RPF0372-The_Power_of_Cause_and_Effect
00:00:00.000 | We sow a thought and reap an act.
00:00:05.000 | We sow an act and reap a habit.
00:00:09.000 | We sow a habit and reap a character.
00:00:14.000 | We sow a character and reap a destiny.
00:00:21.000 | [Music]
00:00:37.000 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in ten years or less.
00:00:49.000 | My name is Joshua Sheets, and I am your host.
00:00:52.000 | Today, I am your philosopher.
00:00:56.000 | Practical philosophy, though. Don't get scared of that word, philosopher.
00:00:59.000 | We're going to talk about the philosophical background of cause and effect and how that applies to your money.
00:01:07.000 | [Music]
00:01:09.000 | A lot of times in modern society, we get uncomfortable with this word philosophy, talking about basically envisioning it as something that has no bearing to our daily life.
00:01:22.000 | But the word philosophy is not a word to be scared of, and your philosophy will determine many, many, many of the things that you experience in life and even how you experience life.
00:01:33.000 | You could have the same event or circumstance that happens to two different people, and they will have the same experience, but their experience of the event – excuse me – they'll have the same event, but their experience of the event will vary dramatically depending on their philosophy.
00:01:54.000 | An overly simplistic example would be that a novice non-athlete who goes into the weight room for the first time might experience the sensation of their muscles burning while doing some physical exercise and conceive it as pain and as a terrible thing.
00:02:13.000 | But an experienced athlete will conceive that as victory of pressing through, and they will visualize all of the benefits that are going to come from this experience.
00:02:23.000 | And it will even affect different interpretation.
00:02:26.000 | So, when I use the word philosophy, please don't be scared by that word.
00:02:30.000 | Today's show is going to be extremely practical and extremely focused on money.
00:02:37.000 | But I want to give you just a quick definition of the word philosophy so that you can have something that's workable in your mind.
00:02:46.000 | And then I'll explain how we're going to apply that to the topic of today, which is the subject of cause and effect.
00:02:53.000 | There are many definitions of the word philosophy.
00:02:56.000 | It comes from the Greek word philosophia, which comes from love of wisdom.
00:03:01.000 | The most useful definition for us is very simple.
00:03:06.000 | It could be made as simple as this, any personal belief about how to live or how to deal with a situation.
00:03:17.000 | Now, there are other formalized versions of it.
00:03:20.000 | For example, you could call philosophy the study of the fundamental nature of knowledge, reality, and existence.
00:03:25.000 | You could talk about this in the basis of a theory or attitude held by a person or organization that acts as a guiding principle for behavior.
00:03:35.000 | Here's some of the readings from the dictionary.
00:03:38.000 | But for now, I just want to talk about any personal belief about how to live or how to deal with a situation.
00:03:45.000 | And the fundamental idea that I want to expose to you was written in the title of the show, which you may have seen before you clicked on the show.
00:03:52.000 | It's called the power of cause and effect.
00:03:56.000 | If you want to experience an effect, you must initiate the sequence of causes that lead to its outcome.
00:04:08.000 | Here's the core premise of today's show.
00:04:14.000 | It's a very simple statement.
00:04:17.000 | Whatever begins to exist has a cause.
00:04:26.000 | That's it.
00:04:27.000 | Whatever begins to exist has a cause.
00:04:33.000 | So, if you are after something that's going to exist, and in the context today, to keep it simple, I'm going to talk about cause and effect.
00:04:42.000 | So, if you desire to get a certain effect, you need to understand the cause that's going to lead with a good percentage or standard of probability to the effect that you desire to get.
00:05:00.000 | And then you need to initiate the actions that will lead to that effect, the sequence of causes.
00:05:08.000 | This is one of those truths that you will have to think about and consider, and it is not without controversy.
00:05:16.000 | There are many philosophies of this world, many religions and religious bodies of thought that would reject this premise that whatever begins to exist has a cause.
00:05:28.000 | This is one of those things you will have to think about and consider carefully.
00:05:32.000 | But ask it carefully and consider if you can agree with it.
00:05:36.000 | Does whatever begins to exist have a cause?
00:05:40.000 | Can something come into existence uncaused out of nothing?
00:05:46.000 | Is that possible?
00:05:48.000 | Can you have something simply materialize without a cause?
00:05:53.000 | Or does every effect have a cause?
00:05:57.000 | If you believe that that's a true statement, it will have a massive impact because that principle is the basis of a huge amount of the world activity that goes on around us.
00:06:09.000 | It's the basis of many arguments about religion, many arguments about political theory.
00:06:13.000 | Why does this social class behave in a certain way?
00:06:18.000 | What can we do about it?
00:06:19.000 | Many arguments about scientific inquiry, the entire idea of cause and effect of the theory of uniformity of nature.
00:06:27.000 | Why do we expect the future to be something like the past?
00:06:29.000 | It's a basis of sociology.
00:06:32.000 | It has a dramatic impact to every area of your life.
00:06:36.000 | And if you don't have an explanatory mechanism to explain how you arrive at an effect, you have very little understanding.
00:06:46.000 | So consider this question and today we're going to focus on applying it to your money.
00:06:51.000 | I'm going to give you many practical examples.
00:06:53.000 | I want to start with a more nuanced one and then we'll go to a more normal one.
00:07:00.000 | The first thing I want to ask is about something like the value of stocks.
00:07:05.000 | Here's a question.
00:07:07.000 | If you own a stock in your portfolio and the price of that stock increases, why did that happen?
00:07:18.000 | We desire to have the effect but why did that stock actually go up?
00:07:26.000 | Why did the market value increase?
00:07:29.000 | What was the cause of that effect?
00:07:32.000 | Now immediately you can see that there could be many causes.
00:07:36.000 | Perhaps there is a euphoria.
00:07:39.000 | Perhaps the company just came out with some good news that all of a sudden is going to make a big difference on their life, on their company, on their profits in the future.
00:07:47.000 | They just invented the cure for cancer.
00:07:49.000 | They just invented a radical new technology that's going to change the world.
00:07:52.000 | So it becomes more valuable but why?
00:07:55.000 | Why did coming up with a cure for cancer all of a sudden increase their stock value?
00:08:02.000 | Well, here's the fundamental theory which is supposed to undergird stock investing.
00:08:08.000 | The price of a stock today is supposed to be set as a basis of the value of all of the future profits of the company discounted to today.
00:08:23.000 | That's the theory behind the value of the stock.
00:08:27.000 | If I come to you and let's make it simple. If I promise to pay to you $10 a month for the next 12 months, $120, and I create that promise to pay to you, what would you be willing to pay me in exchange for that promise?
00:08:48.000 | Well, it could be $120. If you were concerned about somebody robbing you of your $120, them walking up behind you, sticking a gun in your ribs, and taking the money and you give it to me as a matter of safekeeping because you're just about to be robbed, you're about to go into the dark alley and you have no choice other than to say, "Here's your $120," you might be willing to just go with getting your money back.
00:09:10.000 | But you probably are going to be motivated to give that to me with some lower amount.
00:09:15.000 | Maybe if you say, "Okay, I'll give you $100 today in exchange you give me a series of payments, $10 a month for the next 12 months."
00:09:21.000 | The point is that that's where we get the idea of discounting.
00:09:24.000 | And so in theory, if we could choose the discount rate and if we could aggregate all of the future profits of that company and discount them at the discount rate that we've chosen and bring that back to today and look at that over the aggregate of all of the shares that are issued by the company, that should give us, theoretically, the basis of the value of the stock.
00:09:46.000 | That's how it's supposed to work.
00:09:49.000 | So when your stocks increase in value, the reason should be that the company's expected future profits have increased.
00:10:00.000 | Now, there could be many other things.
00:10:03.000 | For example, perhaps their profits didn't increase but the security and stability of this company as compared to all of the other companies has increased on a relative basis.
00:10:13.000 | So now people are willing to pay more for the safety and security of this company.
00:10:17.000 | Or there could be many other reasons.
00:10:20.000 | But you want to understand something like stock market goes up and understand what is the causes of that supposed to be.
00:10:26.000 | Because if you're going to make a wise investment, you need to understand what the change of the value of your investment will be and why that can occur.
00:10:35.000 | Now, here's a key thing to remember.
00:10:41.000 | Financial success is an effect.
00:10:45.000 | It's not a cause.
00:10:48.000 | Financial success is not a cause.
00:10:52.000 | It's not something that happens.
00:10:54.000 | It's an effect of other things that are happening.
00:10:57.000 | So if your goal is financial success, your goal is to be rich.
00:11:03.000 | You've got to look back and try to understand what are the causes of my current state of poverty.
00:11:08.000 | Or what are the causes that will allow me to get from where I am to where I want to be.
00:11:14.000 | And let me give you the very practical example.
00:11:17.000 | If you're deeply in debt, ask yourself, "Why did I get here?
00:11:23.000 | What happened?
00:11:25.000 | What were the causes of this effect?"
00:11:29.000 | The situation, the effect is the fact that you're deeply in debt.
00:11:33.000 | But what were the causes of that?
00:11:36.000 | Now, as with anything in life, there could be many causes and there's no possible way that we could isolate all of them.
00:11:43.000 | But let me give you a few normal ways that this happens.
00:11:46.000 | If I'm doing financial counseling with somebody who's deeply in debt, here are some of the things that usually will emerge as being the causes.
00:11:53.000 | There could have been some dramatic life event.
00:11:58.000 | The big thing that happens.
00:12:01.000 | Failure of a business.
00:12:03.000 | Disastrous health problem.
00:12:06.000 | Divorce.
00:12:07.000 | These are the big things that affect people's lives and this accounts for a significant amount of debt.
00:12:12.000 | If you are a business owner, you are building a business, you're borrowing money in order to make it happen and the market takes an adverse turn.
00:12:21.000 | The real estate market crashes.
00:12:23.000 | The construction market falls apart.
00:12:25.000 | The market for electronic widgets disappears.
00:12:28.000 | Angry Birds is all of a sudden not popular.
00:12:30.000 | Pokemon Go is all of a sudden not a going thing because something else replaced it.
00:12:35.000 | This happens all the time.
00:12:36.000 | I always look at the world of apps.
00:12:38.000 | Those of you who work in this world, my hat's off to you.
00:12:40.000 | I don't know how you do it.
00:12:41.000 | I always look at things like Meerkat, the sharing app, and all of a sudden it was the hottest app in the world and then all of a sudden Twitter comes out with Periscope and just destroys Meerkat.
00:12:50.000 | These things happen all the time.
00:12:52.000 | Facebook comes out with live video and destroys – not destroys, but it's going to make a significant impact on Periscope.
00:12:58.000 | These things happen all the time.
00:13:00.000 | Facebook – no, what was it?
00:13:02.000 | The other app that changed.
00:13:03.000 | Instagram came out with their Stories feature and all of a sudden makes a huge – that's going to make a huge impact on Snapchat.
00:13:09.000 | Now, it could be some dramatic technological change or it could be some simple thing, mismanagement by the company.
00:13:14.000 | One of your employees embezzled from you.
00:13:16.000 | You failed on a contract because your equipment was destroyed.
00:13:20.000 | It doesn't matter.
00:13:22.000 | The point is the failure of a business may wind up with you deeply in debt.
00:13:27.000 | A disastrous health problem.
00:13:30.000 | You were diagnosed with cancer.
00:13:32.000 | Your husband had a stroke.
00:13:34.000 | Your child was born 20 weeks premature and now you have a million dollars of health bills that are there for the care for your child.
00:13:44.000 | These are all things that can happen and they're a big, big deal.
00:13:48.000 | All of these things can happen.
00:13:50.000 | But that's different if you're in debt because of those reasons.
00:13:55.000 | That's different than if you are just somebody who systematically overspends.
00:13:59.000 | Many people are deeply in debt because they just simply are always exceeding their budget.
00:14:04.000 | There could be many reasons for that.
00:14:09.000 | It could just be a lack of financial management.
00:14:11.000 | Many people just kind of income comes in, money goes out.
00:14:15.000 | They don't think too much about it.
00:14:17.000 | They're just always a little bit in the red every month.
00:14:22.000 | Or it could be due to some problem area.
00:14:24.000 | For example, many people wind up in financial distress due to some addiction.
00:14:27.000 | Gambling, alcohol, drugs, prostitution, some kind of addiction that sucks all the money out of their budget.
00:14:33.000 | Now they're deeply in debt.
00:14:36.000 | But if you don't understand the cause of how you got there, you won't understand the proper course of action to put in place.
00:14:45.000 | If you're a systematic overspender and your problem area is that you spend too much money on restaurants and at the mall,
00:14:54.000 | the solution to fix that problem is going to be simple.
00:14:59.000 | It's going to be putting in a better system of financial management with better walls around your behavior
00:15:04.000 | so that you're allocating a certain amount of money to spend on those areas.
00:15:07.000 | We're making it impossible for you to break that accidentally.
00:15:12.000 | People who have a shopping compulsion, something like that, usually it's just they're not paying attention.
00:15:17.000 | But if you're trying to give advice to somebody who's a business owner and they're a million dollars in debt
00:15:24.000 | because somebody embezzled money from them, don't start with talking about their budget
00:15:31.000 | because them just fixing their budget and saving $300 a month through a better budgeting system is not going to work.
00:15:38.000 | Now, not saying it might not have some impact, but you don't solve a million dollar problem with a $200 a month fix in the short term.
00:15:48.000 | You have to solve it some other way.
00:15:52.000 | So, if you want the effect of being out of debt, you have to first isolate the cause of where you currently are
00:16:04.000 | and then you need to clarify what are the causes, the changes that you need to make in order for you to get a different outcome.
00:16:15.000 | Because if you keep doing what you're doing, you're going to keep getting what you've got.
00:16:24.000 | If you keep doing what you're doing, you're going to keep getting what you've got.
00:16:31.000 | Now, if you like what you've got, great, keep on going.
00:16:34.000 | But if you don't like it, you can't fuss about what you've got.
00:16:39.000 | You've got to fuss and make a change of what you're doing.
00:16:44.000 | But appropriate diagnosis of the problem is the key.
00:16:48.000 | Now, here are some changes.
00:16:50.000 | So, for example, you're deeply in debt because you're just systematically overspending over a period of time.
00:16:56.000 | You've got to improve your financial management.
00:16:59.000 | You've got to develop a new system.
00:17:01.000 | You've got to develop new habits.
00:17:04.000 | You don't solve that problem overnight.
00:17:06.000 | It's a systematic series of habits.
00:17:08.000 | What's going to need to change?
00:17:09.000 | Very simply, you need a checkbook.
00:17:12.000 | And you only spend money if you have it in the checking account, if it's written down in your checkbook register,
00:17:16.000 | and if it's been budgeted in advance on a piece of paper and allocated towards that expense.
00:17:21.000 | Those are the solutions that will solve your problem if you're deeply in debt because of systematic overspending.
00:17:30.000 | Perhaps the thing is that you're not necessarily that much of an overspender, but you've never simply set a goal of being out of debt.
00:17:39.000 | Well, in that case, you set the goal of being out of debt.
00:17:42.000 | You set an ideal target, and you create a plan to monitor your progress towards it.
00:17:47.000 | But if you're deeply in debt because your husband had a stroke,
00:17:52.000 | and you have hundreds of thousands of dollars in medical bills and credit cards that piled up during the time that you couldn't work
00:17:58.000 | because you didn't have disability insurance, et cetera, that's a different situation.
00:18:03.000 | The budget doesn't fix it.
00:18:05.000 | The risk management plan fixes it.
00:18:08.000 | And a different income source, or just simply saying, "I can't do it."
00:18:15.000 | And you just say, "I'll pay you guys when you can, but for now, you're going to collections.
00:18:19.000 | You're going to bankruptcy, and you deal with it when you're able to."
00:18:24.000 | You always have to accurately identify the cause so that you can understand what you need to change to get to where you want to go.
00:18:33.000 | I hope that's a practical, useful example for you.
00:18:36.000 | Number two, here would be another example.
00:18:38.000 | If you're earning low wages, ask yourself, "Why am I earning low wages?"
00:18:44.000 | More money, a higher salary, is an effect.
00:18:48.000 | It's not a cause, although it could be a cause of wealth or it could be a primary driver of wealth,
00:18:54.000 | but the actual higher salary is an effect.
00:19:00.000 | So what are the causes that would go into that?
00:19:02.000 | Well, if you're earning low wages, ask yourself, "Why am I earning low wages?"
00:19:05.000 | Here are some ideas.
00:19:07.000 | You might just be a worthless worker, a low productivity employee,
00:19:12.000 | or maybe you're not worthless because you have a job.
00:19:15.000 | If you were worthless, you wouldn't have a job, but you're just not worth very much.
00:19:21.000 | You're kind of mediocre at your work.
00:19:24.000 | You're not particularly productive.
00:19:27.000 | I was recently with my mechanic, and we were talking about this with him.
00:19:32.000 | He had a couple of guys that were working for him, and he was talking about his challenges with him being in the office instead of in the shop floor
00:19:41.000 | because he's a good mechanic.
00:19:43.000 | He obviously comes from an expert mechanic, and this is the challenge that many people who are expert at a particular skill face.
00:19:49.000 | But the most highly productive time for him is not being on the shop floor doing routine mechanical work.
00:19:55.000 | It's being in the office selling more business or diagnosing more complicated jobs more quickly,
00:20:00.000 | building the business that's actually going to run.
00:20:03.000 | But the challenge is if you're an expert mechanic, how do you get good employees?
00:20:08.000 | He had a couple of young guys working with him.
00:20:11.000 | It's kind of an instructive story, so I'll give you all the details, but a couple of young white guys that were working for him.
00:20:15.000 | These are nice guys, but the thing that was so frustrating to him is he had a difficult time trusting them because they had poor work habits.
00:20:24.000 | He would see a Facebook post pop up from them in the middle of the day, and he'd look over at the security camera in the shop,
00:20:31.000 | and, "Yep, sure enough, when they should have been having a wrench in their hand working, there they are on the phone making a Facebook post."
00:20:37.000 | And so that was just a symptom of an overlying problem of him not being able to trust them, not particularly trustworthy.
00:20:46.000 | On the flip side, he had one guy who was a Guatemalan immigrant who came in and worked for him at night.
00:20:51.000 | And in working for him at night, he was the guy, he worked during the evening, he had another job during the day,
00:20:57.000 | he would come in in the evening, work in the evening, and my mechanic trusted him completely.
00:21:01.000 | He was more productive at night, in a few hours, than the rest of the guys were all day.
00:21:07.000 | And he demonstrated himself to be far more trustworthy and far more reliable.
00:21:12.000 | So my mechanic was trying to incentivize this guy to come over and work for him full time, and he named his price, and it was a steep price.
00:21:20.000 | But, I don't know, I haven't been back to see if this actually worked out,
00:21:25.000 | his goal was to replace the two not very worthwhile helpful employees with the one guy who was more expensive, but much more valuable.
00:21:36.000 | Now, would it be a problem if those guys who were going to get laid off thought to themselves,
00:21:42.000 | "Well, the reason I'm getting laid off is because my boss doesn't like me."
00:21:46.000 | Or, "The reason that I'm going to get laid off is because my boss is a racist, he doesn't like white guys, he only likes Guatemalan immigrants."
00:21:53.000 | Or, "The reason I'm getting laid off is I missed..." whatever.
00:21:58.000 | Well, that would sure be a problem if they thought that, because then they wouldn't be able to accurately diagnose the problem.
00:22:03.000 | "The reason they're getting laid off is they're unproductive and untrustworthy.
00:22:06.000 | They're not worth much.
00:22:08.000 | So thus, they get low wages and losing their jobs."
00:22:11.000 | That's how life works.
00:22:14.000 | So if you're earning low wages, ask yourself, "Why am I earning low wages?"
00:22:18.000 | You might just be a relatively worthless worker.
00:22:22.000 | And your wages are indicative of that fact.
00:22:25.000 | In fact, I would say they probably are.
00:22:28.000 | Now, on the flip side, you might be a very diligent worker.
00:22:32.000 | You might work all the time you work, not hanging out, putting your Facebook posts that your boss sees pop up on his Facebook feed.
00:22:38.000 | But you just don't have any specialized skills.
00:22:41.000 | You're good at, using the mechanic example, sweeping the shop, maybe cleaning up the trash.
00:22:47.000 | But you can't get in and diagnose the reason that the check engine light is on.
00:22:53.000 | That would be a very true and normal thing.
00:22:56.000 | So it's not that you're not a useful worker.
00:23:00.000 | It's just that the value of somebody who can sweep out the trash, sweep the floor and take out the trash and maybe pull the tires off with the impact wrench is a lot less than the person who can accurately go in and diagnose the reason that the transmission is slipping.
00:23:16.000 | So you might want to develop those specialized skills.
00:23:21.000 | Simple able-bodiedness can usually lead to a job of some kind.
00:23:27.000 | There's probably something you can do with simple able-bodiedness.
00:23:30.000 | Might be digging ditches, might be washing dishes.
00:23:33.000 | Your problem is everyone else can do that job too.
00:23:36.000 | Everyone else who's able-bodied can do that job too.
00:23:40.000 | So how do you get from no specialized skills to specialized skills?
00:23:44.000 | You can learn them.
00:23:46.000 | But you'll have to focus on them and apply yourself.
00:23:49.000 | You might need some sort of certification, some sort of external objective demonstration of your skill and knowledge.
00:23:56.000 | If you come in as a mechanic off the street versus a – what's it?
00:24:00.000 | Mechanic, isn't it?
00:24:02.000 | ASE?
00:24:03.000 | If you're like an ASE certified, A certified mechanic, that probably commands a slight premium.
00:24:07.000 | You're probably a little bit more valuable in the marketplace.
00:24:11.000 | So perhaps your reason for learning low wages is you don't have any specialized skills.
00:24:16.000 | And your task then is to keep doing the hard work, keep working well, but going and learning those specialized skills.
00:24:25.000 | Now, what else?
00:24:26.000 | Well, you could just be annoying or obnoxious to work with.
00:24:32.000 | I've seen this back when I was in the corporate world.
00:24:34.000 | There was one particular coworker of mine.
00:24:37.000 | This person was a very diligent worker.
00:24:42.000 | He was very diligent.
00:24:44.000 | He consistently produced work on time.
00:24:47.000 | He worked hard.
00:24:48.000 | He came in early and stayed late.
00:24:51.000 | This coworker had specialized skills, very unique in the marketplace.
00:24:59.000 | But his personal ability to communicate was so obnoxious that he was never permitted to be in contact with clients.
00:25:08.000 | He was a good worker, but he was always hidden in the back office because he was obnoxious.
00:25:16.000 | He had all these personal things that he would allow hang out.
00:25:19.000 | He was not empathetic.
00:25:20.000 | He was not thoughtful.
00:25:21.000 | He was not gracious.
00:25:22.000 | He was not – it just – he was obnoxious, really annoying and obnoxious as a person.
00:25:28.000 | This character trait, this expression of his personality led to a very – a significantly underperforming career.
00:25:39.000 | If he'd gone to work on his personality, on his communication skills, he would have been much more effective and his salary would have tripled.
00:25:48.000 | But as it was, he was stuck at a certain level.
00:25:50.000 | He could go to this level and go no higher.
00:25:53.000 | You could be a poor communicator and unable to effectively sell your skills.
00:25:57.000 | That could be due to something latent.
00:25:59.000 | Maybe you have a problem with stuttering.
00:26:02.000 | Maybe you have a speech impediment that is causing you a problem.
00:26:06.000 | It could also just be something due to lack of practice.
00:26:09.000 | At the highest levels of any company or any job, generally the skills that are very valuable are communication skills.
00:26:15.000 | What does the president of the United States actually do?
00:26:18.000 | Well, they make some decisions but they spend a whole lot of time talking.
00:26:22.000 | So thinking and talking, the higher you go up in an organization, thinking and talking are usually really valuable skills.
00:26:29.000 | Same with any large company, thinking, talking, thinking, talking, thinking, talking.
00:26:33.000 | You can work on those skills.
00:26:35.000 | Can you motivate a team with your language?
00:26:37.000 | Can you accurately assess the problem?
00:26:40.000 | If you're a poor communicator and unable to effectively sell your skills to your coworkers or to a prospective employer, you'll have a problem.
00:26:47.000 | Or it could be something as simple as you have poor personal work habits and disciplines.
00:26:53.000 | I think of somebody that I know, their business, and they are in a business that there's an extra benefit if the employee would be able to travel and do repair work on complicated technical, electronic, and physical plant equipment.
00:27:10.000 | But a particular – there are a couple of employees and they've been trying to get this service representative for this particular type of work.
00:27:18.000 | But some of the employees who are qualified based upon knowledge and would be able to do the work, it would bring an extra benefit to them.
00:27:26.000 | Their salary would probably reflect this additional value they brought the company.
00:27:30.000 | They are undisciplined in their work habits and so they can't be trusted to accurately follow the manual and troubleshoot things appropriately.
00:27:38.000 | It's a very simple character flaw.
00:27:42.000 | When you're given a troubleshooting manual, follow it in order, step one, step two, step three, but they don't think that they need to do that.
00:27:49.000 | They're just going to jump around and follow their intuition.
00:27:51.000 | Well, I heard some.
00:27:57.000 | So if you're earning low wages, ask yourself, "Why am I earning low wages?"
00:28:00.000 | Maybe you can get somebody else's input. But if you can diagnose it, "What's causing me to earn low wages?"
00:28:08.000 | Then you can get to work on changing that, that primary cause or those various causes and moving on towards the effects that you want.
00:28:19.000 | Let's talk about go off of income.
00:28:22.000 | What about savings money, saving of money?
00:28:25.000 | If you're not saving enough money to research to reach your goals, try to figure out why.
00:28:30.000 | What's the messed up category?
00:28:32.000 | Where are you overspending?
00:28:34.000 | Are you overspending?
00:28:35.000 | Do you just have unrealistic goals?
00:28:37.000 | Are you living in an expensive city in an expensive part of the country and the idea of living on this tiny amount of money might work great in some other place, but it just doesn't work?
00:28:45.000 | You have unrealistic expectations, unrealistic goals.
00:28:48.000 | Or is it the fact that you just always forget about Christmas or always forget about the family vacation and that's the money that you wind up spending?
00:28:56.000 | If you're making bad investments or if you've made bad investments, ask why.
00:29:01.000 | What went wrong?
00:29:03.000 | Did you trust somebody too quickly without forcing them to verify their trustworthiness?
00:29:11.000 | Did you bet too big?
00:29:12.000 | Did you practice poor portfolio risk management solutions and bet too much money?
00:29:16.000 | Did you not cover your risk?
00:29:18.000 | Did you use improper financing?
00:29:22.000 | The structuring of financing and improper structuring could very well lead to a deal torpedoing your actions, your activities, torpedoing your investment plans.
00:29:31.000 | But was the problem that you financed the deal or was the problem that you used improper financing?
00:29:38.000 | Ask yourself these questions.
00:29:40.000 | If your business is doing poorly, try to figure out why.
00:29:44.000 | Five components of the business, value creation, marketing, sales, value delivery, finance, all of those are unique and you might have a problem in one of those areas.
00:29:54.000 | But if you put on your troubleshooting hat and try to look at your business, you'll be able to understand why is my business doing poorly.
00:30:03.000 | And then you can focus on the thing that is going to – focus on the thing that's going to bring you the biggest impact.
00:30:10.000 | Now, with all of these problems, there are various solutions and the more clear you can get on the problem and what are the causes and the more you drill down, drill down, drill down, the better of a solution you can come up with.
00:30:27.000 | Example, you're not able to get all your work done and you're not perceived as a good employee because you're always late to work.
00:30:33.000 | Why are you late to work?
00:30:35.000 | There's a big difference between somebody who's late to work because they're caring for an aging parent or caring for a young child and their morning schedule is – needs to be adjusted or they need to hire some help versus somebody who is late to work because they oversleep their alarm clock.
00:30:50.000 | For the second person, simply oversleeping their alarm clock, the solution here is probably to get a different alarm clock and to figure out a different waking up circumstance, something else that you could do.
00:31:03.000 | I remember when I was a kid, a really loud one.
00:31:05.000 | I was in high school.
00:31:06.000 | I always overslept alarm clocks.
00:31:07.000 | I had one of those obnoxious things with a little dinger.
00:31:10.000 | We'd go back and forth between two bells and I would put it on the other side of the room.
00:31:14.000 | It would get me up and even still, I would go back to bed sometimes.
00:31:17.000 | It's terrible.
00:31:19.000 | But maybe you need one of those and not an iPhone alarm.
00:31:22.000 | On the other hand, maybe the iPhone alarm is better and you create some kind of complicated passcode that you have to figure out how to do math in the morning in order to be able to turn your alarm off so you're fully awake.
00:31:32.000 | That's a different problem than the person who gets up and it seems like no matter how early they get up, something happens and they just can't get it all done in a reasonable time.
00:31:40.000 | So they need to hire some help.
00:31:42.000 | Same thing with more specific financial issues.
00:31:45.000 | Is the problem that you're budgeting issue, your problem with your overspending that's leading to you being deeply in debt is the fact that you don't have a budget.
00:31:53.000 | Well, why don't you have a budget?
00:31:58.000 | Well, because your life is too complicated.
00:32:01.000 | You have too many financial accounts so you can't budget across the accounts or because you have too simple of a budget.
00:32:08.000 | Let me paint these out so you can see how in different circumstances, they would be very different.
00:32:12.000 | A lot of people have a lot of moving parts and if you try to budget everything together, I think of somebody like a small business owner, say independent contractor, consultant, real estate agent, financial advisor, things like that.
00:32:24.000 | You can't budget your business money and your personal money together.
00:32:26.000 | It's really hard because you know there are investments that you could make but on the other hand, you don't want to invest all of your profits back into the business.
00:32:33.000 | You want to spend some money and so you wind up having all these accounts and all these different things and it can be very difficult.
00:32:37.000 | So you got to try a different budgeting system that's going to work there.
00:32:41.000 | You might need to simplify.
00:32:42.000 | Have a business budget and a personal budget and divide them out into two.
00:32:45.000 | On the other hand, a lot of people do their budgeting in a very simple way with something like just a piece of paper and a calculator.
00:32:53.000 | That can work well if you have a simple budget but how do you budget for your vacations?
00:32:58.000 | How do you budget for Christmas?
00:33:01.000 | How do you budget for large unexpected expenses, your once a year property taxes?
00:33:04.000 | A lot of times, people who have that budget might not be working because it's too simple.
00:33:10.000 | So you need to fix it by adjusting different budgeting systems which brings me to, conveniently enough, sponsor of the day today is YNAB You Need a Budget.
00:33:19.000 | This is the budgeting software that I use and I love on the show.
00:33:25.000 | Many times, we've mentioned in the past archives of the show but really if you struggle with budgeting which is a core issue that most people do, try out the YNAB budgeting software.
00:33:34.000 | You Need a Budget.
00:33:35.000 | Go to RadicalPersonalFinance.com/YNAB.
00:33:38.000 | YNAB has solved all of my issues with budgeting for irregular income and it's also made it incredibly simple to budget and to budget with the money that you have
00:33:48.000 | in a proactive way.
00:33:49.000 | Get a free 30-day trial at RadicalPersonalFinance.com/YNAB which is the acronym for You Need a Budget, the most suggested resource by the Radical Personal Finance audience.
00:34:01.000 | Add over.
00:34:03.000 | What else?
00:34:04.000 | Problem might be that you're forgetting to save money.
00:34:07.000 | There could be various fixes for that.
00:34:09.000 | Maybe you're somebody who should automate the process.
00:34:13.000 | Maybe your problem is that you have low credit score and that's the thing that's causing you.
00:34:18.000 | You're spending too much money because your interest rates are too high because you have a low credit score but it's not that you don't pay your bills.
00:34:25.000 | It's that you're always two days late and those dings all over your credit score make it expensive for you to borrow money.
00:34:30.000 | Well, your solution is to fix it by automating your payments.
00:34:34.000 | But if you've automated all your payments and you're overspending, then your solution is to unautomate your payments so you actually force yourself to face the pain.
00:34:43.000 | Until you know what the circumstances are, you can't prescribe the appropriate cause.
00:34:49.000 | Now, here's the key.
00:34:52.000 | The laws of cause and effect are working whether anyone is looking at them or not.
00:35:01.000 | So you can't escape from the law of cause and effect.
00:35:07.000 | You can't escape from this fact that everything that begins to exist has a cause.
00:35:13.000 | That just is.
00:35:16.000 | That's a fact of life.
00:35:18.000 | So what you and I need to do is try to understand these philosophies, understand these laws that undergird the world around us and live in harmony with them.
00:35:30.000 | You can fight the laws of money.
00:35:33.000 | You can fight the laws of -- you can fight the law of gravity.
00:35:38.000 | Or you can understand the law of gravity and also understand the law of aerodynamics and try to work with it.
00:35:44.000 | You can harness gravity once you understand it.
00:35:47.000 | Gravity is a tremendously valuable effect, a condition on the earth.
00:35:56.000 | It's brutal and destructive to your physical health if you don't understand it and you step off of a hundred-story building.
00:36:03.000 | But if you're trying to move a heavy load and you can figure out how to make gravity work with you, if you're trying to move water across a landscape and you figure out which way gravity flows, it can be very, very useful.
00:36:14.000 | And then by understanding the laws and then looking at other laws that supersede the law of gravity, the law of aerodynamics, you can build an airplane which can take you around the world and revolutionize transportation.
00:36:23.000 | But you can't do it by fighting the laws that exist.
00:36:28.000 | You do it by understanding them and assessing your actions in light of those laws.
00:36:36.000 | No different with money.
00:36:39.000 | Money has laws.
00:36:42.000 | There are laws that govern the effect of money.
00:36:46.000 | Some of these laws are relatively straightforward and self-apparent.
00:36:50.000 | When I talk about increasing income, decreasing expenses, investing wisely, these are relatively self-apparent laws.
00:36:57.000 | Some laws are moral or ethical.
00:36:59.000 | You've got to understand them in the basis of God's law because they're an expression of all laws, all physical laws are an expression of God, the person of God.
00:37:06.000 | That's where they come from.
00:37:08.000 | So you've got to understand what am I working with and then align your actions and your activities in line with those laws.
00:37:16.000 | Easier said than done.
00:37:19.000 | But the first thing to do is to start by understanding the basis and understanding the fact that if you want an effect, you have to start the causes that are going to lead to that effect.
00:37:34.000 | I close with a simple poem.
00:37:38.000 | We cannot control the length of our life, but we can control its width and depth.
00:37:45.000 | We cannot control the contour of our countenance, but we can control its expression.
00:37:54.000 | We cannot control the other person's annoying habits, but we can do something about our own.
00:38:02.000 | We cannot control the distance our head is above the ground, but we can control the height of the contents we feed it.
00:38:13.000 | God help us to do something about what we can control and leave all else in the hands of God.
00:38:21.000 | That's it for the show today. I hope you found this useful. I hope you found this practical.
00:38:25.000 | In my experience doing financial planning and financial counseling, very few people slow down and take the time to understand what's going on in their situation.
00:38:41.000 | If you're somebody who's always busy, busy, busy, busy, busy, listening to this, reading that, never thinking about your own situation, I might recommend a little bit of self-reflection.
00:38:53.000 | Take a long lunch, take your lunch to the park and sit down and reflect. Have a long conversation with your husband, with your wife. Think through the circumstances that face you.
00:39:06.000 | Ask somebody for advice. Getting honest feedback is extremely valuable. It usually hurts a little bit, but it doesn't necessarily need to hurt as much as it does.
00:39:16.000 | But get honest feedback if you can. Take your employee performance reviews and look at them honestly.
00:39:25.000 | Take the reviews on your show, on your book, on your movie and consider them and think if you're willing to change anything and if you can change anything.
00:39:33.000 | And you can understand the causes and effects better. And then if you follow the laws, you'll get the effects or if you're breaking something intentionally, you'll know why.
00:39:43.000 | That's it. That's it for my content today for you. If this show has been beneficial to you, consider becoming a supporting patron of the show.
00:39:53.000 | Radical Personal Finance is primarily, although I do some ad reads from time to time, Radical Personal Finance is primarily funded by listeners.
00:39:58.000 | You listeners who support the show and listeners like you who support the show. If this has been helpful or valuable to you, take some amount of the financial impact that you think of this show and my show over the course of a month.
00:40:09.000 | And I don't know, take 10% of that and send it to me. You can sign up as a patron at radicalpersonalfinance.com/patron.
00:40:16.000 | Radicalpersonalfinance.com/patron. Entirely voluntary program. If you don't have the money, don't feel bad about it.
00:40:23.000 | But if you do have the money or if this show makes some sort of financial impact in your life, please consider becoming a patron of the show. Radicalpersonalfinance.com/patron.
00:40:32.000 | If you'd like to talk with me about something personal to your situation, I am available to you for a consulting phone call. You can book a call with me at radicalpersonalfinance.com/phonecall.
00:40:43.000 | (upbeat music)