Can Writing It Down Change Your Life?

We have all heard that journaling is a good idea. It is something that is recommended by psychologists and religious teachers alike as a method of self examination, but does it really do any good? I would give my personal experiments with journaling a mixed review at best, in part because I am not certain I want to keep a permanent written record of some of my less than stellar thoughts.

Introductory texts teaching technical analysis, trading stocks on the basis of market activity rather than investing in a company on its intrinsic value, agree that after completing a transaction, the trader should write down what he did, why he did it, and how it worked in a formal logbook or spread sheet. Now there is some evidence that this kind of journaling can also improve job performance generally. A Harvard Business School working paper by Professor Francesca Gino demonstrates that employees who set aside 15 minutes at the end of the day to reflect on and record their daily activities will measurably boost their job performance. In an experiment involving employees at an Indian multinational IT services company, Wipro, one group of employees were given 15 minutes at the end of the day to record their activities. After 10 days the journaling employees had 22.8% higher performance than the control group.

"In the field study, we were asking people to work less," Gino says. "It's counterintuitive, because you think you want to use those 15 minutes to keep working, but it actually leads to performance."

I would like to know what was being measured and whether or not supervisors were allowed to read these journals. Unfortunately, this information came from a news article entitled, “This 15-Minute Activity Will Make You More Successful at Work” by Drake Baer. It appears that access to the paper requires a subscription to the Harvard Business Review.

Professor Gino developed the idea for this experiment from her personal practice as a business school instructor. After each class she records what happened including student comments and the points in her lecture that led to quality discussions. She then uses lessons learned from her journal in planning her future classes. In her studies, Gino has discovered this method can help increase a student’s grade point average and while seeking re-employment after losing a job.

She observes, "It's very easy to deceive yourself if you're just thinking about it, but when you write things down on paper, it's easier to identify what's helpful."

Not Yet Half Full....

I saw this chart this morning in an article detailing our current unsustainable bubble economy, fueled by funny money printed by the Federal Reserve in an attempt to postpone what some term a Kondratieff winter. One way or another debt, particularly bad debt, must be squeezed out of the economy. How and when that happens remains to be seen. However, as I studied this graph, it occurred to me that while the glass is not yet half full, the water level is heading the right direction.

Credit card debt is getting better. After peaking in 2009, as a nation we are starting to pay down our credit cards. The numbers are still not good. Interestingly, credit card debt is a tale of two cities. The average U.S. household owes $7,327. However if only the households that carry a balance on their cards is considered, that number rises to $15,706. A fine example of why the average is sometimes a relatively useless number when considering financial statistics. $15,706 in credit card debt, most likely in the 12%-20% range is a crippling burden for a typical family. It is hard for me to understand how a family could allow this to happen, but I have heard too many stories of how the unemployed tried to maintain their standard of living by putting it all on plastic until they landed in bankruptcy court.

We are doing better with mortgages. My highly calibrated eyeball sees about a $1.5 Trillion drop in mortgage debt since the real estate bubble popped in 2006. As a nation we still owe over $9 Trillion on our homes. As a point of reference we owed just over $6 Trillion in 2003. Unfortunately, it is difficult to find hard numbers on the various sorts of zombie mortgages waiting out there in the darkness. Sometimes the borrower, knowing that foreclosure is in the cards, vacates their home with or without notifying the bank. The bank knows that it isn’t getting the mortgage check but doesn’t know why. In some cases the bank chooses not to maintain the property or pay the property taxes. This throws both the property and the mortgage holder into a state of limbo until formal bankruptcy proceedings are complete. More often the homeowner just stops making payments, but remains in the home until the sheriff knocks on the door. If the occupant is maintaining the property, it can be in the bank’s interest not to go for a quick kill in foreclosure proceedings. If the local market is extremely depressed, the bank may lose less money by letting the current occupant remain until housing prices recover a bit.

The really bad news is student debt. In 2009, the year I started writing this blog, student debt was only around $150 Billion. It was not yet an issue. In only six years that number has jumped to around $1.2 Trillion! What was once a minor irritant has exploded into a full blown national crisis. How in the world something that bad could happen so quickly, is a story of greed, naïveté, and the well intentioned folly of a Government that believes more money always makes everything better. It is particularly destructive to our economy because it postpones and limits the development of household formation units. Traditionally young families are one of the major drivers in the economy. Young people get married. Then they start a family. Then they have to buy houses, furniture, appliances, minivans, new clothes for their children (every year), school supplies, etc. etc. Well, they aren’t going to do much of that until they pay off those student loans. It also causes a lot of psychological problems. Young people believed a lie, that a college diploma is a golden ticket to the good life. In fact about 40% of the recent college graduates lucky enough to find a job will not be working at a job that requires a college diploma. Of course us Baby Boomers all know coworkers and friends who tell unhappy stories about their boomerang children sulking in their basements. It is a disaster.

People like me who write blogs like this one still have to convince our nation that debt is a curse not a blessing. However, as Bismarck observed, the foolish are learning from their mistakes and the wise are learning from the mistakes of others. Gradually, as a nation, it is beginning to dawn on our collective psyche that debt is a bad thing that constricts and limits our freedom. Hopefully, sometime in the future, we will rediscover that the ability to lend money to others is a blessing.

Preach What You Practice

I recently read something that caught my eye, “Preach what you practice.” I can’t find who originally coined the phrase, but I like it. We have heard the statement, “Practice what you preach,” usually in a self righteous rant attacking an opponent’s lack of perceived personal integrity. As I have grown older I have found hypocrisy is a more complex and nuanced problem than I believed it to be in my youth. Sometimes an action that appears hypocritical in another is motivated by values that are held by that person which are not apparent to you. In addition a person may sincerely believe in a particular virtue but find difficulty in applying those truths to his life. Unless he claims to be something that he is not, he is not a hypocrite even though his actions do not correspond to his standard of personal integrity. Rather than diligently seeking to remove a speck of sawdust from our neighbor’s eye or even contemplating our own failure to perceive and condemn our own shortcomings, let’s think about what we are doing in our life that works.

Then, let’s preach what we practice.

How we interact with the world is based on our understanding of the world. I will term this understanding your personal meta-narrative, a grand overarching series of beliefs and stories that create your world and are fundamentally responsible for your interactions with this world. Some of the stories we tell ourselves are useful others are not useful. Even if your meta-narrative contains elements of the truth about reality, if it is not helping you to create a better world for yourself and those whom you love, it is not useful. As for the truth, it seems a little messianic for any of us to claim we have the truth, at least in, “The truth, the whole truth, and nothing but the truth, so help me God.” meaning of the word.

I have a friend who is a world class master craftsman. His work appears in famous hotels, like the Ritz Carlton as well as luxury condominium developments in a city where over the top perfection is barely acceptable. Along the way, he has trained numerous young men in his art, readily giving them secrets of his trade that took him over twenty years to acquire, even though he knows these young men will become his future competition. Why would he do that? Because he knows the importance of preaching what you practice. If it is really of value, it is an important step in making the world a better place.

I have spent a considerable amount of time and effort trying to identify behaviors that are consistent with my beliefs as a Christian that are useful in the quest for financial freedom. Along the way I have learned that there are certain behaviors that are more likely to lead us towards financial freedom and others that just as surely lead us to poverty and bondage.

These behaviors invariably rise from the stories we tell ourselves.

I am constantly told that everybody has to be in debt. No. That is a story you tell yourself. You choose to be in debt, because on some level you believed that somebody else’s money could buy you happiness or fulfillment.

Most frequently this argument will be applied to the purchase of a house. Everybody has to have a mortgage, right? Well, no. I took out a mortgage on a three bedroom home because it was cheaper than renting a small two bedroom apartment in the Washington, DC area at a particular point in time. That worked out quite well for me. However, taking out a mortgage on similar homes in my neighborhood at another point in time proved a catastrophe for those unfortunate souls who bought into the 2005 housing bubble.

I have been told by Millennials that student debt is a necessity. No. It is not a necessity. It is a very dangerous free will decision that is likely to strangle your ability to take the next expected steps along the road of life for maybe, ten years. You just graduated with a mortgage, but without a house. That burden postpones marriage, children, and buying that first starter home. In spite of what your parents or well meaning adults (I have been guilty of this one) might tell you, a college degree may or may not be the best plan for your life. Perhaps you were born to paint fireballs and skulls on motorcycles or repair automatic transmissions for Mercedes Benz, an occupation that pays an annual salary in the low six figures. If you truly desire a college education there are many options to taking on $30,000 or more in debt. The best option for the average student not interested in spending time in the military is taking the funds from a Federal Pell Grant to a nearby junior college. If you kill it in a two year school, there is a good chance you will get scholarship or grant money from a state college. You can get a degree from a good school without debt even if you are not the valedictorian of your high school class. It may not be easy but it can be done.

How about the six year car note on the $50,000 pickup in your driveway? Nah, don’t get me started.

How about investing in Wall Street? Do I think for a minute that the stock market is an even playing field? No, but if my story ends there I will not have an opportunity to participate in just about the only place that an average American can build considerable sums of cash for dreams like retirement or a child’s education. Yes, Wall Street if filled with crooks and con-artists. However, consistently investing small sums of money in a diversified mix of low cost index funds over long periods of time will likely bring you to a point of financial freedom, perhaps a greater freedom to do good in this unhappy world than you imagined could ever be possible. Even building my own personal mutual fund out of a mix of boring, conservative, dividend paying stocks has produced pretty good results, though I doubt my personal insights beat the indices over the decades, I have followed both paths. I am here to tell you they work.

If the stories that you tell yourself are working, great! Share your wisdom with the rest of us, “Preach what you practice.” If your stories are surrounding you with a cold dark mess, understand that as you change the stories you tell yourself, you will change your interactions with the world that surrounds you.

And that, can change everything!

What Do You Bring to The Table?

A generous person will prosper, whoever refreshes others will be refreshed. Proverbs 11:25

Michael Ellsberg is an author who studies men and women who became millionaires and billionaires by dropping out of the system, people who did not follow both normal career and educational paths, but found unusual ways to achieve success. Of course the ability to network and sales skills were important tools that helped them on the path to financial freedom. In Ellsberg’s mind networking and sales skills are different but inseparable threads in the paradox of success:

In order to advance your own agenda, you must forget about yourself and your agenda. Instead, you must focus on the agenda of your employer or your customers who are ultimately, your employer.

As you build a network, you are marketing a product. That would be you. No, I am not suggesting that you approach every potential relationship in life like a sleazy used car salesman looking to make a kill. Instead focus on listening and learning. How can you be of service to this individual? What do you know or have that they might need? It is easy to believe that when you approach a person who is successful, wealthy, and powerful, like your boss that she holds all the cards. That isn’t true. Just like you, she has needs. Perhaps you know something or someone who can satisfy those needs. Perhaps all they need is an opportunity to talk. Can you hear what their words really mean? Every person has his own values and goals. These are not the same as your values and goal but they are every bit as valid and valuable to him/her as yours are to you.

Life is complex. Health, a meaningful job, financial freedom, a happy family life, a supportive social network, and spirituality are all necessary components in a happy successful life. Nobody is killing it in all these areas. You might know something about healthy living that could benefit another. You might be in a position to introduce someone to another person who could hook them up with a better job. Whatever you have that might benefit another, look for opportunities to be a blessing. In Maryland I knew two good automobile mechanics. In my new home, neither of my cars has yet required any serious work. Where do I take them if something major goes wrong? I hope a friend can clue me in when the time comes.

Proverbs 18:16
“A man’s gift makes room for him, and brings him before great men.”

The obvious application in the Biblical world would be offering a gift to a king or the minister of a king to obtain access to the throne room, but it could just as easily apply to the talents of a skilled craftsman or a competent physician. I would offer even another understanding of this proverb. The gifts of someone with a generous spirit, someone who is open to opportunities to be a blessing to others, great or small, will in turn be blessed. Their gifts will open doors and make room for them, maybe even in the presence of the mighty.

I have listened to the stories of many highly successful men. All of them that I would want to emulate in some way or another are givers. One of them, an elderly man who owns an insurance agency, gives away his entire after tax salary (approximately $1 Million a year) from his business to charity. Don’t worry. His many investments more than take care of his family’s needs.

Be a blessing, knowing that while God is not a cosmic gumball machine that exists for our benefit, he will be faithful to reward those who diligently seek after him and walk in his ways.

Get a Haircut and Get a Real Job

Get a haircut and get a real job
Clean your act up and don't be a slob
Get it together like your big brother bob
Why don't you get a haircut and get a real job
George Thorogood

The first time I heard this song back in the early nineties, I almost couldn’t stop laughing. Boy, did it hit the nail on my head. The song and the expression, “real job” both became a part of my life. You see, I made the great compromise. A liberal arts degree landed me in a series of factory jobs that I didn’t like and didn’t offer very good pay. While it is sometimes necessary to work at whatever is available in order to take care of yourself and your household, no sane person wants to work at a job they don’t enjoy for lousy money. Working for low pay in your God given calling, I understand. Working at a job you can’t stand that pays an obscene amount of money for a few years that I understand. Not even all medical doctors love their jobs.

But, if you hate your job and it doesn’t pay spit, plan your escape!

I decided that working in a research laboratory as a mechanical engineer rather than as a floor supervisor in a factory might result in a more acceptable job that paid a salary that would support a lifestyle that my wife and I would find acceptable. I went back to school and earned my BSME.

I made the great compromise with life. I got a haircut and I got a real job.

Writing was my passion, but nobody seemed interested in paying me to write. I was raised to function as a cog in a great corporate or governmental bureaucratic machine. I knew how to go to school, get my ticket punched, do the job search thing; then find and keep a job in an existing organization. I did what I knew how to do to obtain a reasonably satisfying, meaningful career that paid enough to cover our needs and some wants.

Now, sometimes I use the expression “real job” in conversations. I try to use it intentionally in order to get people to stop and think about one of two life questions depending on context.

The first application usually appears in conversations with artists or others who are pursuing their dreams, but are having problems with the business of art. To these people I sometimes point out that it is a lot easier to live your dream if someone in the family has a “real job.” Understand this has nothing to do with how hard you work or the nature of your passion.

I know a man who has a wife who owned and operated a bed and breakfast. He willingly admitted that she worked more hours than he did in his steady nine to five job. He also believed that she worked much harder than he worked, but her business would not have survived if she didn’t have access to a family checkbook filled with money that came from his biweekly paycheck. For whatever reason, cash flow problems would have landed her in bankruptcy court if someone did not have a real job. Because someone had a real job, she was able to sell her business for a large sum of money that helped provide them with a very comfortable retirement.

I know a man who was once an engineer. He quit his job to become an artist. He has truly mastered his craft. I find the quality of his work absolutely amazing, but I don’t believe he could have reached such a high level if he didn’t have a wife with a BSRN who had a real job in a hospital that paid the bills and provided the family with health insurance.

I also use this expression when I believe I am talking to someone, like me, who is standing in a pair of uncomfortable shoes. Life seldom seems to work out as expected. If you find the difference between your expectations and the reality of your job situation unacceptable, take account of your options and do something to try and improve your situation. Complaining and waiting for something to change is unlikely to bring you any closer to happiness.

If you find your work meaningful and fulfilling; if you and your spouse are earning enough to meet your family’s needs and at least a reasonable number of their wants; then you have a real job.

I really admire people who have the courage and determination to live their dreams. It takes talent and a lot of hard work to walk the path less traveled. George Thorogood made it happen:

I hit the big time with my rock 'n' roll band
The future's brighter now than I'd ever planned
I'm ten times richer than my big brother bob
And he, he's got a haircut he's got a real job

If you haven’t heard the song, check it out. If I keep writing, maybe some day someone will pay me to sing my songs, but until then you get to listen for free.

Get a Haircut and Get a Real Job

Is it Right? Is it Legal? Is it Profitable?

Over the last couple of months, I keep running into people with problems who don’t understand what I term the Paradox of Success. I have also discovered that consultants, businessmen, and authors are all teaching their audiences, in very different ways, that their understanding of this paradox is the basis for their success. Here it is:

In order to advance your own agenda, you must forget about yourself and your agenda. Instead, you must focus on the agenda of your employer or your customers who are ultimately, your employer.

This truth can also be applied to any aspect of human relationships. This is important because, in the end, even in this day of computers, too big to fail corporations, and unthinking unfeeling Government bureaucracies our interactions can ultimately be reduced to me and one other person.

Bryon Traxler is a specialist who has done over $10 Billion in business as a mortgage broker. He finds funding at places like JP Morgan and Goldman Sachs that he then uses to fund an equity position in major real estate developments. Before he agrees to a business deal, he always first considers his potential partner as a person. If he doesn’t like or trust that individual he will not sign an agreement no mater how lucrative the deal.

Then he asks himself three questions.

1) Is it right?
2) Is it legal?
3) Is it profitable?

When he asks the first question he is really applying the golden rule (So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets.) to every aspect of the deal but profitability. Traxler happens to be Jewish, but that doesn’t matter, the law of reciprocity appears in the texts of 21 different religions. Is there anything morally wrong with your intentions? For example, if you are a thief, either someone who steals time or material from your employer or someone who runs a CMO considering the sale of subprime Collateralized Debt Obligation bonds to a state retirement system your actions do not meet the first test.

If your plan passes the first test there is a good chance, but no guarantee that it will pass the second test. Your dreams for a 400 unit luxury condo development in an older part of town could be a very good thing for you, your customers, and the city, but if the zoning board says, “No.” the buildings will never exist.

The third question applies to everyone involved in the deal. A businessman must consider the legitimate demands of three groups, his employees, his investors or shareholders, and his customers. Before you ask for a job, a loan or partnership agreement, or a raise, put yourself in the shoes of the person on the other end of your request. What’s in it for him?

First of all ask yourself, “Should he like me? Should he trust me?” Would you hire yourself or would you look for a better class of employee? This even applies to anonymous stock purchases by retail investors. All the masters want to know something about the management team before they buy a position in that company. Would you knowingly invest your retirement dollars in a business run by crooks?

Then, if you want $15.00 an hour, ask yourself, “Am I worth $15.00 an hour?” I am sure that if you are worth $30.00 an hour your employer will fall on his hands and knees for the opportunity to give you $15.00 an hour. If you can be replaced by someone willing to work for $10.00 an hour or a machine that works 24/7 without asking for raises or health insurance, your employer has a moral obligation to his customers and his shareholders to say, “No!” or “Don’t let the screen door hit you on the way out.”

If you want a raise, tell your employer what you are already doing that is above and beyond the requirements of your pay grade. If you don’t know about his problems or what is keeping him awake at night, ask. Offer a plan to improve your performance to meet his needs. Make certain he understands you are looking for a raise, but you are willing to do more to get it.

If you consistently strive to become a person of integrity and excellence, I believe that the universe, your higher power, or my God is watching your struggles.

He exists and he rewards those who seek him.

As Mother Teresa observed, “In the final analysis, it is between you and God. It was never between you and them anyway.”

Wealthcare

Back when I first became a Christian, spiritual gifts were all the rage. We would ask each other, “What’s your gift?” or as a conversation starter we would ask, “If you could pick out a spiritual gift, what would it be?” It was easy for me to answer that last question. It was then and it would be now the gift of healing. To make a sick person well; to end pain and suffering; what could be better than that? Miracles of healing do occur from time to time. Unfortunately God has not used me as an instrument in any of these processes.

Still, I pray for the sick.

As a nation we tend to believe that doctors are gods who can answer our prayers with a miracle. Some critics of our healthcare system refer to it as a sickcare system, with good reason. The entire healthcare industry, doctors, drug companies, insurance providers, and patients are all focused on finding the procedure or drug that will get rid of our symptoms rather than focusing on what it would take to keep us healthy.

Some days I feel as though people in very real financial distress expect that someone (usually the Government) can give them a miracle pill that will end all their pain without any effort on their part. Unfortunately, it doesn’t work that way. Wealth like health is the result of a complex intertwining of assumptions, thoughts, decisions, and behavior over long periods of time.

One of my friend’s mother smoked cigarettes into her mid-eighties without lung disease. She finally quit when roll-your-own cigarettes became too expensive. She must have come from the deep end of the gene pool. Most people who engaged in her behavior would have died before the eightieth birthday. If you consistently spend more than you make over an extended period time, building up large balances on your credit cards, I can pretty well guarantee that a trip to the financial emergency room is in your future.

Even if you come from the deep end of the gene pool, super-sizing your daily intake of fast food rather than a eating reasonably sized portions from the menu of a nutritionally balanced diet is likely to cause quality of life problems as you move across the twenty or so years we call middle age. Like exercise and good diet, what you invest in your 401(k) while you are still in your twenties will almost guarantee a better life when you reach your sixties.

Take an inventory of your current beliefs and behaviors. Are they producing the fruit you want to see in your life? Are they likely to move you closer to a better you or a better life or are you taking unnecessary risks that are likely to cause you problems if everything else doesn’t go exactly as planned.

Do you want healthy teeth and gums? Do you brush and floss daily?