Habits are Investments

In a previous post, I discussed the idea that you should focus on building habits one at a time. When we commit to smaller habits that are easy to form and sustain, we grow our ability to achieve more and more. If we try to do too much too soon, we quickly encounter our body’s natural resistance mechanisms. A good way to think about a habit is as an investment. 

Results Take Time

Depending on how big the goal, the subsequent energy required to reach it is proportional. For example, if your goal is financial independence, you can expect to spend several years in that pursuit. If your goal is to become fit, you can expect to achieve your goal after several months (maybe even a year or two).  

But what if instead of setting a big lofty goal, we set a more reasonable one and think of it as an investment? A few dollars a day over the course of many years can lead to financial security very quickly. For example, if our goal is to become fit, perhaps we can choose the small goal of eating a piece of fruit every day. It seems inconsequential, but once that habit is solidified, the door opens to add another small habit (maybe eating adequate protein to support an active lifestyle). Then we add another habit…and another…and, before you know it, you reach your goal. 

Patience is required in this process. If we eat our piece of fruit and then expect to see results after a day, we are delusional (you might feel better, but you won’t look any different). But we can eat our fruit knowing that this habit is the step to begin a journey that will lead us to bigger and better (and more noticeable) results. Think of each small habit built as a deposit into the account that will soon pay dividends much larger than the original investments. 

Compound Interest

Achieving a goal is the end of an exponential process. Much like compound interest. You put in $1,000 and earn $20 interest. The next year, you now have your original $1,000 plus the next $1,000 you invest, PLUS the $20 interest. Habits work the same way. Month one you decide to eat fruit. Month two you are eating fruit and watching your protein intake. Month three you are eating fruit, watching your protein intake, and counting calories. With each habit you build, you have the value of that habit, plus all of the other little habits that are grown out of that one. Does that make sense? (I am a math teach haha) The results may not be immediate, but they will grow faster than you think. The beginning is the hardest. It is against our nature to put in effort without seeing reward. But it’s just the way it is. With a little faith, we can know that these small habits will eventually bear fruit. 

Thanks for reading!

Advice for the New Year

“Just begin and the mind grows heated; continue, and the task is completed” – Johann Wolfgang von Goethe

My advice for 2020 is to just begin. Beginning a worthwhile goal can be easy when you know what to expect along the way.

It Doesn’t Matter how Long it Takes, it will be Worth it!

Any worthwhile goal takes time. A good way to have solace along the way is remembering is that the time will pass anyway. Let’s say it takes about three years to achieve the physique you desire. That’s a long time! But in three years you can look back proudly at your accomplishments and progress, or you can look back in regret that you didn’t begin and persist.

Brian Tracy says that it takes about 22 years after you become serious about money to become a millionaire (some FIRE proponents say it is closer to 15 years if you save aggressively). By any measure, 22 (or 15, or 12) years is a long time. But, the time will pass anyway. Just begin! At the end of 22 years, you can look forward to financial freedom, or look back and regret your inaction.

Every Step Forward makes the Next Step Easier

Let’s say you start your personal development journey by committing to working out three days a week. Once you begin, you face various setbacks, you have to rearrange and better plan your free time, and organize your daily activities around this foundation habit. But you begin and persist, and eventually working out three to five times a week is part of your lifestyle. It is almost as if it is on “cruise control”.

As is expected, you begin to expand and set new goals. Here is the cool thing, once you have built the discipline to make one habit, the next one is easier. Discipline is a muscle, the more you work it (not to exhaustion!), the more efficient and stronger it becomes. This is a similar phenomenon to investing money. You invest $1,000 and in the months and years ahead, you earn interest with little to no effort on your part.

I hope this short post gave you some information and inspiration to set a goal and just begin. Until next time…

Listening to the Seasons

I started seriously working out in the spring of 2012. I remember the exact event that motivated me. I went to the gym with a colleague and we went to the bench press. I did my customary 5-8 reps of 135 lbs and when it was his turn, I watched with amazement as he easily repped 225 lbs. I was amazed. I made a decision that one day I would be able to do the same.

I started my fitness journey doing Stronglifts 5×5 (an excellent start). Within just a couple months, all my lifts had gone up significantly. Then something happened. Progress slowed. Alot. I tried to push past it, but workout after workout I grew more tired and burnt out.

Any fitness professional worth their salt would know the obvious answer is periodization. Basically meaning altering the volume and intensity of your workouts over time to allow for full recovery.

I say all that to discuss an important idea when it comes to fitness and to life. The seasons.

There is a Time for Everything

Ancient wisdom going back to King Solomon talks about the importance of seasons (“There is a time for everything…”). It took me a while to see the true wisdom in understanding and going with the seasons.

When I began to periodize my training, I started to make progress again. Albeit more slowly, but progress nonetheless.

I then began to notice the same patterns in other areas of my life. At times, things would thrive, and then at other times, despite my most valiant efforts, things would change or “get worse”.

In my mid-twenties, I happened upon a book by Jim Rohn entitled “The Seasons of Life”. Reading this book gave me a philosophy that I refer to often (especially in difficult times). I want to share a few of these experiences so that hopefully you can notice and go with the seasons of your life.

Seasons of Fitness

Our bodies cannot work at 100% all of the time. There is basic information we have to know about how our bodies work in order for us to get the most out of them. For beginners, you should follow a linear program. Meaning you should add more weight to the bar, or walk/run longer, until you stop making progress. When you become an intermediate athlete (which will take 3-6 months), then you begin to periodize.

Now with this bit of wisdom, I know that I can’t always lift heavy. I need light days and deload days. I also need to work on other aspects of my fitness to improve. I highly recommend working with a good fitness professional if you are having any trouble at all reaching your goals.

Financial Seasons

Money is an interesting thing. Sometimes you feel like you have more than enough, and then other times, scarcity overtakes you. I am reminded of a story in the bible where David is asked to interpret the Pharaoh’s dream where he sees seven skinny cows and then seven lean cows, and the lean cows eat up the fat cows. David interpreted this dream to mean that there would be seven years of plenty, and then seven years of famine. David’s solution was to save 1/5 or 20% of all the grain during the good years. As a result, Egypt had food all throughout the lean years.

I believe this will be true of pretty much everyone’s financial situation. Sometimes money will come in from unexpected sources, and other times unexpected bills will pile up. So what do we do? We learn to live frugally and save for those times when opportunity and money is hard to come by. Coincidentally, a 20% savings rate would be a great place to start (hopefully ramping up to 50% or more over time).

Just a few weeks ago I got an unwelcome bill. To the tune of $4,000! Of course I was bothered, but my wife and I have carefully planned and saved to the point where a bill of this size is actually no big deal. The comfort of knowing you can handle a financial setback is much better than the comfort of riding in a new car…to me at least…

Professional Seasons

Seasons become very apparent in our work. Sometimes things come to us and thrive. The promotion comes, we learn a new skill or a new way to earn money, and everything is great! And then there are other times where we are looked over for a promotion, a colleague says a harsh word to us, or our work begins to overwhelm us and throw us out of balance.

Here too, we are admonished to submit to the seasons. We should always be learning and growing, but we should be patient (and expect) that we will meet the inevitable plateau and/or backslide. During these times we have to remember that our next season of opportunity is coming. What are we doing to prepare for it? Are we reading? Are we speaking with wise older people? Are we trying new things?

In conclusion, just as the seasons of weather dictate when we will sow and when we will reap a crop, the seasons of our lives dictate when we will sow and reap in our relationships, finance, health/fitness, and work. Let’s be sensitive and listen to the wisdom of the seasons.

Until next time…

How Normal People Can Save 50% or More of their Income

So before we even get started, let’s discuss why we would want to save that much money anyway. Blogs like Mr. Money Mustache have popularized the idea of FIRE or financial independence through early retirement.

I love reading articles on that site and the like. As a relatively new FIRE devotee (about a year), I quickly learned that saving 50% of your income is not only possible, but easy. My wife and I were able (over the course of a year) to save about 55% of our income, boosting our savings and investments significantly.

Applying a little bit of the Pareto Principle (80/20 Principle) we can assume that some lifestyle changes and budgeting principles will create more of an impact than others. In my experience, the three most important factors have been: 1) choosing a home that is affordable, 2) choosing a car that is affordable, and 3) planning (specifically meals and trips) in advance.

I specifically wrote this article with normal people in mind. People who are not necessarily high income earners, but those who work and have a reasonable amount of discipline. I found that the median household income in America is about $60,000. So any theoretical calculations will be using this figure. Please adjust to meet your income. Now…let’s get into it…

Choose an Affordable Home

A good rule of thumb is to choose a home that is 2 to 2.5 times your income. So for our imaginary household, that would be a $120,000 to $150,000 home. Translated into rent, you would be looking for a place for about $1,200 a month. My wife and I (we are both public school teachers) live in an expensive metropolitan area, and we have a dual income. Strangely enough, our humble abode comes in at 2.28 times our yearly income.

Now for the why. Simple. Your house is the BIGGEST financial purchase you are likely to ever make. Think about that…chances are this is the most expensive thing you will ever buy. Sobering thought.

When you choose to buy a home well within your means, you can free up large amounts of money. Be realistic. If a neighborhood has good schools and is safe, how much more would you really enjoy living somewhere else that much more? Don’t become “house-poor”.

Choose an Affordable Car

I proudly purchased my first car for $8,000 CASH in 2011. To date (2019) it is still running strong and I have reason to believe it will last me at least another 3 years and likely more.

Recently I was getting routine maintenance done on my car and I saw a sign that said “Your car is the second most expensive item you are likely to purchase, make sure to take care of it”. To be honest, I was shocked when I read that. I mean…I know it’s true, but I just never let that reality sink in.

Here is the deal with cars. If it is reliable, runs well, is clean, and meets your transportation needs, any car more expensive is just a flex. Think about what you get from a nicer car. Probably just a few compliments and a much bigger car note. No one really cares what you drive, and if they do, they probably aren’t financially independent. Now, to be clear, flexing is cool. Just be acutely aware that it is just a flex and can cost you a lot both in the short and long run. Flex carefully.

Plan your Meals and Trips

Before I considered the idea of FIRE, I didn’t pay too much attention to my purchases. I knew we had enough money to cover our major expenses, so I just had fun eating out and buying little gadgets at my leisure.

It wasn’t until I started looking closer that I realized that these seemingly small luxuries were costing us several hundred dollars a month.

Once we realized this, we began planning our meals for the week. We found that when we did this, we could keep our grocery prices reasonably low and still enjoy the occasional fancy dinner with no financial strain and still hit our savings goals. You see, it is one thing to decide Friday night that you are going to go to an expensive restaurant and it is a whole other thing to plan it on Sunday and think all week about spending $100 that you could be saving. We still enjoy the nice dinners and frequent vacations, but we are much more money conscious in the process.  

We also give ourselves an allowance. $150 to buy whatever we want that month. I have gone a number of months spending only a fraction or none of my allowance. It seems that frugality is a muscle after all.

In closing, these are the strategies that helped our family go from saving ~20% of our income to over 50%. Please feel free to use them and let me know if they worked for you too! Until next time…