Kicking In the Door

If there's one thing that never ceases to amazing me, it's our human instinct to justify our desires. We'll use just about anything to squint, twist, and sell ourselves into a decision we probably shouldn't make. I'll share an example. This family gave me permission to share their story, but this isn't necessarily about them. Millions of people are similar, and I encounter this phenomenon each week in my coaching work.

The couple has two kids, with a third on the way. They drive a mid-size SUV with about 125,000 miles on it. It's worth about $15,000 today, and they own it free and clear. It's been a reliable vehicle for them, but with the need for a third car seat coming soon, they need something bigger. This is a fact; their current vehicle does not adequately handle three car seats. We defined the gap, identified the need, and established a timeline. The meeting adjourned, and we went our separate ways; so far, so good.

Fast forward about 45 days, and we're scheduled to meet again. When I received their pre-meeting information, I spotted a new number on the top half of their balance sheet. "2024 Escalade". "$95,000." Oh goodness. I immediately scanned down to the bottom of the balance sheet. "Escalade Loan." "$80,000." Double goodness!

I tried to remain calm and approach the subject like a sensible, stable, and collected being.....and I half succeeded.

Me: "What in the world happened since we last met?!?!"

Them: "You know. We needed something bigger."

Me: "Bigger, yes, but you took this to an entirely new level."

Them: "It's exactly what we needed. It's bigger, pretty reliable, and comfortable. We need something comfortable for our road trips."

They needed more space, for sure. But their eventual decision wasn't really about more space. They just used that crack in the door to justify kicking it in. There were a million ways to meet their space needs that didn't involve this type of decision, but that's not what they wanted. They decided to use this named need (more space) to get something far, far, far grander than what they actually needed.

We humans love to do this! We find a need (the crack), then let our desires (the foot) kick the door wide open. Then, when we have to look in the mirror and account for our decisions, we get the privilege of saying, "Well, I needed _____, and I successfully addressed the need." In doing so, we also happened to fulfill wants x, y, and z. Quite the coincidence, eh?

We love kicking the doors in! We do it in our personal lives, in our businesses, and in our organizations. We clearly define a need, give ourselves permission to address the need, and ultimately make a decision that's really about far more than the original need (but meeting the need in the process).

Be careful about kicking in doors. You might not like what you find on the other side.

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When NOT to Push the Button

Yesterday, I talked about the behavioral phenomenon where people find more perceived security in their cash than the actual relief gained from using said cash to pay off their debt. I first framed it up through my illustrative Saw-esque concept, but then shared the story of an actual family that's continually struggled for seven years with $47,000 of debt (and a hefty $1,300/month combined payment to go along with it). All the while, they were sitting on $60,000 of cash in savings. At any point on the journey, they could have "pressed the button" and instantly paid off the debt (leaving them with $13,000 in savings and $1,300/month extra in their budget).

I said it without saying it, but I think we should push the button! Contrary to common belief, actual relief is almost always superior to the false sense of security of our cash. In the name of having "security," this family lived a stressed and low-quality life for the better part of a decade. The alternative scenario would have provided much fruit. Pay off the debt, use the additional monthly cashflow to rebuild savings (to whatever extent needed), and live with far more margin.

Today, though, I want to share when NOT to push the button. For as strongly as I feel about pushing the button, I'm equally as passionate about NOT pushing the button under one specific scenario: When the behavior that caused the financial mess in the first place hasn't yet been corrected.

In yesterday's example, this couple deeply wanted to create freedom and gain momentum. They made some very poor choices many years ago and were still haunted by them. They have since gained a healthier perspective on money, started budgeting, and found unity in their finances. In other words, they have addressed the root cause of the initial problem.

Let's assume they hadn't. Imagine this same couple came to me with $47,000 of non-mortgage debt, $60,000 of cash, and perpetually bad habits. They aren't budgeting. They still find themselves dipping into their credit cards each month. They plan to use debt to buy their next car. They haven't been sitting on $47,000 for a long time, but that number continues to grow and will likely be higher in the coming months.

In that scenario, using the cash to pay off the debt would be utterly destructive. Doing so would immediately create relief, but also cause a false sense of accomplishment. They would let their guard down, feel progressively more comfortable to spend, and mimic the same habits that led them into this mess. Translation: They will recreate the same situation they just "fixed." Fast forward 18 months, and they are back to $40,000-$50,000 of debt AND have no cash. That's a worst-case scenario I've seen played out far too many times.

Therefore, push the button. Please push the button! However, before doing so, make sure you have a healthy perspective, solid habits, and intentionality. Let the button be a blessing, not a curse.

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To Press or Not to Press (the Button)

I want to start with a little thought experiment. Think of it as my PG-rated version of Saw. You're forced live your life carrying a 20-pound backpack on your shoulders. It's not impossible, but it doesn't feel great. You constantly feel the weight, and it's uncomfortable. It doesn't prevent you from living, but it's less than ideal. No single moment causes acute physical pain, but the cumulative impact of wearing it starts taking a toll. The whole time, however, you have the option of removing the weight forever. All that's required is you push a button on your kitchen counter. The moment you push the button, the weight disappears. Instant relief! There's one small catch: You can only press the button once. Would you press the button?

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A couple walks into my office, struggling with debt. They are beaten down and frustrated. They look tired. Here's what their situation looked like:

• Student Loan Debt: $22,000 (with a $580 minimum payment)

• Car Loan: $15,000 (with a $520 minimum payment)

• Credit Card: $10,000 (with a $200 minimum payment)

Additional context:

• These are private student loans

• The car has negative equity, meaning they would still owe money even if they sold it.

• They've been roughly in this same spot for their entire 7-year marriage.

After factoring in these three minimum payments totaling $1,300, they have very little margin in their monthly budget. It's tight! They make it work most months, and are doing alright, but they feel the constant weight and tension. Month after month, year after year, they experience the cumulative impact of this weight. It's nothing acute, but it's starting to feel exhausting. They haven't gone deeper into debt in years but haven't found a way to make progress on it, either. Continually seeing this debt hover around $47,000 is taking a toll.

If only they had a button to push! Well, they do, actually! Here's one detail I haven't shared with you: They have about $60,000 in a savings account. "Have you considered using some of your cash to pay off the debt, which would free up $1,300/month in your budget?" I asked them. Like many people before them, they gave me the answer I prayed wasn't coming. "We can't use that cash. That's our security."

"Security?!?! You don't have any security. You're already drowning!!" I was probably sharper than I should have been, but I needed them to realize how badly they were already hurting. They could immediately pay off all $47,000 of debt and still have $13,000 of cash left.

They aren't alone in this sentiment; it's all too common! The perceived sense of security always emotionally outweighs the benefit of actual relief. This is one area where our psychology tricks us. I'm going to flip this on its head....here's what I believe to be the truth: Actual relief always outweighs our false sense of security. They could press the button, but continually choose not to.

Not all people have these buttons to push, but many do. And with that choice, many choose to continually suffer, all in the name of "security."

Would you press that button?

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More Expensive, But Cheaper

My friend Ryan swears by Helm Boots. Whenever he talks about them, or I see him wearing them, I want to buy a pair.....until I see the $300 price tag. Ouch!

I usually spend about $100 on a pair of boots, and I typically buy a new pair each year. $100 is a very reasonable price, and it feels like I get a lot for my money. Ryan, on the other hand, spends more than $300 on his!!! Here's his selling point: "Yeah, but I've been wearing this pair for six years!"

While it's true that he spends 3x as much as I do on his boots, mine are actually 2x more expensive than his ($100/year vs. $50/year). His are far more expensive than mine, yet cheaper.

When we boil this silly story down, it's really just a tale of quality over quantity. When we spend a little more money on things that have durability and longevity, they often provide a lower long-term cost. We're thinking long-term, not short-term. We're paying more today in exchange for less tomorrow. A different form of delayed gratification. Everything we own will end up in a landfill in due time, but perhaps it’s in our best interest to purchase things that will take longer to get there.

What's funny about this concept is that many of us embrace this principle in some areas, yet whiff on others. I buy solidly built vehicles, good jeans, and state-of-the-art technology (phones, TVs, computers, etc.) that lasts for a long time, yet I still buy crappy boots and cheap t-shirts that are trash within a year. It's funny how we have these little wiring quirks.

Where do you get this right? Wrong? It's worth looking in the mirror to assess it. Many of us could benefit from making some tweaks to our purchase decisions. It maybe more expensive on the front end, but much cheaper in the long run. Doing so also allows us to buy products that are just better…period. It’s a win/win!

Seriously, what are yours? I love hearing about other people's quirky wiring and behaviors. In the meantime, I'll be buying a pair of Helm boots!

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Quality is Quality

Uh oh! One sentence in yesterday's post has triggered a firestorm. It was this one: "Their standard of living will likely fall off a cliff, but their quality of life should prosper."

I'll summarize the collective feedback: Standard of living = quality of life. When our standard of living increases, so too does our quality of life. They are one and the same.

By nearly every measure, we have a higher standard of living today than at any time in the history of our civilized world. More people have access to medical care, internet, cars, cell phones, internet, air conditioning, and indoor heating than ever. Houses are bigger, transportation more prominent, technology progressively better and cheaper. Our standard of living continues to rise.

If all that's true, and standard of living and quality of life are correlated, why do we have continually rising mental health issues, suicides, divorces, loneliness, crime, and overall brokenness? It's hard to acknowledge all the pain our modern society is enduring and argue that our collective quality of life is higher today than in years past.

I would propose that standard of living and quality of life have a positive correlation.....to a point, and the point is when our basic needs are consistently met. For example, if we're living under the constant threat that our electricity or water will be shut off, our quality of life will suffer. If we're teetering on the edge of getting evicted from our residence, our quality of life will suffer. If we don't have reliable transportation to get us to and from, our quality of life will suffer.

However, once our needs are consistently met and we can sufficiently live without the fear of imminent destruction, standard of living and quality of life disconnect. At that point, our quality of life is dictated by our choices:

• If we give generously, we'll have a lower standard of living but an increasing quality of life.

• If we choose a high-paying job we hate, our standard of living will go up while our quality of life goes down.

• If we choose to have children, our standard of living will probably go down while our quality of life likely goes up.

• If we invest in relationships, our standard of living will stay the same, but our quality of life will skyrocket.

• If we buy an expensive car with debt, our standard of living will go up (at least when we're driving), but our quality of life will likely be impaired (because of the opportunity cost of the debt payments).

The best way to achieve a poor quality of life is to pursue a higher quality of life by increasing our standard of living. This, in my opinion, is one of the reasons why our collective quality of life is eroding amidst record-high standards of living.

Here's my overly-simplistic remedy: pursue a higher quality of life.....period. Disconnect it from standard of living. Pursue meaning. Find purpose. Serve others. Invest in relationships.

Quantity isn’t quality. Quality is quality.

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The Poison Looks Tasty

I inadvertently stumbled into a social media mess. It was a personal finance influencer sharing the story about how they (husband and wife) cashed out their retirement plans about five years ago, ate all the taxes and penalties for doing so, and invested the money into AirBNB properties.

Here's the moral of the story: We got rich doing this, and you can, too!

This, my friends, is THE definition of survivorship bias. I've talked about this subject before, but survivorship bias is the phenomenon where a small group of people who succeeded xyz becomes the the most visible people in the room, thereby communicating (intentionally or not) that their path is a recipe for success. One problem: The people speaking are the few who survived. They are the audible voices on the subject because, well, everyone else crashed and burned and doesn't want to speak of said trainwreck.

It's like your friend who goes to the casino. Notice how you only hear about it when they win big? We all know they are probably getting crushed most nights, but if we only hear about those huge payouts, we might start to believe going to the casino is a reliable path to riches.

I don't fault this couple for sharing their story. It's actually a pretty cool story. However, the post's comments are terrifying. Hundreds of people expressed interest in following a similar path, eager to make their millions.

This couple might have been skilled in their approach, but they also received some tailwinds by, with the benefit of hindsight, getting into the AirBNB game at exactly the right moment. The short-term rental model was gaining steam, interest rates were at all-time lows, real estate prices were reasonable, and they eventually rode the wave of one of the biggest price appreciations we've ever witnessed.

They won! But what about the other people who didn't get it right? The ones who started at a different time, or didn't get the right properties, or stumbled upon crushing issues, or missed on record-low rates, or jumped in after the short-term rental market was saturated?

The book Rich Dad Poor Dad is another wonderful example of survivorship bias. It advocates taking massive financial risks in order to accelerate wealth building. The author's personal testimony shows it works, as do the testimonies of thousands of his loyal followers. What's not visible, though, are the tens of thousands of people who had their lives destroyed by following this advice: the non-survivors. These people played a dangerous game, and lost. Meanwhile, for the maybe 5%-10% that actually survived such rash decisions, their voices speak the loudest (because they are the only ones speaking).

Survivorship bias is everywhere. Unfortunately, it's hard to shake people from its electrifying allure and dangerous consequences.....until it's too late. If you have friends or family members who have stepped into something questionable, I'm sorry. You might not be able to pull them out of it, but you'll be there to help them pick up the eventual pieces.

In the meantime, be mindful of your own decisions. Shiny objects are everywhere!

K.I.S.S.

I had a great time recording a few podcast episodes with Cole yesterday. As the producer, he rarely appears behind the mic, but it's a rare treat when he does. We recorded an episode reacting to ChatGPT's criticisms of our show. It was a great time!

One of the criticisms stood out: "Simplified Solutions: Complex financial problems are sometimes presented with overly simplified solutions, which might not address the nuances of individual financial situations."

I loved this one.....because it's true. I do, in fact, attempt to make things simple. While some people have truly complex situations, most complicated situations are merely the consequence of people making them complex. People don't intend to make their finances complex, but that's what happens when we don't get a formal education on the topic; we're figuring it out on our own and adding pieces as time passes. If left unchecked, our finances will always become more complex.

For that reason, my first coaching meeting with a client includes mapping their financial life. What lives where, and why. Often, people's financial lives are a complicated web that requires a decoder pin to interpret. Once we get it mapped out, I attempt to re-map it.....but simpler.

Here's an example of a family I recently met with. This is what their financial accounts looked like:

• His checking account (from his single days)

• Her checking account (from her single days)

• His savings account (again, from single days)

• Her savings account (again, from single days)

• Joint checking account

• Joint savings account

• His current 401(k)

• Her current 401(k)

• Her former pension

• Her old 403(b)

• Her old 401(k)

• His old 401(k)

• His other old 401(k)

• His other other old 401(k)

• His other other other old 401(k)

• His other other other other old 401(k)

• Her old brokerage account that a family member set up for her

• His Roth IRA that he started when he was in college

• His Robinhood account, where he trades stocks

• Her whole life insurance policy that was set up when she was a baby.

That's not even all of them, but I'm tired of typing and you're probably tired of reading. See what I mean? It's complex, and unnecessarily so. There's a lot going on. In order to get right with their money and not have it suck the life out of them, they needed to simplify. Here's where we landed:

• Joint checking account (all income and expenses run through it)

• Joint savings account (emergency fund)

• His current 401(k)

• Her current 401(k)

• Her new Traditional IRA (where we rolled her former pension, 401(k), and 403(b) into)

• His new Traditional and Roth IRAs (where we rolled all his old 401(k)s and Roth IRA into)

• Their new taxable brokerage account (where we rolled her old taxable account, his Robinhood, and the proceeds from her canceled whole life policy)

Without anything inherently changing in their financial lives, they felt freer. It was simple. The money was invested well. They had fewer logins. They knew where everything was. They understood its purpose. It was simple.

Simple is good. When in doubt, simplify. Then, simplify some more.

Let Blessings Remain Blessings

I opened the mail yesterday to two unexpected blessings: two checks I never saw coming. I'm not talking about massive amounts of money here—$250 and $100.

What do you typically do if you receive unexpected extra money? If you're a human (and I suspect you are), there are two typical outcomes:

1. The most common outcome is to simply blow it. It's extra, and most of the time, we don't respect those extra blocks of money. It will likely be impulsively spent before the check even clears.

2. The second most common outcome is to dump it into a general savings account, which will be hoarded in the near term and probably impulsively spent at some point in the future.

I prefer to let blessings remain blessings. First, I don't actually care what you do with it. Whether you spend it, save it, or give it is not what's important in this conversation. Here's what I do personally, and it's how I coach it every single time:

1. Add this as income to your budget. If it's money coming in, whether it's a $100 reimbursement check or a $10,000 bonus, it's income. Add it to the budget as such.

2. Once it's in the budget, you have $x more in the budget than you did before. Let's pretend it's $200. You add the $200 as income to your budget, giving you $200 more to allocate somewhere in the realm of spending, saving, or giving. Treat it as you would any other $200 in your budget. $200 is $200.

3. As such, allocate this money in accordance with your current plan. If you're in the midst of paying off debt, pay off more debt. If you're saving for a big trip, save more for your trip. If you've been working on a financial gift to your favorite organization, give it.

4. Execute the plan. If you say you're going to do something, do it. After all, you promised yourself in your budget. Own that. If you plan to buy a new espresso machine, buy the machine! If you plan to pay off that credit card, pay it off! Don't break your promise to yourself.....or your spouse.

That's the thing about money, it's fungible. All there is is money in, and money out. The moment we try to say this is for that, and that is for this, we've lost the plot. Instead, look at everything as one big puzzle. When we do that, we develop a much healthier and more productive relationship with our money. No guilt, no emotional strings, no sense of obligation. Just wisdom and discernment.

As for us, August has been a kid-expense-heavy month. Activity fees, school supplies, new shoes, and end-of-summer fun have drained that category quickly. I suspect Sarah and I will pad that category with this unexpected windfall. That's our current reality, and we'll live into that.

Meet your money where you are. Don't waste these little (or huge!) opportunities. Let your blessings remain blessings.

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The Night Test

A friend recently asked me how we can know if we're taking too much risk. There are, of course, many different ways to measure risk. Probabilities, standard deviations, risk/return ratios, historical averages, and loss severities, to name a few. Each has its own application and merit. However, I have a simple test that I apply to my own life, and challenge clients to apply to theirs.

It's one simple question: Do you sleep well at night?

If the answer is yes, we're probably good. If the answer is no, we need to reassess our decisions. Far too often, people make decisions that keep them up at night. What if this happens? What if that happens? What if, what if, what if? That's a tell-tale sign we're doing something that we shouldn't.

It's quite difficult to live a meaning over money life when we're constantly haunted by our financial decisions. I've been there!! There have been plenty of times in my life when I made financial decisions that impaired my sleep. The debt, certain investments, reducing my emergency fund too far, not having enough cushion in my checking account, and not properly saving for upcoming (known or unknown) expenses. Each of these questionable decisions hindered my financial stability and jeopardized my ability to live a meaningful life.

It's not that money is the most important thing in our lives (it's not!), but our finances leak into every aspect of our lives. If we're feeling tension in our money, we feel it literally everywhere. In our marriage, in our work, in our parenting, in our hobbies, and even in our faith. You deserve better than that!!

Do I sleep well at night? I think about this question a lot. If my answer is "no," I must make a change. There's no reason to have that sort of tension and affliction in our day-to-day lives. Sometimes, it's unavoidable, but often, it's in our power to act. If so, then act.

I've had to unwind so many decisions in my life to find peace. It can be frustrating, time-consuming, and embarrassing, but it's worth it! If you find yourself in a financial situation that's keeping you up at night, I encourage you to act. Make a shift. Give yourself peace. Refocus on the meaning.

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Keep Zooming Out

In case it hasn't been brought to your attention (yet), the world is melting. Or probably melting. Or possibly melting. Something like that. Unemployment is up, inflated prices continue to put pressure on families, and political unrest (at home and abroad) is wreaking havoc on our collective psyche.

However, as always, we fixate on the stock market. While the stock market isn't THE indicator for our economy, I understand why we dwell on it. It's one of the few tangible, in-your-face, clearly measurable tools available in our crazy world. It's even color-coded! Green = Good. Red = Bad. These days, when we turn on the news, we see lots and lots of red.

As of yesterday's market closing, the U.S. stock market (S&P 500) is down 8.5% in less than three weeks. In a world that's supposed to provide a positive 8%-10% annual return, that recent development feels scary—very scary.

However, as I always say, we need to zoom out. And every time we zoom out, we need to keep zooming out. Doing so is the only way we can emotionally, mentally, and psychologically survive the scary times.

Here's what I mean. Our recent stock market beatdown takes the U.S. stock market down to where it was on - checking my calendar - May 8th of this year. Oh, that doesn't feel so bad now. Let's zoom out further. When the market first hit this level on March 20th, it was a new all-time, 154-year high. So the level we're at today, less than five months ago, was celebrated as another record-setting, butt-kicking, all-time high. Ah, now we're talking. Keep zooming out.

5 Days (-5.1%) = Feels scary!

6 Months (+4.6%) = Not too bad

5 Years (+77%) = Oh, I guess we're good

Regardless of how good or how bad things feel, I encourage you to keep zooming out. Perspective matters.

The Culture of Can’t

I don't know if it's always been this way, but we live in a toxically negative culture. A culture of "can't." Voices that echo throughout our lives, day in and day out. You can't get out of debt. You can't start the business. You can't get a better job. You can't afford to give that money away. You can't save for that big upcoming purchase. You can't have a job that doesn't suck. You can't, you can't, you can't.

I haven't seen data on this, and I haven't yet conducted a formal study on the subject, but I have an anecdotal observation after talking with hundreds of people about it. If someone has a bunch of debt and has yet to make meaningful positive progress on paying it off by their early 30s, there's a high likelihood that it will only get worse. Why? Because when we're told "you can't" enough times, we start to believe it's true. Then, it becomes a self-fulfilling prophecy.

I just met with a couple in their mid-40s. They've struggled with their debt for nearly 20 years. They'd pay a little off, then accumulate more—a constant yo-yo spanning two full decades. They came to me as a last-ditch effort to salvage their finances.....and maybe their marriage. They wanted to know what tips, tricks, and strategies I have for them to make more money. Or perhaps some loopholes to get their loans forgiven. Maybe bankruptcy would do the trick? They wanted an out.

Me: "Why don't you just pay off the debt?"

The Husband: "We can't. It's too much."

Me: "Yeah, it's a lot. But why don't you just pay it off?"

The Wife: "We can't. It's impossible." Then, there was a rant about inflation, kids, activities, the government, crappy bosses, travel, needs, etc.

Me: "Yeah, all that stuff would get a lot easier if you just paid it off."

The Husband: "We can't. We would have by now if we could."

______________

Fifteen months later, they had paid off $50,000 of credit card debt. That's a lot of debt to pay off for someone who "can't." That's the problem. Our culture continually tells us we can't do things. I believe they can. I told them they can. I showed them how they can. I reminded them they can. And then, their actions proved they can.

If you only internalize one thing I write this week, please let it be this: You can! Not only that, you should! I'm not telling you what to do. Rather, I'm telling you that you CAN and SHOULD do the thing you're thinking about right now. You know, that one thing. The thing you wonder, ponder, stress about, and dream for. That thing. You can. You should. Please don't let our culture (i.e. all the people and media around you) tell you otherwise.

The Problem With Worry

I don't know about you, but I've consumed far too much national news coverage in the past few weeks. From the presidential debate, to the attempted assassination of President Trump, to President Biden's withdrawal from the 2024 presidential race. I've been glued to the TV and Twitter, and hasn't been exactly healthy.

There's a lot to worry about right now: unprecedented political unrest, massive layoffs, a job market that feels like it's teetering on the edge, the miserable results of several years of rampant inflation, and a stock market that continues to defy the odds by hitting more all-time highs. It just feels weird....and worrisome.

It's really easy to dwell on the things we fear. These things can consume us. After all, the dynamics I mentioned above (plus all the ones I didn't mention) are terrifying and have the potential to cause turmoil for American families. So, it's perfectly understandable why one would fixate on these possible adverse outcomes.

On the flip side, worry does no good. Zero. Zilch. Nada. The last time I checked, there are no positive outcomes associated with worry. But when we spend our time and energy bathing in our fears, we're not doing something that can actually help us. Worry shifts our attention from what we can control to what we can't. Fear takes us from a place of action to inaction. Dwelling on outside news separates us from behaviors that have the potential to provide positive momentum.

Instead of obsessing about what could go wrong, we should spend our time, energy, and resources saving up an emergency fund that can actually protect our family.

Instead of complaining about inflation (we all do it!), we should focus on our budget and live with intentionality.

Instead of worrying we won't have enough down the road, we should invest.

Instead of getting angry that people are hurting, facing injustice, and living without their needs met, we should give. Put our money where our mouth is and simply give.

Instead of wondering what the politicians will do next, we should just pay off our debt.

Instead of getting frustrated by how much our job sucks (whether it's the culture, work, or compensation), we should pursue work that matters.

There are so many things we can't control in life. Big, scary, powerful things. Then, there are the things we can actually influence. If we simply focus on what we can control, we will most certainly be better off.

I know this all sounds so commonsensical and overly simplified, and that's intentional. We need to lean hard into common sense while simplifying our lives.

Turn off the TV. Close Twitter. Control what you can control.

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How We Were Silently Molded

This may be the most Captain Obvious thing I'll say all week: We're all different. Different backgrounds, different experiences, different personalities, different genetics, different relationships.....different different.

I think we collectively underestimate the impact these differences have on how we perceive and handle money. Who we are with money is a deeply personal dynamic, wrapped in all the various experiences we've had throughout our lives.

The very first conversation I have with new clients is about what their childhood looked like. Whether we want to admit it or not, what we experience in our childhoods and how we were raised deeply influence our present-day relationship with money. If I can understand what someone went through when they were kids, I can understand why they have XYZ tendencies and behaviors around money in adulthood.

I'll share a few examples:

If someone grew up in poverty, there's oftentimes a fork in the road. One path leads to the pursuit of more, buying all the things they didn't have growing up (and likely spoiling their own kids). The other path leads to self-sabotage, subconsciously spoiling opportunities to make financial progress.

If someone grew up in material wealth, they are likely to feel entitled to a similar lifestyle in adulthood. This can take the shape of an at-all-costs mentality. They will replicate the high standard of living they grew up with, whether they can afford it or not. For the ones who can't readily afford this replication, the heavy use of debt often comes into play.

If someone grew up with an average-to-good standard of living, but their parents experienced a sudden and drastic financial disaster, it's common for them to develop hoarding tendencies. Young Millenials and Gen-Z fit this mold brilliantly. Between 2008 and 2010, millions of American families experienced unprecedented financial turmoil: massive layoffs, record foreclosures, and long-lasting unemployment. Many kids went to bed perfectly fine one night, and woke up to their lives turned upside down the following day. It's common for kids who went through this experience to grow up with a penchant for financial hoarding. Why? Because their lived experience tells them that everything could be perfectly fine one day, and gone tomorrow. Therefore, you can never have enough money.

I could write this list for hours, but I'd prefer not to put you to sleep. Rather, this is an invitation to reflect. What do your financial habits and perspectives look like? Second, how might your childhood have shaped them? Understanding this relationship is key to becoming more self-aware and correcting toxic or destructive behaviors/habits. It's a worthwhile conversation to have with yourself!

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The Scales of Meaning

As I was writing yesterday’s post, I had a series of flashbacks. Flashbacks of tense conversations I’ve had with clients about significant life decisions. It reminds me of this:

Money is finite. Each month, there’s only so much of it to go around. For every dollar we spend on one thing, it’s one less dollar we can spend on another. While it’s true there are dozens of categories and thousands of transactions at play, sometimes it boils down to a few major decisions. That’s where the scale comes in. For the sake of this post, I’ll refer to them as the “Scales of Meaning.”

In yesterday’s post, I shared the story of new parents who both desperately wanted mom to stay home with their baby. However, as a result of their family’s financial structure, the only way to make it happen was to give up some combination of their big house, two luxury cars, and fancy trips. 

When we place these options on the scales of meaning (cars/house/vacation one side, and staying home on the other), it shines a light into our soul. This couple repeatedly said that mom staying home is the most important thing. It’s one thing to say it, but another to place them on the scales of meaning. Once they are on the scale, we have a choice to make. Option A or Option B. Their decision will be the real answer. No more lip service. Words are cheap. What’s really most important? Turns out, this family’s lifestyle was actually more important than staying at home. She miserably and painfully stayed at work so they could continue to enjoy their fancy lifestyle. 

The scales of meaning are a humbling tool. It forces us to put our money where our mouth is. Here are a few recent examples I’ve encountered:

• Keep the car or unlock more family trips with the kids: They sold the car and started buying plane tickets.

• Stay in the massive house or make a major career shift to pursue work that matters: They downsized their house, and he started working at a non-profit where he now inflicts much impact.

• Continue to live a high-end lifestyle or send their kids to a Christian school (which isn’t cheap): They now live much more humbly and their kids go to a school they believe in.

• Dad keeps his high-paying, long-hour job or he shifts so he can be more present in his children’s lives: They ultimately decided it’s okay to miss everything if he can “provide a better life.” Ouch!

The scales of meaning don’t discriminate. Rather, they expose us. They wipe away any façade we may portray to the world (or ourselves) and shine the light on what we truly value. It reveals what we truly value.

I encourage you to try it sometime. It’s a beautiful way to visualize our lives and the decisions set before us. It’s a humbling exercise, though. You’ve been warned! 

Being Ungrateful Beings

Do you ever think about how much we take for granted? I think about this topic a lot, but never more than I have this week. Post-hurricane Houston has been a mess. I've spent most of the last three days in an 85-90 degree office with no electricity, no A/C, no lights, and no WiFi. Nothing. I didn't have a hotel for two days. Very few restaurants were open. People were waiting in line for hours to get gas. I sweat through my clothes for three straight days. It felt like my brain was melting onto the table.

I know I'm being dramatic here, but I thought it would be fun to verbalize how I was feeling. Back to my original question: Do you ever think about how much we take for granted? I rejoiced when I had a real meal. I rejoiced when I checked into a hotel. I rejoiced when I felt the relief of A/C. I rejoiced when I had enough hotspot signal to use the internet. All these little take-it-for-granted conveniences of life felt like a luxury.

What if we lived our lives with that perspective? What if we truly appreciated how good we have it? A roof over our heads. A/C and heat to keep the temps stable. Our various pieces of technology that allow us to connect with the world. A working bathroom. Lights to see in the dark. Getting gas without waiting in 2-hour lines. Accessible food. A comfortable bed. What if we stopped taking for granted all these normalcies of life?

After all, we aren't far removed from a time before these things existed. I vividly remember a time without cell phones and WiFi. Some of you remember a time without TV. Many of you remember a time without A/C. We take all this for granted, to our own detriment.

Most of us have all our needs met.....and more. Yet, we so quickly turn ourselves into victims when we compare ourselves to people around us. We so easily conflate needs and wants. "I NEED that car." "I NEED a new phone." "I NEED a bigger house." We so quickly forget how good we really have it.

Today, I'm going to carry myself with a posture of gratitude, and I hope to do the same when I get home from Houston tonight. Most of us have everything we need, and more. Perhaps we should start acting like it.....

The Dip Is a Myth

I have a strange hobby. Occasionally, I'll set a random reminder on my phone for the distant future. These reminders usually stem from conversations with buddies or goals with clients. It's always a fun treat to get a random, obscure reminder. Yesterday, I woke up to a memorable one: "Remind Ryan the dip is a myth." That's it. That's all it said.

This reminder stems from a conversation I had with a group of friends one year ago yesterday. A few of the guys asked me about my opinions on investing. After I shared my perspective (which you've heard here often), a guy (we'll call him Ryan) disregarded the entire thing. "I'm saving all my cash to buy the dip. That's where the real money is made." For context, he had liquidated most of his retirement investments and was sitting on mostly cash, eagerly anticipating a crash. I can't remember the exact amount, but it was a bit north of $200,000.

I, of course, couldn't disagree more with this sentiment. It's a proven bad strategy, oozing with naivety, a false sense of control, and overconfidence. After all, buying the dip requires you to know when the dip actually occurs, put your money where your mouth is, and know when to sell.

Further, let's not forget the stock market is up far more than it is down. To demonstrate, here are a few staggering statistics about the last 154 years of U.S. stock market history:

• The market has been up in 74% of calendar years.

• It's been up 78% of 2-year stretches.

• Even crazier, it's been up 85% of 3-year periods.

The odds are heavily in favor of up!

After sharing the behavioral, philosophical, and historical reasons why buying the dip is a terrible idea, Ryan responds, "You're wrong. You'll see." We agreed to set a reminder 12 months out and compare notes 365 days later.

Well, yesterday was the day, according to my pop-up reminder. So, how did Ryan fare? Here's a screenshot of how the Vanguard total U.S. stock market index performed over the last 12 months:

+25.2%. Ouch! Not only did Ryan not win, he got crushed. In his arrogance and greed, assuming he had $200,000 sitting in cash, he lost at least $50,000 of gains! That's a tough lesson.

I sent him the reminder today, along with the market performance screenshot I included above. He responded, "It was the right decision—it still is. I'll keep waiting for the dip." Old habits die hard.

Will Ryan ever succeed in this endeavor? Maybe. The odds are heavily stacked against him, though. It will require a mix of luck, close monitoring, the conviction to act, the conviction to act again, and a lot more luck. Conversely, he could follow the statistical odds of success by simply investing now and never worrying about it again. I like that option much, much, much better.

Fortunately for you, the best way is the simplest way. The dip is a myth, so just invest.....then patiently (and boringly) wait.

Forgetting the Plot

I'm coaching the second-grade boys' basketball program for my kids this summer. It's structured as two open gyms per week, focusing on skill development, relationships, learning the game, and fun. The first two sessions were great, but last night's was a mess. It was chaotic, we didn't stick to the plan, the kids got frustrated, and the coaches lost control of the action. In short, we forgot the plot. Amidst all the chaos and unforeseen circumstances, we lost sight of the purpose of being there. I take 100% ownership of that. I feel a lot of frustration and regret toward myself. All that said, I'm confident we can get the train back on the tracks at our next session. I'm excited to learn from these lessons and get back to the desired plot.

In many ways, this is a close parallel with life. Amidst the chaos, busy, and unforeseen events, it's easy to forget the plot. We say to ourselves that x, y, and z are our primary objectives. Yet, if we were honest with ourselves, our actions may say otherwise. This is a dynamic I've seen in my own life, and I see it multiple times per month with the families I have the privilege of coaching. Life is crazy. It's intense, unpredictable, and throws many curveballs at us (never mind the fastballs occasionally thrown at our heads!). If we're not careful, we forget the plot.

Here are a few examples of how this can play out. Perhaps one or more of these examples resonates with you.

The couple who says their top priority is to spend more time with family, but ultimately structures their life in such a way that they spend even less time with the family. They think to themselves, "If we make a lot more money, we'll have more freedom to spend time together." However, in the pursuit of more money, they create a life with even less freedom. They forgot the plot.

Or the couple whose top priority is to get out of debt so they don't feel as restricted in their finances. They lock down the finances so they can aggressively pay off the debt, but ultimately create a money culture in their family where spending money becomes taboo. They inadvertently rewire themselves to be cheap and overly frugal. In their pursuit of a less restrictive financial life, they create an even more restrictive life. They forgot the plot.

Or the couple whose top priority is to be more generous, but only after abc goals are accomplished. They have every intention of increasing their generosity, but they continually set artificial hurdles and boundaries in front of it. They aggressively pursue these objectives, while simultaneously being even less generous....for the purpose of eventually becoming more generous. It becomes a complete self-sabotage. They forgot the plot.

Here's a quick tip on how to avoid this. Every so often, ask yourself what's most important; write it down. Then, look at your actions and see if/how they align with your objectives. If they are aligned, awesome! If not, you might have lost the plot. Luckily, you're the author of the story. It's never too late to get back on track!

But at What Cost?

Despite repeatedly writing and talking about materialism and the risks of pursuing more, I'm also human. I got bit by the jealousy bug last night! The boys were invited to swim at a friend's house, which was quite thoughtful of the host family. When I arrived to drop them off, I was met with the backyard pool of all backyard pools. Wow, this thing was stunning: waterslide, basketball hoop, tons of seating, an outdoor living room (with a massive TV), a built-in kitchen.....the whole works! Just the pool area alone probably cost more than my house is worth. My immediate reaction was jealousy.

Then, as I always do, I took a step back and looked myself in the proverbial mirror. We all have choices. Do I really want that pool? Do I really want that house? Is that what I really want? If so, why am I not pursuing it? If having xyz is so important, I should react and act accordingly.

Then, I ask myself one more question: "But at what cost?" For every decision or pursuit, there's a cost. There's no free lunch. For every dollar we spend on one thing, there's one less dollar to spend somewhere else. For every hour invested in something, there's one less hour to invest elsewhere.

So, I suppose I could endeavor to have a house with a pool like theirs. That's on the table. But at what cost? Here are a few costs off the top of my head:

• I'd probably need to use most (or all) of the liquid savings we built for other purposes.

• I'd probably be forced to abandon my current career path in exchange for a higher-paying job that would support the necessary house payment.

• Our generosity would probably fall off a cliff.

• We would probably lose the flexibility and freedom our current life structure provides.

• We'd probably lose the ability to freely travel like we do now.

When I look in the mirror and ask myself the "but at what cost?" question, that pool suddenly doesn't feel as appealing as it did in the moment.

It's not a matter of IF we will get bit by the jealousy bug, but WHEN. It's going to happen. As such, we must be ready to face it head-on. That's where the "but at what cost?" question can be so handy.

I don't have any negative feelings towards people who do things that make me jealous. After all, they are simultaneously making decisions that have their own costs. That's what makes all of this so personal. We each have choices to make.

It's not about making THE right choice. Instead, we should each pursue the right choice for us. The right choice for you and the right choice for me.

I know I'll get jealous again, but when I do, it will be another opportunity for me to look in the mirror and ask myself if I'm truly pursuing the life I'm meant to live. That's a gift!

Putting THEIR Money Where MY Mouth Is

One of my clients recently received an unexpected $2,000 (after-tax) bonus. Excited about this newfound money, they quickly commenced negotiations about where this money should go. There were several options on the table:

• New furniture

• Disney World

• New hunting equipment

• Revamp the wardrobe

• Invest it into retirement

• Pay down the car loan

• Plus a handful of others

When our next meeting rolled around, making a final decision was the top priority. I stood at the whiteboard, jotting down every idea mentioned. After all ideas were exhausted, I added one more: "Give it away."

Instant pushback! They explained they needed this money, pointing at the lengthy list drawn out on the whiteboard as evidence. They "needed" this money. That word was mentioned at least a dozen times, which is exactly why I wanted to open this alternate door.

The fact they "needed" it, in their words, is the exact reason they "needed" to give it away. They've lost perspective. That's not an indictment on them; we all do! It's so easy to get caught up in our own situations that we lose sight of the big picture. They've done a great job. They are doing a great job. They will continue to do a great job. They are blessed. They will be just fine.

Generosity always wins. And by always wins, I'm referring to everyone involved. The recipient wins, as a need is met. The giver also wins. Psychologically and emotionally, there is no better use for money than to give it to someone who has nothing to offer us in return. That single act sets off a chain reaction deep down within us, leading to meaning, fulfillment, and contentment.

Contentment. That's important here. As I've highlighted (er, beat a dead horse) in multiple recent posts, we live in a culture of more. More money, more stuff, more status, more more. It has a weighty gravitational pull. Even for those who most staunchly oppose such culture (I'd put myself in that camp), it's a hard gravitational pull to avoid. We're all human, after all. However, there is one thing that can combat the materialistic pursuit of more: contentment. And one of the most significant contributors to contentment? Generosity! Generosity is exactly what the doctor ordered! It's almost like we've been created to give!

This is one of the main reasons I so badly wanted this family to give the $2,000 away. They need contentment. They need to jump off the hamster wheel of more. They need perspective. And you know what? They did it! They decided to test out my "absurd theory" (their words) and give this whole generosity thing a try. They pondered who, how, and where to give it, made a plan, and executed!

Their response: "It was transformational. I don't know why or how, but it was. We just feel different."

Yes! It is different. It's one of those things you can't quite put your finger on, but once you know, you know. Contentment through generosity.

They looked at each other, smiled, and one excitedly said to the other, "Let's do it again."

Never-Ending Highlight Reels

I love social media. I think it's one of the greatest inventions ever created. It unlocks the entire world, and literally every person in it, for free, in the palm of our hands. It allows unprecedented access to other people, and provides unparalleled opportunities for creativity.

It's also one of the most dangerous inventions ever created. It's the ultimate double-edged sword. While it allows us unprecedented access to other people, it unfortunately allows us unprecedented access to other people. Well, to be more specific, it gives us unprecedented access to other people's highlight reels.

What we see on social media isn't real life. It's a tiny sliver of real life, carefully curated and ever-so-intentionally massaged to suit the palette of an outside audience. It's posted primarily to generate a specific feeling or response. Nobody posts content with the intent of making you think worse of them. It's always intended for you to perceive them positively.

If I were to internalize my social media feed as reality, here's the reality I'm signing up for:

• Everyone has perfect marriages.

• Everyone has perfect spouses.

• Everyone has perfect kids.

• Everyone is always put together and dressed fashionably.

• Everyone takes the most luxurious trips all the time.

• Everyone lives in the most perfect (and perfectly clean) houses.

• Everyone drives the newest and coolest vehicles.

• Everyone lives the richest lifestyles.

• Everyone has the perfect job.

• Everyone has perfect lives.

None of this is true, of course. What we see is the best sliver of someone's life. There's probably truth in it, but it's not THE truth. It's the highlight reel. SportsCenter doesn't show us the entire game. They only show us the 6 best plays. It's curated. It's flashy. It's what catches our eyeballs. Social media does the same.

If all that's true, we can stop comparing ourselves to whatever we see on social media. We can let go of this make-believe reality that doesn't actually exist. We can quit beating ourselves up over not having the perfect kids or the perfect spouse. We can give ourselves grace for not living in mini-mansions or driving vehicles that can land a man on the moon (while simultaneously making a perfect espresso).

Just let it go. Yeah, I know, it's not always that simple. If there are people in your life that are especially hard to stomach on social media, perhaps it's time to break out the trimming shears. Cut that out. You don't need a constant toxic presence in your life. After all, you have unprecedented access to their life.....choose carefully.

I'll continue to love social media, but do so with an understanding that it's just a sliver of people's reality. I'll also stay vigilant to ensure I prune my feed if I find myself struggling with jealousy or unfair comparisons. With unprecedented access comes an unprecedented need to be mindful.