Monthly Archives: November 2015

What I Learned This Year

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LexiMyLexiHealth Is Wealth: In my peer group, wealth can be measured in terms of vanity/victory (athletes) or consumption/conquest (materialists).

Since putting athletic competition to one side, I’ve done better with my physical health. I was fooling myself with a belief that extreme exercise was a requirement for personal satisfaction. Even moderate exercise leaves me as a 1-in-10,000 exerciser.

With improving physical health, it’s clear that my inner experience is what’s next.

With a young family, there are moments when I feel trapped.

Well, despite my tendency to blame others, there’s only one person who can free me!

  1. Freedom to take actions to support my physical, mental and spiritual health
  2. Freedom to control my schedule
  3. Freedom from thought patterns that aren’t useful

With the above in mind, I ask: Who should allocate my capital and my time?

In my case, the answer is “me.”

The last year has been driven by “volunteer” work, mainly with my family.

As I’m prone to over-doing-it… there have been times when I’ve driven myself into the ground.

The symptoms are concerning.

I lose my ability to concentrate, which shows via impaired hearing, sight and memory. I even got a little delusional after the 55-hour week with the kids.

Not fun, and a strain on my marriage, but I do a reasonable job of getting myself back on track.

Knowing my family history, and taking personal responsibility, I’ve decided:

  • to share experiences with the people that are close to me
  • to reduce noise in my daily life
  • to free myself for daily exercise in nature

This requires doing less “for money” and spending money “for time”.

This requires saying “no” or “not yet,” depending on the circumstance.

This requires facing unfounded, but deeply held, fears:

  • letting people down
  • sliding into ill-health
  • financial ruin
  • failed marriage

Do my facts fit my fears?

Usually not.

But when they do, change slowly.

Small, Negative Suprises

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Sneaky SquirrelPart of being human is a tendency to over-react to small losses.

As this error has cost my family (big) money, I’m going to share a case study that illustrates the point.

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One of my jobs is to manage a small portfolio of local real estate. From time-to-time items come up that need to be sorted. Each of those items represents a small dose of unexpected pain.

In most years, there will be a dozen items that require action. Total cost of these items is on the order of one-month’s living expenses.

To give an idea on scale of the “pain”, the portfolio is worth ten-year’s living expenses and, annually, it generates cash equivalent to seven-month’s living expenses.

Combining the above, you could calculate that the portfolio has a cash yield of ~5% on net realizable value.

When compared to all of the alternatives, this investment is one of the best places to invest.

But the random, little bits of pain hurt — jammed sewer lines, flooded basements, six-foot high marijuana plants, missing tenants, leaking toilets… none of this is unusual, or unexpected.

The small doses of pain hurt so much I’ve been considering selling the portfolio and switching into a less attractive investment.

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To escape the small and random pain, I am willing to accept certain, large and immediate pain! A discount on market value and payment of significant tax liabilities. The total cost would be more than two-year’s living expenses.

In a fantastic investment, with less attractive alternatives, I’m willing to pay 25x more than the cost of the pain to make it go away.

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Rather than pay two-years living expenses to make the pain go away, I’ve hired a property management company to insulate me from the pain.

Annual cost is 0.6% of net realizable value and less than a month’s living expenses.

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Beware of quick reactions triggered by small, negative surprises.

They are often irrational.

 

 

Teaching Up The Tree

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cottonwoodLast spring, a friend asked for my advice.

He felt his elders were making mistakes and wanted to get through to them.

I drew a blank on his question and have been considering it for some time!

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2015-10-05 16.05.12I saw two components…

  1. a desire to help others
  2. an opinion that someone else is wrong

For the first component, I asked myself, “What is the most powerful form of teaching that I can bring to my family?”

If I’m looking to maximize my impact then nothing beats sharing stories about how I repeated one of my family’s most common mistakes.

So… I pay attention to what needs fixing in the elders, notice when it needs fixing in myself and share a funny story about my error with my kids.

My kids love hearing about my mistakes.

Adults hearing about their own mistakes?

Less so.

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IMG_4860The second component of my friend’s desire to teach…

I asked myself, “Am I sure?”

  1. Am I sure that my way is correct?
  2. Are there circumstances that would make my way incorrect?

My buddy and I were discussing long-term financial security. At the time, we were 100% certain that “our way” was the right way. I agreed that his elders were mismanaging their affairs.

As fate would have it, a few months later I heard a story about a pensioner.

An elderly woman had most of her life savings sitting in a local credit union (earning 0.1% per annum). Instead of telling her that she had to change, her family initiated a discussion to understand why that decision made sense to their mother.

It turns out the lady had thought through her rationale in detail. Her strategy recognized a personal lack of knowledge, a lack of trust in financial advisors, fear of loss and zero personal upside from positive investment returns.

Sometimes it is my lack of understanding that needs to change.

 

Food, Sex and Money

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IMG_1573This week, I am holding down the fort (with a lot of help) and my wife’s away on a retreat.

She’s spending time with a bunch of smart ladies, most of whom are slightly older than herself. It’s an environment similar to the camping trip that I wrote about.

Before she headed off, I made the following observation…

If you listen closely then you’ll hear most minds focusing on food, sex and money.

Taken together, they are an influence strategy that you’ll see reflected in most scandals.

This coming week, you have a unique opportunity to tap into the life experience of older women, who understand the life heading your way.

Why don’t you ask them what to expect, what they learned and how best to cope with the inevitable changes of the next 15 years.

Love you, babe.

cheers