise, what time we go to bed, whether we get to work on time; what we eat, where we live, with whom we socialize. These things fall into what Covey calls our Circle of Influence, which sits inside our Circle of Concern.

[Circle of Concern vs. Circle of Control]

According to Covey, proactive people focus their efforts in the Circle of Influence. They spend their time and energy on things they can change. This has two effects. First, proactive people actually do affect change in their lives; and as they do so, their Circle of Influence expands.

On the other hand, reactive people tend to focus on their Circle of Concern. They spend their time and energy on things they’re unable to influence (or can influence only with great difficulty). They try to change other people, to correct social injustices, to shift thought patterns of states or nations. Their efforts are largely frustrating and futile. What’s more, as they focus on their Circle of Concern, their Circle of Influence begins to shrink from neglect.

Any time you shift your attention from your Circle of Influence to your Circle of Concern, you allow outside forces to control you. You place your happiness and well-being in the hands of others. If you don’t act for yourself, you’re doomed to be acted upon.

But what about about luck? Aren’t there times when we really are at the mercy of the world around us? Of course. But our responses are always our own. Eleanor Roosevelt said, “No one can hurt you without your consent.” Covey agrees:

It’s not what happens to us, but our response to what happens to us that hurts us. Of course, things can hurt us physically or economically and can cause sorrow. But our character, our basic identity, does not have to be hurt at all. In fact, our most difficult experiences become the crucibles that forge our character.

Shit happens. Shit happens to everyone. Ultimately, who we are and what we become is determined not by the shit that happens to us, but how we respond to that shit. Remember Reinhold Niebuhr‘s famous serenity prayer:

God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.

Most people are reactive. It’s likely that you’re reactive too — at least to some degree. Don’t fret. I’m reactive also. But with time and effort, I’ve managed to shift from an external locus of control to one that’s primarily internal. You can too.

Focus on the things you can control. Use that control to remove constraints and complications from your life. Strengthen and stretch your Circle of Influence. This is the only path to changing your Circle of Concern. You have no control over the hand you’re dealt, but you can choose how to play the cards.

Exercise: Here’s a simple idea from Seven Habits. For thirty days, commit to working only on your Circle of Influence. How? Keep your commitments, to yourself and others. Don’t judge or criticize other people, but turn your attention inward. Don’t argue. Don’t make excuses. When you make a mistake, accept responsibility and fix it. Don’t blame or accuse. When you catch yourself thinking “I have to…” or “If only…”, stop yourself and choose to reframe the thought in a more positive light. As far as possible, accept responsibility for your circumstances, actions, and feelings.

The Search for Meaning

Victor Frankl was an Austrian psychiatrist who survived the Nazi death camps during World War II. The extreme suffering and harsh conditions caused many inmates to lose their will, to welcome death.

To be sure, prisoners often had no control over whether or not they died. But Frankl observed, “A man can, even under such circumstances, decide what shall become of him — mentally and spiritually. He may retain his human dignity even in a concentration camp.”

When treated like an animal, Frankl said, a person can choose to be an animal — or she can choose to be “brave, dignified, and unselfish”. According to Frankl, “the way in which a man accepts his fate and all the suffering it entails…add a deeper meaning to his life.”

In the classic Man’s Search for Meaning, Frankl states his thesis thus:

Everything can be taken from a man but one thing: the last of human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.

Frankl’s experience served as a crucible for his theory of personality development, which he called logotherapy. Before him, Alfred Adler had argued that people possessed a Nietzschean “will to power” (more here), and Sigmund Freud had argued that we’re all motivated by a “will to pleasure” (more here). Frankl, on the other hand, believed that humans are born with a “will to meaning”, a fundamental need to discover their purpose in this world.

The three basic tenets of logotherapy are:

  • The search for meaning is the primary motivation in each of our lives. This meaning is unique and specific to each individual. (Frankl’s philosophy is one reason I ask Get Rich Slowly readers to do is create a personal mission statement.)
  • Life has meaning under all circumstances, even the most miserable ones. What matters most isn’t the meaning of life in general, but the meaning of each person’s life in each moment.
  • Humans are self-determining. That is, we don’t just exist, but choose what our existence will be. We have freedom to find meaning in what we do and what we experience — or at least in how we respond to each situation.

Frankl’s argument that you’re always free to choose your attitude is echoed in Mihaly Csikszentmihalyi’s statement that “how we feel about ourselves, the joy we get from living, ultimately depends on how the mind filters and interprets everyday experience”. It also echoes Johnstone’s Impro: “People with dull lives often think their lives are dull by chance. In reality everyone choose more or less the kind of events that happen to them.”

Suffering ceases to be suffering...Accepting responsibility for your own fate and attitudes can be uncomfortable and intimidating. There’s a kind of solace when you can attribute your situation to the winds of fate, the whims of the gods, or the inner workings of the universe.

But recognizing that you’re a free agent can be liberating too. When you take matters into your own hands, you shed your fears, create your own certainty, and discover that you’re freer than you ever imagined possible.

If you struggle to know what you’re life is about, you’re not alone. I get email all the time from folks who are stumped about what it is they want to accomplish. They know they don’t like how things are going, but they’re not clear on just what they should do to make things better.

To finish this discussion of meaning and happiness, I’m going to share three exercises designed to help you find direction. (If you’ve read my stuff at Get Rich Slowly before, you’ll probably recognize one of these. That’s okay. If you still need help finding your purpose, you should work through it once more.)

First up, let’s talk about how to prioritize how you currently spend your time.

Your Big Rocks

You lead a busy life. There never seems to be enough time to do the things you really want to do, the things that make you happy. You’re too preoccupied with work, errands, and other demands placed upon you by the outside world.

In Work Less, Live More, Bob Clyatt argues that you can make time for the important stuff. The secret, he says, is to prioritize, and he offers an analogy. (I’ve learned recently that this idea might have originated with Stephen R. Covey in his book First Things First.) Here’s how it works:

Imagine you have a jar. You want to fill this jar with some rocks and some sand. What’s the best way to do it?

  • One way is to add the sand to the jar first and then add the rocks. If you did this, however, you’d quickly find that it’s impossible to make everything fit. With a layer of sand at the bottom of the jar, there’s no room for the rocks.
  • On the other hand, if you begin by putting the rocks in the jar, when you pour in the sand it will sift downward to fill in the gaps and the cracks between the rocks. Everything fits.

Here’s a video that demonstrates this idea in action:

This same principle applies to your personal life. You can achieve well-being by prioritizing the Big Rocks in your life. This may sound elementary, and you may be tempted to ignore this advice. Don’t. This one idea revolutionized my life. It made me happier and more productive. By focusing solely on the things that were most important to me — by making room for the Big Rocks — I was able to reclaim my life and time.

A few years ago, after first reading about this idea, I sat down and drafted a list of the things that were most important to me. I decided that my Big Rocks were fitness, friends, writing, Spanish, and travel. If these weren’t in my jar, I wasn’t happy. So, I made sure to squeeze these in before anything else. Once these rocks were in place, once these things were on my calendar, then I’d fill the remaining space with the sand — television, email, errands, and so on.

Because of this simple exercise, I got lots more done and had a better time doing it.

Who Are You? — and What Do You Want?

In order to get things done, to be productive, to achieve greater meaning and happiness in your life, you need to make sure you’re spending more time on the big rocks and less time on the “sand” of everyday life (such as errands and email). But how can you determine which things are important?

George Kinder is a Certified Financial Planner. Unlike many CFPs, Kinder isn’t just about the nuts and bolts of money. He moves beyond the numbers in an attempt to address the goals and values of his clients. “Without life planning,” he says, “financial planning is like using a blunt instrument on the organism we call the human being.”

Near the beginning of his work with each client, Kinder challenges her to answer three questions. These questions are designed to lead the client deeper and deeper into her desires until they reveal her goals and values, the things that bring her meaning and purpose. Kinder shared these questions in his book, The Seven Stages of Money Maturity.

Your next task is to set aside half an hour to answer Kinder’s questions as honestly as possible:

  1. Imagine you’re financially secure. You have enough money to take care of your needs, both now and in the future. How would you live your life? Would you change anything? Let yourself go and describe your dreams. What would you do if money were no object?
  2. Now imagine that you visit your doctor. She reveals you only have five to ten years left to live. You’ll never feel sick, but you’ll have no notice of the moment of your death. What will you do in the time you have remaining? Will you change your life? How will you change it? (Note that this question does not assume unlimited wealth.)
  3. Finally, imagine your doctor shocks you with the news that you only have 24 hours to live. Nothing can be done. At this time tomorrow, you’ll be dead. What feelings arise as you confront your mortality? What did you miss? Who did you not get to be? What did you not get to do?

Answering the first question is easy (and fun). There are many things we’d do if money were no object. But as the questions progress, there’s a sort of funnel. They become more difficult to answer, and there are fewer possible responses. Life planning is all about answering that final question.

Note: If you’d prefer, you can download a free PDF with a similar exercise that I used in the Money Boss crash course: Your Personal Mission Statement. Someday, I’ll update that for Get Rich Slowly.

According to Kinder, the third question usually generates responses that follow five general themes:

  • Family and relationships. Ninety percent of responses to the final question contain this topic.
  • Authenticity or spirituality. Many responses involve leading a more meaningful life.
  • Creativity. Surprisingly, a large number of respondents express a desire to do something creative: to write a science-fiction novel or to play guitar like Eric Clapton.
  • Giving back. Further down the list are themes about giving back to the community, about leaving a meaningful positive impact.
  • A “sense of place”. A fifth common theme (though nowhere near as prominent as the top three) is a desire to have some connection with place: a desire to be in nature, to live someplace different, or to help the environment.

Kinder says that some people — the facts and figures people — look at the life-planning process and ask, “What does this have to do with money?” It has everything to do with money. When you understand what you want to do with your life, you can make financial choices that reflect your values.

All of these questions — and the entire life-planning process — are meant to cause the participant to ask herself, “Who am I as a person, stripped from what I do as a job every day? Is it possible to derive meaning and satisfaction with this stripped away?” Inevitably, the answer is yes.

Your Lifeline

Here’s a third and final exercise, which I picked from my friend Jim Collins. You’re going to create a graphical representation of your life — past and future. Before we start, grab a piece of paper and a pencil. Ready? Great! Here’s how this works.

Step one. With the paper in “landscape mode” (wider than it is tall), place one dot on the center of the left side. Place a second dot on the center of the right side. Draw a line to connect the two dots. Your page should look something like this:

Lifeline: connecting the dots

Step two. For the next step, you’ll need to do some guesswork. Based on what you know of your health and your family history, estimate how long you’ll live. I know there’s no way to be sure — you could be hit by a truck tomorrow, or maybe next week scientists will find the secret to living 1000 years! — but do what you can to best guess the date of your death. (If you need help, try one of the many on-line longevity calculators, such as the one at Once you’ve calculated your projected date of death, write it below the right-most dot.

Example: As my long-time readers know, the men in my family don’t live long. In fact, they often die on or around their fiftieth birthdays. Also, for strange reasons known only to the universe (or god), many of my family die on or around Independence Day. Thus, I often say that I expect to die on 04 July 2019, when I’m fifty. This may sound morbid, but I like to think of it as hedging my bets. I hope to live longer, but I’m fully prepared to have a short life.

Lifeline: date of death

Step three. Below the left-most date, note your date of birth. On your paper, you’ve created a visual representation of your lifeline.

Lifeline: date of birth

Step four. The next step requires a bit of math. You’re going to add a third point to your lifeline, a point that represents today. “Today” will fall on a different point on the line for each person. To find the proper place for you, divide your current age by your expected lifespan. For instance, I’m 45 and expect to live until I’m 50. For me, the point representing today is located about 10% from the right side of the line. If you’re 20 and expect to live until you’re 80, your “today” point would be about one-quarter of the way in from the left. And so on.

Lifeline: today: title=

Step five. Finally, choose a handful of major events from your life and place them on the lifeline in (approximately) the appropriate location. You might choose to list your first day of school, your wedding date, or the birthdates of your children. Add three to five major events to your lifeline.

Example: On my lifeline, I’ve included these key events: Writing “The Meanest Inchworm” in third grade, which was the first clue that I’d one day become a writer. Getting married. Writing my first blog. Selling Get Rich Slowly. Re-purchasing Get Rich Slowly.

Lifeline: important events

Your lifeline is now complete. On the piece of paper before you, you have a representation of your life, both past and future. But before we’re finished, there’s one final step I’d like you to take. Using an eraser, a marker, or another piece of paper, mask everything on your lifeline that comes before today. Blot it out. Hide it. Make it go away.

Lifeline: blackout the past

All of the time before today is past and does not matter. What matters is the future: today and everything after.

For folks like me, our projected futures contain just a small amount of time. Knowing that, I cannot wait to do the things that I want to do. If your projected future is short, you shouldn’t wait either. Don’t dwell on the past. You can’t change it. Focus instead on making the best quality tomorrow you possibly can.

On the other hand, if your projected future is long (say you’re 20 and expect to live another 60 or 80 years), cultivate patience. Take time. Make smart choices. Do what you can to set yourself up for future success. And don’t get down on yourself just because you’ve made a few mistakes in the past. The past is the past. Look how much tomorrow lies before you!

For another take on this exercise, take a look at the life calendar from Tim Urban at Wait But Why.

The Path to Purpose

We covered a lot of material in this article. Let’s review what we’ve learned.

Happiness and meaningYou can improve the quality of your daily life by learning to focus your attention and choosing to filter your experiences through a lens of positivity. But while it might be simple to find happiness in a single day, it can be much more difficult to link a series of days into a meaningful whole. Still, just as we must be active agents in creating our own happiness, we must also take an active role to create meaning in our lives.

“Creating meaning involves bringing order to the contents of the mind by integrating one’s actions into a unified flow experience,” writes Mihály Csíkszentmihályi. To give meaning to life, to achieve this “unified flow experience”, you need a purpose — an overall goal around which your lesser goals are clustered.

The path to purpose is different for each of us. Exercises like those I’ve shared here — the big rocks, the three questions, and the lifeline — can help you identify your personal purpose, but often this process requires many years of experience and soul-searching. Don’t feel bad if you haven’t found your purpose.

And be aware that it takes more than cultivating purpose to make meaning out of life. To make meaning, you must also forge resolve. You must take your goals seriously. If you’re not willing to accept the consequences of the goals you set, or to put in the effort required to achieve them, those goals become meaningless.

Curiously, it can often be easier to find meaning and purpose by limiting your options. The more choices we have, the more difficult it is to maintain our resolve.

“Commitment to a goal and to the rules it entails is much easier when the choices are few and clear,” notes Csíkszentmihályi. “When we can imagine only few opportunities and few possibilities, it is relatively easy to achieve harmony. Desires are simple, choices are clear. There is little room for conflict and no need to compromise.”

Because life is complex (and becoming more so every day), it’s vital to keep your psychic energy focused on the things that matter most. Exercising personal restraint and preferring simplicity can help you stay glued to your purpose, on your goals both big and small. Restraint and simplicity reduce the possibility of distraction.

But restraint and simplicity aren’t enough. When life gets busy and you feel overwhelmed, you must do more than just simplify your environment. At these times, action and intensity become your allies. “Harmony is restored to conscious indirectly — not by facing up to contradictions and trying to resolve conflicting goals and desires, but by pursuing chosen goals with such intensity that all competition is preempted,” writes Csíkszentmihályi. “Action helps create inner order.”

Action cures fear; apparently, it also imparts purpose.

The final piece to the making of meaning is self-knowledge, the process by which you sort through conflicting choices. Based on your personal history, preferences, and passions, you must filter the available options to select the goals that truly reflect who you are and what you mean to the world.

Example: At any given moment, I have many options available to me. Do I want to write another book? Do I want to speak at a conference in India? Do I want to continue to write about money? Do I want to study Spanish? Do I want to travel more? Less? And so on. Most of these options are good (by which I mean they’re positive, both for me and for the world). Who I am and what my life means is a product of the opportunities I choose to pursue.

Ultimately, it’s up to each of us to discover our life’s purpose though a combination of simplification, action, and self-reflection, by being true to who we are and what we believe, and be setting goals we find worthy of pursuing for their own sake.

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Popular 80’s Brands That Are Gone (But Not Forgotten)

Are you wondering what happened to your favorite brands from the ’80s?

From television to fashion, past decades always seem to come back in style, and the ’80s have been especially hot lately. As ’80s kids are fully entered adulthood and even having kids of their own, it’s the perfect time for a nostalgic look back.

Many brands are cashing in on the trend by making retro, ’80s-inspired content. However, very few of those brands were actually around in the ’80s. What happened to the ones that started it all?

In this guide, we’ll take a look at some of the best brands from the ’80s that may be gone, but live on in our memories. Keep reading to find out where these former cultural icons went.

1. Coleco

Never head of Coleco Industries? You’ve surely heard about their products, though. This was the brand behind one of the weirder toys from the decade: Cabbage Patch Kids. Coleco also made a number of the popular video game consoles of the ’80s.

However, Coleco Industries didn’t even make it to the end of the decade, in spite of these seeming successes. In 1988 the company was bankrupt, and by 1989 it had to sell its assets and product lines.

The flagship console from the company, Colecovision, was launched in 1982 and associated with such popular pastimes as Donkey Kong and Star Wars games. Today, some people hungry for nostalgia still buy the old consoles on eBay for up to $200.

2. Bally Fitness

In 1983, the Bally Manufacturing company bought a manufacturer of exercise equipment. By 1987, Bally had all but taken over: it was the biggest operator/owner of fitness centers in the world.

It wasn’t until 1995 that Bally named all of its centers “Bally Total Fitness,” but by then people were already well familiar with the brand. However, the heyday of Bally didn’t last. In 2011, the brand started to sell its fitness clubs, and the last one closed its doors in late 2016.

Although you may no longer see the Bally Fitness name in lights across America, you could argue that this company revolutionized the way we work out by pioneered the modern concept of the gym.

3. Prozac

That’s right, one of the most famous antidepressants is also a quintessential ’80s brand.

Prozac first started changing people’s lives when it hit the market in 1986. This was a revolutionary treatment for many people, and soon became part of many pop culture references.

Today, many people still use antidepressants, but Prozac is no longer the first choice. With cheaper generic versions of the brand-name drug, plus many different alternatives, Prozac stopped dominated the antidepressant market a long time ago.

4. Kodak

Kodak was actually founded in 1888, but the film company hit its peak popularity in the ’80s and early ’90s. However, with the advent of digital cameras and smartphones, a film company couldn’t possibly stay on top.

In 2012, the company filed for bankruptcy and continued with small-scale operations that have lasted to this day. This is a far cry from 1996, when the company was the fifth most valuable business worldwide.

5. Drexel Burnham Lambert

Although this wasn’t exactly a huge name in the pop culture world, Drexel Burnham Lambert was an investment banking firm that was integral to the financial world of the 1980s.

One thing the ’80s is known for is the cutthroat Wall Street culture of bankers and investors, and Drexel Burnham Lambert was one of the pioneers of this culture. The brand operated largely in junk bonds, which were high-risk but high-reward.

However, these risky bonds were the company’s downfall: in 1990, they were forced to file for bankruptcy because they’d been illegally involved with junk bonds.

6. Jordache

What happened to everyone’s favorite jeans of the ’80s?

Jordache rose to fame for its designer jeans throughout the late ’70s and the ’80s. People were still rocking Jordaches well into the ’90s. However, by the late ’90s, the brand’s popularity was over and their products could only be found heavily discounted at retailers like WalMart.

You won’t believe what your beloved jeans company has been doing since then. Today, the brand is involved in real estate ventures in the U.S. and even has some business ventures in Israel.

However, they haven’t stepped away from jeans entirely: they actually make private denim for still-popular brands like Levi’s and the Gap.

7. Compaq

If you lived through the ’80s, your first computer may very well have been a Compaq. Founded in 1982, this company made some of the earliest PC compatible computers for IBM.

The tech company didn’t exactly disappear: instead, it was bought by Hewlett-Packard in 2002 at a price of $24.2 billion.

8. Magnavox

In the 1980s, this portable video camera suddenly made it possible for people to record their lives like never before. Amateur filmmakers, proud parents, and more jumped on the chance to document their favorite moments.

Magnavox was one of the most popular VHS recorders, but JVC and RCA also offered alternatives.

All three of these companies actually still exist, but needless to say, their revenue doesn’t come from sales of VHS recorders. In the ’80s, Magnavox made everything from video cameras to the earliest video game console toy.

The brand was already owned by the company Philips, and was never exactly dismantled. But in the ’90s, the Magnavox name no longer held weight for consumers, so Philips stopped using it.

9. Pan Am

Pan American World Airways offered a popular way to globetrot in the ’70s and ’80s. Pan Am was actually the biggest international airline in the U.S. for decades: from its start in 1927 until 1991, when the company was bankrupt.

Branding issues and PR problems brought the company down, and rising oil prices didn’t help either. The company was revived by investors in 1996, but never achieved full success again.

What Can You Do With ’80s Brands?

Although most of these brands no longer exist in the same way they once did, the power of the ’80s brand is back thanks to today’s wave of cultural nostalgia.

For many, selling vintage ’80s products has become a great way to make money. If you have retro gear around the house, or find something special at a thrift store, you can often resell it on eBay for more than it originally cost.

Hoping to turn your passion for the ’80s into a full-blown side hustle? Check out our tips for successful side hustles here.

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How to build confidence (and destroy fear)

Credit Sesame

How to Destroy Fear and Build ConfidenceMy mission at Get Rich Slowly is to help readers achieve personal and financial freedom. I want to help you master your money and your life.

Generally speaking, we focus almost exclusively on the financial side of the things. This week, I’m going to shift gears and share some of the things I’ve learned about overcoming fear, finding happiness, and achieving personal freedom. (Don’t worry. We’ll get back to the hard-core financial talk very soon.)

In December’s discussion of wealth habits, I talked about what T. Harv Eker calls “financial blueprints”. Actually, I talk about them all of the time. Understanding your money blueprint is a vital part of changing your relationship with money.

Our blueprints are created through lifelong exposure to money messages received from people around us, especially our family and friends, and from our country’s culture and mass media. Eker says the unfortunate truth is that most of us have faulty blueprints that prevent us from building wealth.

“When the subconscious mind must choose between deeply rooted emotions and logic, emotions will almost always win,” writes Eker.

He says that most of us are motivated by fear, especially when it comes to money. We don’t call it fear, though. We say we’re motivated by security. Eker notes — correctly — that fear and security are essentially two sides of the same coin. The tough truth is that money doesn’t dissolve fear.

Eker writes:

Fear is not just a problem, it’s a habit. Therefore, making more money will only change the kind of fear we have. When we were broke, we were most likely afraid we’d never make it or never have enough. Once we make it, however, our fear usually changes to “What if I lose what I’ve made?”

Like Eker, I’ve found that fear motivates a lot of people. Instead of making decisions based on goals and desired outcomes, most folks make fear-based decisions. As a result, they get less out of life than they’d hoped, less out of life then they might if they knew how to overcome their fears. (For more about this, see last week’s article about scarcity mindset versus abundance mindset.)

I’m not judging. I’ve been there. For years, I let fear rule my life. But over the past decade, I’ve learned how to quell many of my fears. Better still, I’ve learned how to act in spite of my fear. As a result, my life (financial and otherwise) has drastically improved.

Today, I want to teach you how to destroy fear and build confidence. To begin, let’s talk about death.

Note: Long-time readers have seen some of this material in other forms. This is my attempt to gather all of it into one place.

The Regrets of the Dying

Australian singer-songwriter Bronnie Ware worked in palliative care for many years, spending time with men and women near death. As she worked with her patients, she listened to them describe their fear, anger, and remorse. She noticed recurring themes.

In 2009, Ware wrote about her experience in a blog post that went viral. She turned that article into a book called The Top Five Regrets of the Dying. When people die, she says, they often express one or more of the following sentiments:

  • “I wish I hadn’t worked so hard.” People (especially men) often find themselves trapped on what economists call the hedonic treadmill. They work to achieve material wealth and status, which should bring happiness but doesn’t. Instead, they want more. So, they work harder to achieve even greater wealth and status, which should bring happiness but doesn’t. And so on, in an endless cycle. People trapped on the hedonic treadmill are never happy because their reality never meets their ever-increasing expectations.
  • “I wish I’d had the courage to express my feelings.” In order to keep the peace and avoid rejection, we sometimes bottle our emotions inside. But refusing to be open and honest leads to a life of quiet desperation. Sure, the barista at the coffeehouse might laugh if you ask her to dinner; but it’s also possible that dinner could lead to the love of a lifetime. On your deathbed, you’ll regret the things you didn’t say and do far more than the things you’ve done.
  • “I wish I’d stayed in touch with my friends.” In Aging Well, George Vaillant summarizes more than fifty years of Harvard research into adult development. “Successful aging [is] best achieved in relationship,” he writes. “It is not the bad things that happen to use that doom us; it is the good people who happen to us at any age that facilitate enjoyable old age.” In The Blue Zones, his book about populations of people that live longer than most, Dan Buettner writes that two secrets to a long and healthy life are making family a priority and finding the right “tribe”. At the end of their lives, people who failed to foster friendships regret it. (Here’s my summary of The Blue Zones.)

[Blue Zones commonalities]

  • “I wish I’d let myself be happier.” Happiness is a choice. Your well-being doesn’t depend on the approval or opinion of others. Happiness comes from one place and one place only: You. This idea, which is well-documented in happiness research, is the key to personal and financial success. (On Thursday, we’ll explore this notion at great length.)
  • “I wish I’d had the courage to live a life true to myself, and not the life others expected of me.” Ware says this regret is most common of all. “When people realize that their life is almost over and look back clearly on it,” she writes, “it is easy to see how many dreams have gone unfulfilled.” We spend too much time doing the things that others expect of us. (Or the things we think are expected of us.) But living for the approval of others is a trap. We can never hope to please everyone. In fact, it’s nearly impossible to please anyone – other than yourself.

These regrets share a common theme. In each case, the dying lament having spent too much time seeking outside approval instead of focusing on their own feelings, values, and relationships. This is true regardless of wealth and social status.

Ware isn’t a nurse and she’s not a scientist – her observations are based on experience, not empirical data – but from my reading over the past decade, her conclusions match the research into happiness and human development.

Money can’t buy happiness – at least not directly. Money is a powerful tool, it’s true. Abused, it brings sorrow and suffering. Used wisely, it opens doors, delivers dreams, and fosters joy. Although wealth is no guarantee of well-being, the more money you have, the easier it is to flourish.

But here’s the truth: You don’t want to be rich – you want to be happy.

On your deathbed, you want to have lived a life without regret. To do that, you need to face and defeat your fears. You need to find joy in day-to-day activities, and use that happiness as a platform to procure passion and purpose. You need to forge freedom, both personal and financial.

The Source of Fear

Our lives are filled with fear.

Some of our fears are physical. We’re afraid of spiders, snakes, and dogs. We’re afraid of heights, crowds, and enclosed spaces. We’re scared to jump out of airplanes (or even to fly in them), to go swimming, or to touch a drop of blood. We’re afraid we might be mugged.

Some of our fears are psychological. We’re afraid of failure, darkness, and being alone. We’re afraid of the future. We’re afraid of death. We’re frightened of being judged by others, and scared to ask someone for a date.

[J.D. under bear sign]Some fears are rational. I, for instance, am scared of bears. This is a healthy, rational fear. Bears will eat you. When you ignore your fear of bears, you can up like Timothy Treadwell, the man profiled in the film Grizzly Man. (Sorry if that’s a spoiler for anyone.)

If you’re walking alone at night and a thug demands your money while holding a gun to your head, you’ll feel afraid and rightly so. This is a natural, rational fear.

These healthy fears have a biological basis, and are the product of millions of years of evolution. A fear of snakes (or bears) has helped the human race to survive. A fear of heights keeps you from spending too much time in places where you might fall to your death.

But sometimes rational fears can become irrational or excessive. It’s one thing to be nervous while walking on the edge of a crumbling cliff high above a river; it’s another to suffer a panic attack on the seventeenth floor of a well-constructed, glass-enclosed office building. (Or to worry about a bear attack in Paris!)

Still other fears are mostly (or completely) irrational, yet they’re very common. An estimated 75% of all people experience some degree of anxiety when speaking in public. I’m one of them. I’m aware of no biological basis to be afraid of giving a speech in front of 500 strangers, yet doing so makes most of us sweat and stammer.

Healthy, rational fears keep you alert and alive. Irrational fears and anxieties prevent you from enjoying everything life has to offer.

If It Bleeds, It Leads

If our lives are filled with fear, that may be due in part to the prevalence of internet, television, and radio. Our fears are fueled by the modern mass media, which makes money highlighting extreme and unusual events.

Here, for instance, is the front page from the 18 January 2014 on-line edition of USA Today:

USA Today headlines

Human trafficking! Attacks on Americans! Identity thieves! Remains of dead boy! Elsewhere on the front page, there are stories about extreme weather, a new truck that burst into flames, the background of a high-school gunman, a gay teacher forced to resign, and so on. And this is a normal, uneventful day.

If you pay attention to the news, you might think terrorist attacks are common, bicycles unsafe, and that it’s dangerous to let children play unattended in the yard. Yet statistically, terrorist attacks are exceedingly rare, riding a bike increases your life expectancy, and your children are safer outdoors than you were when you roamed the streets twenty or thirty years ago.

The events in the news are newsworthy only because they’re the exception, not the rule. They’re statistical outliers. Yet because we’re fed these stories daily, we think these things happen all of the time. As a result, we’re afraid to live normal lives.

I have a friend who’s reluctant to leave her home. Because she’s been assaulted in the past — an unfortunate event, but a statistically unlikely one — she lives in fear of being assaulted in the future. It’s true that by appearing in public, my friend runs the risk of being assaulted again. It’s far more likely, however, that doing things outside the house would bring her pleasure and fulfillment.

To some degree, each of us is like my friend — but not as extreme. We are all filled with fears, and these fears hold us back.

To live a richer, more fulfilling life — a life without regret — you must first overcome your fears. You can start by exposing yourself to new experiences, by interacting with your environment and allowing it to change you.

It all begins with the power of “yes”.

The Power of Yes

[Impro cover]For a long time, I was afraid to try new things, to meet new people, to do anything that might lead to failure. These fears confined me to a narrow comfort zone. I spent most of my time at home, reading books or playing videogames. When opportunities came to try new things, I usually ignored them. I made excuses. I wasn’t happy, but I was complacent. I was safe.

Then I read a book called Impro by Keith Johnstone. It changed my life. (Fun trivia: Here’s where I learned about the book.)

Impro is a book about stage-acting, about improvisational theater, the kind of stuff you used to see on the TV show Whose Line Is It Anyway? I’m not an actor, nor do I want to become one, but several of the techniques described in the book were applicable to my everyday life.

In one section, for example, the author explains that in order for a scene to flow, an actor has to take whatever situation arises and work with it. She needs to accept and build upon the actions of her fellow actors.

Once you learn to accept offers, then accidents can no longer interrupt the action. […] This attitude makes for something really amazing in the theater. The actor who will accept anything that happens seems supernatural; it’s the most marvelous thing about improvisation: you are suddenly in contact with people who are unbounded, whose imagination seems to function without limit.

I thought about this passage for days. “What if I did this in real life?” I wondered. “What if I accepted offers and stopped blocking them?” I began to note the things I blocked and accepted. To my surprise, I blocked things constantly – I made excuses to not do things because I was afraid of what might happen if I accepted.

  • When online acquaintances asked to meet for lunch. I’d refuse. I was scared they might think I was fat or stupid. (Or that they might be an axe murderer!)
  • When a local television station asked me to appear on their morning show as a financial expert, I was afraid of looking like a fool, so I refused.
  • When a friend wanted me to join him to watch live music at a local pub, I declined. I’d never been in a bar (yes, I’d led a sheltered life) and was nervous about what might happen.
  • When another friend asked me to bike with him from Portland to the Oregon Coast, I said no. It was a long way. It seemed difficult and dangerous.

These are only a handful of examples. In reality, I blocked things every day. I refused to try new foods. I didn’t like to go new places. And I didn’t want to try new things. Or, more precisely, I wanted to do all of this, but was afraid to try. My default response was to find reasons something couldn’t be done instead of ways to make them happen. Because I focused more on possible negative outcomes than potential rewards, I avoided taking even tiny risks.

After reading Impro, I made a resolution. Instead of saying “no” to the things that scared me, I’d say “yes” instead.

Whenever somebody asked me to do something, I agreed (as long as it wasn’t illegal and didn’t violate my personal code of conduct). I put this new philosophy into practice in lots of ways, both big and small.

  • When people asked me to lunch, I said yes.
  • When people contacted me to make media appearances or do public speaking gigs, I said yes.
  • When friends asked me to go see their favorite bands or to spend the evening chatting at a bar, I said yes.

As a result of my campaign to “just say yes”, I’ve met hundreds of interesting people and done lots of amazing things. I’ve eaten guinea pig in Perú and grubs in Zimbabwe. I’ve climbed mountains in Bolivia and snorkeled in Ecuador. I’ve learned to love both coffee and beer, two beverages I thought I hated. I’ve learned to ride a motorcycle. I’ve shot a gun. I’ve gone skydiving and bungie-jumping. I published a book. I sold my website (and bought it back again!). I wrote a monthly column in a major magazine.

These things might seem minor to natural extroverts, but I’m not a natural extrovert. I’m an introvert. These were big steps for me. These experiences were new and scary, and I wouldn’t have had them if I hadn’t forced myself to say yes.

In recent years, I’ve come to look at saying “yes” like playing the lottery. Every time I do something new, there’s a chance I’ll win big. Let me explain.

The Lottery of Life

My work nowadays involves meeting and chatting with folks from all walks of life. They email me to say, “Want to have lunch?” and I say, “Of course!” We talk about podcasts or travel or bicycling or comic books. Whatever strikes our fancy. When we’ve finished our tea or Thai noodles, nothing seems to have happened — not on the outside, anyhow.

What’s happened, though, is that we’ve both received lottery tickets. By meeting and chatting and sharing ideas, we’ve been given tickets in the lottery of life.

I also get a ticket whenever I try something new. (Because I now try new things all of the time, I’m accumulating a lot of lottery tickets.)

I get tickets when I say “yes” to things that are scary or difficult too. When I spoke at World Domination Summit in 2012 — something that scared the hell out of me! — I got a lottery ticket. When I flew to Ecuador to talk with people about Financial Independence, I got a lottery ticket. When I introduce myself to strangers or “important people”, I get a lottery ticket.

But note that these tickets are rarely handed to me. To get them, I have to take risks. I have to move outside my comfort zone. As much as I enjoy sitting on the couch in the evening watching Comedians in Cars Getting Coffee with Kim, neither one of us receives a lottery ticket for doing so. To get tickets, we have to do things.

[Shaman cleaning

The prizes in life’s lottery are many and varied.

When I learned Spanish, for instance, I received a winning lottery ticket that has paid off in all sorts of ways. I made new friends (my tutor, my English student), traveled to new places (Perú, Bolivia, Argentina, Chile, Ecuador), read new authors, tried new food, watched new movies, and so much more.

When I was in Quito a couple of years ago, I rode the teleférico, the cable-car that carries visitors 4000 feet up the side of a nearby volcano. During the fifteen-minute ride, I chatted with two couples that spoke only Spanish. If I hadn’t learned Spanish, I couldn’t have understood them, much less conversed. But because I do speak Spanish, I enjoyed a pleasant chat about one couple’s life in Venezuela and the other couple’s life in Quito. Plus I garnered a restaurant recommendation for later that evening. Yet another small prize I won simply because I took the time to learn another language.

[The teleferico in Quito]

That’s an example of receiving a small payoff from the lottery of life. Sometimes, however, you hit the jackpot.

In 2008, I received an email from a blog reader. He’d be in Portland the following week and wanted to know if I had time to meet for lunch. “Sure,” I said. “Let’s do it.” I met the reader and his wife at a local Thai restaurant. We had a great conversation. I was impressed by his story and his drive. I gave him blogging tips. He told me stories about traveling the world. His wife showed me how to stretch my injured hamstring.

Over the next year, my new friend shared a couple of guest posts at Get Rich Slowly. He stayed at my house one night when he got stranded in Portland.

Eventually, this guy — whose name was Chris Guillebeau — moved to Portland. Our friendship grew. In 2010, I joined Chris for a train ride from Chicago to Portland. On that trip, he shared a crazy idea. “I want to create a conference and hold it in Portland. I want you to be on the planning team,” he said. For the next three years, I helped to organize the World Domination Summit, which grew into a grand party for 3000 people.

Saying “yes” to lunch with one stranger had a ripple effect that continues to spread throughout my entire life. Because of that one action, I’ve met hundreds of incredible people, some of whom have become close friends. I’ve traveled to Norway. I’ve spoken on stage before one thousand people. Chris and I collaborated to create the Get Rich Slowly course. (And the payoff continues: I’ll be presenting a three-hour workshop on Financial Freedom at this July’s edition of WDS.)

Not every meeting or experience pays off so handsomely, of course. In fact, some are disasters! But most provide some sort of reward, and sometimes those rewards are enormous. Prize-winning tickets are so common and fruitful, in fact, that I’ve almost become addicted to playing the lottery of life. I relish making new acquaintances, going new places, and trying new things.

I used to think I was unlucky. Good things happened to other people, never to me. Everyone else had more fun than I did. Now, eight years since learning to say “yes” to life, I know the truth. Success breeds success. When you do something well, you open doors to new opportunities. When you fail to act, doors remain closed.

Wishing won’t make you happy or wealthy, and good things don’t just happen. Luck is no accident. Luck isn’t magic and it’s not a gift from the gods. You make your own luck.

Luck Is No Accident

What we think of as “luck” has almost nothing to with randomness and almost everything to do with attitude. According to psychologist Richard Wiseman, only about ten percent of life is truly random; the remaining ninety percent is defined by the way we think. Wiseman says we have more control over our lives — and our luck — than we realize.

John Krumboltz and Al Levin, the authors of Luck is No Accident, agree. In that book, they write:

You have control over your own actions and how you think about the events that impact your life. None of us can control the outcomes, but your actions can increase the probability that desired outcomes will occur. There are no guarantees in life. The only guarantee is that doing nothing will get you nowhere.

This has certainly been true in my own life. When I sat at home, afraid to do things and meet people, I was “unlucky”. Once I took action, my fortunes changed.

Wiseman says that “lucky” people share four attributes:

  • Lucky people make the most of opportunity. This is more than just being in the right place at the right time. Lucky people must be aware when an opportunity presents itself, and they must have the courage to seize it.
  • Lucky people listen to their hunches. They heed their gut instincts.
  • Lucky people expect good fortune. They’re optimistic. They think win-win. They make positive choices that benefit themselves and others. They tend to assume the best.
  • Lucky people turn bad luck into good. They fail forward, learning from their mistakes and finding the silver lining in every cloud. There’s a Spanish saying, “No hay mal que por bien no venga,” which can be roughly translated as, “There is no bad from which good could not come.” Lucky people believe this.

In Impro, Keith Johnstone writes:

People with dull lives often think their lives are dull by chance. In reality, everyone chooses more or less what kind of events happen to them by their conscious patterns of blocking or yielding.

This, my friends, is truth — perhaps the fundamental truth.

Our attitudes produce our luck. Choice is the backbone of life and meaning. This theme will appear repeatedly at Money Boss, and not just when discussing luck and fear.

At the heart of happiness is choice. We make meaning in our lives through our choices. At its core, freedom is about the ability to choose. And our financial states — for good or ill — are largely defined by choice.

Everyone chooses more or less what kind of events happen to them. Learn this quote. Learn to love it. Because you already live it, whether you know it or not.

Allow me to pause for a moment to acknowledge that yes, some people enjoy better circumstances than others. Systemic poverty is a genuine problem. It’s a barrier that some people have to overcome in order to achieve success. And yes, shit happens. You could get hit by a truck tomorrow. To me, these things are obvious and should go without saying. Yet, if I don’t explicitly mention them, I’ll get nasty comments and email.

Action Cures Fear

Saying “yes” is the first step to fighting fear and living a life without regret. But saying “yes” isn’t enough by itself. To cure fear, you must also take action.

Cody is a personal trainer in Portland, Oregon. He coaches athletes to lift more and run farther than they believe they’re able. Cody says one key to achieving peak performance is acting in spite of fear.

When lifting weights, for instance, many athletes — especially novices — become intimidated. They may be physically capable of living a given weight (and may have even lifted that very weight in the past), but they’re afraid to do so; they think about what might happen if they drop the bar. Others might imagine the pain and suffering that comes from running a marathon, the long hours of work ahead, and allow those thoughts to stop them from attempting the race.

Cody says that successful athletes overcome their fear by turning off their brains and taking action. Instead of waiting for the moment when fear subsides — a moment that might never come if she keeps thinking about it — the veteran forces herself not to think about what she’s doing. She simply does it. She lifts the weight or scales the wall or dives into the pool. She keeps running and doesn’t think about the distance that remains.

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At the start of the classic science-fiction novel Dune, our young hero is put to a painful test. To calm himself and focus his mind, he recites this litany against fear:

I must not fear. Fear is the mind-killer. Fear is the little death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.

If fear is the mind-killer, then action is the fear-killer. To overcome fear, you must reach a point where you’re no longer thinking — only acting. Thought creates fear; action cures it.

Cody’s insight isn’t new. Motivational speaker Brian Tracy has said, “If you want to develop courage, then simply act courageously when it’s called for. If you do something over and over again, you develop a habit. Some people develop the habit of courage. Some people develop the habit of non-courage.” (Tracy’s famous advice for doing what you fear? Eat that frog!)

In The Magic of Thinking Big, David J. Schwartz writes, “Action cures fear. Indecision, postponement, on the other hand, fertilize fear…When we face tough problems, we stay mired in the mud until we take action. Hope is a start. But hope needs action to win victories.”

Schwartz advocates a two-step plan to build confidence and destroy fear:

  1. Isolate your fear. Determine exactly what it is that scares you.
  2. Take action. Figure out what action will counter your fear, and then do it.

“Hesitation only enlarges, magnifies the fear,” Shwartz writes. “Take action promptly. Be decisive.”

Often what we’re actually afraid of is the unknown. We like certainty, and choosing to do something with an uncertain outcome makes us nervous. That initial step into the unknown can be scary. But after the first, each subsequent step becomes easier and easier. When you act, you remove the mystery.

For years, I was frightened to speak in front of crowds. I avoided it. And when I agreed to speak, I put off preparation until the last possible moment. But when I began to say “yes” to offers and opportunities, I had to learn to speak in front of crowds. At first, I didn’t like it. But over time a funny thing happened. The more talks I gave, the better I got — and the more I enjoyed it. I’m still not great at it, but my fear fades a little more each time I step on stage. Action is curing my fear.

Action Creates Motivation

At home, Kim wakes at five o’clock to get ready for work. Most days, I just lie there. “I don’t need to get up,” I think. “I’ve nowhere to go.”

But I’ve learned that if I don’t get up, I regret it. If I stay in bed, I don’t make it to the gym. I miss work deadlines. I have less time to do the fun stuff, like hiking, and reading, and riding my motorcycle.

So, I get out of bed. I get dressed. As unappealing as it sounds, I go outside for a walk or a run — even when it’s raining (as is frequently the case back in Portland). The first few minutes suck. I’m tempted to turn around and return to my cozy bedroom. Before long, however, I find I’m actually enjoying myself. I return home invigorated, eager to get things done.

If I were to wait for motivation, I’d sleep all day. By forcing myself to take action, I find the motivation that was missing before.

Feeling Good is a popular self-help manual by David Burns. The book helped a younger me through an extended bout of depression. Part of the solution was to overcome my chronic procrastination, procrastination brought about by fear. In Feeling Good, Burns describes the problem.

Individuals who procrastinate frequently confuse motivation and action. You foolishly wait until you feel in the mood to do something. Since you don’t feel like doing it, you automatically put it off. Your error is your belief that motivation comes first, and then leads to action and success. But it is usually the other way around; action must come first, and the motivation comes later.

You see, action primes the pump. It creates momentum. It instills confidence.

Another way to boost confidence is careful preparation. Anxiety is largely self-doubt and insecurity — an underlying belief that you cannot handle whatever is before you. Anxiety often causes fear and procrastination. Because of this, preparation plays a key role in mitigating fear.

When you prepare — to speak to a crowd, to hike through a bear-infested forest — you decrease your doubt. You can’t eliminate the possibility of failure, but you can drastically reduce the odds. You rehearse possible situations. You practice the required actions. You allow your imagination to explore (and cope with) worst-case scenarios. Preparation helps you to do your best.

And that’s the important thing: If you always do your best and you do what’s right, then you needn’t fear the results. Sure, bad things will happen sometimes. But if you’ve done well and done what’s right, the negative outcome isn’t your fault — it’s just how things are. If you’re unprepared, however, you must own the negative results.

When we’re prepared, we feel competent. When we feel competent, we feel confident. When we’re confident, our fear fades into the background.

Action Is Character

A decade ago, I was full of hot air. And I was lazy. And depressed. This wasn’t a good combination for getting things done. I talked a lot about the things I wanted to do, but I never did them. I found reasons not to. I even had trouble keeping up my end of the household chores, which frustrated my wife.

I was a Talker.

Maybe you know somebody who’s like this. A Talker seems to know the solution to everything, has great plans for how she’s going to make money or get a new job. She can tell you what others are doing wrong and how she could do it better. But the funny thing is, a Talker never acts on her solutions and her great plans. She never gets that new job. She’s out of work or stuck in a job she hates.

To everyone else, it’s clear that the Talker is full of hot air, but he believes he’s bluffing everyone along — or worse (as was my case) isn’t even aware that he never follows through on his boasts and promises. Sometimes a Talker conflates talking with doing. When confronted, a Talker has excuses for not getting things done: He doesn’t have time, he doesn’t have the skills, the odds are stacked against him. When a Talker does do something, he often takes a shortcut.

That, my friends, is the man I used to be.

Something changed in the autumn of 2005. I began to read a lot of books. Not just personal finance books, but self-help books and success manuals of all sorts. As I read the books, I discussed them with my cousin, Nick. During our conversations, I’d sometimes lament that X was a priority in my life — where X might be exercise or getting out of debt or reading more books — but that I never had time for it. Instead, I “had to do” a bunch of other stuff instead.

“Well, then X isn’t actually a priority,” Nick would say, which made me angry. I’d argue, but Nick would point out that the things we actually do are the priorities in our life. What we say doesn’t matter; it’s what we do that counts.

It took me a long time to learn this lesson, but eventually I began to align my life with my stated priorities. Instead of just talking about doing things, I did them. I stopped looking for shortcuts and started doing the work required to get things done. Unsurprisingly, this worked. When I did things instead of talking about them, I got better results.

Today, I am a Doer.

In his notes on The Last Tycoon, F. Scott Fitzgerald wrote, “Action is character.” Fitzgerald meant that what a fictional character defines who that character is. Superman is a superhero because he does heroic things, not because he talks about doing them.

The same is true in real life: You are defined by the things you do — not by the things you think or say. If you never did anything, you wouldn’t be anybody.

Action is Character

We Are What We Repeatedly Do

We are what we repeatedly do — not what we once did, and not what we did only once.

One mistake does not define you, nor does a single act of kindness. These events may provide glimpses of a potential you, but who you really are is revealed by what you do on a daily basis.

  • You can say that health is important to you, but if you don’t eat and act healthfully, it’s just not so.
  • Thinking about writing doesn’t make you a writer; writing makes you a writer. If you’re not writing, you’re not a writer.
  • You can say your life’s too busy and you want to slow down, but so long as you keep scheduling things, you’re showing that you value your busy-ness more than the downtime.

I’ve self-identified as fit for almost seven years. For most of that time, I have been fit. I’ve eaten well and exercised often. But during the past couple of years, my attention has been focused elsewhere. My priorities have shifted. During my RV trip across the U.S., I allowed my diet and exercise regimen to slip until today they’re average at best. I can see it in my body and feel it in my mind.

Talking about fitness and having been fit in the past won’t make me fit today. To be fit, I have to do the work to become (and remain) fit. Fitness will return when I choose to eat right and exercise once again. Not just once, but every day.

If you don’t like who you are, choose to be somebody new.

We are what we repeatedly do.

Note: This quote — “We are what we repeatedly do. Excellence, then, is not an act but a habit” — is frequently attributed to the philosopher Aristotle. However, Aristotle never wrote this. Instead, the quote is Will Durant’s summary of Aristotle’s philosophy.

Summing Up

Whew! That’s a lot of information. Let’s summarize what we’ve learned today.

  • On their deathbeds, people generally regret the things they did not do rather than the things they did. They also regret having spent so much time seeking outside approval instead of focusing on their own feelings, values, and relationships. In short, dying people regret having been afraid.
  • Some fears are physical. Others are psychological. Some fears are rational. Many are not. Healthy, rational fears keep you alert and alive. Irrational fears and anxieties prevent you from enjoying everything life has to offer. In part, our irrational fears are fueled by the mass media. We’re bombarded by news of the exceptional and the unusual, so that we come to believe life is more dangerous than it actually is.
  • A mighty weapon in the war against fear is the power of yes. By teaching yourself to accept opportunities in life, you can gradually overcome your irrational fears. You can teach yourself to become bold, to try new things, to meet new people, and to enjoy a more rewarding existence.
  • This is one of the secrets of lucky people. What we think of as “luck” has almost nothing to do with randomness and everything to do with attitude. Everyone chooses more or less what kind of events happen to them. You make your own luck.
  • It can help to imagine that life is like a lottery. Any time you do something — especially something new — there’s a chance that your life will be vastly improved in the long run. When you say yes, you’re given a lottery ticket. Often that ticket won’t pay off. But sometimes you’ll hit the jackpot.
  • Saying yes isn’t enough by itself. To cure fear, you must take action. Action boosts confidence. So does preparation. When we’re prepared, we feel competent. When we feel competent, we feel confident. When we’re confident, fear fades into the background.
  • If you always do your best and you do what’s right, then you needn’t fear the results. Sure, bad things will sometimes happen. But if you’ve done well and done what’s right, the negative outcome isn’t your fault — it’s just how things are. If you’re unprepared, however, you must own the negative consequences.
  • The bottom line? Action is character. You are defined by the things you do — not by the things you think or say. You are what you repeatedly do. If you don’t like who you are, you must choose to be somebody new.

What have action and fear to do with personal and financial independence? Everything!

The first step toward freedom of any sort is facing and fighting your fears. “You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face,” Eleanor Roosevelt once said. “You must do the thing you think you cannot do.”

From these humble beginnings, you can progress to greater things.

Next, we’ll explore personal well-being. We’ll talk about what happiness is, how it’s achieved, and what you can do to maximize happiness in your life. Because happiness too is an important part of achieving personal and financial freedom.

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The Secret to Saving Money in California

I have a friend who works for YouTube and lives in the Bay Area. He tells me that the income inequality there is so bad that he doesn’t understand how low-income workers even survive. It’s such a concern that he tips double when he eats out.

And what he says is absolutely true. The median home value in California is over $500k and the median one-bedroom rent is $1,750. And wages haven’t caught up.

If you’re a middle-class joe trying to eke out an existence in California, chances are you’re struggling to even pay for your life let alone save. But it’s not impossible to get ahead of the paycheck and make life more affordable in California. Here are a few ways to do that.

1. Automate Your Savings

One money-saving tenant is the principle of paying yourself first. Running your life like a business might be a foreign and maybe stressful concept. But when you realize that you’re your own employee in your business, it can be kinda fun.

Think of savings as payment instead of a burden. That money is still yours and it will feel even more like yours when you pretend it’s a payment to yourself.

Set a small goal for savings at first. This doesn’t even have to be very much, maybe one to two percent. And then over the course of the next year, slowly raise that amount.

Ideally, you should have six months’ worth of income saved up. But obviously, you can’t build that quickly unless you’re a billionaire. Make it a goal to have six months’ worth of income saved up in two years.

Yeah, emergencies in that time might come up and slow you down, but you can recover. Budgets are meant to be flexible.

Once you’ve done this, you’ll be in the habit of paying yourself first. You can move on to saving for retirement or things you want to do such as vacations or home improvements.

2. Rent Out an RV or a Rental

Alright, this one takes a bit of money in the first place. But if you can get a loan, you can quickly recover the money and start having residual income.

For an RV, you can buy one for a few thousand dollars and fix it up or you can buy a new one. But renting an RV out is actually pretty easy. There’s a site that’s essentially the Airbnb of the RV world.

It’s called Outdoorsy and you can make a minimum of $1k per rental depending on the kind of RV you’re renting out. That’s almost a month’s rent for a small apartment. And it’s money you can make with minimal effort.

And the plus side of renting an RV is having an RV. If your goal is having money to travel, then you’ll be able to travel California when the RV isn’t rented instead of fretting about money in California.

3. Rental

This one is even more work than an RV rental, but it could yield more money. One of the best ways to rent a place is to go in on it with a friend. Now, you want to make sure you get along with your friend in all situations because business deals can be stressful.

There are two ways you could go about this. Either rent out an entire house or apartment on something like VRBO or rent out a room in your house with Airbnb.

The first option will require some major investment. And you might not see great returns on your investment for a year or two. But if your rental is successful, you could pay off the mortgage and eventually have residual income outside of your job.

Be sure to research the rules in your city, however. Some towns are moving to ban or regulate AirBnBs and VRBOs. You don’t want to fall into the trap of owning something you could never use.

4. Move to a Cheaper Part of California

My friend at YouTube lives in Silicon Valley. He’s considered moving out to the New York HQ where life would be a lot cheaper. But he likes where he lives and works.

For some people, moving to a cheaper place may not be an option. But if you want to stay in California, there are some cheaper options than the Bay Area or San Diego. California is a massive state with plenty of room for cheaper living.


If you’re looking for a place that boasts almost half the median home value for California, look no farther than Chico, CA. It’s a small town just 90 miles north of Sacramento and it has a small college town vibe to it.

Chico State University sits nearby and universities often increase the cultural value of an area. While agriculture is the main industry there, plenty of jobs exist in other industries including the beer industry.


While it sounds like something you might shout once you’ve found your lost keys, Eureka is another vibrant inland California town. It’s an old Gold Rush town and the architecture still feels wild west.

Historic Victorian buildings litter the downtown. But sadly, the biggest industry is tourism and health care. This means that job choices are limited.

But if you can figure out ways to make money outside of the typical 9-5, then Eureka might be your town. It too has a median home value of less than $250k.


Wine is a big deal in California and everybody knows about Sonoma, but few know about Temecula. While the wine rush has blown up certain economies in California, some regions remain fairly untouched.

Temecula is one of those places with only 40 wineries. And it’s a beautiful valley to live in.

It’s a little more expensive than Chico or Eureka, but the jobs market is a bit better than either. It also boasts the biggest casino in California.

Saving Money in California Takes Dedication

You may not be able to live the life of your dreams immediately. It may take a few years of saving and digging deep to get out of debt or build up your life. But it’s entirely possible if you have the know-how and the dedication.

Want more advice on how to save or make money? Check out some more Shoemoney here.

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12 exercises to help you discover purpose and passion

Happy blogiversary! Twelve years ago today, I launched a humble little blog about personal finance — this blog, Get Rich Slowly. It was meant as a way for me to share the things I was learning as I dug out of debt. It turned into so much more.

For the next couple of weeks, I’m on the road in the southeastern U.S., speaking to people about personal finance and meeting with readers.

This morning, for instance, I spoke to the 76 people attending Camp FI in Spring Grove, Virginia. My topic? No surprise: The importance of having purpose in your life. As you can see, I am a PowerPoint genius…

PowerPoint presentation at Camp FI

If you’ve spent any time reading my material, you know that I believe purpose is the foundation on which all plans — financial and otherwise — ought to be built. Purpose is a compass. It helps you set big goals, sure, but it also acts as a guide when times get tough. Your mother died? Your wife left? Your husband lost his job? If you know what your primary purpose is in life, these stressful events are much easier to deal with.

For this presentation, I added a new twist. You see, a lot of folks who are interested in money tend to pick things like “getting out of debt” and “becoming financially independent” as their purpose or mission. But I think these are poor choices.

I’ve seen far too many folks make debt elimination a goal — then fall right back into debt once they’ve achieved it. And there are plenty of people who reach FI (or retire early) only to find they no longer know what to do. (It’s like aiming to reach a certain weight instead of choosing to make lasting lifestyle changes that lead to weight reduction.)

Instead, I think it’s important to recognize that your financial situation should be side effect of pursuing some greater purpose. Financial independence ought not be your aim; it’s merely a means to an end.

When I speak about purpose (which is often), I tend to fall back to the George Kinder/Alan Lakein personal mission statement exercise. I feel like it’s one of the best available tools for helping people find focus. But it’s not the only tool.

Today, to celebrate this site’s twelfth birthday, I want to present twelve alternative exercises for discovering your purpose and passion. If you’ve tried one (or more) of these without success, try another. One of them is sure to be useful for you.

Note: I’ve done my best to credit sources for these exercises. (Many come from Barbara Sher’s excellent book Wishcraft, which is all about crafting the life you really want.) At the end of this article, I’ll give you a list of recommended reading — and tell you what I think is the single best book for discovering passion and purpose.

Your One-Hundred Word Philosophy

The first exercise is one I created myself. It’s based on CrossFit’s “world-class fitness in 100 words” statement. There’s no time limit for this exercise, but it could take a while so be prepared.

Your aim is to write out your life philosophy in exactly one hundred words — no more and no less. This can take any form you want, from a statement of values to a list of instructions. Begin by writing down your core beliefs and values. It might also be helpful to think about books that have had a big impact on your life or powerful advice you’ve received in the past. Based on your experience and beliefs, what is your life philosophy?

As an example, here’s my own hundred-word philosophy, which I’ve written as instructions to myself:

One Hundred Words

Some of those admonitions are my own invention. Some come from books like The Four Agreements and The Power of Now. “Refuse to let fear guide your decision-making process,” was advice from my girlfriend. “Create your own luck” is based on my friend Michelle’s advice to “create your own certainty”.

Again: Target one hundred words exactly. It’ll force you to spend time thinking and editing and being introspective.

As you can see, I paid an artist friend to create a pretty letterpress poster of my 100-word philosophy, which I’ve hung on the wall here at home. I look at it every day. Obviously, you don’t have to go that far.

Your Original Self

This next exercise, which comes from Barbara Sher’s Wishcraft, sounds hokey at first. Turns out, however, that it’s a lot of fun to complete. Here’s how it works.

Set aside about half an hour for quiet contemplation. (There’s no writing involved in this exercise — only thinking.) Let your mind wander back to your childhood. Remember what you used to do to have fun — especially those times you especially treasured. When you were allowed to daydream or do whatever you wanted, what did you choose to do?

Try to answer these questions:

  • What sorts of things attracted and fascinated you when you were a kid?
  • What sense — smell, sight, hearing, taste, touch — did you live through most? Or did you enjoy them all equally? What kinds of sensory experiences do you remember best?
  • What did you love to do (or daydream about), no matter how silly or unimportant it might seem now? Did you have secret aspirations and fantasies that you never told anyone about?

After thirty minutes of unstructured reverie, ask yourself a couple of questions. First, do you feel like there’s a part of you that still loves the things you loved as a child? What do you miss most? Next, ask yourself what talents or abilities these childhood dreams and passions might point to in the present. What can you do today to reconnect with some of who you were as a kid?

As I mentioned, I enjoyed this exercise. Although you don’t have to, I wrote down what I liked as a kid:

When I was a kid, I loved the outdoors. I loved to run and play outside. We lived in a small trailer house but were surrounded by acres and acres of land. We had freedom to romp across the fields, explore the nearby woods and orchards, and to browse the banks of the creeks. My favorite family vacations were those that involved camping. (Unfortunately, there weren’t many.)

I loved looking at the insects and the plants. I liked digging in the dirt. I liked finding bones and rocks and shards of glass. I enjoyed playing games outside — tag, dirt clod fights, whatever. I especially liked building forts. I liked going down to the “big tree” and hanging out under its branches.

Yes, there’s still a part of me that loves this sort of thing. I think that’s one of the reasons I’ve come to treasure the morning walks with the dog. It’s an opportunity for me to explore the same stretch of ground over and over and over again. I truly enjoy watching how the woods and fields change a little every day. And that’s probably one of the big reasons I enjoyed the RV trip. It forced me to connect to the world outside in a big way.

What talents and abilities might this interest point to? I’m not sure really.

Who Do You Think You Are?

This activity is short but effective.

On a blank piece of paper, spend 5-10 minutes answering the question: Who do you think you are? How would you describe yourself to a total stranger? Be objective. What are most important characteristics that define your identity? There aren’t any right or wrong answers here, and there’s only one rule: Don’t overthink this. Put down the first and surest answers that come into your head, the ones that make you say, “This is me.”

[This exercise also comes from Wishcraft.]

Focus on Five

We’ll explore the next exercise in greater depth next week when I write about goals. You’ll find a version of this in nearly every book on productivity or positive psychology. This version is taken from Angela Duckworth’s Grit (which in turn borrowed it from billionaire Warren Buffett, who may have taken it from Alan Lakein).

Here’s how it works:

  1. Write down a list of your top twenty-five goals (or more). This might seem impossible at first, but give it a try. List all of the projects you’re currently working on, both at home and at work. List all of the things you want to do but feel like there’s no time. List at least twenty-five. More is beter.
  2. Next, review your list. Which goals are most appealing? Do some soul-searching — it doesn’t matter how — and narrow the list to the five highest-priority objectives. Just five. Circle them (or copy them to another piece of paper).
  3. Lastly, look at the goals you didn’t circle. “These you avoid at all costs,” writes Duckworth. “They’re what distract you; they eat away time and energy, taking your eyes from the goals that matter more.” Harsh but true.

If you need help prioritizing your goals — it can be tough to sort through so many! — rate each one on a scale of 1 to 10 based both on how interesting it is and how important it is. Then multiply those numbers together. For instance, if one of your goals has an interest rating of 9 (very interesting) and an importance rating of 3 (not that important), its score would be 27. Compare the scores. Higher is better.

Duckworth says that she would add a fourth step to Buffett’s exercise. Ask yourself: “To what extent do these goals serve a common purpose?” The more closely aligned your top five goals are, the better you’ll be able to focus on your passion (or purpose).

When I write about goals next week, I’ll ask you to do a different version of this exercise drawn from Sonja Lyubomirsky’s The How of Happiness.

A Letter to the Future

Here’s another exercise that’s common in self-help manuals. You’re going to contemplate and describe the personal legacy you’d like to leave in this world.

Think about how you want to be remembered by your grandchildren or great-grandchildren. (If you’re childless like me, you’ll have to pretend.) In the form of a first-person letter, write a summary of your life, values, and accomplishments as you’d like them known to your descendants. Pretend like you’re near the end of your life and want to share the “greatest hits” version of your personal story for posterity.

One common way to approach this is to pretend you’re writing your own obituary. In The Seven Habits of Highly Effective People, Stephen R. Covey offers the following variation:

In your mind’s eye, see yourself going to the funeral of a loved one. Picture yourself driving to the funeral parlor or chapel, parking the car, and getting out. As you walk inside the building, you notice the flowers, the soft organ music. You see the faces of friends and family you pass along the way. You feel the shared sorrow of losing, the joy of having known, that radiates from the hearts of the people there.

As you walk down to the front of the room and look inside the casket, you suddenly come face to face with yourself. This is your funeral, three years from today. All these people have come to honor you, to express feelings of love and appreciation for your life.

As you take a seat and wait for the services to begin, you look at the program in your hand. There are to be four speakers. The first is from your family, immediate and also extended — children, brothers, sisters, nephews, nieces, aunts, uncles, cousins, and grandparents who have come from all over the country to attend. The second speaker is one of your friends, someone who can give a sense of what you were as a person. The third speaker is from your work or profession. And the fourth is from your church or some community organization where you’ve been involved in service.

Now think deeply. What would you like each of these speakers to say about you and your life? What kind of husband, wife, father, or mother would you like their words to reflect? What kind of son or daughter or cousin? What kind of friend? What kind of working associate?

What character would you like them to have seen in you? What contributions, what achievements would you want them to remember? Look carefully at the people around you. What difference would you like to have made in their lives?

Make no mistake: This can be a powerful exercise. Tear-inducing, even. That’s okay. By thinking about how you’d like people to remember you in the future, after you’re gone, you can take steps to align your present self and actions with that ideal vision.

20 Things You Like to Do

Here’s another exercise from Barbara Sher’s Wishcraft. She says she borrowed it from Sid Simon’s Values Clarification.

To begin, list twenty things you like to do. You must come up with twenty. That’s the only rule. Don’t cop out and make a list of four things you like to do. Or twelve. List at least twenty. (You can write down more, if you like.)

Now you’re going to make a chart.

Take a fresh piece of paper. Down the left side of the page, in the first column of the chart, copy your list of twenty things you like to do. (The order is completely unimportant.)

Now, across the top of the page create 8-10 columns. Label them like this (you might have to write tiny): How long since you last did this activity? Free or costs money? Alone or with somebody? Planned or spontaneous? Job related? Physical risk? Fast-paced or slow-paced? Mind, body, or spiritual?

Feel free to add other categories that occur to you. (At home or in the world? Spouse likes also? Enjoyed a decade ago? Whatever. It’s your list.) Now go through your chart and fill it out for each of your interests.

What patterns emerge? What do these patterns tell you about your self and life?

To illustrate what this chart ought to look like, I did the exercise myself. It was enlightening. And it took me longer to complete than I expected. I could come up with sixteen things I like to do, but expanding the list to twenty was tough. Here’s a screenshot of my list. (Because I’m a nerd, I used a spreadsheet instead of a piece of paper.)

20 Things I Like to Do

Kind of sad (and hilarious) to note that this list is in the order I thought of things. So, that means “computer games” came to mind as something that I like to do before “sex” did. Yikes!

Looking at my list, it seems like I do a pretty good job of doing the things I like to do. Not perfect but good. There’s also a good balance of free activities vs. activities that cost money, and an even divide between social and alone time. But it’s clear that most of the things I like to do are spontaneous, not work-related, mental, and — most of all — slow. The only activity on my list that’s truly adrenaline-inducing is riding my motorcycle.

Who Do You Want to Be?

This exercise is based on a conversation I had with my friend Tyler Tervooren.

On a blank piece of paper, make a list of qualities and habits you’d like to develop. Do you want to ride your bicycle every morning? Do you want to be more patient with your children? Do you want to be more helpful to your co-workers? Do you want to read the Bible every day? Do you want to drink less alcohol?

It doesn’t matter what order you write these in. Take as long as you need to make your list.

When you’ve finished, reframe each item using the following format: “I am the kind of man who [blank]” where [blank] is the habit or quality you’re trying to develop. (And obviously, if you’re a woman please reframe each of these as “I am the sort of woman who [blank].”)

For example, if you wrote down that you’d like to get in the habit of waking 10,000 steps every day, you might reframe that as: “I am the kind of woman who walks 10,000 steps every day.” Or, better: “I am the kind of woman who walks everywhere she can.”

If one of your aims is to talk less about yourself and pay more attention to others, you might write: “I am the kind of man who listens first and talks second. I’m genuinely interested in what others have to say.”

Now copy each of these sentences onto an index card — one for each habit. Place these index cards by your bedside. Every morning when you wake up, train yourself to look at these cards first thing. Read through all of them to remind yourself of the habits and qualities you’d like to develop. Finally, choose one to make your focus for that day. Keep it in mind as you go about your normal routine, and do your best to live up to the affirmation.

Tyler says this habit helped him make real and lasting changes to his life. He built new habits to replace some of the tendencies that had been giving him trouble.


Who You Might Have Been

Imagine you grew up with all of the resources — financial, emotional, educational — you could have possibly wanted or needed. Your interests were encouraged and fostered. You had help and encouragement in all that you did. You weren’t limited by time or money or location. In a perfect world, what do you think you would be doing now? What would you already have done? What kind of person would you be?

Think big. Be as extravagant and far-fetched as you’d like. What’s the one big dream you would have pursued if everything had gone your way? If you really would have wanted to become President, then say you’d be President. If you would have become a movie star, say you’d be a movie star. Don’t hold back. Let your imagination fly free in whatever direction it desires.

Don’t pull any punches. Answer truthfully. Describe what this ideal life might look like.

[This exercise also comes from Wishcraft.]

The Ideal Schedule

In David James Duncan’s The River Why, Gus, the main character, decides at a young age that in an ideal world he would fish 14-1/2 hours per day. He’s still in high school when he formulates the following plan:

The Ideal 24-Hour Schedule

  1. sleep: 6 hours
  2. food consumption: 30 min. (between casts or while plunking, if possible)
  3. school: 0 hours!
  4. bath, stool, etc.: 15 min. (unavoidable)
  5. housework and miscellaneous chores: 30 min. (yards unnecessary; dust not unhealthy; utilitarian neatness easily accomplished)
  6. nonangling conversation: 0 hrs.
  7. transportation: 45 min. (live on good fishing river)
  8. gear maintenance/fly-tying/rod-building/log-keeping, etc.: 1 hr. 30 min.
  9. fishing time: 14-1/2 hrs. per day!

Then, in true money boss fashion, Gus brainstorms ways he can pursue his purpose:

Ways to Actualize Ideal Schedule

  1. finish school; no college!
  2. move alone to year-round stream (preferably coastal)
  3. avoid friendships, anglers not excepted (wastes time with gabbing)
  4. experiment with caffeine, nicotine, to eliminate excess sleep
  5. do all driving, shopping, gear preparation, research, etc. after dark, saving daylight for fishing only

Result (allowing for unforeseeable interruptions): 4,000 actual fishing hrs. per year!!!

I love it. (And I intend to use this example in future talks, so be prepared.) Gus knows his purpose and by brainstorming his ideal schedule, he’s able to figure out ways to put this dream into action.

In Wishcraft, Barbara Sher suggests a similar exercise. Here’s how it works.

Grab paper and pen. Seclude yourself somewhere quiet. Close your eyes. Imagine your ideal day. Imagine a day that would be perfect if it represented your usual days — not a vacation day. Just a regular, average day if your schedule were ideal. Spend a few minutes visualizing what such a day would look and feel like.

Once your ideal schedule begins to become clear, write down what it’s like in the present tense and in detail — from getting up in the morning to going to sleep at night.

I might say, for instance: “I wake up at 5:30 already in my gym clothes. I grab a piece of fruit, hop on my bike, and ride to the gym. I do an hour of Crossfit. I ride home, grab the dog, and take her for a walk. When we get back to the house at around 8:30, I spend four hours writing about money.” And so on.

As you write about your ideal day, think about the following: What’s the first thing you do when you wake up? What do you have for breakfast? Do you make it yourself or does somebody bring it to you? Do you take a long, hot bath? Or do you take a cold, bracing shower? What clothes do you wear? How do you spend your morning? How do you spend your afternoon? How do you spend your evenning? At each time of the day, are you indoors or outdoors? Quiet or active? With people or alone?

As you envision your ideal schedule, focus on what, where, and who.

  • What are you doing? What kind of work? What kind of play? Don’t limit yourself. If you’d like to sing or sail but don’t know how, in this fantasy you do know how.
  • Where are you? What kind of place, space, and situation? Are you on a farm in rural England? In a New York office building? On a sailboat in the South Pacific? In a fully-equipped workshop? Again, you’re not on vacation. You’re imagining a normal day — but an ideal day. Where are you?
  • Who are you with? Who do you work with? Who do you live with? Who do you talk with? Who do you sleep with? Maybe it’s the same people you work and sleep with already. Maybe it’s somebody else.

Let your imagination go. Don’t put down only what you think is possible — put down the kind of day you’d like to live if you had absolute freedom, unlimited means, and all the powers and skills you’ve ever wished for.

Note: Before (or after) you complete the “ideal day” exercise, you might find it useful to figure out how you actually spend your time right now. For that, I suggest performing a week-long time inventory. On the advice of Paula Pant, I tracked my time last summer and it was very enlightening. It helped me see where I was frittering away my minutes and hours. For more info and instructions on doing a time inventory, visit Laura Vanderkam’s website where you can grab free downloadable PDF forms and spreadsheets to help track your time in fifteen-minute increments.

What Color Are You?

This exercise from Wishcraft is for the more right-brained artistic folks. You analytic engineer types might not like it. (On the other hand, it might be good for you to actually complete it!) Here’s how it works.

Choose a color that represents you. It might be your favorite color or it might not. It ought to be a color that, at this moment, feels like you. The best way to do this is to have an array of colors in front of you. If you have a box of crayons, go get it. If not, here’s a page with a bunch of colors.

You’re now going to role-play that color. You are going to pretend you are that color. You’re going to think like that color, speak like that color, act like that color.

Take a sheet of paper. Write: “I am red” or “I am orange” or “I am carnation blue”. Do not say “I like blue because…” or “I think blue is…”. For the rest of this exercise, you are that color.

Now, in a few sentences to a few paragraphs, describe what qualities you have as that color — not as yourself. For instance: “I am dark blue. I’m quiet and deep like the ocean.” Or: “I am yellow. I’m bright and cheerful, intelligent and warm.

There are no right answers to this exercise. If you’re black, be black! I think Suzanne Vega’s “Small Blue Thing” is a great example of what you might do with this activity.

What color am I? I’m orange, of course.

The 14-Word Description

This exercise comes from my friend Amy Jo. Several years ago, she did a photo project in which she took portraits of people she knew. Before each session, she asked the subject: What are the fourteen words that best describe you?

For our purposes, I want you to brainstorm as many words as possible to describe who you are. You should come up with a minimum of fourteen, but it’s better to brainstorm more. Don’t ask others to describe you. Your aim here is to describe yourself. How do you see yourself?

If you come up with more than fourteen words to describe yourself, narrow the list to only the fourteen that fit you best.

Lastly, for each word write a short sentence that describes why you chose it. For instance, if one of your words was athletic, your descriptive sentence might be, “I enjoy playing sports and being outdoors.”

Here are the fourteen words I chose to describe myself six years ago. (They’re all still accurate.)

  • Adventurous – I love to try new things.
  • Creative – I love to make new things.
  • Curious – I love to learn new things.
  • Evolving – I’m a different man today than I was yesterday.
  • Independent – I make and act on my own decisions.
  • Intelligent – I am smart.
  • Playful – I like to joke and jest.
  • Positive – I look on the bright side.
  • Resourceful – I search for ways to get things done.
  • Sociable – I enjoy the company of others.
  • Tenacious – I pursue my goals with vigor.
  • Unguarded – I share myself freely, and I accept the word of others.
  • Versatile – I am good at many things.
  • Zealous – I’m passionate about my friends and hobbies.

Here’s one of the portraits from our 14-words photo shoot. I look so serious!

J.D. looking sinister [Amy Jo]

When I gave Amy Jo my list, she made an interesting observation. “When adults do this exercise, their words are always positive,” she told me. “But when kids do it, they describe themselves using both positive and negative words. It’s as if they’re more aware of their shortcomings — or at least more willing to admit them.”

Three Questions about Life Planning

Last of all, here’s the exercise I use most often. The father of the life-planning movement, George Kinder, is a certified financial planner and the author of The Seven Stages of Money Maturity. To identify and clarify your direction in life, Kinder suggests thinking about three hypothetical situations:

  • Imagine that you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything? What would you do with the money?
  • Now imagine that you visit the doctor and she tells you that you have 5-10 years left to live. She says that you won’t feel sick, but you’ll have no notice of the moment of your death. What would you do in the time you have left? Would you change your life? How?
  • Finally, imagine your doctor shocks you with the news that you only have 24 hours left to live. If you only had a day remaining, what dreams would you leave unfulfilled? What would you wish you had finished? What would you wish you had done or been? What would you have missed?

These questions — which are based on the work of time-management guru Alan Lakein — are powerful tools for figuring out what you want out of life. If you take the time to really ponder them and answer them honestly, they can help you clarify your personal values and set meaningful goals.

Over the past five years, I’ve shared this exercise with hundreds of people. Many who took it seriously have written to tell me it changed their lives. It changed my life too. Maybe it’ll change yours.

Recommended Reading

In this article, I’ve done my best to credit sources. A couple of these exercises are my own — the hundred-word exercise, for instance — but most are not. Most are borrowed from books. But there are plenty of excellent books out there that can help you figure out what you want out of life even if they don’t ask readers to fill out forms our meditate on what’s important.

Victor Frankl’s classic Man’s Search for Meaning, for example, is a work that almost everyone refers to. It’s a ground-breaking short book about how to find purpose even under the worst circumstances. But it doesn’t contain any reader homework.

Here then are a few of my favorite purpose-related books. You might like them too:

To my mind, however, the best book on this subject is relatively new: Angela Duckworth’s Grit: The Power of Passion and Perseverance. This was my favorite book of 2016. If I could make it required reading, I would. It’s that good. I’ve listend to the audio version nearly a dozen times (including yesterday during my 21-hour trip home from Florida).

Grit is dense with information and ideas. Duckworth makes a convincing argument that passion and perseverance — or, in Money Boss lingo, purpose and patience — are the best predictors of success. If you can hone in on a single top-level purpose then doggedly pursue it, your life will be filled with meaning and happiness. Great stuff. I hope to publish a review of the book sometime soon.

As I said at the start, your purpose is your compass. Its your mission. It’s what gives your life direction and meaning. To support your purpose, however, you’ve got to set up a personal action plan built around a hierarchy of goals.

Next week, I’ll share some thoughts (and exercises) on how to set goals and structure life to pursue your purpose. How do you put your personal misson statement to use? We’ll talk about that in just a few days.

In the meantime: Tell me about your purpose. What is it? Do you have a personal mission statement? Which of these exercises do you find effective? Are there others that are better?

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How Barbara Corcoran Turned $1,000 into an Empire

I genuinely wish Barbara Corcoran would run for President. Not because she’s rich. Not because she has any kind of political experience (she doesn’t). But because of her humility and wisdom.

Barbara Corcoran did not grow up rich. She lived in a two-bedroom apartment with ten siblings. She struggled through school due to her undiagnosed dyslexia and was often considered the “dumb kid” in school.

She worked 22 different jobs before she became rich. It wasn’t until she met a guy in real estate that her life began to change.

1. Where Is Barbara Corcoran Now?

Now, everybody knows Barbara Corcoran for Shark Tank, a TV show where entrants get to compete for the attention of investors. Corcoran is one of those investors.

Her years of experience in real estate gave her a keen eye to suss out the best investment opportunities and shy away from bad deals. She’s the kind of investor Trump wishes he could be.

When sizing up contestants, Cocoran looks at whether the contestants can stand up to the scrutiny of the “sharks.” She herself muscled through a hard life when she was younger and always hires people who can do the same.

But before you start to think that Corcoran is some hard-ass with a penchant to hold herself above others, know that Corcoran never forgets where she came from.

While she is worth millions, she flies economy instead of first class. She even saves up her airline miles for relatives rather than use them for possible upgrades. Although, Corcoran does bring a gourmet meal onto the plane. She believes that it’s your responsibility to make the best out of every situation you’re in.

She waited until her 40’s to have children, but once she did, they were taught humility. When her son was five, he asked on a plane, “Why can’t we sit in those big seats?” Her reply? “Get a job.”

It sounds harsh, but when you’re raising children who never knew want or worry, you have to teach them the value of work. Gordon Ramsey treats his children similarly. He doesn’t let his children sit in first class with him because they “haven’t worked nearly hard enough to afford [it].”

Sold Her Company

Corcoran sold her real estate company for $66 million in 2001. It was a company of over 800 employees that she had built from the ground up.

She sold the company because she wanted to focus more on her children. But Corcoran, having lived a life of hard work, couldn’t just stay home. She began making appearances on shows like Good Morning America and the Today Show.

Then, in 2009, Mark Burnett asked her to join a reality TV show Shark Tank. This is the Barbara Corcoran we know now. Successful, rich, and a full-fledged TV personality.

But how did Corcoran get here? It all began with a $1k loan and a budding romance.

2. How Barbara Corcoran Turned $1k Into an Empire

In the 1970’s, Barbara Corcoran was a waitress at the Fort Lee Diner. She was only 21. She met a guy named Ramone Simone who offered her a ride home.

The two became friends and about a year later, Ramone suggested they start a real estate company together. They pulled out a one thousand dollar loan and split it evenly.

Naturally, they called the company Corcoran-Simone.

The off and on romance only lasted seven years. They broke up the company when Simone decided to marry Corcoran’s secretary.

At that point, Corcoran had one thousand dollars to invest again and she began her own company, the Corcoran Group.

Her First Sale on Her Own

Every entrepreneur remembers when they made their first dollar on their own without the help of a boss or a partner. It’s usually a fond memory.

Corcoran’s first sale was an apartment rental for the Gifunni Brothers, a building where she secretaried previously. It was an L-shaped studio apartment.

When she went to place the ad, she noticed that every other apartment offer read the same. She went to Gifunni and asked if they’d be willing to build a partition so she could advertise a den. The super agreed and she placed an ad that said, “1 BR Plus Den: 340.”

All other ads read, “One bedroom 320 a month.” She got 80 calls the next day.

Splitting the Business

Corcoran-Simone hadn’t officially split off at this point. And Simone showed up looking for his half of the new business. They split the clients 50-50 and Corcoran eventually moved a floor above.

She says that her choice to move up a floor was a positive psychological move. Being below the guy that dumped her for her secretary would have hampered both her mood and her ability to work.

Over the next twenty years, the Corcoran Group went from a one-woman show to a company of over 800 employees. Barbara Corcoran built an insanely successful career off of that one sale.

What Can We Learn From Barbara Corcoran?

Corcoran saw something other people didn’t. While her move to build a partition to create a “den” in her apartment rental was a gimmick, it set her offer apart from others.

When selling either a product or yourself, find a way to set what you’re doing apart. This could mean honing in on a vertical or merely flaunting what you’ve got. Are you better at something than most people? How can you use that to help or impress others?

Barbara Corcoran devoted her later years to setting herself apart. She claims that even now she works harder than anyone her age.

If you want more entrepreneurial advice, check out Shoemoney’s Shoeintology.

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The stages of financial freedom ~ Get Rich Slowly

Today we’re going to explore the six stages of financial freedom. First, though, I want to introduce you to my friends Mac and Pam.

Pam is a pathologist and an elite ultra-runner. Mac is a former high-school science teacher and current stay-at-home dad. Together, they form a formidable financial team.

They’re also a couple of nerds. I mean, look at them!

[Pam and Mac]

Maybe because they’re such nerds, Mac and Pam have always put an emphasis on saving. But they don’t just pinch pennies. They’ve optimized their lives to boost their income and their happiness. They’re well on their way to financial independence. In many ways, they epitomize the ideals espoused by my Money Boss philosophy.

The Money Boss Method in Real Life

When Pam was in her final year of med school, for instance, Mac worked as a research tech at a neuroscience lab. He brought home only $18,000 but they were careful to avoid living paycheck to paycheck.

“We would pay the rent,” Mac says, “we would put money into savings, and we’d still have money left over at the end of the month. We made choices not to buy the little things that could have killed our future.

After med school, Mac and Pam moved to Portland. While Pam did her pathology residency at Oregon Health & Science University, Mac taught high-school science. At that time, their salaries were similar.

When their first child was born in January 2005, Pam took maternity leave until Spring Break. From Spring Break until the end of the school year, Mac brought the baby with him to work and placed her in the student-run daycare.

“Counting the cost of daycare, my teacher’s salary went down to minimum wage,” Mac says. At the end of the school year, he asked for a year off. That year turned into forever. “It came down to whether I wanted to raise other people’s kids or whether I wanted to raise my own.”

The traditional choice is for the mother to stay home with the kids, but that seemed silly in their situation. With her residency completed, Pam could earn four or five times what Mac could make as a teacher. “It didn’t make sense to throw away the money we spent on Pam’s education to not reap the benefits of that education.”

For the past decade, Mac and Pam have worked in tandem toward family and financial goals. Pam makes the money. Mac takes care of two kids and day-to-day household operations while also managing their investments. They’re both careful with spending.

“We spend a lot less than all of our friends who earn similar amounts,” Mac says. “Lots of our doctor friends have multiple houses. They own fancy cars. They spend lots of money and we don’t. Neither of us wants a second home. I drive a 2007 minivan and Pam drives a 2004 Avalon. Our only debt is our house. We pay off our credit cards every month and we have no car payments.”

From the beginning, saving has been a priority for Mac and Pam. And as they earned more, they saved more. It’s true their spending increased too, but at nowhere near the same rate. A higher income meant they could put more in the bank — not buy more stuff.

Because they’ve been so diligent for so long, Mac and Pam will be able to retire in their forties. They’ve made the choices and done the work necessary to achieve Financial Independence at a young age.

“We’d rather accumulate our wealth, to live how we want later in life than spend on things now,” Mac says. Yes, they could afford to buy things today, but doing so would require sacrificing more important opportunities tomorrow.

These two are money bosses! They’ve been climbing the ladder of financial freedom for a long time.

[The Smith Family]

The Six Stages of Financial Freedom

I used to believe that financial freedom meant just one thing: Having enough money that you never had to work again. Over the years, people like Mac and Pam have taught me that financial independence exists on a continuum. It’s not “all or nothing”, but an ever-increasing range of options. It’s a process.

Each stage of financial freedom allows you greater autonomy and self-expression, and these are qualities that lead to happiness.

Nearly a decade ago, I came up with what I called the three stages of personal finance. Later, I expanded this to four or five stages. Today, I recognize there are many degrees of financial independence.

For our purposes, we’re going to keep things simple.

After blending my ideas with those of Joshua Sheats at Radical Personal Finance, I’ve come up with a model that tracks six stages from financial dependence to financial abundance.

But before you can begin progressing through the six stages of financial freedom, there’s a preliminary hurdle you have to clear. You’re in this “zeroeth stage” if your expenses exceed your income.

Stage 0 – Dependence

In this stage, your lifestyle depends on others for financial support. We all start here. We’re born this way. How long it takes to break free varies from person to person. You’re in this stage if you rely on financial support from your parents. You’re in this stage if you spend more than you earn. You’re in this stage if your debt payments exceed your income.

After you begin to earn a profit, you begin to progress through the six stages of financial freedom. The first three are the “surviving” stages.

Stage 1 – Solvency

Solvency is the ability to meet your financial commitments. You reach this stage when you no longer rely on anyone else for financial support — when your income exceeds your expenses, when you are no longer accumulating debt. When you are earning a profit, you have achieved solvency. Some people reach this stage in their teens. Some never reach it. (I reached it at age 35 in October 2004, when I stopped debting and began to repay what I owed.)

Stage 2 – Stability

You achieve stability once you’ve repaid your consumer debt, established some emergency savings, and continue to earn a personal profit. You may still possess some “good debt” — college loans, a mortgage — but you’ve eliminated other obligations and built a buffer of savings to protect you from unfortunate events. (I reached this stage at age 38 in December 2007, when I made my final debt payment.)

Stage 3 – Agency

The final “surviving” stage is free agency, the ability to work and live how and where you want. In this stage, you’ve eliminated all debt (including student loans and mortgage) and you have enough banked that you could quit your job at a moment’s notice without hesitation. This is commonly called “screw-you money”. (I achieved agency in March 2008.)

Note: I know first-hand there are times you might prefer to carry a mortgage even if you don’t have to. For the purposes of this stage, if you have enough saved and invested to pay off your mortgage, it’s the same thing as not having one.

In the final three stages, you move from surviving to thriving. Money is no longer a safety net, but a tool to help you build the life you envision for yourself and your family. Remember our discussion of the “crossover point” earlier this week? That concept is key to defining where you are in these latter stages of financial freedom. (Each of these stages assumes no debt. Or, as explained in the note above, enough cash on hand to instantly repay your debt.)

Stage 4 – Security

You achieve financial security when your investment income can cover your basic needs. That is, based on how much you have saved and invested, you could live a meager existence for the rest of your life. Even if you never worked another day in your life, you have enough to afford simple housing, basic food, essential clothing, and insurance.

Stage 5 – Independence

Financial independence is the ultimate goal for most folks. At this stage, your investment income is sufficient to fund your current standard of living for the rest of your life. You can afford the basics, but you can afford some comforts too. You have Enough. (I leaped from agency to independence in April 2009. This is the stage I’m in today.)

Stage 6 – Abundance

In the final stage of financial freedom, you have “enough — and then some”. Your passive income from all sources will not only fund your lifestyle indefinitely, but grant you the freedom to do whatever you want. You can share your wealth with others. You can indulge in luxury, explore the world. You can build a business empire.

Note: Where am I on this scale? I’ve definitely achieved Financial Security. If you’d have asked me a year ago, I would have told you that I was solidly in stage five, Financial Independence. Honestly, that’s probably still accurate — but a lot about my financial situation seems less certain than it did a few months ago. That’s a topic for another conversation…

The more money you save, the more freedom you have, and the greater risks you can take. As your financial independence increases, you chip away at the wall of worry. You’re able to make decisions based on happiness and not on dollars.

And here’s the thing: As you develop smart money habits and skills, these will not only help you obtain whatever immediate level of financial freedom you’re working toward, but also progress toward future levels of freedom.

If you’re working toward debt freedom, for instance, as you learn to spend less and earn more, this profitability will continue to help you once you’ve achieved solvency. You can apply the same ideas as you work to obtain stability, and then agency.

I spent far too long this morning playing in Photoshop to create the summary below. I am not a graphic artist…but I try.

[The Stages of Financial Freedom]

Summing Up

That’s it for migrating the Money Boss crash course to Get Rich Slowly!

Over the past few weeks, I’ve shared the nuts and bolts of my financial methodology. To summarize:

  • You are the boss of you. Nobody cares more about your money than you do, so assume responsibility for your financial future. Run your life like a business.
  • The best way to get what you really want is to become clear on your goals and values. That’s why everyone should craft a personal mission statement.
  • Your saving rate is the most important number in personal finance. Savings — which I like to think of as “profit” — gives you the power to do what you want in life.
  • Frugality is the cornerstone of wealth-building, but the best way to spend less is to cut back on the big stuff.
  • You are 100% responsible for your income. To earn more, learn more. Work more and work better. Sell yourself. If you take the time to supercharge your income, your profits will soar.
  • Think like a billionaire by carefully guarding each dollar you earn. Recognize that every time you spend today, you’re sacrificing a piece of tomorrow. Be wary of opportunity costs. Practice mindful spending.
  • Invest wisely. Don’t try to get rich quick. Develop an investment philosophy and develop an investment strategy that supports this philosophy.
  • Use barriers and pre-commitment to automatically do the right thing — every time.
  • As you adopt this philosophy, your wealth snowball will begin to grow. The more you work at it, the bigger it’ll get. Protect it. Your wealth snowball is the key to your financial future. Eventually, you’ll reach the crossover point, that place where your investment income exceeds your day-to-day spending. You’ll have achieved Financial Independence.

It was a lot of work to put this together, but it was also a lot of fun. I’d love feedback if you have it. I want this info to be as useful as possible to future readers, so drop me a line to let me know what you liked — and what you didn’t. Constructive criticism will not offend me.

I’ve collated this series of articles into a free ebook called A Brief Guide to Financial Freedom. Like much of this material, it’s still branded for Money Boss, but soon I’ll revise everything to be GRS-specific.

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Mastering the abundance mindset ~ Get Rich Slowly

Old habits die hard.

When you get to be a middle-aged man like me, you have forty-nine years of learned behavior to guide your actions and decisions — even when you know your choices aren’t necessarily for the best. Our mental blueprints (including our money blueprints) are deeply ingrained and tough to change.

Don’t worry. I haven’t turned into a spendthrift or anything. But I’ve been thinking a lot lately about how certain parts of my past continue to affect me, sometimes in huge and annoying ways. For instance, I fight an ongoing battle against a scarcity mindset. I haven’t been able to master the abundance mindset.

Mastering the abundance mindset is a key part of pursuing financial freedom

Scarcity and Abundance

I’ve been reluctant to talk about scarcity and abundance because the terms have been co-opted by “Law of Attraction” types who use them to encourage magical thinking. I hate the New Age-y approach to these concepts. I want to discuss them from a psychological perspective.

  • With a scarcity mindset, you believe that everything is limited. Time is limited. Money is limited. Love is limited. This causes you to worry about the future. You’re consciously or unconsciously more concerned with what might go wrong than with what could go right. You make fear-based decisions. You’re afraid of missing out. You’re afraid of not having enough. You have trouble with moderation and often exhibit “all or nothing” behavior.
  • With an abundance mindset, you believe there’s plenty for everyone. There’s plenty of wealth, prestige, and happiness to go around. You’re optimistic about the future. You think things will work out even if there are bumps along the way. You make decisions based on the Big Picture rather than a single snapshot in time. It’s easy for you to balance tomorrow and today.

I’ve written before about my trouble with impulse control. In the past, I’ve had problems with overspending, overeating, video game addiction, alcohol consumption, and borderline hoarding behavior. (I’m a compulsive collector of Stuff.)

All of this — the collecting, the addictive tendencies, the lack of self-control — stems from a scarcity mentality. But I didn’t realize it until a few years ago when my therapist helped me see the source.

Because my family didn’t have much when I was young, I find it difficult to defer gratification. My default mindset — even when life is grand — is that if I want something and it’s available, I should get it now. Somewhere deep inside, I feel as if there won’t ever be another chance. My father had this mindset. My mother had it. My brothers have it too. (Like me, Jeff and Tony have both learned to fight the feeling of scarcity in their own fashion.)

A Real-Life Example of the Scarcity Mindset
Over the past year, my deeply-seated scarcity mindset has begun to manifest itself in another annoying way.

Since moving into our new house last July 1st, we’ve had to make tens of thousands of dollars worth of repairs. About $56,000 of these costs came from the sale of our previous home, but that still leaves us on the hook for $30,000 or $40,000. We have one last project to do before we believe we’re finished: We want to replace the rotting back deck and install a hot tub. (This was the first project we had planned to tackle when we moved in, but we had to put it off for more pressing priorities.)

Kim and I know without a doubt that we’ll use the deck and hot tub nearly every single day of the year. (TMI: Currently, she and I both take several hot baths each week. If we had a hot tub, we’d be able to soak together.) It’s not a question of whether we’ll get value from building an outdoor oasis. No, the problem is that I’ve reached some sort of mental breaking point.

I’m reluctant to spend another penny on home improvement. I’ve over it. I hate the idea of cashing out yet another chunk of my index funds. Hate it, hate it, hate it. I feel like that’s money I’ll never get back. (I feel this way despite the intellectual understanding that we’d recoup maybe 80% of our costs if we were to sell the home in the future.)

I recognize that this is my scarcity mindset kicking in, yet I cannot shake these feelings. They’re a part of my money blueprint.

Here’s the thing: In so many ways, financial freedom depends on casting aside this scarcity mentality and embracing an abundance mindset instead. Financial well-being is fundamentally tied to positive expectations of the future.

Let’s look at three ways the scarcity mindset can manifest itself — and how to embrace abundance instead.

Jealousy and Spite

For some, the scarcity mindset manifests as jealousy and spite. These folks resent the success of others, financial and otherwise. They find it tough to be happy when something good happens to a friend or family member. They’re territorial, reluctant to co-operate toward a greater common good.

Here’s how Stephen Covey describes this flavor of scarcity in The Seven Habits of Highly Effective People:

People with a scarcity mentality tend to see everything in terms of win-lose. There is only so much; and if someone else has it, that means there will be less for me.

This type of scarcity mindset is the source of the average American’s love-hate relationship with wealth. Most people want to be wealthy — but are suspicious of those who already are. They typical person believes that when she makes money, it’s a result of hard work and skill. But others who get rich? They’re lucky jerks who don’t deserve it.

People with this form of the scarcity mindset don’t just hold back themselves but they keep down the people around them. This usually manifests as gossip and griping. Sometimes these people “keep score”. In extreme cases, they actively work to sabotage the success of others.

People with this type of scarcity mindset are a drag on life, a net negative to the world at large.

What if you suffer from this sort of scarcity mentality? Train yourself to be happy for others. Recognize that my success does not diminish you. Life is not a zero-sum game. To that end:

  • Don’t compare yourself to other people. Focus on yourself, on your own goals and accomplishments. If you must compete, compete with yourself. Strive for constant self-improvement.
  • Practice a win-win approach to life. Look for ways to improve your own situation while also helping those around you. When faced with a conflict, don’t try to be the “victor”; instead, work toward a solution beneficial to both parties.
  • Teach yourself to share. Force yourself to give things — time, money, resources — to other people. When you have a surplus of something, spread the love. (More on this later.)

Jealousy and spite can be overcome, but it takes work. Making the effort is a great way to change your outlook, creating a better life for yourself and the people around you.

Never Enough

For some who grew up deprived, the scarcity mindset manifests itself as an inability to spend -- even when it's okay
For others, the scarcity mindset manifests as fear of the future. These people think and act like children of the Great Depression. They’re so worried about how bad things could get that they’re unable to recognize and enjoy what they already have — even when they have a lot.

Let me give you an example.

I once met with a woman who had over $6 million in the bank. She was my age — mid forties — and lived a modest lifestyle. She wasn’t overly frugal, but she didn’t spend a lot either. Plus she had just landed a job that paid half a million per year. Nice position to be in, right? Not to her. She was scared to stop working because the didn’t want to run out of money.

Based on standard assumptions about inflation and stock market returns, this woman could probably spend $240,000 per year for the rest of her life and still die rich. (That’s without taking into account her new $500k per year position!) Her spending was closer to $50,000 per year, yet she fretted about not having enough.

Other folks are more extreme. I’ve known retirees who have millions in the bank but who are so frightened of the future — inflation! peak oil! stock market collapse! — that they won’t spend on needed home repairs and health concerns. What good is all of that money if you’re dead or your house falls down around you?

These folks aren’t harming anyone else (at least not directly), but they’re doing severe damage to their own well-being. They sacrifice happiness today in order to have more tomorrow — but they never enjoy tomorrow.

People with this type of scarcity mentality never have enough. No amount of money will allow them to sleep soundly at night.

What if you feel like you’ll never have enough? Unlike those who suffer from jealousy and spite, you should keep score. Do this in two ways:

  • First, keep a journal — a standard daily diary. It doesn’t have to be detailed. Write down the most important events from your life. And every day note at least one thing for which you are grateful. At the end of each year, go back and re-read what you’ve written. (This exercise will increase in value the longer you keep at it.)
  • Second, track your net worth and spending. Know how much you have and how much you need. Remember this rule of thumb: For every $25 you’ve saved, you can probably spend $1 each year without worry. (If you’re really nervous, you might change that to $1 for every $30 or $40 saved.)

If you have more than enough stashed away and still fret about the future, force yourself to spend. I’m dead serious. Pick something you’ve always wanted to do or have, and go get it. Money is a tool to build a better life. If the tool sits unused, what’s the point?

Instant Gratification

Finally, there are the folks like me, people who find it tough to wait for what they want. We’re “shopaholics” and compulsive spenders. With our flavor of the scarcity mindset, we’re so skeptical about tomorrow that we enjoy too much today. We want it all and we want it now.

A decade ago, when I still struggled with money, I had nothing saved. No retirement, no nothing. What I ought to have been doing was paying down my debt and building a foundation for the future. Instead, I was spending everything I earned on books, comics, and computer games. It never occurred to me to wait. I wanted things now, so I bought them.

As I mentioned at the start of this article, my therapist helped me to understand that growing up poor had given me a loathing of uncertainty and an inability to delay gratification. My money blueprint was largely constructed around a fear of missing out. During my transition from spendthrift to money boss, I learned to put off potential spending. I learned to wait for the things I wanted.

Like the last group, people with this sort of scarcity mentality never have enough. But the lack manifests in a different way. Instead of needing more money, we need more Stuff. We buy and buy and buy and are never satisfied. There’s no amount of possessions that will make us happy.

What if a feeling of scarcity drives you to always want more? Practice the art of deferred gratification. I learned this skill by using the 30-day rule. Here’s how it works:

  1. When you see something you want, make a note of what it is, where you saw it, and how much it costs. But don’t buy it yet.
  2. Over the next 30 days, be on the lookout for free or cheap alternatives. Does the library have that book? Can you borrow that tool from a friend? Could the local thrift store have a similar shirt?
  3. At the end of 30 days, if you still want the item then consider buying it. In most cases, however, you’ll find the urge to purchase has passed.

Also practice moderation. Recognize that most things in life don’t require an “all or nothing” approach. You can have some, and that’s okay.

Finally, keep a gratitude journal. The fundamental problem with this type of scarcity mindset is not appreciating what you already have. Force yourself to catalog the good things in your life.

From Scarcity to Abundance

A scarcity mindset leads to self-defeating behavior. It sabotages your chances for future financial success. Even when a Depression-type scarcity mentality helps you accumulate piles of cash, you’re unable to enjoy it. You’re afraid to.

Fear is always at the heart of scarcity: fear of failure, fear of the future, fear of missing out. Those with a scarcity mindset cling to the notion that there’s a limited amount of everything, and they’re afraid they won’t get their share. We’ll talk more about fear (and overcoming it) next week. For now, you should recognize that in order to achieve financial freedom, you must adopt an abundance mentality.

If you’re worried about lack, you aren’t free.

To get what you want, give what you want

I’ve already suggested several ways to fight specific flavors of scarcity. To finish, let’s look at a technique anyone can use to move from scarcity to abundance: To get what you want, give what you want.

What do I mean?

In an amazing article from the academic journal Psychological Science, researchers suggest that “giving time gives you time”. The authors found that spending time on others (instead of yourself) boosts how much time you think you have — in both the present and the future.

Many of us feel pressured by the modern world. We feel rushed, as if there’s never have enough time to do what we want. We feel a lack, a scarcity, of minutes and hours and days. To cope with this, we tend to turn inward. We watch TV. We play videogames. We get a massage. But studies show that “wasting time” like this truly is a waste. When we spend time on ourselves, we feel like the time is lost.

On the other hand, when we give our time to others — helping friends or volunteering in the community, for instance — we experience feelings of “time affluence”. Plus our time seems “fuller”. We feel better about ourselves and what we’ve done. And as a bonus:

“Giving time to others not only increases the giver’s sense of subjective time but can also increase the recipient’s objective amount of time, such that giving time contributes to the well-being of both the self and others.”

That, my friends, is abundance in action.

The bottom line? “When individuals feel time constrained, they should become more generous with their time — despite their inclination to be less so.”

The same idea applies to other areas of your life in which you experience feelings of lack. When I started giving away and selling my Stuff several years ago, for example, I came to realize just how much I had. Before, when I was constantly in acquisition mode, I felt like I had very little. I was wrong. I had mountains of things!

If you feel a lack of respect from others, give respect to others. If you feel a lack of compassion from others, be compassionate to others. If you feel like people don’t love you, love other people. If you feel broke, donate time and money to the poor. If you feel like you’ll never have enough wealth, systematically give away some of what you have.

In The Seven Habits of Highly Effective People, Stephen Covey writes:

The abundance mentality…is the paradigm that there is plenty out there and enough to spare for everybody. It results in sharing of prestige, of recognition, of profits, of decision making. It opens possibilities, options, alternatives, and creativity.

The abundance mindset comes from understanding there’s plenty in the world: plenty of money, plenty of love, plenty of time. There’s plenty for everyone — both for you and for others. There’s plenty now and there’ll be plenty tomorrow. Enjoy it!

A Real-Life Example of the Abundance Mindset
While we were wintering in Savannah two years ago, Kim hustled to get her dental hygiene license for the state of Georgia so that she could earn some money. She spent a couple of days driving across the city, dropping off résumés and speaking with doctors. Soon she started getting calls asking her to do fill-in work while other hygienists were sick or on vacation. She also got an offer for a long-term position at a big office in town.

Kim could have taken the long-term gig. In fact, she was tempted. “What if I can’t find any other positions?” she asked as we talked through her options. “This is a sure thing. Maybe I should take it in case nothing else comes along.”

After a few days of internal debate, Kim decided not to take the long-term offer. “I’m getting plenty of calls from other offices,” she reasoned. “I’ll bet I can stay busy just with the short-term stuff, and that’ll give me greater flexibility.”

Sure enough. Because she refused to make a fear-based decision, because she chose to believe she’d have more opportunity rather than less, she was able to pick and choose when and where she’d work. She had more offers than she had time. She constantly got new calls asking her to fill in.

When we returned to Portland, she used the same experience to find permanent dental hygiene positions. She cast her net wide, then waited for the offers to come. And they came. By exercising patience and an abundance mindset, she landed two gigs that she loves. (Plus, she still gets fill-in offers all of the time.)

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5 Great Ideas for Making Money with Bitcoin

Unless you’ve been living under a rock lately, then you have likely heard about Bitcoin and how a lot of people have made big bucks off it. And I mean big, with some people turning a couple hundred dollars invested a few years ago into hundreds of thousands recently. Not a bad return, right?

So, you are probably wondering how you can do the same thing? Well, you might have heard people saying that the only way to make money with bitcoin is to get in early. As it happens, those people are both right and wrong – but luckily, they are mostly wrong.

What people mean when they say this is that it’s too late now to invest in bitcoin at a shockingly low sum – say, like, just pennies or a few dollars. However, that doesn’t mean you’re out of options for earning money with bitcoin, even if you don’t want to invest in it exactly! Read on to learn more about bitcoin and how you can use the spike in bitcoin to your advantage.

What Is Bitcoin?

Let’s start with the absolute basics…

You’ve likely heard bitcoin being referred to as cryptocurrency or digital currency. As it happens, there are other types of cryptocurrencies that have cropped up, especially in the wake of bitcoin’s popularity. However, bitcoin so far remains the most successful and the most powerful. Still, that hasn’t stopped people from investing in other types of crypto in hopes that they will turn into the next bitcoin and yield equally big – or even bigger – returns.

Bitcoin comes from a process called mining – a complex algorithm that requires a powerful computer to complete. It takes a lot of time, effort, and power to even mine a single bitcoin. It truly depends on the computational power being used – and a lot is needed. Still, there are numerous bitcoins gained through mining every day.

There are certain things that distinguish bitcoin from other, more traditional, forms of currency. This includes its decentralization, limited supply, immutability, divisibility, and more. But of course, what most people reading this will be most interested in is how it can make you money!

Ways to Make Money with Bitcoin

Now, let’s get to the real reason you are probably reading this post in the first place – You are wanting ideas and tips for how to start making money with bitcoin!

Okay, here you go:

You’ve probably heard of people investing in bitcoin as this is one the most well-known and discussed ways to earn bitcoins. As mentioned earlier – there are those who got into the currency for not much more than the spare cash in their pocket and hit it big. However, the time for that has largely passed. It’s far more expensive to get into bitcoin this late in the game and you aren’t likely to see those massive returns like the people who invested years ago. This makes buying and holding a non-option for many people, but this is absolutely still a very viable way to make money from bitcoin. Relatively speaking, we are still very early in the whole evolution of crypto, so there is still plenty of room to get in now and cash out big later. Remember, you don’t have to buy an entire bitcoin at a time. You can buy a portion of one to start, make a little money, and continue investing your profits back in to buying more.

  • Build and Manage a Bitcoin Faucet of Your Own

By building and managing a bitcoin faucet of your own, you could earn up to several hundred dollars monthly, which could be multiplied by who knows how much if you continued to invest that back into BTC. The process involves paying out small amounts of your bitcoin to users (which is done automatically). However, you will be gaining a lot more revenue by ads that you can place on your website. Interest piqued? Here’s everything you need to know to get started.

  • Start a Website Explaining Bitcoin

For most people, bitcoin (and digital currency in general) is a difficult concept to understand – but just about everybody and their dog is asking about it right now, how it works, and how they can get in on it. Well, why not answer their questions? Start a bitcoin information site and explain the basics of the elusive cryptocurrency to your users. At the same time, generate your income from affiliate offers and ads you place on your website!

Getting started on this method will only cost you a little bit of money in startup costs, but it will pay off in the long run!

The internet is filled with a seemingly infinite amount of opportunities to post content and people who need writers. Many companies will pay you (quite well) to write content that promotes services and products. Believe it or not, you can even find websites that will pay you in bitcoin to write things for them, such as blog posts and articles. Another option is to start your own blog, which sort of ties into the option above, and place ads on it. You can accept bitcoin as payment for those ads. Basically, if you know how to write well, then you have opportunities to earn bitcoins via writing.

This is what you might call the “holy grail” of making money through bitcoin and is the oldest way of doing so that I know of. There’s no doubt that many people have achieved immense success with bitcoin mining. Remember, bitcoins are created by solving complicated algorithms. Miners are awarded with new bitcoins as they are created and transactions completed. At first, bitcoins could be mined using a home PC.

Nowadays, it’s not even nearly as easy as it used to be. Mining has grown to be quite difficult, and the algorithms have exponentially increased in difficulty. Now, miners need a specially built mining rig, usually more than one, and/or they must join a bitcoin mining pool to harness the computing power of several devices in order to make it worthwhile. Even then, the returns are not as great as you might expect – certainly not what they once were, but it can still be a good option if done correctly.

Get Earning!

As you can see, there are plenty of ways to make money using bitcoin – and these are just a few of them – there are many more. But remember, the profitability of bitcoin was at its greatest if you got into it early on, so the longer you wait, the less your return will likely be! It is rising quickly and becoming more mainstream every day. So, what are you waiting for? Get started on making money with bitcoin today!

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How to know you’ve reached financial indpendence

Today I want to introduce you to the Crossover Point, that magical place where you have enough saved that you can live off your investment returns. To start, let’s talk about one of my money heroes, billionaire Warren Buffett.

Buffett wasn’t always a billionaire. He started from scratch, just like you and me. Here he is in 1948 — when he had less than $10,000 to his name:

[Warren Buffett 1948]

What a dork!

Buffett began making money when he was six years old. He’d buy packs of chewing gum for three cents each, then go door to door selling them for a nickel. (He refused to sell individual sticks; you had to buy an entire pack of Doublemint or nothing.)

“He could hold those pennies, weighty and solid, in his palm,” writes Alice Schroeder in her excellent Buffett biography. “They became the first few snowflakes in a snowball of money to come.”

From chewing gum, Buffett graduated to soda pop. He sold bottles of Coca-Cola to his neighbors in Omaha, and he even peddled his wares to sunbathers while vacationing at Lake Okoboji in Iowa. Buffett sold used golf balls. He hawked peanuts and popcorn at University of Omaha football games.

All the while, he kept score. He deposited his pennies and nickels in the bank and kept track of his savings in a passbook.

At a young age, Buffett began to grasp the extraordinary power of compounding. Again from Schroeder’s book: “The way that numbers exploded as they grew at a constant rate over time was how a small sum could turn into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn.

When he was ten years old, Buffett vowed to become a millionaire by age thirty-five. By the time he turned eleven, he’d accumulated $120. He used his cash to buy his first three shares of stock. He had 24 years and $999,880 to go to meet his goal.

Buffett’s Snowball of Money

When Buffett left Omaha for college at age 20, he’d saved $9804, some of which was in stocks. He moved to New York to attend Columbia University, where he took finance classes from Benjamin Graham and David Dodd. He continued to invest, both for himself and now for family and friends. He wrote articles about the stock market. (Even back in 1952, he was obsessed with GEICO stock.) He bought his first business, a service station.

Buffett got married and had kids. He earned more money, both from work and investing. All the same, he was reluctant to spend. He was frugal — almost miserly. He didn’t like to buy new clothes. He made a deal with a nearby newsstand to purchase outdated magazines at a discount. For a long time, he didn’t own a car. (After he did purchase a vehicle, he’d only wash it when it rained.)

Like a money boss, Buffett kept his costs down while boosting his income.

“For Warren, holding on to every penny this way, since he had sold that first pack of chewing gum, was one of the two things that had made him comparatively rich at age twenty-five,” writes Schroeder in The Snowball. The other contributing factor? Buffett was making money at an ever-increasing rate.

The years and decades passed. Buffett continued to invest. His snowball grew exponentially.

  • By age 11, Buffett had saved $120.
  • By age 21, Buffett had a net worth of $19,738.
  • By age 26, Buffett was worth $140,000.
  • By age 30 — five years ahead of schedule — Buffett was a millionaire.
  • By age 40, Buffett had more than $25,000,000.
  • By age 50, Buffett had accumulated over $150,000,000.
  • By age 60, Buffett had become a billionaire.

Today, Warren Buffett is worth $84.1 billion. He’s the third-richest man in the world. During his 85 years, he’s created the greatest wealth snowball the world has ever seen.

And it all started with chewing gum.

Snowball by Kamyar Adi

I can’t promise that you and I will become billionaires. In fact, our chances of doing so are exceedingly slim. But I can promise that if you follow the advice I share at Get Rich Slowly, you will produce a modest wealth snowball of your own. And if all goes well, you’ll eventually reach that Crossover Point where you can live off your investments for the rest of your life.

Your Wealth Snowball

You begin rolling your wealth snowball the moment you achieve a positive cash flow — as soon as you’re earning more than you spend. Each penny of profit adds to your fortune.

  • When you stay late to work overtime, you add do your wealth snowball.
  • When you choose to bike instead of drive, you add to your wealth snowball.
  • When you decide to downsize your home or work a second job or skip the new iPhone, you add to your wealth snowball.

The bigger your profit margin, the faster the snowball grows.

It’s not just earning and spending that affect your wealth. Your investment returns play an important role too. In the short term, your contributions have a greater impact than investment performance, but over the long term the extraordinary power of compounding comes into play.

Assume you make a one-time $5000 contribution to your retirement account at age twenty and manage to earn an 8% return every year. If you never touch the money, your $5000 will grow to $159,602.25 by the time you’re sixty-five years old. But if you wait until you’re forty to make that one-time investment, your $5000 would only grow to $34,242.38 before you retire. Compounding is the reason it’s so important to begin investing when you’re young!

When you add to your wealth snowball regularly, its growth accelerates.

If you were to invest $5000 each year for forty-five years, for instance, and if you left the money to earn an 8% annual return, your savings would total over $1.93 million. You’d have more than eight times the amount you contributed. This is the power of compounding.

Because you’re a money boss, you don’t want to wait forty-five years to achieve Financial Independence. You want to reach your Crossover Point in ten or fifteen years, not fifty. With a short investment horizon, there’s less time for compounding to do its work. That’s why it’s so important to save half of your income — or more.

Here’s what Mr. Money Mustache calls the shockingly simple math behind early retirement:

  • With a 10% profit margin (or saving rate), you’d need to work for 50 years to reach Financial Independence. Your wealth snowball grows — but not quickly.
  • With a 20% profit margin, you’d need to work for 37 years to achieve Financial Independence.
  • With a 35% profit margin, you’d need to work for 25 years to achieve Financial Independence.
  • With a 50% profit margin, you’d only need to work for 17 years to achieve Financial Independence.
  • And if you can manage to save 70% of your income, you could achieve Financial Independence in 8-1/2 years!

Pull out your personal mission statement. Look at your goals. Your profit margin directly affects how quickly you’ll achieve these aims. The sooner you grow your wealth snowball, the sooner you can do the things you dream of doing.

The Crossover Point

At some point in the future, your wealth snowball will be so large that it’ll last the rest of your life. You’ll never have to work for money again unless you choose to. It’s at this point that you’ll have reached Financial Independence.

At this crossover point — a term coined by Joe Dominguez and Vicki Robin in Your Money or Your Life — your investment returns provide more money than you spend.

The Crossover Point

Realistically speaking, it’s important to have a margin of safety. (In fact, this is one of Warren Buffett’s core beliefs!) To that end, I make the following assumptions when I calculate whether somebody has reached the Crossover Point:

  • You’ll spend as much in the future as you do now. (About one third of people spend more, one third spend less, and one third spend the same.)
  • If you withdraw about 4% from your savings each year, your wealth snowball will maintain its value against inflation. During market downturns, you might need to withdraw as little as 3%. During flush times, you might allow yourself 5%. But around 4% is generally safe.

Based on these assumptions, there’s a quick way to check whether or not the Crossover Point is within your reach.

Multiply your current annual expenses by 25. If the result is less than your savings, you’ve achieved Financial Independence. If the product is greater than your savings, you still have work to do. (If you’re conservative and/or have low risk tolerance, multiply your annual expenses by 30. If you’re aggressive and/or willing to take on greater risk, multiply by 20.)

If you’d prefer, you can approach the problem in reverse. Start with your current wealth snowball and see how long it’ll last.

To keep things simple, we’ll work with net worth (the difference between what you own and what you owe). If you’ve already calculated your net worth, use that number. Otherwise, you can download or copy this net worth spreadsheet I created in Google Docs. (It’s still branded for Money Boss, but it’s now officially the Get Rich Slowly net worth spreadsheet!)

Once you have your net worth, multiply it by 4% (or by 0.04). Based on recent history, this is how much you could safely spend each year without draining your savings. (If you want to be conservative, multiply by 3%. If you’re feeling bold, multiply by 5%.)

How do these numbers make you feel? Is your wealth snowball bigger than you thought? Or is there work to be done before you’ll feel secure? How long until you reach your Crossover Point? Or are you already there?

Photo credit: Snowball by Kamyar Adi. Not sure who took the young Buffett photo.

Note: I’m migrating old Money Boss material to Get Rich Slowly — including the articles that describe the “Money Boss method”. This is the tenth of those articles.

Look for the final installment in the “Money Boss method” series later this week.

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