Mind the Beginner

Money, both a blessing and a curse on this planet. For better or for worse we’re stuck with it and it will dominate our lives in one way or the other. Only relatively recently I started learning about money and how to manage it. Now you probably know that there are numerous brilliant blogs about money management and frugality online. They all have the four noble truths about money in common. In this blogpost I’ll try and give you the basics of money all in one simple overview. You could see this blogpost as “Money 101″. Once you know this stuff money will be your friend.

The First Truth: Money can be spent

Well, this is very obvious and you probably do it every single day. Getting you to part with your money is what it’s all about for just about every part of the world economy. Spending more than you earn is a definite way to trouble and spending money on things you want but do not need are a sure-fire way to get more and more clutter in your home. Minimalism can not be maintained this way and if you like minimalism it’s a good idea to have a good hard look at your spendings. If something really a need? or is it jut a want and could you easily do without. Now I don’t want you to never indulge in impulse buys, just keep them in check and know when an impulse buy is only that, an impulse. Gaining control of this is very powerful and will reduce clutter (and spendings). Leaving you with more money in your control.

The Second Truth: Money can be saved

Saving money is almost always a good idea and it’s the natural choice if you end up spending less than you earn each month. Saving money can get you one of two things: a bigger reserve that will earn you interest (and we all know the power of compound interest) or a larger amount of money that can help you get something big you unexpectedly need (a washing machine for instance), note how I’m not saying something big you want. A buffer so to speak.
How far you take the savings is up to you but if you’re really into saving you might reach the crossover point one day. That elusive point when the yearly interest on your savings is enough to pay for all -yes all- your needs. How cool would that be, being able to pay the rent or mortgage with nothing but the interest on your savings. It would mean you’d have the option to stop actively pursuing an income and sit back and relax knowing that you’ve crossed over.

Reaching this point is mostly for those who work hard and save hard. Relaxing after reaching crossover almost always makes these people miserable so they choose to keep working and saving.

The Third Truth: Money can be invested

While saving will make you roughly 3% on a yearly basis if you’re lucky, investing money can and most often does generate a more significant interest rate. With some experience and know-how you could generate 10% a year, but that would mean you’d have to actively (let someone) manage your money. Investing can be done in “paper” (stock-market) which seems to be a rather iffy idea at the moment. You could also invest in real-estate, a slightly sounder idea sometimes. You could think about “flipping” homes. That is, buying a house for x dollars, spend y dollars fixing it and then selling the property asap for x+y+z where z is every last dollar you can squeeze out of it. After that you can choose to invest in another property, adding z to your investment sum. A tried and tested way of making money for anybody willing to do the hard work and taking the gamble of buying a lemon.
Investing money is roughly translated as “letting money work for you”, where saving is just letting it sit there. A bigger gamble but with potentially greater rewards. Of course flipping homes is just an example. You could invest in very small things, perhaps dabble a bit in stocks or help someone with a start-up, becoming a stakeholder or angel investor if you can. Investing is a risk, you might make a loss and you can’t have immediate access to your money. If those things don’t form a problem for you, investing is the way to go in trying to reach crossover. (They should have called it game-over…)

The Fourth Truth: Money can be donated

Yes, that’s the last option you have. (We’re not going to discuss stuffing it in an old mattress) Giving money away directly through charity can be a very fulfilling way to make an impact with your money and it’s just for this reason that a lot of people who can manage it do give away money. If you have enough anyway why not, right? You could also opt for the giving away of presents if you don’t like to give away “numbers”.

Spend it
Save it
Invest it
Donate it

Every choice has it’s benefits and disadvantages. It’s all up to you to decide what you want to do with your money. Just remember, it’s always up to you what you do with your money and don’t let anybody tell you otherwise. If you want to save, who are those people from the marketing department to tell you that you -need- that latest gizmo.

I’ll tell you one last secret about money (and things in general): If someones opinion is that you don’t matter just because you don’t own this-or-that. You should ask yourself how important that opinion is to you. You are not your possessions, never was and never will be. Walking down the path of materialism will never reach an end: One Hummer will be beat by two Hummers or a Ferrari. A Ferrari is of course nothing compared to a yacht. It’s a never ending race of ridiculousness and false needs.

Identify true needs and spend what is needed. Save, invest and donate what you don’t spend. If you consistently spend less than you earn you’re on your way to crossing over and have a buffer for a rainy day. That’s money for you, and actually it’s so obvious that I keep wondering how I managed to spend so many years not knowing.

Now you know the four noble truths about money, it’s your friend.

Do you every lie awake at night thinking about what you would wish for if you ever got three wishes granted? At some point in our childhood I’m sure we all have these thoughts. Some smart kids usually make sure to wish for more wishes. Others just end up with the cliche’s of “rich” and “famous”. A bit more creativity gets wishes like “speaking all the languages in the world” or “being able to play this or that instrument to perfection”

Some of these wishes are totally unrealistic, you can never hope to master every language nor can you master several martial arts. Unlimited wishes – or actually any wishes at all – are unrealistic.

Other wishes though are skills actual people do have. Take playing an instrument for example. To master is takes countless hours and that is where most people throw in the towel. We’re so used to getting things on a silver platter that having to work for something seems to cause an allergic reaction. So we drift off into another dream about wishes and what we would wish for.

What would you give to make those wishes come true? What would you be willing to actually physically do? Would you toil countless hours, read all there is to read and fall on your face time and time again because you didn’t quite get things right yet? No probably would not now would you, that’s why you wish for things to come to you the easy way.
But lets just be honest here, things very rarely come to us that way. Every single thing does take actual work to get. Talent is one thing, but without making proper work of it the talent will mean nothing.

You can wish for all the talent in the world and perhaps you even already have talent. What sets people apart though is the willingness to go the extra mile and work hard to develop that talent or perhaps work really really hard without talent just because they want to accomplish something.

How many wishes does it take to get where you want?

Zero

Because wishes are highly overrated. All it takes is countless hours of faceplanting. Do I hear you ask how many that should be? The answer to this one should be a constant “one more is always better” because you never know what that latest (greatest?) faceplant will teach you. Take a fall, take another one and after you dust yourself off hit the dust again for good measure. No wish will ever come true, at least none of those involving skill.

Does all this sound depressing? Lets turn things around a bit.

If aquiring a skill takes countless hours, but there are people on this planet with those skills that means those hours aren’t that countless. You’ve probably heard of the 10,000 hours idea stating that it takes that many hours to master something. All you have to do is make those hours and you will get the skill.

Now that’s a lot of hours so lets have another round of thinking: How many people really do invest all those hours? Just a few, it’s even safe to assume that investing just 1000 or 500 hours is somewhat rare. Invest 1000 hours (or should I say 1000 faceplants?) in the skill and you can be sure that you’ll be better in it than most.

Most of the skills we want, we want just so we can show them off. Faling flat on our face isn’t exactly showing-off material so we wish, and wish. Hoping the skills will come but the failure will not. Start showing off the failures and the skill will be there, its just the other side of the same coin.

Show the skills and you show the coin…

I had a very interesting lecture today on Artificial Intelligence, I’d like to share a few ideas from that lecture that inspired me. They were all about uncertainty and started out with two terms that seem to be the foundation of uncertainty in all endeavors:

Either uncertainty caused by ignorance, or by laziness

Ignorance is coupled with not knowing because you simply don’t have a way to get the knowledge. The winning numbers of the lottery is one such event where you’re simply always going to be ignorant of the truth. And if you somehow end up certain about a future lottery, please do drop a line…

On the other side of this coin is laziness or in other words getting certainty is just to much work. An example I got in lecture was centered around pathology. Lets say you’d be able to reach certainty in a medical diagnosis but you’d need to perform 2000 tests. On the other hand you could be 90% certain with just 20 tests. Now those numbers are fictional of course but you get the idea.

Uncertainty doesn’t change anything about the truth values. Statements are always true or false, it’s the agent who isn’t certain.

Read that line again please and realise what it means: truth by it’s very nature is complete, we (agents) are the ones who distort it, doubt it and often even reject it. This -does not- change the truth however, just our perception of it.

So far it’s black and white, now a small sidestep into fuzzy logic. A logic that allows for an infinite number of grayish colors. Take the statement “This car is fast”, while it’s certainly true for an Austin Martin, it’s “more true” for a Koenigsegg. Gradual truth if you want to think about it that way. By themselves both statements are true but one seems more true than the other now doesn’t it?
It’s a very down and dirty simplification of the truth about uncertainty but at least it provides a fresh perspective on how we think. After all, artificial intelligence tries (among other things) to make a machine act like a human would in the same situation.
Handling uncertainty comes down to a few pointers:

• Don’t be lazy (Do the 2000 tests)
• Keep the cost-benefit trade-off in mind though
• We can’t solve the ignorance problem. Relax about that

Asking yourself questions about what you think is always a good practice I might add. Uncertainty is one of those subjects that really benefits from regular scrutiny. A few questions that might help you here are:

• How uncertain are you at any given point?
• How certain do you want to be at that point?
• How does the uncertainty increase and decrease?

Last but not least there is always the trade-off between Utility and probability: How strongly do we want/need some result (utility) and how certain are we to get it? (probability) A probability of 100% although very nice is very hard to come by. Is it always necessary to reach this value? I sure don’t hope so, imagine the costs that would bring, and is the benefit really that big? Also imagine the stress it would bring if we always wanted the truth and would not accept any amount of uncertainty.

It’s always good to want less uncertainty and seeing as the truth is out there we can choose to go look for it. Don’t be lazy, accept ignorance and above all don’t worry if you don’t have perfect certainty yet.

If it’s not ignorance that’s stopping you you’ll get the truth in the end if you are prepared to make the costs.

Happy hunting

If you’re a bit like me you’ve probably been told you’re crazy on a lot of occasions. Sometimes it’s a bit more subtle and you’re “just” called unrealistic or a dreamer but it can even go as far as being called totally insane. From time to time you come across others who have the same thing.

The Internet is one such place, a place where you can be yourself without getting into trouble for being crazy. You might be called eccentric but most likely you’ll be a unique voice and if you start blogging you’ll be sure to gather a lot of subscribers. The benefit is Internet instantly becomes clear: there are more people like you out there. If only one in a thousand people think like you do chances are you will hardly ever meet one in real life yet set up a blog on the subject and in no time you’ve got yourself a little tribe.

The truth is out there

But is craziness really crazy? Or is it just the opinion of the way a minority thinks. It’s out of sync with the norm and so it’s somehow wrong. The truth is not always the opinion of the majority after all.

The minorities however are on the rise. Talking with fellow students or colleagues probably will get a few raised eyebrows on the subjects of personal development and lifestyle design. The four hour workweek gets some laughs and looks of disbelief, the whole idea of passive income streams is all but ignored. Ignore the crazy folk.

Talking online and blogging however you can’t deny that these topics are definitely getting more and more attention. It might just get mainstream soon and in doing so it’s going to get harder and harder to be heard. Because that’s one of the benefits of being crazy. On the one hand you don’t get listened to because you’re crazy, on the other hand you do find yourself part of a tribe that does listen. Once that tribe gets to big it’s going to be a tough job staying one of it’s leaders.

Little league

A simple example: I blog about personal development, lifestyle design, minimalism and zen. ….ever heard of Zen Habits? Illuminated Mind? and of course the blog of Tim Ferris. A small time blogger like myself couldn’t possibly compete with these huge guns in the niche. Maybe if I started a few years ago I’d be one of them but as things are we’re down here. Proof that these ideas aren’t that strange after all although when looking at real life experiences only you wouldn’t know you were sane.

The Internet offers us so much. In real life our ideas might be called crazy, we’re the only ones we know who have them. While on-line there are so many people talking about the subject that we have a tough time making ourselves heard through all the twitter and chatter.

What can we do about that one? Either way it’s hard being heard. But what if you implement the lessons from real life into blogging? Write about something that seems totally crazy on-line. After all, it’s just another environment you’re in and in that perspective no different than your real life chats with people.

• Being crazy makes you stand out;
• standing out gets you noticed;
• getting noticed gets you heard (eventually);
• getting heard lets you share your ideas.

You meet all kinds of cool people who share your ideas or at least have an interest in what you’re writing. The world is big enough to build your own group around just about any subject. If you thought of it it’s certain others think the same. Blogging is the game of finding those people.

Call me crazy, but that’s how I see the on-line world. Millions of people, and we’re all crazy in one way or the other. Don’t be ashamed, it’s the place to be to find like-minded people. Speak up about your thoughts and you will be heard. Be yourself, be crazy and enjoy talking to the other crazies.

Failure is a part of every day life for without it we wouldn’t be learning at all. Failure is level zero so to speak, it’s where we start from, we have nothing, no achievements, no successes. From this starting point we embark on a journey to get where we want to be. Without exception this is “better”, “successful”, “loved” or perhaps “being worthy in the eyes of others”. (Nobody goes forth in life trying to be miserable after all, we all have our golden dreams.)In the eyes of others is a very important statement here for we usually want things not for ourselves but so we can show others that we really are somebody. If bragging about ourselves to others would not get us higher up some social ladder would we still do it just or ourselves?

The single biggest hurdle to get over is to accept that we are utter failures in life when we start out. We can’t even take care of ourselves now can we? Diaper changes, meals served to us and all kind of other things. We don’t have control over anything, not even our own body (yet). The more we learn, the more we gain control over our own actions. The more control we have to more responsibility this brings along with it. But you -as avid reader of this blog and other blogs on personal development and lifestyle design- already know this don’t you? They say knowledge is power and most certainly knowing that, with more control comes more responsibility equals more power. You’re in control of your own actions every single day. Again this is old news if you’ve been reading about personal development.

Acceptance

Accepting the current failure is the big hurdle, getting over it can be done by realizing that you have the control to change things. You’re not a victim of your own life or a victim of circumstance. With enough knowledge (power) you can change just about anything. It might not make you a millionair rock star, but you can have a very comfortable life if only you take control and not let life slip through your fingers. Life isn’t that bad actually once you get properly acquainted with the way the game is played

But still, I haven’t written anything you didn’t know already now did I? For you see, that’s the problem with all these development blogs. We keep beating about the bush on that one issue that seems so hard to grasp: You are responsible and so it’s up to you to make the change.

Same old stuff, different day

We bloggers can write all we want and you can read every single blog out there on the subject. Fact is that reading is not the same as actually taking responsibility. I could write all I want about the major changes in my life, how I made the changes and how I’m on my path to where I want to be. Many bloggers do the same and their posts are always a great hit with the readers. Reading about how we live our lives and how we do things might give you some ideas, but reading alone will not change your life. Taking (blog-inspired) action is where the control is. Even if you do manage to take control failure will always be a part of the game of life, it’s here to stay.

I know I really enjoy reading about others traveling, about Leo planning to move to San Francisco, Alan’s latest adventures, Carl’s new blog, Sean’s escape from the 9-5 and all those other cool people out there. But the fact remains I’m not traveling, moving or having adventures. I’m just a blogger and a dreamer. I’m not where I want to be so in that respect I’m a failure. But at least I know it and want to change things. I’m not a victim, I’m responsible for my own life and so it’s up to me to make the change… I got myself into this mess, now I’m getting myself out!

Nothing new to report here, you know all this stuff

…so turn off the screen, get off your behind and start acting responsible. And you know what? It’s not about being worthy in the eyes of others. It’s about being who you want to be, regardless of others. I have nothing new to offer you, nothing that deep inside you don’t already know.

Are you with me? Let’s see what’s next. A new adventure is never far away, that’s life for you.