RPF0576-Sometimes_You_Win_Sometimes_You_Learn-How_to_Harvest_the_Important_Lesons_from_Your_Past_Financial_Failures
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00:00:29.800 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:36.400 | skills, insight, and encouragement you need to live a rich and meaningful life now, while
00:00:41.440 | building a plan for financial freedom in 10 years or less.
00:00:45.880 | My name is Joshua.
00:00:46.880 | I am your host.
00:00:47.880 | And today I want to share with you some ideas to help you to embrace your financial mistakes
00:00:54.160 | as part of your learning.
00:00:57.520 | If you want the one-sentence synopsis of this show, it's simply this.
00:01:04.160 | Sometimes you win and sometimes you learn.
00:01:08.040 | But only if you're actually paying attention.
00:01:10.880 | First, a couple of questions for you on the topic of learning.
00:01:17.760 | One of the major errors I see us making in modern life is we neglect the topic of how
00:01:24.280 | to learn.
00:01:25.280 | I ask you this question.
00:01:27.680 | During the course of your formal education, were you ever given a course or a lecture
00:01:33.760 | even, a single lecture, on how to learn or perhaps how to study?
00:01:41.400 | Were you ever given tools of learning that you could apply throughout your entire lifetime?
00:01:47.040 | Did a professor share those secrets with you?
00:01:52.760 | For most of us, the answer is no.
00:01:55.060 | And that's for a number of reasons.
00:01:56.160 | First, of course, the entirety of the way that formal academic instruction is conducted
00:02:01.280 | assumes the need for an expert.
00:02:03.740 | So most of the time when you are presented with a problem, you might very easily revert
00:02:10.240 | back to the idea of school.
00:02:12.000 | I need to go and find an expert.
00:02:13.200 | I need to go and find a teacher to teach me and to show me these things from the front
00:02:16.840 | of the room.
00:02:17.840 | Now, there's a place for teachers.
00:02:20.000 | There's a place for experts.
00:02:21.000 | I make my living as an expert teacher.
00:02:24.920 | But I want to equip you to go beyond me.
00:02:28.040 | I want to equip you to go beyond almost any teacher with some ideas on learning for yourself.
00:02:35.880 | Although there are times at which you need a teacher, some of the most valuable learning
00:02:40.880 | can be done without a specific teacher, especially in the types of things that we discuss here
00:02:48.080 | on Radical Personal Finance, especially in your own pursuit of a rich life and financial
00:02:55.200 | freedom.
00:02:58.440 | One of the most important tools of learning that you have is your own personal experience.
00:03:06.000 | There are many things in your own life that you would count as wins, and there are things
00:03:12.420 | in your own life that you would count as failures.
00:03:16.960 | But when looking to the future, if you will analyze the data from your own history of
00:03:24.200 | wins and failures, if you'll analyze that data, you can do a better job in the future.
00:03:31.360 | And you can turn those experiences of failure into valuable lessons for the future.
00:03:38.360 | In fact, those experiences of failure, because they are probably very emotionally charged
00:03:43.620 | for you, will give you the lessons that will keep you out of the ditch in the future.
00:03:50.640 | Personally, I have a long series of these financial failures, things in my own life
00:03:56.240 | that have been very painful, big mistakes.
00:04:00.000 | I've shared a few of them here and there, but some of those mistakes are things that
00:04:04.600 | I'm embarrassed to even speak out loud.
00:04:07.600 | Foolish, foolish decisions.
00:04:11.800 | Sometimes I do things and only in hindsight do I realize how foolish a certain action
00:04:17.360 | was.
00:04:18.820 | But once I make that mistake, as long as I study it, process it, and learn from it,
00:04:24.440 | there's a good chance I won't repeat it in the future.
00:04:28.040 | I'll share one humorous anecdote to give an example of how deep these lessons go.
00:04:34.800 | When I was in high school, I worked each summer at a summer job, and I had the task of saving
00:04:41.720 | money from that summer job to cover some of my expenses over the course of the year.
00:04:47.360 | Most of that money was allocated towards personal spending without any direction from my parents,
00:04:52.680 | but some of that money was allocated toward my school expenses.
00:04:56.480 | My father and I had a deal when I was in high school that I could go to a private school
00:05:02.120 | if I would contribute $100 a month towards my own education.
00:05:05.920 | That was $100 a month during the course of the school year.
00:05:09.360 | That came out to $700-$900 a year.
00:05:13.360 | Not a big bill, but it was not insignificant.
00:05:18.320 | And generally over the course of the summer, I was earning somewhere between $10-$13 an
00:05:24.880 | hour if memory serves.
00:05:26.440 | And so over the course of the summer, I could earn about $3,000 if I worked a full-time
00:05:30.500 | job for most of the summer.
00:05:34.240 | One summer, it came time for me to pay my dad my first monthly bill for my school tuition,
00:05:44.160 | and I didn't have very much money in my bank account.
00:05:47.480 | And this was quite a surprise to me because I was used to, at the end of the summer, coming
00:05:51.360 | to a place where I had plenty of money.
00:05:54.240 | I had several thousand dollars in the bank.
00:05:56.480 | But this particular end of the summer, I didn't have much money, and I had not paid any attention
00:06:01.880 | to my money.
00:06:03.480 | Well, this was, of course, quite embarrassing because I had a deal.
00:06:06.760 | I was behind on money.
00:06:07.760 | I didn't have the money to pay my bills.
00:06:10.400 | And so my dad forced me to go and do, in essence, a forensic audit of my finances.
00:06:17.240 | And what I learned was very sobering.
00:06:20.960 | In short, what had happened was I had spent all of my money at the local convenience store,
00:06:28.360 | at a gas station that was near my summer job.
00:06:31.820 | And I was pretty bored at this particular summer job, so I would go to that gas station
00:06:35.400 | quite frequently.
00:06:37.760 | I would generally, I found out afterward, go there two or three times a day.
00:06:42.440 | I would go in the morning and get some coffee, sometimes get something to eat.
00:06:45.800 | I might go at lunchtime, and this particular gas station had some of that yummy hot fried
00:06:50.120 | food.
00:06:51.120 | I think they had some delicious chicken wings.
00:06:52.640 | And I would often buy some wings or some other food and perhaps a drink or a bag of chips
00:06:57.660 | or whatever the thing was.
00:06:59.160 | And then sometimes in the afternoon, on my afternoon break, I would go by, or on my way
00:07:02.400 | home I would go by.
00:07:04.960 | And what I found was, by the end of the summer, I had blown perhaps half of my earnings at
00:07:12.320 | that stupid convenience store.
00:07:16.480 | I was broke for that entire school year, and it was not fun being broke.
00:07:24.880 | It was a huge, huge deal.
00:07:29.560 | That lesson sank in very deeply to the point that today I'm generally allergic to convenience
00:07:35.360 | stores.
00:07:37.360 | I must confess that from time to time I do buy a cup of coffee, but I cannot remember
00:07:41.640 | the time, the last time, that I've purchased anything other than a cup of coffee at a gas
00:07:47.040 | station or convenience store.
00:07:50.000 | But because I'm so sensitive to this, I have watched many people who don't have very much
00:07:54.360 | money spend a lot of money at a convenience store.
00:08:00.400 | Now I point that out to you.
00:08:02.040 | If you're looking for where your money may be going, take a look at the convenience store.
00:08:06.680 | But I point it out to you as an example of a lesson that has served me very well that
00:08:11.640 | I learned the hard way.
00:08:14.800 | But I only learned it when somebody came along and forced me to pay attention.
00:08:23.140 | I don't think I would have had the awareness of my finances to actually figure out what
00:08:30.560 | had happened if my dad hadn't forced me to go back and do a forensic accounting and try
00:08:35.720 | to figure out where all of the money that I earned went.
00:08:41.120 | That was the exercise.
00:08:42.120 | I had to go back and figure out how much money I had earned, and then I had to figure out
00:08:45.960 | where it went.
00:08:46.960 | Now of course there was a lot of money missing in that analysis.
00:08:49.120 | I wasn't a good record keeper in those days.
00:08:52.440 | But I did figure out that that convenience store was the primary culprit.
00:08:58.640 | Now that's just a simple and hopefully mildly humorous example of a high school student's
00:09:06.160 | financial stupidity.
00:09:08.960 | But there have been a lot of other lessons that I have learned.
00:09:13.280 | And I'm wiser today because I've paid attention to those lessons.
00:09:19.680 | The problem is those are my lessons.
00:09:21.680 | Those are the lessons from my own actions and activities.
00:09:26.080 | And my lessons can't be your lessons.
00:09:29.120 | I can share them with you, but you have your own lessons.
00:09:33.280 | And you need to learn how to pay attention to your own lessons of life and let them help
00:09:42.680 | you to become wiser.
00:09:45.600 | And I think this is a major problem that we face in our world today.
00:09:49.120 | I already pointed out one of the errors.
00:09:51.880 | Most of us have not learned how to learn.
00:09:55.640 | It seems silly if I point it out, and humbling because it's true.
00:10:02.140 | But very rarely have we ever learned how to learn.
00:10:06.960 | I've frequently referenced one of my most useful books, Mortimer Adler's How to Read
00:10:11.320 | a Book.
00:10:13.460 | Very rarely, once we've learned the basic mechanics of reading, very rarely were we
00:10:17.720 | ever taught how to read.
00:10:22.520 | Or another example would be how to study.
00:10:23.960 | Have you ever taken a course on how to study effectively?
00:10:27.960 | One of the things that I find amazing is the amount of time in academic studies that we
00:10:32.920 | spend taking tests and studying, and yet very rarely have any of us actually taken a course
00:10:39.960 | or a seminar or read a book on how to study.
00:10:43.440 | What about how to speak or how to listen?
00:10:46.280 | Mortimer Adler has another book, How to Speak and How to Listen.
00:10:49.200 | It's quite good about how to actually speak effectively, how to listen effectively.
00:10:55.440 | And then learning, how to actually learn.
00:10:58.880 | As I've grown older and I've observed this deficiency that I didn't really know how to
00:11:03.000 | learn and I didn't really know how I learned, I started studying the topic.
00:11:06.920 | I've gained immense valuable information by learning how to learn, learning the techniques
00:11:13.440 | of learning and also the techniques of how I particularly learn my own personal learning
00:11:18.760 | style.
00:11:19.760 | And I'll share with you a few simple suggestions that I hope will help you to learn from your
00:11:25.640 | own financial experiences and the experiences of others so that you can make wise decisions.
00:11:32.600 | Because your ability to live a rich life and to build financial freedom will be dependent
00:11:38.640 | on your ability to make wise decisions and to follow through on the actions associated
00:11:46.320 | with those decisions.
00:11:50.560 | Number one, pay attention to life.
00:11:54.760 | Pay attention to your own life and the lives of others.
00:11:58.960 | First your own life.
00:12:01.200 | Notice what's happening in your own life.
00:12:04.000 | Observe the things that are happening in your own life.
00:12:07.880 | Observe the state of your bank account.
00:12:11.000 | Pay attention to your net worth.
00:12:13.360 | Pay attention to your spending habits.
00:12:16.040 | See what's happening with your job.
00:12:17.700 | Pay attention to how you do your job and how effective you are at it.
00:12:22.000 | Pay attention to your life.
00:12:24.680 | Pay attention to the relationships in your life.
00:12:26.560 | Pay attention to the stresses and the triggers in your life.
00:12:31.060 | When you find yourself earning a lot of money, pay attention to why.
00:12:35.240 | When you find yourself not earning a lot of money, pay attention to why.
00:12:40.240 | It's not an accident.
00:12:42.360 | You can notice and figure out and discern why these things are happening.
00:12:48.400 | When you wind up with significant expenses, pay attention to why.
00:12:52.000 | What's happening?
00:12:57.120 | If you'll just pay attention, then you can figure out plans and ideas for how to minimize
00:13:02.040 | those expenses.
00:13:04.960 | Pay attention to the lives of others.
00:13:08.280 | Take an interest in others.
00:13:09.320 | Take an interest in speaking to other people and learning from their experiences.
00:13:14.080 | Yes, it's valuable to learn from your own experience, but if you can avoid some mistakes
00:13:20.840 | by learning from the experiences of others, it's a very wise way to approach life.
00:13:27.640 | But very rarely do we take the time to ask other people how they came to be where they
00:13:34.440 | are.
00:13:36.520 | So observe the behavior of other people if you don't want to ask them.
00:13:40.840 | Observe the behavior of the person who is popular.
00:13:43.920 | Observe the behavior of the person who is rich.
00:13:46.780 | Observe the behavior of the person who is an outcast.
00:13:50.200 | Observe the behavior of the person who is poor.
00:13:52.760 | Try to identify those things that you can see that might possibly be contributing to
00:13:58.640 | their social status or to their financial position.
00:14:02.400 | Now, that's only a hypothesis, but you can test your hypothesis with other people, with
00:14:09.480 | other circumstances, and try to see if your hypothesis proves true.
00:14:16.160 | Pay attention to life.
00:14:17.960 | Two, make time for contemplation and consider carefully the situations of life.
00:14:26.680 | What's happening and why is it happening?
00:14:30.140 | In our very busy, very frenetic, very loud world, it seems more and more challenging
00:14:37.500 | to make time for contemplation and consideration.
00:14:43.800 | We're all guilty of it.
00:14:47.320 | When's the last time you heard somebody say, "I'm bored"?
00:14:52.520 | It's almost impossible to be bored in our modern era, because we fill our lives at every
00:14:58.260 | moment with activity, and we have no shortage of ways to amuse ourselves.
00:15:04.040 | And yet, in our busyness and in our access to information, our ability to use the circumstances
00:15:12.160 | of our lives and generate wisdom seems to be increasingly limited.
00:15:17.360 | I think it's important to make time for contemplation, quiet time, to consider what's going on.
00:15:26.680 | Make time for quiet conversation with the people who are in your life, who know you
00:15:32.040 | well, who can understand the circumstances of your life, and talk about important things.
00:15:41.200 | Number three, ask yourself questions.
00:15:43.920 | A great question has a way of leading you to a solution.
00:15:51.680 | Frequently, we bumble past opportunities to ask ourselves questions, and we don't give
00:15:59.240 | our brains the opportunity to analyze the information and give us an answer.
00:16:05.040 | One of the most valuable suggestions I could make to you is simply this.
00:16:09.160 | Ask yourself a question in writing on the top of a journal page, and then brainstorm
00:16:15.620 | some solutions to that question.
00:16:18.400 | Brainstorm solutions to your problem.
00:16:21.240 | Do this in writing if possible so that you can see your own thinking.
00:16:25.040 | But it can be very simple.
00:16:26.040 | If you're broke, ask yourself this, "Why am I broke?"
00:16:31.360 | If you're broke and you write down at the top of a page, "Why am I broke?"
00:16:35.280 | And then you sit there and you write down a dozen or two answers, I'll bet that you'll
00:16:40.720 | get 80 to 90% of the reasons why you're broke right on that piece of paper.
00:16:48.740 | You don't need me to come along and identify why you're broke.
00:16:52.100 | You already know it.
00:16:55.220 | So write it down on a piece of paper, and then figure out the answers.
00:17:00.060 | Now of course you could take a more positive tack if you like.
00:17:04.080 | You could start with, "How can I make more money?"
00:17:07.900 | And if you write that at the top of a page, you'll program your brain to start looking
00:17:11.220 | for money-making opportunities.
00:17:13.780 | Brainstorm as many answers as you can, and even if you only come up with two or three,
00:17:17.980 | you will radically transform how you see the world.
00:17:21.340 | Because for the rest of that day and the rest of that week, you'll look around and you'll
00:17:25.140 | be thinking about that question, "How can I make more money?"
00:17:29.860 | So ask yourself questions.
00:17:32.500 | Brainstorm solutions to your problems and do it in writing.
00:17:36.780 | And four, be humble enough to admit when you're wrong and when you need to change.
00:17:44.340 | The reason we often don't want to write down those questions and answers is our pride.
00:17:52.180 | We frequently don't want to admit the mistakes that we've made.
00:17:56.340 | The problem is you're only deluding yourself.
00:18:01.300 | Everyone else can see those mistakes that you've made.
00:18:08.260 | You're the last one to see it if you're too proud to face it honestly.
00:18:14.180 | I've been struck by this in looking at pictures or videos of myself.
00:18:20.460 | We all have an idea of how we're perceived, but in the stark light of a photo or a video
00:18:29.380 | camera, we can see how we actually look.
00:18:34.220 | And we might have this perception of how we are, but our perception is not the truth.
00:18:40.580 | The truth is everyone sees you the way that you look on video.
00:18:46.700 | Everyone sees you the way that you look in a picture.
00:18:49.300 | That's the truth.
00:18:51.340 | The problem is not with what's actually true.
00:18:56.780 | The problem is the difference in your inability or my inability to look at the actual facts.
00:19:02.340 | So the same thing with some of these questions.
00:19:04.820 | If you're wrong, be humble enough to admit when you're wrong and need to change.
00:19:10.500 | There's no problem.
00:19:12.140 | You'll be the last one to know.
00:19:14.260 | But if you'll be humble and admit when you're wrong and a course of action and need to change,
00:19:18.900 | go for it.
00:19:19.900 | That can be as simple as recognizing something like this.
00:19:24.100 | Credit cards have never been a blessing for me.
00:19:26.220 | I'm going to stop using them.
00:19:27.940 | Well, you'd have to admit you were wrong to do that.
00:19:31.260 | But yet if you do so, it can lead to a much brighter future.
00:19:37.100 | You can either experience a small moment of pain to admit the mistakes that you've made
00:19:42.100 | and humble yourself enough to accept them and then enjoy the long future ahead of you
00:19:48.900 | without making those mistakes.
00:19:51.940 | Or you can continue on in pride and reap the consistent error of your ways for a very long
00:20:00.380 | period of time.
00:20:02.140 | So be humble enough to change course.
00:20:04.660 | If something's not working, just admit it.
00:20:07.420 | It's not working and I need to change.
00:20:10.180 | And if you'll continue that process of paying attention to life, making time for contemplation,
00:20:16.420 | asking yourself questions, brainstorming solutions, and then admitting when you need to change
00:20:22.700 | and actually doing it based upon some of those solutions you've found, you'll come up with
00:20:28.940 | good solutions, good things to try that will lead you closer and closer to the direction
00:20:36.500 | of your dreams, to the direction of the highest ideal.
00:20:42.940 | In closing, I want to simply encourage you with this.
00:20:47.900 | Your mistakes, the failures are wonderful learning opportunities.
00:20:56.540 | They don't feel good when you're in the middle of them, but in time they provide you with
00:21:07.020 | the lessons that you need to live a successful life.
00:21:13.700 | When I think back over the course of my life, I'm grateful for the failures.
00:21:19.620 | I'm grateful for the mistakes because those things have taught me some very valuable lessons.
00:21:26.500 | I don't want to repeat them, but I see the benefit.
00:21:32.580 | I'm able to do what I do in sharing with you about money largely because of the many mistakes
00:21:38.180 | that I've made.
00:21:40.780 | At the very least, it should give me a bit of humility in my tone that makes you willing
00:21:47.260 | to listen to me.
00:21:50.140 | If I were an arrogant know-it-all and didn't share with you some of the errors, you'd never
00:21:54.260 | listen to me.
00:21:55.580 | So at the very least, they've done that, but in reality, it's far more.
00:22:00.420 | Those mistakes have given me compassion.
00:22:02.960 | Those mistakes have given me lessons.
00:22:06.260 | And by watching my own mistakes and the mistakes of others, I've learned enough to have something
00:22:13.560 | useful to share with you.
00:22:17.140 | So embrace your mistakes.
00:22:20.660 | Sometimes you win, and sometimes you learn.
00:22:23.180 | It's a much better philosophy of life than trying to ignore them.
00:22:27.900 | [MUSIC - "RAIN"]
00:22:28.900 | Rain, I see you're running with the blues.
00:22:29.900 | You've done that thing you do to my parade.
00:22:30.900 | It's a sin.
00:22:31.900 | You got me swimming in regret.
00:22:32.900 | You keep finding ways to get me looking back.
00:22:33.900 | I'm not going to let you go.
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00:25:24.900 | I'm not going to let you go.
00:25:25.900 | I'm not going to let you go.
00:25:26.900 | I'm not going to let you go.
00:25:27.900 | I'm not going to let you go.