Self Delusion And The Dumbest Excuses Ever

Posted on November 9, 2011 by AJ Kessler

You’re almost certain to get two answers if you ask any student why they’re not doing something that would benefit them, whether it’s taking more rigorous (or simply more) classes, getting an internship on the side, working out, joining an organization, etc.: “I don’t have enough time” or “I’m not smart enough”.

The first answer is almost always preposterous.  School is the easiest, least busy time in your life, with so much free time most kids don’t even know what to do with it all.  (See e.g. Jersey Shore’s ratings.)

The second answer is almost as preposterous.  Just look at everyone who has come before you, and everyone who currently works in any field: are they all smarter than you?  Of course not.  Pick any field you want: there are hundreds of thousands, if not millions, of people working in it.  Do you really think you’re incapable of doing something millions of other people have figured out?

Bullshit.  You’re not too busy and you’re not too dumb.  The real answer is you’re either lazy, or scared.  Once you own up to it, life gets a lot easier.

(And it should go without saying, this doesn’t apply just to students)

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The Idiocy of Worrying About Your Legacy

Posted on November 8, 2011 by AJ Kessler

Marcus Aurelius, the 16th Emperor of Rome, the most powerful man on earth for a time, kept a journal of thoughts and notes for himself, to keep himself grounded.  The twelve “books” worth of writings cover a broad range of things, from practical tips to heavier philosophical musings, but the emperor brings up one thing over and over and over: the absurdity of legacy.

So many who were remembered already forgotten, and those who remembered them long gone.  – Book 7 ¶6

He brings up death multiple times per book, constantly reminding himself of his own mortality, of the fact that it is not something to fear, and of the need to ignore the distractions of everyday life and those around him, and focus on what’s really important.  Legacy, is not one of those things, and he ridicules those who chase that goal:

The way people behave.  They refuse to admire their contemporaries, the people whose lives they share.  No, but to be admired by Posterity — people they’ve never met and never will — that’s what they set their hearts on.  You might as well be upset at not being a hero to your great-grandfather.  – Book 6 ¶ 18

It’s amazing how many great people become concerned with their legacy in their later years.  On the one hand, it’s good for the world: if you’ve led a villainous life, spending a few years pouring your resources into making up for that past is good, regardless of your motivation.  But, it’s also the height of narcissism and delusion.  Steve Jobs will be almost entirely forgotten within three generations.  Bill Gates, unless he cures cancer, will likely be forgotten within five.  Political leaders, celebrities and sports legends will be lucky to be remembered even while they’re still alive, let alone one generation later.  No matter how many libraries, or schools, or monuments you build with your name on it, you will be forgotten.

So, doing things for legacy’s sake is clearly the wrong way to approach your life, not only because it’s ridiculous to be concerned about what people you’ll never meet or know think about you, but because almost without exception, no matter what you do, they won’t think about you anyway.

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Skill Rot, or Why You Shouldn’t Learn That

Posted on November 7, 2011 by AJ Kessler

It’s not like riding a bike: you can’t hop right back on and it doesn’t come back easily, even though you still might end up getting your groin impaled by the contraption you’re trying to control.

Skill rot is what happens when you don’t do something for a while.  Just like muscle tissue, your skills slowly decline without regular use, no matter how good you were before.  Skill rot sucks.  And worse, it sets in fast.  You might spend three to six months getting pretty good at something, whether its HTML programming or fine woodworking, and if you don’t do it for just a few months, poof, it’s pretty much gone.  Even if you’ve spent years getting great at something, taking six months or a year off can have similarly devastating effects.  The stuff you once knew how to do without even having to think now require a trip through google hell or over to the reference book.

So, why do we care?  Well, other than maintaining your skills by regularly doing whatever it is you’ve spent time to get good at, you should think about what you want to devote your time to learning in the first place.  Ya, learning some java so you could build that web app would be cool, but if you’re a mechanical engineer, and you’ve only got plans to build the one thing, it’s probably going to be a waste.  Even if you get around to working on project number two, by the time you do, you’re almost sure to have forgotten everything you spent months learning to complete project number one.  Better to hire somebody to do it for you and spend your time honing or acquiring skills that you’ll regularly use, and thus won’t soon lose.

The good news is, just like muscle tissue, the better you were at something, the more intimately you knew how things worked and why, the faster it comes back.

*Caveat: This thinking shouldn’t apply to anyone under 21, who, if they don’t yet have a passion, should try as many things as possible until they find that thing they can be passionate about.

 

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The Prodigy Fraud

Posted on November 6, 2011 by AJ Kessler

Wolfgang Mozart was composing music at five years old.  By eight, he was giving public performances as a violinist and a pianist.  Before his death at age 35, he produced some of the most renowned music that has ever existed.  Mozart was just naturally talented, right?  Born to write and play music?  A prodigy of the highest order, of course?

Actually, not really.  In fact, from a modern view, he was only about twice as good as an average student.

Recent scholarship has put his abilities as a prodigy performer in a new perspective.  Researches constructed a precocity index for pianists.  They figured out the number of years needed by pianist under modern training programs before publicly performing various works, and then compared that with the number of years actually needed by several prodigies throughout history.  If the average student needs six years of preparation before publicly playing  a piece, and a given prodigy did it after three years, that student would have an index of 200%.  Mozart’s index was around 130%.  Clearly ahead of average students, but 20th century prodigies score 300-500%.

– Geoff Colvin, Talent is Overrated

You could say his success started at birth though.

Wolfgang’s father was Leopold Mozart, a highly accomplished music teacher, and a decent musician and composer in his own right, who started Wolfgang’s intensive training in composing and performing at age three.  Bye age eight, Wolfgang had written a few brief symphonies, which hewed closely to the style of Johan Christian Bach, who he had been studying with when they were written.  By eleven, Wolfgang had composed his first four piano concertos, though they didn’t contain any original music.  None of this early work is regarded as particularly great, and they are almost never played today.

In fact, Wolfgang’s first world class piece of original music is his Piano Concerto No. 9, which wasn’t written until he was 21.  While 21 is certainly young, this piece of music wasn’t produced until Wolfgang was already 18 rigorous years into his training.  Sort of odd for someone considered the go to example for natural born talent, isn’t it?

And that’s the rub.  The more we dig into the lives of prodigies like Mozart, or Talent is Overrated.  I’d definitely recommend the book if you’re interested in deliberate practice, or just want to hear more fascinating stories about how interesting people accomplished what they did.

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Look Better and Get Better By Culling

Posted on November 2, 2011 by AJ Kessler

It’s important to go back and review your old work.  Just a little time away from it and you can look at it with fresh eyes.  Enough time away from it and you can look at it with someone else’s eyes.

Getting to the point where you can evaluate a piece of work without any emotional attachment whatsoever, even if it’s only for a brief moment, is incredibly valuable.  Not only can you more easily and objectively spot flaws, you can decide what shouldn’t even have your name on it.  When you’ve just suffered to produce something, when you’ve poured hours and hours and hours into it, it’s very difficult to say, “Nope, this sucks.  Trash it.”  But, sometimes it does suck.  And that’s OK, most of your work is going to suck.  But, it’s important to recognize it when it sucks.  You don’t want to be constantly publishing work that sucks.

So reviewing your old work, culling the stuff that obviously sucks, will not only improve the quality of the work you have floating around out there, but it will also improve your skill.  Any time spent critiquing work, identifying why it works, why it doesn’t, how it could be improved, etc., is going to sharpen your skills, whether the work you’re critiquing is your own or somebody else’s.  The added benefit of critiquing your own work is the possibly of remembering the thought process behind the choices you made, or the obstacles that prevented you from doing something else.  This in turn creates a more immediate lesson that you can draw from (e.g. next time you’re painting, you’ll know not to do X, since the last time you did X, the result sucked.  This makes the lesson much more tangible than reading about the way Picasso did it.)

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The Tipping Point Is Bullshit

Posted on November 1, 2011 by AJ Kessler

The concept of “the tipping point” has been bastardized.  People now seem use the expression to mean that there’s some sort of silver bullet or fatal flaw.  If you could just do this one thing, or eliminate this one flaw, you’d go viral.

The truth is, complex problems don’t generally have simple solutions.  Rarely does making one tiny change produce massive results.  And, even when that is the case, it’s pretty hard to tell which change to make ahead of time.  While it’s often easy to cite the one change that did produce a huge difference after the huge difference has happened, it’s never easy to see it ahead of time.

So don’t be discouraged when fixing one little thing doesn’t turn it all around.  It takes lots of improvements over lots of different variables before you’re likely to make that big breakthrough.  Keep working to improve as many different little things as possible, and eventually you will hit on the right things that cause that viral success.

 

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On Being Prolific

Posted on October 31, 2011 by AJ Kessler

Picasso created somewhere between 50,000 and 100,000 pieces of art during his life.  If we take the low estimate and assume he starting making real art at about 6 years old, this means he had to create about two pieces a day, for 85 years.

No wonder he produced some good work.

If you produced two products a day, whether they’re paintings or sketches or songs or essays or blog posts or photographs or culinary dishes or program functions or whatever, even for just a year, imagine what you could create.  If you did it for 10 years, imagine what you could change.

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Remember What You’re Measured By

Posted on October 30, 2011 by AJ Kessler

Pointless bustling of processions, opera arias, herds of sheep and cattle, military exercises.  A bone flung to pet poodles, a little food in the fish tank.  The miserable servitude of ants, scampering of frightened mice, puppets jerked on strings.

Surrounded as we are by all of this, we need to practice acceptance.  Without disdain.  But remembering that our own worth is measured by what we devote our energy to.

Marcus Aurelius, Mediations Book 7.3

Your own worth is measured by what you devote your energy to.  Make sure you’re devoting your energy to the right stuff.

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Don’t Wait Until It’s Too Late: Define Your Priorities Now

Posted on October 29, 2011 by AJ Kessler

Some good advice about priorities from Clayton Christensen over at the HBR:

Over the years I’ve watched the fates of my HBS classmates from 1979 unfold; I’ve seen more and more of them come to reunions unhappy, divorced, and alienated from their children. I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.

This is universal: people may say that success or hard work or their careers or whatever are important to them, but if they sit around all day watching sports or playing video games, it’s pretty clear what’s really important to them.  On the other end, a lot of successful people say their families are the most important things in the world to them, but they don’t see them or spend time with them because they’re busy doing something else.

When people who have a high need for achievement have an extra half hour of time or an extra ounce of energy, they’ll unconsciously allocate it to activities that yield the most tangible accomplishments. And our careers provide the most concrete evidence that we’re moving forward. You ship a product, finish a design, complete a presentation, close a sale, teach a class, publish a paper, get paid, get promoted. In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.

If you study the root causes of business disasters, over and over you’ll find this predisposition toward endeavors that offer immediate gratification. If you look at personal lives through that lens, you’ll see the same stunning and sobering pattern: people allocating fewer and fewer resources to the things they would have once said mattered most.

It’s always sad when these people lose the thing they said was their real priority, like a loved one, and finally realize how poorly they allocated their time.  Decide what your real priorities are early.  Don’t wait until it’s too late.

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Your Brand Is Irrelevant

Posted on October 28, 2011 by AJ Kessler

Branding has been tremendously valuable over the last 100 years or so.  Even during the last five or ten years, pundits have been telling people to turn themselves into brands.  Brands are identifiable, they stand for something, they signify quality.  But, is social media going to render brands meaningless?

Fifty years ago, brands were king.  You didn’t have a whole lot to choose from, but people stuck by their choices.  People didn’t just buy GM cars, there were GM families.  Housewives only bought Morton’s salt or Revlon cosmetics.  These brands represented a known quality.  Wherever you were, if you could find a drugstore, you knew the Revlon lipstick you bought was going to look good.  You knew whenever it rained, Morton’s would pour.  Being able to offer consistent quality was huge selling point, and fit perfectly in an era when the only modes of mass communication were newspaper, radio, and a tiny bit of television.  Brands were built around this lack of information: people put their trust in a company to curate their products because there wasn’t really anybody else to put their trust in.

But the world is totally different now.

Before you buy something on Amazon, what do you do?  Unless you’re a maniac, you read the reviews.  Before you choose a new restaurant, chances are you check out yelp or open table or zagat to see who has the best of what you’re looking for.  Before you book a trip somewhere, you probably check out TripAdvisor, or at least browse some of the reviews on Expedia or wherever you’re booking.  Hell, before you book your seat on a flight, you can get a review of the individual seat on SeatGuru.  If something is really, really new, you can cull reviews from thousands of people you may not even know on twitter or facebook.  There’s now more information than we know how to handle.

So why do we care about brands?  If AppleTV gets lackluster ratings on Amazon, we’re not going to buy it just because it’s made by Apple.  We know it’s shitty ahead of time.  We don’t care if it’s a Wolfgang Puck restaurant if everyone on yelp says the staff is rude and the food sucks.  I don’t care if the sign on the outside says its a Ritz-Carlton; if the reviews say the rooms are dark, cramped, and smell musty, I’m not gonna stay there.  This extends to what we would consider more personal brands too: I might be a huge fan of Seth Godin or (insert internet demi-god), but I’m probably not picking up his newest book if other people say its boring, or useless, or a rehash of old material.

So, if we don’t trust brands anymore, what the hell is the point?

Well, there’s two things brands still do: (1) they convey status, and (2) they grant access.

(1) Brands are obviously still extremely effective status symbols.  This will never go away.  Gucci purses or Jimmy Choo shoes or Cartier jewelry (or their successors) will always convey a certain message that a grocery bag, some Keds and a cracker jack decoder ring never could.  Brands that convey a lifestyle or that immediately identify a person will always be valuable.

(2) If you’re a brand I’ve had a good experience with, or who has a good reputation, I’ll listen to you.  If you’re Ritz-Carlton, I’ll open an email you send me, or I’ll talk to you if you call.  If you’re the Shitbag Motel, your email’s going straight into the trash.  This is why personal brands are still important: if you’re Seth Godin, you’ve given enough and earned enough trust that I’ll read or listen to whatever you ask me to read or listen to.  That doesn’t mean I’m going to buy, but it means you always get to ask.

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If You Can Easily Describe What You Do, You’re Fucked

Posted on October 27, 2011 by AJ Kessler

If you’re hanging out with the spouse of someone who is very successful, it’s hilarious to ask them what their spouse does.  Most of the time, they have no idea.  They’ll know what field he’s in, “uh… she works with computers…”, or if she owns a business he’ll know what sort of product she sells, “she runs a software company”, but beyond that, they’re generally pretty clueless about what the person they’ve chosen to spend the rest of their life with, to have kids with, to share everything with, does on a day to day basis.

And that’s integral to their success.  Richard Branson doesn’t have a job description.  It would take him 4 days to tell you everything he does.  Even somebody like Jony Ive, whose “only” job is to be Apple’s head designer, would have a tough time describing what he does on a daily basis.  It might be drawing some new designs, or managing teams, or reviewing new plans, or consulting on some outside project, or dealing with a manufacturing plant, or another thousand different things he’s responsible for.

If you can succinctly sum up what you do every day, you might be fucked.  If all you do is review certain documents, or input a certain kind of data, or handle a certain kind of phone call, you’re replaceable.  Even if you’re highly trained, if your job is rote in any way, you’re replaceable.  If you’re a lawyer, and all you do is draft wills, Legalzoom is already slowly eating your lunch.  Whoever comes next, and they will come, is going to eat your breakfast and dinner.  If you’re a doctor who just reads x-rays or MRIs or CT scans, there’s no reason a lower priced but equally skilled doctor in India can’t do your job over Skype.  And he will.

Most people like well defined jobs.  They like showing up and being told what’s required of them.  People are clamoring for the return of US factory jobs, which essentially require them to show up and perform some labor in some precisely defined fashion.  In part, you can blame our educational system for this: 20 years of schooling trains us to accept a rigid work structure.  You show up for class, you do assigned homework, you take definitive tests that measure how well you perform, you get to go to the next level, and you repeat.

Unfortunately, the people who do this kind of work in the real world are needed less and less.  If something has strictly defined inputs, outputs, requirements or goals, it’s easy enough to program a robot to do it, or at least find someone who’s willing to do it for less.  Why would we pay you to assemble cars if this robot, who never gets sick or screws up, can do it better, faster, and cheaper?

The people who are going to thrive, the ones who always have thrived, are the ones who can work without this rigid structure.  The people who can figure out what needs to be done next, and why.

 

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How They Use Statistics To Scam You

Posted on October 26, 2011 by AJ Kessler

I guarantee you I could pick 10 stocks that would outperform the market, each year, for the next 10 years.  How?

The Dow Jones Industrial Average, or the S&P 500, or Nasdaq, are stock indexes.  A stock index is a broad collection of stocks.  The S&P is literally just a group of 500 stocks.  So, when someone talks about “the market”, they are usually referring to one of these indexes.  If “the market” goes up 5%, what they really mean is the S&P, that group of stocks, went up 5% on average.

So, since the index is an average, if you randomly picked half the stocks out of that basket, you’d have a 50% chance of beating “the market”.

Now, say there are 1000 financial advisers in the world.  In any given year, 500 of them, simply by sheer luck, should beat the market.  Fine.  But how about these guys that beat the market for five or ten years in a row?  Well, out of those 500 who beat the market the first year, 250 of those will also beat the market in year two.  125 will beat the market in year three.  62 will beat the market in year 4.  31 will beat the market for five years in a row, simply by chance.  This means that simply by dumb luck, 3% of all fund managers should beat the market for 5 years in a row.

But, this statistics game is a powerful selling tool.  Lets pretend you’re a fund manager or a pundit looking to sell your stock picking advice.  You decide to send out 100,000 emails touting your next big stock purchase.  You’re smart though, so you’re not putting all of your eggs in one basket.  You write one email to 10,000 people touting Stock 1.  You write another email to the 10,000 people touting Stock 2, and so on.  Even if only one of your picks is right, you’ve now demonstrated to 10,000 people how good you are.

Now, you send a follow-up email, telling those 10,000 people how good you are, and asking them to jump on board.  You say you understand if they’re skeptical, so you offer another stock pick.  Again, you divide up your emails in the same way as above, touting a different pick to each group.  Even if only one of your picks does well, you’ve now got 1000 or 2000 people who have seen you pick 2 stocks in a row for them.  You could do this a few more times and still have hundreds of people who now swear you’re the next Warren Buffet.  All the while, you haven’t done anything but guess and play the numbers game.

So, ya, I could pick 10 stocks that would outperform the market, each year, for the next 10 years.  I’d just have to start with a big enough audience.

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Focus On Your Core Principle to Make Decisions And Beat Procrastination

Posted on October 25, 2011 by AJ Kessler

I finished reading Made To Stick last week, which is fantastic and highly recommended for anyone who does anything creative, anything that requires communication, or anything related to sales (so… pretty much everyone).  One of the biggest things that’s stuck with me is the bit about the core principle.

Basically, Chip and Dan Heath, the authors, have found that a lot of super successful companies are guided by an overarching, core principle.  The principle needs to be simple enough and well defined enough that you can base any decision around it.  One of the strongest examples is Southwest Airlines, whose core principle is to be “The Low-Fare Airline”.

It’s perfect: it could not be more simple or clear.  If you’re running any department in Southwest, you don’t need to look at a manual or consult a superior to know what the right decision is.  Say you’re in charge of on-board catering and you hear that your passengers would like some nicer food options, particularly a nice salad.  You don’t need to set up a focus group, or get cost estimates, or run revenue projections.  All you have to ask is “Will offering nice salads help us to be The Low-Fare Airline?  The answer is no.  Decision made.

There’s no reason to limit this to business though.  In fact, not only can this be a powerful technique to improve whatever aspect of your personality you’d like, it can serve as a great motivator and procrastination killer.  If you have a tendency to get distracted, stop yourself and ask if whatever distraction your engaged in is helping you to be “[Insert Core Principle]”.

  1. Identify Core Principle.
  2. Whenever you do something, ask “Is this helping me accomplish my core principle?”
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6 Easy Steps To Get Rich Without Worry

Posted on October 24, 2011 by AJ Kessler

Yesterday’s post prompted some email questions about how I handle my finances, so I figured I might as well answer them here:

What’s the easiest way to get rich?

  1. Inherit
  2. Lottery
  3. See Below
  4. …
  5. …
  6. …
  7. ???
  8. Build and sell your dot com/business/art/dream project/whatever

Aside from inheriting and hitting the actual lottery, the easiest, most feasible way to get rich is to spend less than you earn.  It doesn’t matter what kind of job you have or how much you earn, if you do this long enough you will be rich.  Guaranteed.

The Six Steps to Riches Without Worry:

  1. Eliminate debt as quickly as possible.  If you have credit card debt, you’re an idiot, but you’re not alone.  Pay it off as quickly as possible.  There’s little point in saving or investing when paying down your debt can effectively net you a 20% return (depends on your card’s APR, obviously).  If you’ve got student loans, I’d pay them off as fast as possible too.  You’re probably not going to be able to beat the 7-8% rate on those by investing either, so this is a good strategy for now.
  2. Open a high interest savings account and a checking account if you don’t have them.  You should never pay fees for these.  If you can’t negotiate out of them (you almost certainly can), find another bank.  These accounts are key because you’re going to use them to automate your finances so you never have to think about this stuff again.
  3. Open a discount brokerage account, or if you have enough money, a brokerage account where they’ll waive your fees.  If your employer matches 401k contributions, open a 401(k) and max out the match.  This is free money.  If you don’t do this, you’re an idiot.  If your employer doesn’t offer a match, open a Roth IRA.  If  you expect your tax rate to rise over the course of your life, max out your Roth IRA.  This is the greatest investment deal in history.  Do it.
  4. Set up your spending plan.  See Below.
  5. Automate
  6. Invest

The Spending Plan

Steps 1-3 are pretty self explanatory.  Step 4 is where most losers get lost.  People have a problem with budgeting (aka setting up a spending plan).  Their fat asses can’t even budget calories, let alone money.  But here’s a secret: it’s not hard, and it’s actually a huge relief.  You’ll never have to think about money again.  You just need to set aside 5 minutes to do it, then you need to automate it.  Let’s look at a sample budget for someone making $70k a year.  If you’re in California and don’t have a bunch of deductions, this comes out to around $4100 per month after taxes.

Rent: $1500
Utilities: $100
Cell: $50
Insurance: $75
Car: $100
Gas: $250
Loans: $400
Groceries: $250
Internet/Cable: $100
Savings $875
Guilt Free Spending $400

Obviously you can change these numbers around any way you like.  If you don’t have a car you can lop $350 bucks right off the top of this thing.  Don’t mind sharing a room?  You could easily knock that rent in half, even if you live in New York, LA or San Francisco.  Live in Ohio?  Slash it in half again.  The point here is that it’s all about what you value, and this will let you concretely see that and make a decision.

Remember though, saving as much as possible is the real goal here.  The more you save now, the more that money can compound, and the richer you’ll be.  If this is your first budget, you should aim to save 30% of your take-home pay.  And, while one catch-all bucket called “Savings” is good, it’s even better to break it down:

Retirement (401k, IRA, etc.): $300
Big Goals (House, Kid’s College, etc.): $300
Other (Vacations, Emergencies, etc.): $275

Breaking down your savings serves three big functions: (1) If you have to cut your spending, you know what it’s coming out of, not just some big amorphous “Savings” blob.  (2) It’s good to state your goals and to constantly remind yourself of what you’re saving for.  If you’ve got a big vacation planned, it’s motivating to watch that account grow (yes, I put them in separate sub-accounts) and realize you’re getting closer to your goal. (3) Your attitude towards saving will change.  You might realize that you’d rather see some of the money from the other categories be directed into one of your savings goals.

Wait, wait, wait.  What the hell was that “Guilt Free Spending” bit?  It’s just what it sounds like.  You get, in this case, $400 a month to blow on whatever you want.  Fancy dinners, gadgets, shoes, whatever.  It’s guilt free.  This is an awesome part about the budget.  You don’t have to have to think about “Can I afford this?” or “Gee, I don’t know how much I should be spending on stuff like this.”  You won’t feel ignorant or shameful or guilty about over-spending.  Nope.  Now you get to spend $400 a month on whatever you fancy.  Light it on fire, for all I care.  All your other needs and goals are already being fulfilled.

Automate It

Now that you know how much to spend on everything, let the computers do everything for you.  (1) Get your paycheck directly deposited into that checking account.  (2) If your employer has a 401(k) match, have him deduct that amount automatically from your paycheck (be sure to calculate your take-home pay based on that).  (3) Set up your credit cards to automatically pay off the full balance each month by pulling money from that checking account.  (4) Set up any other monthly bills you have to get paid automatically.  You can pay pretty much anybody automatically through your bank, even companies that don’t accept web payments.  (5) Have your savings account and investment account automatically pull out your monthly savings amount.

Boom.  Done.  Minutes spent per month thinking about money: however long it takes you to figure out how you’re gonna spend your guilt-free money.

Invest It

Now that your money is automatically flowing to your investment and savings accounts, put that money to work.  Unless you intimately know some industry, you’re not going to beat the market.  Even if you do intimately know some industry, you’re still probably not going to beat the market.  Take the experts’ advice, buy some index funds, and be done with it for now.  If that’s too much work, you can buy a lifestyle fund that will get you 80% of the way there.

Done.

That’s it.  Do this for enough years and you’ll be rich.  You won’t be able to retire when you’re 30 (unless you’re making a crazy amount of money or your dreams don’t require a lot of cash and you’re cheap as fuck) but life will be a lot of fun, you’ll have plenty of cash to blow, and you’ll never be worried about money.

 

If you’re interested in reading more about these kinds of ideas and this system, I would definitely recommend checking out Ramit Sethi and his book.

Posted in Advice, Money, Negotiation, Quotes, Self-Improvement, Tips | Tagged , , , , , , , , , , , | 2 Comments

You Too Can Retire In Your Early 30’s

Posted on October 23, 2011 by AJ Kessler

There seem to be a growing number of personal finance blogs touting super early retirement (ie after around 10 years of working).  These guys are “living the dream” after “jumping off the debt-powered treadmill” and they’re preaching that you too, you fool/drone/sucker*, can wake up like Neo in the Matrix and realize what a sham this whole consumerist world is.

So what how does this work?  It’s so simple I can sum it up in one sentence: You need to be cheap as fuck.

I don’t mean “no more lattes at Starbucks cheap”.  To work for 10 years and retire, you need to be “I rotate my bike tires so they last longer” cheap.  You need to be “I buy a year’s supply of rolled oats when they go on sale” cheap.  That’s basically what every one of these blogs boils down to.

If that sounds appealing to you, go for it.  As these guys are demonstrating, it definitely can work.  If material possessions don’t really matter to you, if you don’t want to do anything that requires a fair amount of money, or if you’d simply rather focus on something other than the “rat-race” (though don’t forget that being this frugal takes a lot of effort), this seems like a great way to go.

If, like me, you’d rather have your hand slammed in a car door, I just saved you a few hours of blog reading.

 

*Note that if you are using debt to fuel your $400 a week shoe/gadget/whatever habit, you are a fool.

Posted in Advice, Money | Tagged , , , , | 62 Comments