live long & prosper.pdf

7/27/2019 Live Long & Prosper.pdf

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LiveLong&ProsperGordoByrn,December2012

Formykids:

Imsureoftwothings:Loveisgoodanddeathiscoming.Takewhatyoufindinsideandmakeitbetter.


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TheRoadLessTravelled

At25yearsofage,IachievedTheHolyGrailoffinancebytransitioningfromassociatetoapartnerofmyfirm.Forgraduatesofmyera(Classof1990),thisrepresentedthepinnacleofthebest-casescenarioformycareer.

Sixyearslater,Iwouldgratefullythankmycolleaguesandhandbackmypartnership.Atthetime,IknewthatIwasmakingachoicewithanopportunitycostof$1millionperannum.Twelveyearson,thedecisionturnedouttobeworthmorethan$25million.ThisbookexplainswhatIboughtmyselfwiththe$25millionthatIdidntearn.


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HowToUseThisBook

Goodbooksgivemetoomuchtoworkon.Ihighlightkeypassages,takenotesanddevisestrategies.However,bythefollowingweek,allisforgottenbecauseIvetriedtodotoomuch.

Toimproveyourlife,pickasingleideathatmakessenseandimplementitimmediately.Beingabletomakesmallchangesismoreimportantthananyonechange.Whatyouareseekingtocreateisahabitofincrementalchange.Thecapacityforself-improvementcomesfromtheabilitytoobserve,learnandadjustonesself.Changeslowly.Ineachchapter,Ivetriedtobeaspracticalaspossibleandprovideyouwithactionablepoints.Whenyoucomeacrossagoodidea,Ihopeyoupause,writeitdownandtakeaction.

ThisbookisaseriesofideasthatIvelearnedandturnedintohabits.Themajorconceptsaresimple,andpowerfulwhenyoumakethemyourown.Thechaptersfocusonwhathashelpedmeatdifferenttimesinmylifeandaresplitintosectionsonplanning,change,relationships,wellnessandfinancialhealth.Feelfreetojumparoundandskipsections.Takewhatyouneed,makeitbetterandpassiton.IllreferyoutotheBestBookssection.Thesetitleshavehelpedmewithmythinkingoneachtopic.Ivepulledthebest-of-the-bestintothisbookandIdencourageyoutoworkyourwaythroughtherecommendedreading.Infectyour

mindwithideas.StoriesareaprovenwaytoconnectwithreadersandIllshareafew.However,myoverridinggoalistogiveyouasimplemethodtocreatealifewithmeaning.HavinglivedinAsia,EuropeandNorthAmerica,Ivecometorealizethatthehumanconditionisuniversalandourculture,particularlythemedia,doesntknowbest.Thisbookisanantidotetowhatmodernsocietysayswillmakemehappy.Whywaittobegreat?


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PartOneSELFbigfontcenteronpage


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WhatIsALifeWithMeaning?Asayoungman,thecentralchallengeIfacedwaslearningwhatmademetick.WhatdoIliketodo,howshouldIspendmytimeandhowdoIcreatesatisfaction.ThissectionlaysouthowIdirectmylife.Asyoungadults,thequestionwefaceis

whatsrightforme?Overtime,theinitialprocessofself-discoverytransitionstodirectingourlives,viaplanningandaction.IllendthissectionbysharingideasonhowIvecopedwithsetbacksandmanagemyownexpectations.CreatingALifeWithMeaning

Insightcomesfromfindingawaythroughsetbacks,ratherthanpersonalvictories.Timesofpersonalcrisishaveprovidedmewiththeopportunityforintrospection

andgrowth.Ivebeenfortunatetoexperiencesuccessesaswellassetbacks.Mygoodtimeshavestrengthened,andlimited,mycharacter;mostdirectlybyleadingmetobelievethatIdidnthavetochange.Probablymygreatest,andmostdangerous,rationalizationwasusingexternalsuccessestosuppressadiscontentwithaconventionallifepath.Asayoungadult,youdhavetolookintohowIspentmysparetimeforcluesthatanever-expandingbalancesheetwasntforme.Ispentmytimedrinkingandpursingactivitieswithsilentisolation(off-shoresailing,weightlifting,trekking,endurancerunning,mountainclimbing).Ihadatendencytouseavoidancewhendissatisfiedin

mylifeanddistractedmyselfwithwine,womenandsong.Iwasmarriedforashorttimearoundmy30thbirthdayandmydivorceprovidedmewithanopportunitytoreappraisemylife.Atthetime,Ihadcompletefinancialsecurity,adreamjob(thatIwasgoodat),goodfriendsandaccesstoeverymaterialdesirethatIdeverconceived.Evenwithallthat,Iwasfixatedonadreamaboutescaping.ThischapterlaysoutapersonalplanningframeworkthatIusedduringatwo-monthsabbaticalthatItooktenyearsintomyfirstcareer.

Justbeforemysabbatical,afriendsuggestedthatIreadabookcalledTheArtistsWay,whichcontainsa12-weekwritingprogramforimprovingcreativity.Duringmybreak,IrentedaroominthemountainsaboveBoulder,Coloradoandmixedthewritingprogramwithdailyenduranceexercise.Thebookitselfwasnotinspiring;itisnotahow-tomanual.Thetransformativeprocesswasdrivenby:


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12-weeksofbrainstormingeachmorning 6-weekslivinginthemountains,awayfrommynormalroutine Asimplelifeofdailyexerciseandexcellentnutrition

Followingmysabbatical,IreturnedtomydeskanditwasobviousthatIneededto

changedirection.Sittingherenow,Icanseethattherealchangewasadecisiontoconsciouslydirectmylife.However,atthetime,theonlythingIknewwasthatIneededtoleavemyoldlife,ratherthancreateanewone.Returningfrommybreak,Iagreedtoaone-yearleaveofabsenceandacquiredanimmigrationpermitforNewZealand.Ileftmyfirstcareerattheendof2000and,afterspendingamonthinAustralia,flewtoNewZealand,whichbecamemyhomeforthenextfiveyears.WritingdownmydreamshasbeenthesinglemostpowerfulinfluenceinmylifeandtheplanningframeworkthatfollowsishowImakethetransitionfromhopeto

reality.Therewillbetimeswhenyoufeellikeyourbackisupagainstthewall,rememberthatyourenotalone.Ifyougetreallydesperatethenyoucantrywhatworkedforme!


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FindingDirection

IntheBestBookssection,youllfindreadingsthatdealwiththequestionofwhattodowithourlives.Ponderingourpurposeispartofwhatitmeanstobehuman.

Imnotgoingtotellyouwhattodo;ratherImgoingtosharetotheprocessthatIusetodirectmyownlife.Fromthatprocess,takewhatyouwantandlistentoyourheart.InthemostproductiveperiodsofmylifeIhavehadaclearmissionwithsimplegoalssuchas:

Dowellasschool Doasmuchworkaspossible Savemoney Doasmanyhoursofaerobicexerciseaspossible Getanewcompanyfunded Getacompanysold

Itsawide-ranginglistand,atthetime,ifyouaskedmewhatIwasdoing,thenIwouldhavebeenabletotellyouveryclearly.Doyouknowwhatyouaretryingtoachieve?Havingasinglefocusenablesme:

Toallocatemytimeandtakedailystepstowardsmygoal Tofiltermytimebysayingnotyettounrelatedopportunities Tovaluemytimeandsetpriorities

TheperiodswhereIvefeltlosthavebeenwhenIdidnthaveamissiontoguideme.Forme,havingamission(orpath,orreasontogetupinthemorning)iswhatsimportant.Thespecificgoals,themselves,arentasimportant.Why?

Thefeelingofengagementwithataskgivesmeaning. Thefeelingofprogressandpersonalimprovementgivesmeaning Thefeelingofpurposefromfollowingaself-directed,andethical,lifegives

meaningWhateveryourmission,Irecommendthatyoutrimitdownsothatitis:

Simple Easytoremember Requiresoneaction,perday,donefirst

Thesethreecharacteristicswillenableyoutocreateadailywinwhereyoutakeonesteptowardsyourgoal.Starteverydayofyourlifewithawin.Oneofmylong-termgoalshasbeentogetupbefore7a.m.AslongasIpullthatoff,Istartthedaywithasmallvictory.Whilemycentralmissionrunsdeeperthan


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makeitoutofbedinthemorning,havingasmallvictorystartthedayprimesmeforsuccess.WhatfollowsarethespecificsonhowImanagemyself.


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BuildingYourPersonalPlan

ThissectionrequiressomeworkbutIpromisethatthepayoffwillbefargreaterthanthesmallamountofenergythatsrequired.ImnotgoingtotellyouwhattodowithyourlifebutIamgoingtorecommendhowtodo.

Getyourselfanotebookandwriteathemeatthetopofeachpage.Mythemes:

BigPicture:themostimportantthingsinmylife,anddreamsthatIwanttoachieve

KeyLikes:actions,peopleandsituationsthatdrivemypersonalsatisfaction

Geography:placesthatgivemeenergy,whereIwanttovisit,andwhereI

wanttolive

Body:howIwanttotakecareofmybody Mind:thingsIwanttolearn,thingsIwanttoteach,andactionsIneedtotake

toclearmymind

Spirit:whenandhowIwillrejuvenate,andtheactionsIneedtotakeformyemotionalhealth

Marriage:thingsweliketoshare,whatworksforus

FamilyFinances:familybalancesheet(today,fiveand10yearsfromnow),

andincome/expenseprojectionforthenext12months.Idothisindetailseparatelythensummarizeforreview.

PersonalTop10List:thetenmostimportantthingsinmylifethatrequire

focus,effortandtime

Actions:whatactions/habitsaremostimportanttome

Hazards:whatitemsneedtobewatchedtoavoidroadblocks

Bits&Tips:quotesandadvicethatresonateswithme.Brainstormasmuchaspossibleundereachthemeandgetlotsofrandomideasdownonpaper.Dontfilteranythingthemorethebetter.Annually,scheduleablockoftime(Iuseaweek)weekwhereyouunplugfromworkandtechnology.Duringthisperiod,reviewyournotesanddecideonthekeythemesforeachtopic.


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Ifyourjobwontallowyoutounplugonceayear,thenIrecommendthatyoufindadifferentcareer.Constantconnectivityisextremelydrainingandreinforcesourcollectivebiastowardsover-estimatingourimportanceintheworld.Lifekeepsonrollingwithoutusandanannualbreakwillhelpyoumaintainyourperspective.

Istartthebrainstormingprocessamonthoutfrommyretreatso,bythetimemyvacationcomes,Imreadytogo.Armedwithmynotes,myhopes,mydreamsandmyideas,IreadthemeachmorningandconsiderhowIfeelaboutthem.Yourreviewweekdoesntrequireaformaldailystructure.WhatIvefoundistheanswers,andideas,comenaturallywhenyoucommittobeingtrulyunplugged.IfyoulikestructurethentherearetwelvethemesandyoucansplitthemAM/PMacrosssixdays.Myreviewweekhasatonofopentime.Ifyoureusedtobeingoverscheduledthen

beingunpluggedisscaryandyoumightfindthatyoureaddictedtothedramaofyourday-to-daylife.Ioftenfindmyselftemptedtoplugbackin,certainlyintheearlydaysofmyretreat.Rememberthatsteppingoutsideourday-to-dayroutineistheeasiestwaytogainperspectiveonwherewewanttotakeourselves.Itellmyselfthatmyweekissopreciousthatitsworththeefforttoisolatemyselfalittlebitandseewhathappens.WhenIstarteddoingthesereviews,Ilearnedthatmylifewasntalignedwithmygoalsanddreams.Specifically,Ispentmostmytimedoingthingsthathadlittleimpactonmypersonalsatisfaction.Therearestrongpsychologicaltendenciesthatworkagainstchoosingtochange(seeMungeronthePsychologyofHuman

Misjudgment).Unplannedsetbacks(injury,illness,divorce,unemployment)haveenabledmetotakeafreshlookatmylifechoices.Witheachpassingyear,Ivegainedadditionalinsightintothekeydriversofmysatisfactionandthepositiveexperiencewiththisprocesshasmadeiteasiertoadjustthedirectionofmylife.WhenIgetdepressed,IpulloutoldplanstoremindmyselfthatIcangetalotdoneifIkeepitsimpleandtakeonepositivestepeachday.Itistemptingtoresisttheideathatwecreateourownrealitybymakingourhopes,dreamsandgoalsconcrete.However,Iaskmyself,HowcanIachieveanything

withoutthinkingitaboutit?Ivealsofoundabenefittofrequentlyprimingmyspontaneousmindtoservethegoalsofmystrategicself.Tohelpgetyoustarted,youllfindmymostrecentstrategicplaninanappendixattheendofthebook.Iuseaspreadsheetformyfamilyfinancialplanningandhaveincludedatemplatethatyoumightfinduseful.


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MyLessons

Eachofusneedstocreateourownplanandunderstandthatplanwilldevelopaswemovethroughlife.

Acrossmylife,Ivehadfriendswhowereperfectlysuitedforpathsthatwerenotrightformesothissectionisntabouttellingyouwhattodo.Rather,IwanttosharecentraltruthsthatIvediscoveredaboutmyownlife.Throughthissharing,Imightstimulateyourbrainstormingorcounteracttheconfusionthatresultsfromlivinginasocietythatsfocusedonconsumptionandpleasure.Withinmypersonalplan,Ihaveasectionofthingstorememberandgivemyselfthefollowingadvice:

Thequickestwaytoincreasedisposableincomeistoreducepersonalexpenditure.

Thefastestwaytoimprovemyperceivedstandardoflivingistoassociate

withpeoplethathavealowerone.

Collectexperiencesnotpossessions.

Liveasimple,healthy,outdoorlifewithgoodfriendsandexcitingchallenges.

MystudentscometomeandItraveltothebestteachers.

IfindoubtthenWAIT.InvertingtheaboveshowshowIampronetomisleadmyself.Consumption:Ivebeencaughtinthewheelofchasingincometoincreasespendingonitemsthatdontmakemehappy.Aswell,Impronetofoolmyselfthatjust-a-little-morewillmakemehappy.Inmylife,theanswerisnearlyalwaysless:lessstress,lessclutter,lessexternalsuccess.Lessbeingwhatcreatesmoreserenity,moretimetothink,moretimetodothethingsthatbringtruesatisfaction.Envy:Impronetomagnifyingenvywithinmyselfthroughmychoicesoflocation,

peergroupandmediaoutlets.Surroundyourselfwithsituationsthatreflectyourvalues,notthefalsegodsofconsumptionandpleasure.Stress:FeelingtrappedinacorporatelifewhereImworkingindoors,atrepetitivetasksandlettingmyphysicalwell-beingslipaway.SayingNoToGoodDeeds:Ivehadtoteachmyselftosaynotothegood,tomakeroomformylifetobegreat.Manyneglecttheirownneedstodevotethemselves


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towardsthehappinessofothers.Whileservicetosomethinglargerthanourselvesprovidesmeaning,remembertomeetyourownneedsfirst,thenfocusonyourinnercircleoffamilyandfriends.Todogreatwork,youneedtocreate,andprotect,emptyspaceinyourlife.

BiasTowardsAction:MostthingsworkthemselvesoutifIdonothing.Seeingthishappen,repeatedly,remindedmethatIoverestimatemyabilitytoimpactasituation.Theimplicationsareto:

Focuswhereyoucanhaveapositiveimpact Focusonyourbestopportunities,situationsandpeople Learntopause

o whenexcitedo whenstressedo beforeanyimportantdecision

Becausemostpeoplerollthroughlifewithoutplanning,alittleeffortwithself-directionhasdramaticeffects.Thetipsinthischapterhaveenabledmetoconsistentlyoutperformmyexpectationsoveramulti-yeartimehorizon.Thepowerofpersonalplanningliesinthegeneral,notthespecific.Onceyouhavecompleteddetailedevaluation,boilitdowntoitsessence:

Asimpleplanthatyoucanrememberandexecuteeveryday Periodsofspecificfocusthataddresskeygoals Scheduledrecovery,anddowntime,beforeyouneedit Nosinglephaseoftheyearcompromisestheperiodthatfollows Paceyouryear Enjoyable,relaxingandsatisfying

Forexample,IvebeentalkingaboutwritingthisbookforthreeyearsbutitdidnthappenuntilImadeacommitmentto:

Getupby7a.m. Writetwopages Dosomeexercise Meetmyexistingworkcommitments Spendtimewithmywifeandkids

Byrestrictingcommitmentsoutsideofthelist,mydailytargetsareeasytoachieve.Bystickingwithmyplan,Idevelopahabitofkeepingsmallpromisestomyself.Whetherthegoalisanewbusiness,preparingforachallengingraceoreducatingmydaughterthemethodisthesame.Createthehabitofsmallpositivesteps,doitdaily,persist.


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Considerhowmuchofyourdailyenergy(thought,action,words)isdirectedtowardsthesimpleactionsrequiredtocreatealifewithmeaning.Worktotrimthetimethatsspentonareasperipheraltocreatingthelifeyoudesire.


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AnActionPlanForAchievementToday:

Getyourselfanotebook Writeathemeacrossthetopofeachpage Brainstormonethemeeachmorning

TwoWeeksfromToday: Reviewyourbrainstorming Lookforrepeatingmessages Filteryourplantoasmallnumberofdailyactions,notmorethanthree

Thereafter:

Starteachdaywithasimplewinitcouldbeassmallaswhatyoueatforbreakfast

Setonepriorityperday Doyournumberonetaskfirst Createahabitofkeepingsmallpromisestoyourself

Rememberthekeystoguidingyourlife:

Scheduleless Takeresponsibilityforyourtime Alignyourspendingwithtruesatisfaction Createahabitofdailyactiontowardsyournumberonegoal

Keepitsimpleandpersist!


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Expectations&Setbacks

Havingusedmyplanningprotocolsince2000,IvecometorealizethatIgetwhatIexpect.Writingmygoalsdownclearly,andconsistentdailyactiongetsresults.

HeresthefirstTop10listIeverwrote.ThegoalswerewrittenwhileIwasinthecorporateworld,workingdailyatadeskandwishingIcouldchangemylife.

1. Touchsomeonewithmywriting2. Cleanoutmycomputerroom3. Relaxmore4. Sub-10hoursatanIronmanTriathlon5. Buyahousetohaveabase6. Bepublishedinamajormagazineorinaforumwhereawideaudiencecan

readme7. Getridofalotofstuffinmylife8. Moreloveinmylife9. Writeentertainingpiecesthatmakepeoplelaugh10. AnewcareerthatwouldgivemetimetodowhatIwantaswellastravel

Mythemesare:writing,love,acceptance,freedomandsimplicity.Whilemyvaluesandsatisfactiondriversdatebacktomyteens,ittookuntilmyearly30sforthemtobecomevisibletomyconsciousmind(seeDrucker,ManagingOneself).Acknowledgingtheselifelongaspirationsenablesmetofilternewopportunitiesanddirectmylife.Mylistisnotaroadmap.Rather,makingthethemesvisibleestablishesclarityfordecisionsonmydailylife.Ireviewmylifenomorefrequently

thanonceperquarter.TheressomethingmagicalaboutputtingpentopaperanddecidingwhatstrulyimportantinyourlifeoneyearlaterIhadtickedtheboxonsevenof10items.Becauseofthelawsofprobability,theressomebodyouttherewhowillwriteatoptenlist,annually,for65yearsandhiteverythingonthelist.Youcouldbetheluckyone,sogetstarted!TurnsoutthatIwasntthatpersonandIvehadsetbacksacrossmylife.Overalifetime,itwouldbehighlyunusualnottoexperienceatleastafewmajorsetbacks.

Heresmylist:

FailuretoAchieve RelationshipFailureandDivorce Unemployment CorporateBankruptcy IllnessandInjury LargeFinancialLoss


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NoneofthesearepleasantandIwouldntwishthemonyou.However,onceIgetthroughthem,sometimesmorethanonce,theyreallyarentthatbad.Fearisanessentialtoolforstimulatingchangepriortocrisis.Weoftenhearthatwe

havenothingfearbutfearitself.Therealityisthatunplannedsetbacksarehighlylikelythroughoutourlife.Expectinglifetobeclearsailingsetsusupforgravedisappointmentwhenrealityhits.Imnottellingyoutoexpecttheworst.Rather,Imsayingthatalifewithmeaningwillbefilledwithunexpectedsetbacksandchallenges.Havingbackupplans,andunderstandingwhatscaresus,willenableustocopeandaddresschallengeswhentheypopup.Ihavefourmainfears:financialloss,failure,unemploymentandhealth.Thesefearsarecommoninmypeersandquiteusefulformotivationalpurposes.

FearofFinancialLoss

Counterbybuildingcorecapital(seeCreatingFinancialHealth) Createafallbackplanthatwouldenableyoutoliveonafractionofyour

currentexpenditure HammertheLiveSimplycredointoyourself(annualretreats,peergroup,

spokenandwrittenwordarehelpfultools)FearofFailure

Getoutthereandfailafewtimes:failsmall,failbig,keeptrying Deeplyfeelthepainofyourfailures Thennoticehowitleavesandlearnthatfailureisntfatal Listentotheelderlylingeringhumanpaincomesfromregret,notfailure

FearofUnemployment(FailureandFinancialLoss)

Incorporateaparttimecareerintoyourfallbackplan Buildcorecapitalsoyouhavetimetomaneuver Continuallylearnnewskills Maintainanetworkofsmartpeoplethatyouassistwithoutexpectationof

immediatebenefitHealthFears

Insurewhatyoucan,acceptwhatyoucannotcontrol Create,andthenfollow,yourpersonallongevitystrategy(comingupshortly

inPartTwo) Spendtimewiththeelderlytounderstandwhatsheadingourway Livewelltodayunderstandingourmortalitykeepsushonest


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PersonalPlanningSimplified

WhilethepreviouschapterexplainedhowIdirectmyownlife,thissectionismybestadviceformakingimmediateimprovementinyourlife.

Bymakingthesetipsahabit,youcapturemostofthebenefitfromthedeeperprocessthatIhaveoutlined.TheSixKeys

Placethebigthingsfirst:Blockoutfulldaysforimportantitemsandgetawayfromyourdailyroutinetoapplytotalfocustoareasofyourlifewhereyouwanttomakedramaticimprovements.

Focusonalimitednumberofthings:Knowwhatyouwanttogetdone

eachdayandcheckthealignmentofhowyouspendyourtime.

Rotateyourfocus:Byyear,byseason,bymonthandbyday.

Practicesayingno:Mostimportantlytoyourselfand,secondly,toattractivenon-coreopportunities.

Bewillingtomakeunpopulardecisionsthatareinthebestinterestsof

whatyouwanttoachievemakethiseasieronyourselfbyhavingalignmentwithinyourinnercircle(spouse/family/work/self).

Beanexemplar:Firstupinthemorning,firstoutthedoor,mostproductive.Beinganexemplarcreatesconsiderablepersonalfreedom.Freedomflowsthroughbeingfitforleadership.

Ifyoudecidetofollowthissimplifiedapproachthenitsstillworthwritingdownyourplanstogiveyou:

Visibilityonkeydecisions Alocationforremindingyourselfaboutkeyerrorsofjudgment Anabilitytoreturntoyourpre-decisionmindsetforevaluation Anabilitytotrackprogressovermultiyeartimehorizons

Inmy40s,IhaveagoodunderstandingofwhatmakesmetickandIvefoundthathavingmyliferotatewiththeseasonsworksverywellformyfamily:

Winter:learnnewskills,completelong-termprojectsandfocusonfamily Spring:strengthenexistingrelationshipsandimprovebusinesslife Summer:improvethephysicalselfandrejuvenatethespirit Fall:review,strategyandplanning


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PartTwoHealth,Wealth&Change

Imfondoftellingmyfamily,youwillliveyourlifeandIwilllivemine.Themantraisaremindertorespect,andsupport,eachothersjourney.

Asaparent,myroleisnttocreateaseriesofmini-mes.Myroleistoequipmykidswiththeskills,andvalues,tocarryforwardwhatsbestaboutourfamily.Atthesametime,weneedtorememberourfamilysmistakesasthesearelikelytorepeatdowntheline.Ifulfillthisrolebest,whenIfocusoncreatingdesirabletraitswithinmyself.Thispartofthebookfocusesonhealth,wealthandchange.Mytakeoneachofthesepointshasdevelopedovermylife,andwillcontinuetochangeasImovethroughthephasesofmylife.Hopefully,Illgetachancetorevisitthemandsharemyperspectiveinmy50s,60sandbeyond.

Itakealongviewonhealthanddefineitaswellbeingacrossourentirelife.Asyouage,youmightevenfindthatyoustarttooptimizeforthewellbeingofyourspouse,yourkids,andyourfriendsaswell.Whenwehearwealthwetendtofixateonfinancialwealth.Whilethereisasectiononfinanciallessonsinthisbook,Idencourageyoutoconsiderwealthinthelargestsenseoftheworldfreedom,health,longevityandpersonalsatisfaction.Onceourbasicneedsaremet,happinesshasaweakcorrelationwithnetworth.Many,myselfincluded,havefoundthatfinancialsuccessdidntcorrelatetopersonalhappiness.Thesectiononwealthisdesignedtohelpyouthinkoutsideoftheboxandbalancewhatwereexposedtowithourmediaandpopularculture.

Illcloseoutthissectionbysharingtips,tacticsandhabitsthatIusetomanagemymoodandmakeincrementalchange.Howyourefeelingrightnowisafunctionofyourgenericsandhowmanylittlethingshaveimpactedyournaturaltendencies.Bychoosingourenvironment,andcommittingtoincrementalchange,wecangreatlyinfluencethequalityofourlifeexperience.


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CreatingAPersonalLongevityPlan

Howdoyouwanttodie?Iknowthatyouwouldprefernottothinkaboutitbutplaythegame...howwould

youliketocheckout?Thewaywelive,ourchoices,ourlikes,andourtolerancesallaretrainablethroughincrementaleffortandpractice.Considerwhatyoucouldachieveifyouidentifiedafewsimpleprinciplesthatwouldextendthequalityofyourlife.Astory:abuddyofminevisitedhisdoctor.Thedoctoldhimthathewasfacingalife-or-deathsituationwithhishealth.Heneededtochange,orhewasgoingtodie!Whenmypaltoldmethisstory,myresponsewas"sowhat,we'reallgoingtodie."Tomostofus,deathisn'trealsufferingisreal.Thischapterisaboutreducingphysicalsuffering.

Ihadachancetovisitmybuddy'sdoctoranddrewthechartbelowforhim:IthinkthisisamorepowerfulargumentthelinesareIllness,AverageandGoal.TheY-axisisQualityofLifeAndX-axisisTime.Thechoiceisn'tlifeordeath.OurchoiceislengthofdeathandI'mshootingforthecliffedgeapproachthatyoucansee.

Source:MarkAllenThereistremendousnoiseandemotionsurroundingpersonalhealth.Bodyimage,self-worth,consumption,control,nutrition,cancer,andheartdiseasethesetopics

setoffpowerfulemotionswithinus.Ivebeenfat,lean,sedentary,achampionathleteandeverythinginbetween.Alongtheway,Ivebeentaughtbysomeofthefittest,butnotalwayshealthiest,peopleontheplanet.Armedwithapowerfuldrivetomakemyselffaster,Ivespentyearsstudyinghumanperformance.


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Thetruthabouthealthisourlivesarenotabouthealth.Theconceptofbeinghealthydoesntmotivatepeople.Fear,vanity,sufferingandpleasuremotivateus.Takinganhonestlookatmyself,IseethatmydailychoicesaredrivenbyadeeperdesiretoaddressvariousproblemsthatIthinkIhave.

Whatarethecommonproblemswehavewithourbodies? Appearance Performance PainandIllness

Withahealthyphysicalbody,IvenoticedthatIammorecreative,moreproductive,morepositive,andhavelessforceddowntime.Additionally,Ihavealotmoreoptionswithinthephysicalworld:climbingamountain,ridingmybike,orparticipatinginatriathlon.Mywhyforphysicalheathincludes:

Feelinggoodinside CreatingapositivebiastowardshowIexperiencetheworld Reducedstress Increasedcreativity Increasedproductivity Maintainfullfunctionwithinmylife(sex,kids,chores,tripswithbuddies) Lookgood Expansionofmyphysicalworld Reduceddowntime

Thatsalonglist.IfIboilitdownthenthetruedriversare:lookgood;and

participateinfuneventsvanityandrelativesuccesswithmypeersareeffectivemotivatorsthatcandrivepositivechange.Experiencetellsmethatwinningwontprovidealifewithmeaningbutacknowledgingmysourcesofmotivationhelpsmecreatealifestructurethatincreasessocialpressureonmyself.Mydailyschedule,friendsandlocationcreatesignificantpressuretomaintainhighstandards.Thatsmywhy.Heresmyhow.

Wakeupbefore7a.m. Eatrealfood Exerciseevery12hoursorso Notice,thenremove,anythingthatcausesmetomisstheabovegoals(mybig

nottodosarefatigue,excessivealcohol,sugar)Letsdigintotheminabitmoredetail:WakeUp:IcantcontrolthetimethatIfallasleep.WhatIcancontroliswhenIgetup.Makingitoutofbedby7a.m.meansthatIcanstarteachdaywithasmall


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victory.ThesinglebesttoolIvefoundforwakingupisanauto-brewcoffeemakerthatsready,daily,at6:45a.m.WhenIminafunk,Iwillusethecoffeemakerasanalarmclockandplaceonmybedsidetable!EatRealFood:Resistdogmaandavoidthepoliticsofnutritionalevangelists.Focus

oneatingrealfoodthatcreatesstabilityinyourmood,energyandappearance.Thecoreofmynutritionalstrategyisbuiltaroundthreemeals:

Scrambledeggscookedincoconutoil,servedoverquinoa,drizzledwitholiveoil

Choppedwholefruits Hugemixedsaladswithleanproteinandgoodfats(avocados,nuts,seeds)

Thatsit.Therearenosecrets.Whenitcomestonutritionalexcellence,wearenotlimitedbyknowledge,money,or

time.Keepitsimpleandpayattentiontohowyoufeel.IfIfollowtheprotocolabovethenIfeelgreat,haveplentyofenergyandlookgood.Therearebillionsofdollarsspent,annually,toconvinceusotherwise.FrequentMovement:Moveyourbody,moderately,andpayattentiontohowyoufeel.Thefirst20minutesofdailymovementgivesyouthegreatestreturnoninvestmentby:

Givingyouawinfortheday Maintainingahabitofactivity Acknowledgingthatthetoughestpartisgettingstarted

Tooptimizeforvanity,Ihavefound12hoursofweeklyexercisetobeoptimal.Thatfigure:

Givesmeareasonablebaseline,fromwhichIcanincreasetobecompetitivewithmybuddies;

Enablesmetoburnoffstressandexamineemotionalquestions;and Facilitatesproblemsolvingandcreativethinking.

Comingfromaneliteendurancebackground,IhavetoconstantlyremindmyselfthatthebenefitsofexercisedeclinerapidlyonceIexceedmypersonalsweetspot.Musclesoreness,fatigueandmoodswingsaresignsthatIvegonetoofar.Separatefrommyathleticlife,Iexperienceexactlythesamewarningsignalswhen

Imworkingtoohardonmybusiness,orfamily,lives.Likewise,Ineedtobealerttochoicesthatcausemetotakeanunplanneddayofforfallshortofmyweeklytarget.Ivefoundthatthemosteffectiveuseofwillpoweristoreplace,notremove,thechoicesthatresultinfallingshortofmyminimums.Replacehabitsthatcauseyoutomissyourminimums.


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PersonalMantras: Hittingmybaselineiswhatsrequiredtoachievemygoals Theminimumisenough PausewhenImoutofcontrol

Withnutrition,IvefoundtheprinciplesofH.A.L.T.tobeeffective.IavoidchoicesthatwillleavemeHungry,Angry,LonelyorTired.Asaneliteathlete,Iusuallyhadtwo,ormore,HALTattributesrollingatanygiventime!IdidntgaincontrolovermynutritionuntilIwasabletopause,andstepawayfrom,acycleofovereatingandexcessiveexercise.Mytriggerwasexcessivefatigue.Ifyourestrugglingwithdisorderedeatingthenlookforthesourceofexcessivestress.


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LivingWithoutZeros

Mygoodfriend,JeffDrJShilt,firstbroughtthe"NoZeros"philosophytomyattention.

Asaneliteenduranceathlete,Iusedtotargetfivehoursofdailyexercise.Thatsover1,500annualhoursofexerciseandIwouldntrecommendthatforanyone.Jeff'sasmartguy.Seeingthattraininglikeanelitedidn'tfithislife(asdoc,dad,professor,administrator),herealizedthathecouldachievealiftinproductivityifhedroppedthedayswherehedidnothing.Jeffgetsmoredonebydoinglessnothing.Theerrormostpeoplemakewithchangingtheirlivesisdecidingonanarbitrarydestination,backfittingarecommendedworkloadthenaddingalittlebitextraasa

cushion.Anoverlyambitiousstartpointvirtuallyguaranteesthattheywillfailtoachievetheconsistencyrequiredtosucceed.Withanewareaofyourlife(nutrition,businessdevelopment,sport,languages,parenting),asinglestepforward,applieddaily,isallthatmatters.Takeasinglestep,everyday,andpersist.Withinmyownlife,Ihavefourtypesof"unplannedzeros"definedaschoicesthatfailtomovemeforward:

Missingtraining:Ineedthebenefitsofdailyexerciseinmylife Sleepingin:IalwaysconvincemyselfthatIdeservedit... Nutritionallapses:Samerationalization,Ideservedit... Beingrudetomyclosestfamily:Whydoweunloadonthosethattrulylove

us?AsurefireindicatorthatIhavetoomuchgoingon,oramseekingtocontrolothersbecauseIamfailingtotakeresponsibilityformyself.

Bywatchingthesituationsthatcausethese"littlefailures,"Icanremovetheitemsthatpreventmybigsuccesses.TakeHomePoint:Considertheminimumrequiredtomoveforward,

daily.Thenmakeahabitofremovingchoicesthatscrewitup.Setyourminimumsatalevelthatyoucanalwaysachieve.

Successstreaksarepowerfulmotivators.


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AnActionPlan

Breakinginertia

20minutesofexerciseperdayfor28days Choose3-5simplemeals,ofrealfood,repeat Usewillpowertohiteasyminimumtargets Replace,ratherthaneliminate Keeplittlepromisestoyourself Rememberwhyyoustarted,writeitdown,postitwhereyoucanseeit Eatunlimitedamountsofleanproteinandveggiesthishelpsyoureplace

whileyoucreatethelifethatwillreducethedrivetoovereat Replacethebiggiesfirstbread,cheese,beer,alcohol,latenighteating,

cereal DoONEthingatatimechooseonething,makeitahabit,thenmoveon


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MoodManagement

Iendedthesectiononlongevitywiththeadvicetoavoidbeinghungry,angry,lonelyortired(H.A.L.T.).Therealityisthatweoftenhaveaninabilitytocontrol,orsee,ouremotions.

Asayoungadult,Irarelyconsideredmyabilitytomanagemymood.Speakingfrankly,Iusedwork,sexandalcoholtosuppressanyemotionsthatIdidntfeellikehavingaround.Laterinlife,Ireplacedworkandalcoholwithexcessiveexercise.ItwasaneffectivestrategybutIvefoundalternativewaystolive.Thissectionoffersadviceonmanagingyourmoods.Itisfarfromtheonlyway.Morethanprovidingamodelforexternalsuccess,thehabitsthatIsharehavehadapositiveimpactonmyinternallife.Forthemostpart,mylifeisharmonious,directedandsatisfying.

IfItakeresponsibilityfordoingwhatIknowworksthenthepayoffisimmediate.Thisdoesntmeanthatlifeisalwaysclearsailing.However,IknowthatifIkeepittogetherthrougharoughpatchthenIllbebacktonormalwithin72hours.Ivebuiltcredibilitywithmyselfbykeepinglittlepromisesandreframingsituationsthatpressmybuttons.Mykeythreeformoodmanagementare:

ExerciseIneedtogeneratesomestimulationformyserotoninreceptors,ideallytwicedaily

Nutritionpoorfoodchoices,especiallysugar,screwupmyneurochemistry Sleepdialingdownmymindcalmsmeand,whenIcantsleep,IknowthatI

havetoreducewhatsgoingoninmylifeItsmyjobtomanagetheabove.IfIdontdomypartthen,asaphysicalorganism,therewillbeconsequencesinhowIexperiencetheworld.Theresnorightorwrong,itisorganicchemistryworkingonmybrain.Thechoicesofmy20s,whichImadewithwork,food,sexandalcohol,wereseekingtofillsimilarneedstomy40s.Ihaventtranscendedmyself,orbecomeabetterperson.AllIdidwasmodifymyapproachwithamethodthatsmoreappropriateforthelifeIwanttolead.

WhenIamrollingthekeythree,Igetintoagrooveofclearthinking.Duringmomentsofclarity,Ihavehadtheinsightthatmeaningflowsfrom:

Harmony Stability Direction Love Unscheduledtime


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Illdigdeeperintomythemes,whichappeartobeuniversalacrossmypeers.Inyourownlife,writedownyourinsightssoyoucandiscoveryourowntruth.Whenyouhaveagoodidea,makeitrealbywritingitdown.Itismucheasiertoseedisharmonythanharmony.Icreateharmonybyremoving

people,andsituations,thatcausedistress.Havingspentmy20slivinginlargecities,Ifindcrowdstobetiring.Evensittinginaroomalone,thereisabackgroundhuminalargecitythatsdifferentthanwhatIexperiencelookingoverthewaterin,say,NewZealand.Ibalanceurbanlivingwithtimespentinnature,especiallynearwaterorinforests.Tocreatestability,mydailylifeisthesameregardlessofmygeographiclocation:

WakeUp Exercise Work MoreExercise,orPersonalProject MoreWork,orFamilyTime Gotobed

Abenefitofbeingself-employediscontrollingmyownschedule,soIcanmaintainmydailystructuresevendaysaweek.Similartoharmony,itiseasiertofeeltheeffectsofinstability:particularlyemotional,andfinancial.Onceagain,Iknowthatitismyresponsibilitytotakecareofmyownemotionalandfinancialwellbeingfirst,becauseItisonlyfromapositionofpersonalbalancethatIllbeabletohelpothersand

achievemyowngoals.Forexample,IwasunsuccessfulinrelationshipsuntilIsortedmyselftothepointthatIwascontenttobealone,andsingle.Ihavebeenknowntoconfusemybasichumanneedsofloveandacceptancewithadesireforsexorownership.Mywifedoesntsharemyneedforamissionbutsheappreciatesbeingmypartnerinchartingthedirectionofourfamily.IdobestwithhavingaspecificmissionthatIcanworkondaily.Ihaverealizedthatthereisntanyachievementthatwillsatisfytheneedtohaveamission.So,Ichoosemygoalscarefullyandmoveononcetheyvefulfilledtheirfunction.

Ifyoulookdeeplyintotroubledmindsthenyoulloftenfindalackofloveintheiryouth.ThemostimportantthingthatIcangivemyfamily,andperhapstheonlyreallyusefulthing,ismylove.Ilovemykidsandtheyteachmetolove.UnscheduledtimeisthewayIcreatespaceinmylife.Todomybestwork,Ineeddailyblocksofunstructuredtime.Ifinddoinggreatworktobemoresatisfyingthandoingalotofwork.


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Ittookmetwenty-fiveyearstofigureoutmymoodmanagementlist.Soheresaquickwaytoshortcuttheexperiencecurve:

1. Makealistofthepeople,andsituations,thatcauseyoustress.2. Reviewthelist.3. Writedownwhatstriggeringyourstress.

Yourlistoftriggersmightlooklike: Confusion Clutter Impositionofcontrol Disruptionofroutine Exposuretoconfusedminds Noclearplan Hate Anger Overscheduled

Gettingstuffdoneisaboutsettingafewprioritiesandmakingsureyoutakeonepositiveaction.Overcomingemotionalhabits,andreducingstress,isaboutlearningtoobserve,thenleave,thenegative.Learntosaynotochoiceswithresultsthatoverwhelmwhatsimportant.Yourlistoftriggerswillprovideyouwithwhattoavoid.Invertingyourlistwillletyouseeyourkeydriversforsatisfactionandmeaning.Forexample,mytriggersaretheoppositeofmykeys(harmony,stability,direction,

love,unscheduledtime).Itiseasierformetoseewhatbothersme,screwsupmylife,andstressesme.Imakealistofthenegativesandinvertthem.Ilearnedthetactic,oflearningviainversion,fromMungerswritingsintheBestBookssection.ButwhataboutsituationsthatIcantavoid?Asaparent,Icant,anddontwantto,leavemykidswhentheyarebeingdifficult.Likewise,IwontbeeffectivetoquiteverytimeIbumpintoadifficultsituation.Evenforsituationsthatyouwanttoleave,youllwanttomanageyourdepartureassmoothlyaspossible.Withthatinmind,letsdiscusstacticsfortoleranceandacceptance.

Whatarethephysicalfeelingsofstress?

Thefirststeptomanagingstressisspottingitsarrivalviatightness,closing,heatandpressure.Thesetriggersareourearlywarningsystem.Inhighlychargedsituations,itisusefultohaveapartnertohelpusrealizewhenwevestarteddownthepathofanautomaticstressresponse.


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Whenphysicalsensationsofstressbegin,Iwanttoachieveawareness,whichisfollowedbyapausetoconsidermynextaction.Tightness,closing,heatandpressureallareeasilyfeltinthebody.TheseawarenesstriggerscanbefeltinternallybeforeImakeanexternalresponse,or

error.Totrainmyselftopause,Ivetaughtmyselftoaskquestionsinternally:

WhatcanIlearnfromthissituation? AmIsurethatthingsareastheyappear? WhatdoIwanttoachievetoday? Whatstrulymotivatingthisperson?

Youcantrymyquestions,ordeviseyourown.IvepickedmineupfromsourcesasdiverseasaVietnamesemonktoarealestatenegotiatingcourse.Thequestions

havebeenusefulbutwhatsmostvaluableiscreatinganautomatichabittopausewhenIfeelstress.Ifyoufindyourselfconstantlyflippingintoanautomaticresponsethenyoullneedtofindalowerpressureareaofyourlifewhereyoucanpractice.Forme,thatpartofmylifeisathletics.Sportisanareaofmylifewhere:

Icantrainaloneandremovesocialpressure Imnotasemotionallyinvestedinoutcome Allofmytriggers,emotionalhistoryandbiasesfollowme Icancontrolthewhen,whereandhowmuchstressIgivemyself

WhetherIamteachingmyselfhowtoremainrelaxedwhilerunning,orlearninghowtocopewithanovertiredtoddler,myapproachisthesame:

RemovetimepressurebyallocatingatleastdoublethetimethatIexpectthetasktotake

Focusonenjoyingmyselfratherthananexternalperformancegoal Reduceexternalstress;suchasotherpeople,noiseorfatigue

Tobeabletoperformwhentimeistight,stakesarehighandexternalstressisintense;weneedtocreatespaceforclarityofthoughtandaction.Trainingour

reactionsisbestdone,initially,inalowstressenvironment.Toimproveyourabilitytomanageunderstress:

Notewhatcreatesstress Reducethestresstriggersinyourlife Invertyourstresslistandfocusonmoreoftheopposite Trainawarenessofyourtriggersinlow-pressureenvironments Learntopausebeforeautomaticreactions


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Toclose,rememberthatactionleadsemotion.Thequalityofourlivesrestswithactionsthatwechoosetomake.


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HowIFoolMyself

Sincemyteens,mylifehastakenmanyturns.Ivelivedaroundtheworld,workedindifferentculturesandexperiencedlifechangingsetbacks.Ofallmyexperiences,thesetbackshavebeenthemostusefulastheyarewhatpromptmetoevaluate

whereIamtakingmylife.Uptothispoint,Ivewrittenaboutthetools,tricksandtacticsthatIusetoshapemylife.ThischapterisaboutthemostcommonwaysthatIvefooledmyselfandmadepoordecisions.Severaltimesinmylife,Iveblownit.ThewaysthatwefoolourselvesareextremelycommonandyoullfindacomprehensivelistinMungerswritingonHumanMisjudgment(seeBestBooks).MylifelessonsaremoregeneralthanMungersandtheareaswhereImostoftenfoolmyselfare:

SunkCosts:particularlyingivingtoomuchweighttotherecentpastInfluence:givingtoomuchweighttomycapacitytocreatechangeMore:thinkingmoreistheanswerControl:thinkingthatcontrollingotherswillbringmesatisfactionTocountermytendencytoovervaluesunkcosts,Ivedevelopedtacticstoimprovedecisions.First,ItellmyselfthatitsOKtochangemymindonthebasisofnewinformationandpubliclystatemydesiretomakethebestdecisionbasedoncurrentfacts.Collectively,weshareastrongculturalbiasagainstchangesothisdoesntcome

naturally.Next,togivemyselfafurthernudge,Iconsider:

IfIcouldstartoverthenwouldImakethesamedecisionbasedonwhatIknowtoday?

WouldIbecomfortabledoublingmyinvestment?WhetherIamconsideringtime,moneyoremotionalenergy;thesetwoquestionsgivemeaquickcheckonhowtospendfutureresources.

Evenifmoneyandtimehavebeenwasted,ourpastexperienceisvaluableforthefuture.Ihaverepeatedmistakes,sokeepingawrittenrecordofkeydecisions,andreviewingyearslater,ishelpful.Sharetheselessonswithyourfriendsandfamily.Individually,wedobetterwithcertaintypesofdecisionsthanothers.Itsimportanttorecognizeyourpersonalblindspotsandbuildateamthatsstrongwhereyouareweak.Havingateamthatswillingtocorrectmeisbeneficial,evenifIdontlikeitatthetime!


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Asateacher,guide,consultantandparent;Ioverestimatemyabilitytoinfluenceoutcome.Withinmyconsultingbusiness,peoplewithaprovenrecordofperformancehireme.IvefoundthatIenjoyworkingwithpeoplethatarealreadysuccessful(!)becauseitiseasiertomakethemsuccessfulinanewareaoftheirlife.

Invertingtheobservationabove,Ihavepouredtremendousenergyintosituations,andrelationships,wherethesolutionwasnevergoingtocomefromme.Infact,Ivehadsuccessesbycompletelyremovingmyselffromaproblemtoooftenweoverlookthepossibilitythatourinvolvementfeedsdysfunctionandpreventsasolution.Mymantraswithregardtoinfluenceare:

Assistwithoutownership RememberthatIhavemyhandsfullwithmyself Focusonmystars

Mystarsarethepeopleclosesttome,andtheopportunitieswiththegreatestpotentialtoenhancemylife.Livinginaconsumersociety,Imoftentrappedintothinkingthatmoreistheanswertomyprayers.

Moremoney,soIcouldhavemoretime,todomoreofwhatIliketodo Moreexercise,soIcaneatmore,soIwillbemoresatisfied Morestuff,soIcoulddomoreandbehappier Morecontrol,soIcouldgetpeopletodomoreforme,soIwouldhavemore

time More,more,more

Despiteknowingthatmoreisntwhatmotivatesme,givesmesatisfactions,orlimitsme;moreisalwayswithme.Myantidotestomore:

Spendtimewithpeoplethathaveless Focusonmorelove,morefreedom,morespace Limitmyexposuretothemedia,particularlypopularculture,tabloid

journalism,socialnetworks,publicforumsthatallowanonymousposting

andadvertisingWheneverIcatchmyselfthinkingmore,Istopandmakeamentalnotetoexaminetheimpliedassumptions.Ittakesconsistentmentalefforttocountermyattractiontomore.Relatedtomore,Icangetcaughtinthinkingthathappinessliesoverthereorinthefuture.WheneverIcatchmyselfthinking,IfIcouldjustthenIstop,callmy


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ownbluffandremindmyselfthatitifsomethingisimportantthenIneedtomakeithappenhere,andnow.AsIage,Imgettingbetterwithrealizingthatitsneitherdesirable,norpractical,toexpecttocontrolothers.Aswell,IgentlychidemyselfwhenIseektocontrol

others,ratherthanfocusingonimprovingmyself.Combiningthelasttwotips,myanswerisntmorecontroloverothers.TheansweristocreatespaceandfocusoncompletingdailystepstowardsthelifeIwanttolead.Inthenextsection,IllshiftgearsfromaninwardfocustosharingwhatIvelearnedaboutrelationshipswithothers.


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PartThreeTheInnerCircle

Thispartofthebookisaboutgettingalongwithmytribe.Inmycase,thisincludesspouse,kids,keyfamilyandclosefriends.Humansformdifferentsocialassociations

basedonblood,marriage,race,nationality,sports,hobbiesandbusinessinterests.Howeveryoudefinepeersthissectionsharesideasforgettingalongwithinaworldthatsrunbysocialbonds.Myinnercircleisdefinedbyasimpletest.IfIwillchangemyscheduletoseesomeonethentheyarepartofmyinnercircle.Flippingthisstandardcanmakeforuncomfortablerealizationswithregardstopeoplethatwethinkwevalue.AsIsaidearlier,ifIdontcareenoughtochangethenIdontreallycare.


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CreatingHealthyRelationships

I'vebeendivorced,unemployed,exhausted,stressedout,andoverweight--generallynotatthesametime,thankfully.Somyadviceisnoguaranteeofsmoothsailing.However,byapplyingthesetips,I'vebecomecomfortablewithmychoices

andimprovedmymostimportantrelationships.Whatdoyouwant?

Iamdrivenbyadesiretofeelfree.Youmightbemotivatedbylove,envyoracceptance.Goingthroughthepersonalplanningprocessonanannualbasiswill,overaseriesofyears,enableyoutoseeyouremotionaldrivers.Rememberthatyouhaveyourwholelifetofigureitout(!)andyourvalueswilldevelopasyoumovethroughthephasesoflife.Followingtheexpectationsofotherscanleadustomakedecisionsthatreducesatisfaction.Asayoungman,Iplayedthegamewellandmoveduptheladderinmy

firm,andinsociety.However,Inoticethatsuccessleftmefeelingempty,ratherthansatisfied.Myfirstself-realizationsfocusedonwhatwasntsatisfyinginmylife.Gradually,Isawtherolethatfreedomplayedinmygooddays.Assomeonethatlikestofeelfree,thefollowingneedtobecarefullyconsidered:

Deskjobs Longtermcommitments Marriage Kids Debt Traditionalcorporateemployment

Alloftheabovehaveplayedanimportantroleinmylife-commitmentsthemselvesarenotaproblem.TheproblemariseswhenItrytodotoomuchatonetime.So,Iphasemycommitmentsbasedonmynear,mediumandlong-termgoals.ComingbacktowhatIwroteinSimplifiedPersonalPlanning,Ineedtophaseitemsthatconstrainmeandplacehigh-productivityblocksintomyyear,generallyinthewinterwhenmentalachievementcompensatesforrestrictionsonmyphysicallife.Finances-Ifyouvaluefreedomthenkeepyourpersonalexpensesaslowaspossible.Consumingalotofthefamily'sresources,especiallywhentravelling

withoutyourfamily,isarecipeforfriction.BeVisibleWithYourChoices-ThewayIlivemylifeisvisibletomypeergroup.Regardingcar,clothes,jewelryandotherwants:letothershavesuperiorgoods,ortakethecreditforsuccess.Stayfocusedonyourtrueneeds.Bewhatyouappeartobewhilelivingtransparently.


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BeReliableonLittleThings-Turnupontime;alwaysbeatyourbudget;doitrightthefirsttime.Consistentlytakecareofthelittlethings.Littlethingscreatetrust,whichisrequiredforfreedom(orrespect,orresponsibility,orwhateverdrivesyourmotivation).

UpgradeYourPeerGroup-Ifyouwantqualitypeopleinyourlife,andpersonalfreedom,thenyou'llneedtoupgradeyourassociates.Seekfriendsthatmirrorthevaluesyouwanttolive.Chooseyourpartnersverycarefully.BeTheChange

Ifyouwantafitspousethenbeafitspouse Ifyouwantsupportthenbesupportive Ifyouwanttobeinchargethenmakeyourselffitforleadership

Wecan'tfoolthepeoplethatareclosetous-soitisbesttobeopen,consistentandtruetoyourmission.Ifyoufeellikeyourpast,orchildhood,overwhelmsyouwith

negativeemotionsthenstartwithsmall,butdaily,actionstobuildtrust.Asapersonalaside,don'tconfuseadesireforfreedomwithadesiretobeserved.WhenIamfeelingoverburdened,Iwanttheworldtocatertome.Thefreedomweseekwillnotarrivebyoppressingthosearoundus.ThesolutionistosimplifymylifesoIcanfocusonthefundamentalsofmypersonalplan.Creatinganenjoyableprivateliferequiresawillingnesstobeless"successful"publicly.


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IntimateRelationships

MymostimportantlessonsofaristheknowledgethatifIhadbeenprotectedfrommakingmistakesthenIwouldhavemissedoutonalotofself-improvement.Havingtheopportunitytofacetheconsequencesofpoordecisionshasbeenessentialformydevelopment.Mybiastowardsactioncangetinthewayofaneedtostandback

andletothersworkthingsoutforthemselves.Theotherlessonwashowtogoaboutmakingmyselfasuitablepartnerformarriage.MyabilitytobeagoodspousedidnthappenuntilafterIgaveuponmarriageandfocusedonself-improvement.+++Iaskedmywife,Monica,whatshedrecommendtoseekinapartner.Shecameupwith:

Putsyoufirst Similarinterestsand,asacouple,yousharethoseintereststogether Trust Yourbestfriend

Tothatlist,Idoffer:

Dontassociatewithanyonewithangerflowingthroughhimorher.Movethesepeople,gently,fromyourlife.Apersonthatcantcontroltheirangermakesapoorpartner.Angerisasignthatwerenotlivingconsistentlywithourtruenature.

Rememberthatwereallpronetothemythoftheperfectstranger(seeLivingston).Thewayweseeothersisafunctionofhowweseeourselves.

Thesolutiontoourrelationshipchallengesliesinsideus,ratherthanfindingaperfectstranger.Whileitisfollytoexpectmarriage,orchildren,tofixarelationship,wehaveanimpactoneveryonethatsinsideourinnercircle.

Lookforagoodfitinthekeyareaswhereconflictshappen:o Valuesthepersonalplanningprocesswillenableyoutoseehowyou

wanttolive.Seekpartners,andpeers,thatshareyouroutlookonhowtolivewell.Valuesarenotaboutright/wrongtheyareamatterofcultureandperspective.

o Financeshowyouusemoneyo Schedulehowyouscheduletimeo Familyyourapproachelders,peersandchildreno Homehowyousplittheworkofrunningahouseo Workthetimecommitmentyoumaketoyourcareers

Imlikelycomplicatingthingswithmylonglistsofocusonthesethree:kindness,senseofhumor,makesyouwanttobeabetterperson.Threethingshelpedmecreateastable,intimaterelationship:


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IwascomfortablewiththepossibilitythatIwouldspendtherestofmylifealone.Societytellsus,incorrectly,thatourvaluederivesfromthepersonwecangettosleepwithus.Ourvaluederivesfromthesortofpersonwebecome.Wecanhaveverysatisfyingliveswithinanyrelationshipstatus.

Iworked,andcontinuetowork,onbecomingthesortofpersonthatIwantedtomarry.

ImovedtoaplacethathadthegreatestnumberofpeoplethataresimilartowhomIwantedtomarry.ThetacticofsurroundingmyselfwithwhatIwanttoachieve/become/findhasworkedverywell.

Inmarriage,asinlife,weneedtocreatewhatworksforus.MywifeandIremindourselvesthatourmarriageneedonlyworkforthetwoofus.Fivehabitsthatreducestressinrelationships:

Visibilitymyscheduleisavailableandaccessibleatalltimes Stableweekwhereweseeeachothermostdaysswimmingissomething

weenjoysoIsetmyscheduletoseemywifeatthepool.Everypersonhassomethingthatsspecialtohimorher.Findthatspecialthingandshareit.

DateNightonenightweeklytodiscusswhateverwewantmainlyformetorunthroughmylistsandconsultbeforetakingaction

CouplesTripstwonightsaway,monthly,justthetwoofus(whenwevehadanewborninthefamily,he/shegetstotagalong)

CouplesRetreatsoneweekaway,annually,justthetwoofus SpaceIdontknowifitisallmenbutIneedfrequentblocksoftimealone,

andinsilence.ItraveloneweekamonthandImneverawayformorethantwoweeksatatime.

Theideaistoshareexperiencesandcreatefrequentopportunitiesforcommunication.Peoplegrowapartduetolackofcommunication(thingsbuildup)andindependentchange.Thesearentbadthings,perse,butwevefoundthatalittleeffortletsusgrowtogether.Itwillbefuntocomebacktothissectioninafewyearsandseehowitschanged.Inlife,thingschangeandthatsOK.Thenextsectionshiftstowardskidsandfamily.Wewereveryfortunatelytogetourmarriagesettled-inbeforeourfirstchildarrived.


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ARecipeForASuccessfulCouplesRetreat

Maketimeforjustthetwoofyou. Gotoaninexpensiveplacewereyouareunlikelytobedisturbed. Turnyourphonesoff. Sharethingsthatyoubothlikedoing. Eachpersongetstorunthroughhisorher"list".Yourlistcancontainanythingthatsonyourmind.Ivefoundthatwritingdownitemsofconcern

makesthemreal,andalsogivesmetimetoputtheminperspective.Ifsomethingisarepeatingsourceofstressformultiplemonthsthendiscussion,followedbyaction,isrequired.

Discussfinances,familyandtime--theseseemtobetheissuesthatcancreateunderlyingstress.

Focusonthenearterm,andthelongterm. Agreepoints,takeaction,andfollowup. Dontletthebusinessofbeingafamilygetinthewayofhavingfunand

sharingexperiences.

Don'tkeepscore.


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FamilyPlanning

OurfirstchildwasbornjustbeforeIturned40anditworkedoutwellthatIwaitedtobecomeafather.

Thisallowedmeto: Spend20yearstakingtwocareersasfarasIwanted(financeandelite

athletics) Haveachancetotravelandsavemoney Haveachancetolearnandimprovemypatience

KidsinvolveasignificantreductioninpersonalfreedomandImgladwewaited.Similartoinvestments,ifyouareunsurethenwait!Sofar,thebestreasonforkidsischildrenbringloveintotheworld.

Loneliness,andtheneedforreliablesupport,isacommonchallengefacedbytheelderly.Itspossibletouseassistedlivingtosub-contractmanyofthehasslesofgrowingold.However,abetter(orbackup)solutionisastrongmarriagewithchildrenthathavebeenbroughtupinanenvironmentofloveandself-respect.Onthetoughdays,mywifejokestomethatshessureparenthoodwillultimatelypayoff.Optimismisavaluabletraitinaspouse,orparent!+++Beforewehadkids,Igavethoughttothefinancialimpactofchildren.Lookingback,

Ifocusedonthewrongareas.Consideringthequestionsthatfollowmayhelpyougetabetterexpectationonthefinancialimpactofchildren.

Willyoubothwork? Whatlevelofchildcarewillyouneed? Whatpreschoolwillyourkidsattend? Willyouwanttomaintainyourabilitytotravelwithoutyourkids? Howdoeshavingkidsimpactyourhealthcarepremiums? Howdoeshavingkidsimpactyourvehiclesandwhereyoulive?

WhenIranthenumbersonhavingafamily,allIthoughtaboutwasfoodand

clothing.Thoseareminorcostscomparedtothechangesthathappenwiththewayyouwanttoliveyourlife,howyouwillgivecaretothekidsandwhereyourchildrenwillgotoschool.Evenifyougetallthenumberscorrect,anotherareawhereIfailedtoanticipatechangewastheimpactonmytime.IfIknewhowmuchmyworldwouldshrinkthenIprobablywouldnthavehadkids.Thatwouldhavebeenabigmistakebecause,itturnsout,thatIdontmindatall.


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FitPregnancy

Wehaveallheardstoriesaboutmassiveweightgainduringpregnancy.Tabloidjournalismreportsonstarsgainingupto80poundsacrosstheirpregnancies.Listeningtothesetales,manywomenmustwonderiflargeamountsofbabyweight

arethenorm.DoIhavetobecomehuge,tohaveahealthybaby?Mywife,Monica,hasnavigatedthreesuccessfulpregnanciesandherexperiencemightberelevanttoyou.Ifyouapplythreetipsfromthissectionthenremember:

1Dosomeformofactivityeverysingledayofyourpregnancy

2Useyouwillpowerforportioncontrol,notfoodavoidance

3Beflexiblewithnumberoneandnumbertwo

Whatareawomansconcernswhenshesthinkingaboutgettingpregnant?

Iwilllosemybody Iwilllosemyhealth Iwon'tbeabletodoanything Iwillgetfatandneverrecover Itsgoingtohurt

WeretriathletesbutMonicadidn'trideherbikeduring(orsince)herpregnancies.Instead,shefocusedonswimming,runningandyoga.Whenweweretryingto

conceive,shemaintainedahighlevelofphysicalactivitybutimmediatelyshiftedherprioritytothebabyshealthonceshebecamepregnant.NoZeros--Monicadidsomeformofphysicalactivityeverysingleday,forallofherpregnancies-eventhedayherwaterbroke.Shefoundtheactivitystreaktobeusefulforhermotivation.WhileourmedicaladvicewasthatitwasOKtomaintainafitnessprogramthroughpregnancy.Monica'sdocalsonotedthatthereisn'tmuchpracticalknowledgeaboutpregnancyandtheenduranceathlete.

Thewarningsboileddownto: Don'tletyourbodyoverheat Staywellhydrated Don'tgetoutofbreath(steadyeffort,orlower) Listentoyourbody

Whilemostpeopletalkabouttrimesters,lookingfromtheoutside,Inoticedshiftsclosertoten-weekblockswithinMonica's40-weekpregnancy.


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Firsttenweeks--hormonalchanges,mainlyimpactedmoodandappetite.Monicachanneledhercravingstowardsfreshfruit(ratherthansugar/starch).

Secondtenweeks--feelingmuchbetter,moderatedherlifewithanattitudeof

baby-comes-first.Thirdtenweeks--pregnancystartstoshow,pubicbonediscomfortat26weeks,stoppedrunningat30weeks,shiftedtoanellipticaltrainer2timesperweek.

Finaltenweeks--monthsofhighfrequencyswimmingleftherfeelinggreatinthewater,somehighvolumeswimweeks,hikingstartedaround34weeks,ellipticalreducedtoonceperweek.TosumupMonica'sfocus:

Pre-pregnancy--health,notfitness Duringpregnancy--babycomesfirst,keepmoving Postpartumactivitycomeswaydowntolackofsleepandthebabysneeds

ThebiggestmentalchallengesMonicafacedwere:

Notstopping Copingwithweightgain Copingwithherbodychanging Copingwithpeergroupresponse

Therewillbedayswhereyoufeellikeeveryonewantsyoutogethuge,slowdownandbeuncomfortable.Thosefeelingsarenormalandithelpstoknowthatall

pregnantladiesaredealingwiththem.Letsconsiderthemessagethatyourelikelytohearfromyourpeergroupandfamily:

Itsokaytobesedentary Itsokaytogainlargeamountsofweight Giveintosugarcravingsandthedesiretoovereat

NowthatmightnotbewhatourdoctorsarebeingtrainedtosaybutitswhatIhearrepeatedfromwomenandexpectantfathers.Thatisalousymessagetocommunicateforthemothershealth,whichdirectlyimpactsherbaby.

Invertingthemessage,asummaryofMonicasapproach:

Maintainpre-conceptionactivityanddropintensityacrosstheboard Dosomethingeverysingleday,evenifitsawalkorfloatinthepool Focusonnutrition,andhealth,ratherthanyourweight Usewillpoweronportioncontrol,notfoodavoidance


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ItsimportanttoemphasizethatMonicadidnthaveanyweightgoals,ratherthepregnancysawaconsistentfocusonthefourbulletpointsabove.Additionaltipsforthecouple-to-be:

Clearyourscheduleandcreatespaceforchange-Youwillhaveafundamental,andpermanent,changeinyourlife.Reducethestressofthischangebymakingspaceforbaby.Itisnotpossibletocreatetoomuchspace!

Createstabilityinyourmarriageandkeepwhatworks-Beforethekidscome,figureouttheroutinethatworksforyouandholdthecoreofthatroutineoncethekidsarrive.Forus,thatmeansmaintainingaweeklydatenightandamonthlycouplesretreat.Forthefirstmonthsoflife,thenewbornisapermanentfixtureofourtimetogether.

Beflexible-Aplanisgreatbutwhenthebabyarrives,ifnotbefore,youllrealizethatyourplanprobablyneedstochange.

Dads:

Dowhatyouretold-Resolveissueslater,ifatall.Afteryouvewatchedchildbirth,youllbegratefulfortherestofyourlife. Bethereforthebirth-Pregnancyandchildbirthprovideyouwithaunique

opportunitytodemonstratethatyouaretrustworthy.Inlife,wedontgetmanyopportunitiestoclearlydemonstratecharacter.

Arealitynobodymentionsisthatitistoughertokeepittogetherafter,ratherthanbefore,childbirth.MakingMonicastipsahabitbeforepregnancywillbenefittherestofyourlife.


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BirthandBabies

Wewenttoalltheclassesbeforebabynumberonearrivedandfeltpunked(!)bytherealityofchildbirth.Thingstheydonttellyouaboutchildbirth:

Itcanbereallyslow Painithurts,alot Bloodtheresgoingtobealotofbloodafterwards,thatsnormal

Thatsaid,asidefromthesethreepoints,theclasseswerehelpfulandIrecommendthem.Childbirthisatotal-bodyexperienceforyourwife,beingabletosharethatcancreateadeepbond.Shewillalwaysrememberifyouwerethereforher.Besides,afteryouwatch,you'llspendtherestofyourlifegratefulthatyourwifeishandlingthebirthingpartoftherelationship.Blewmymind!

Fourthingsthathelpedmewithbabies: Dontpanicstayrelaxed Theydontbreakbutalwayssupporttheheadandneck Swaddlescreaminginfants Babiestalkbycrying

Similartohowdogsdetectfear,kidsfeedoffastressedparent.Thepointsaboveareeasyformetorememberwhenfacedwithascreamingkid.


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CopingWithKidsWhenLex(ouroldest)wasborn,Iintuitivelyknewthatthemaingoalofchildcarewastokeepheralive.Thisisn'tajoke.Ithinkhealthandsafetyisnumberoneforwhatwecanbringyoungkids.

WhatIstruggledwithwasthelackofmeasurablegoals,targets,metricsoranythingconcrete.Withatoddler,thereisnotmuchtoachieve.Ithought:What'sgoingtobemostvaluabletomeat65or75yearsold?Ianswered:Friendship,companionshipandlove.SoIfocusontwothings:

Healthandsafety(alwaysnumberone) Demonstratinglovetothepeoplearoundmykids

TheearlyyearsareachallengeandtherearedayswhenIthinkaboutescaping!However,thereareenoughgoodmoments,socialtaboosandlegislationtosustainme.Hereiswhatworksforus:

Rotatethekids-IfIamdealingwithkidsalldaythenIamshotbynightfall.Thedayswherewesplitthekidsarealoteasier.Imworkingonbeingabletosharetheinsanityasaformofbondingwithmywife.Ihavesomeworktodoonusingthecrazinessofouryoungfamilyasasourceofmaritalstrength.Sleeptrumpseverything-Wellrested,Ifindmymostchallengingdaysentertaining.Myamusementfeedsintothesituationandhelpsdiffuseit.When

tired,Icanfeelmyselfwantingtoleadbydomination.Whenrested,I'mabletoleadbylettingsituationsruntheircourse.

Removetimepressure-EverythingwithchildrentakestwiceaslongasI'dexpect.That'sokbecauseIdon'twanttorunoutofthingstodowhentakingcareofatoddler!

Onafamilyvacation,focusonthefamily-Hybridtripshaveproventobeadisaster.Yourcareerwillkeepyousanebutsavethatforwhenyoureattheoffice.YouCantDoItAllSimultaneously-Combiningmyroles(father,husband,

businessman,athlete)reducesthequalityofmyexperience.Mysatisfactionplummetswithmultitasking.Finally,theworstsituationsmakethebestmemories.Somedayitwillallpayoff


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PartFourBusiness&Finance

Discussionsofmoneyandwealthcangenerateemotionalresponsesonparwiththetopicsofreligion,politicsandnutrition.

Weliveinaworldwherethemajoritylinkfinancialwealthtoself-worth.Itsimportanttoremembertherealsocialpressurethatcreatesonourdecisionsandviews.Ifself-confidenceisapersonalweaknessthenyoullbepronetoabdicatepersonalresponsibilityforyourfinances.Ithinkthatisamistakebecausecreatingafewsmallhabitswillhavealargeimpactonyourpersonalsatisfaction,andgreatlyreducethatchancethatyoulleverrunintofinancialproblems.WhenIaskpeopletodefinefinancialindependence,mostpeoplebackintotheiranswerbasedoncurrentspending.Whileitseemsattractivetohaveourfinancial

needsviapassiveincome,theidlericharepoorrolemodels.Constantlysavingmoneysothatyoumighthavetheabilitytospendanamountofmoneyinthefutureisalousygoal.First,youmightneverachieveyourgoal.Second,itoverlooksamucheasier,andmorevaluable,goal.Financialindependenceisabouthavingthereservestogeneratefreedomoflocationandoccupation.Ethically,alittlebitoffinancialbackinggivesyoutheabilitytosayyestowhatyouwanttodo.Mostimportantly,financialreservesmakeitfareasiertostandyourgroundonwhatyouareunwillingtodo.


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CreatingFinancialHealth

WhenIwasyoung,Ithoughtthatitwouldbeniceto"berich"buthadnoideaabouttruewealth.Alongmyjourney,Ihaverealizedthatwealthisneitherthegoal,northebenefitoffinancialsecurity.

Thetwomainbenefitsofwealthareethicalreinforcementandpersonalfreedom.Ifthepursuitofwealthforcesyoutocompromiseyourvalues,ortiesyoutounpleasantsituations...thenonereallyneedstoconsiderifthereisabenefitatall.Thefollowinghabitschangedmylife.Ivebuiltthemgraduallyandsharethemsoyoucanimproveyourfinancialhealthandincreasetruewealth.1--Spendlessthanyoumake:Thisonehabitmadeatremendousdifferenceinmylife.Ithasservedmeextremelywelland,whenIencountersetbacks,Ihavetheresourcestobounceback.

Keepyourfinanciallifeassimpleaspossible.HereshowIstarted:

Createamonthlybudget Payaseparatesavingsaccountwith10percentofwhatyouearn Compareyourforecastsagainstreality

Bymakingahabitofpayingyourselffirstandcreatingvisibilityforyourspending,youwillsetupahabitofaccumulatingcapital.Rememberthatsavingisthemostimportantpartofinvesting.2--Protectcorecapital:

Whatiscorecapital?Putsimply,itiscapitalthatyoucannotaffordtolose.Corecapitalgivesabufferwithinourlives.Annually,Icomparemycorecapitaltomycostofliving.Iexpressmynetworthasyearsofexpenditure.Iaskmyself,HowlongcouldIlastifallmyrevenueceased?Whilethatsoundsextreme,Ivehadtwoincidentsinmylifewheremyincomesuddenlydroppedby95percent.Acrossalifetime,itwouldbeunusualforsomethingunexpectednottohappen.Whenmyincomecrashed,mycorecapitalgavemetime,whichisavaluableresourceduringacrisis.Timetoconsidermyposition,timetomakeaplanandtime

toexecutemystrategy.Animportantuseoffinancialassetsistheirabilitytobuytime.Howmuchcorecapitaldoyourequire?Thatsforyoutodecide.Withthehabitofspendinglessthanyouearn,youwillhavetheabilitytocontinuallybuildyourcorecapital.


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Inmyearly20s,adecisiontolivesimplyenabledmetobuildcorecapital,despitebeingthelowestpaidpersoninthecompany.Bymyearly30s,havingafewyearsofexpenditurebankedwasakeyfactorinhavingthecouragetochangethedirectionofmylife.

Inmyearly40s,mycorecapitalwastappedwhenIsuddenlyfoundmyselfunemployedwithayoungfamilytosupport.Saving10percenthaslittleshort-termimpactbuthavingmultipleyearsofCoreCapitalgivestremendousflexibilitytoourlives.Setsmallsavingstargetsthatyoualwaysmeet.Ahabitoffrequentsavingismoreimportantthantheamountyousave.Smallamountsbecomelargeoveralifetime.3--Bewaryofleverage:

Thefirsttwotipsarewhatittakestobuildfinancialsecurity.Thenexttwotipscoverhowmostofusblowit.Mycorecapitalhasnoborrowingsagainstitandissetaside,separatefromanyguaranteesorotherliabilities.ItsarainydayfundthatIexpectnevertousebuthavehadtotapwhenfacedwithunexpectedadversity.Imnotsavingmoneytoacquireluxuryassets,dabbleinthestockmarketorroll-the-dice.MyCoreCapitalexiststoensurethatIhavetimetocopewithunexpectedsetbacks.

IachievedmyCoreCapitalgoalbeforeIeverboughtahouse,leasedacarorborrowedmoneyfromabank.Intimeswhenmoneyisfreelyavailable,itistemptingtoscaleuplifestyle.Duringboomtimes,sticktothebasicsoffinancialhealth:spendlessthanyoumakeandconsistentlyaddtoCoreCapital.Evenmoderatelevelsofleveragecanleadtofinancialsetbacks.Whenmoneyistight(2009-2011),thatlessonwillbefreshinourminds.However,liquiditymovesincyclesand,15yearsfromnow,liquiditymightbedifferent.Thinkbackto2005-2007whenpeoplecouldborrowlargesumswithmerelyasignature.Remember,neverleverageyourcorecapitalandringfencethewaythatleverage

cancreatefinancialloss.Useinsuranceandcorporatestructurestoprotectagainstpersonalloss.Makesurethatyourfriends,childrenandbusinesspartnershandletheirownloanguarantees.Formostofus,thegreatestfinancialgiftwecangiveourchildrenisrelievingthemfromanyobligationtotakecareofmomanddad!Imgoingtodigalittledeeperintoleverage.


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Acommonmistakeforinvestors,andlenders,isfailingtoconsiderdownstreamleverage.Justbecausethereisntleverageagainstyourinvestment,doesntmeanthatyourinvestmentisntleveraged.Letsexamineasimplecasestudy.

Ibuyanassetfor$1,000.Iborrow$500topayformypurchasesoIamleveragedonmyinvestment($500:$500=1:1).Iftheinvestmentfallsfrom$1,000to$900(10%)thenIlose$100onmyequityinvestment($100/$500=20%).

TheuseofborrowingshasmagnifiedthereturnthatIreceiveonmyinvestmentwith10%reductioninassetvalueresultingina20%reductioninequityvalue.


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WhatiftheassetthatIboughtwassharesinacompany?Ifthatcompanyhadacapitalstructurethatwas70:30(debt:equity)howwouldthatimpactthevalueofmyinvestment?Letsassumeasimilar,10%reductioninthevalueoftheassetinthiscasethe

sharesofthecompany.

Companyisworth$10,000($7,000debtand$3,000equity) Iown$1,000ofequity,331/3%(funded$500:$500) Companyvaluefallsto$9,000($7,000debtand$2,000equity) ValueofwhatIownfallsto$667($500debtand$167equity)

Inthecaseabove,a10percentreductioninthevalueoftheassetresultedina67percentreductioninthevalueofmyinvestment.Itsimportanttorunawiderangeofscenariostounderstandhowvariouschangeswillimpactyourinvestmentvalue.Ifyoucantunderstandthescenariosthendontinvest!Rememberthatyoualways

havetheoptionofwaiting.Thisisjustonewaythatleveragecanwipeyouout.Theworldisfullofagents,brokersandhustlersthatmakemoneybygettingyoutodoadeal,anydeal.Thesefinancialplayershaveavestedinterestingettingyoutodosomething,anything.Keepyourfinanciallifeassimpleaspossible.Because


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4--Youonlyneedtoachievefinancialsecurityonce:Ifyoufollowthefirstthreehabitsand,usemypersonalplanningtips,thenyouwillstackthedeckinyourfavorofalifetimeoffinancialhealth.Istartedsavinginmyteens,whenIcouldntconceiveofbeing30yearsold.

However,onceIbuiltahabitofsaving,itcontinuedonautopilotandservedmeverywell.Overtheyears,therehavebeentimeswhenIvestrayedfromthefundamentalsthatIpresentedhere:

Spendlessthanyouearn Avoidpersonalleverage Protectyourselffromsituations,evenremoteones,whichcanwipeyouout

EachtimeIwouldstray,myintuitionwouldwarnme(oftenstrongly)togetbackto

basics.Changeispainfulbutchangingmyways,andreturningtobasics,hasproventobetherightdecisioneverytime.Itissurprisinglydifficulttosticktothebasics.Weletourguarddown,wecutcorners,wearelesscareful.Weneedtobeconstantlyvigilant!5Wealthandfreedom:

Immotivatedbyfreedom:Principally,freedomoflocation,andfreedomofoccupation.Buildingupfinancialwealthcanhelp,andhinder,ourrelationshipwithfreedom.

Atthebackofmymind,thereisalwaysthethoughtthatifIcouldjusthavealittlemoremoneythenIdhavemorefreedom.Thetrapofmoreisalwayswithmeandstronglyreinforcedbypeersandthemedia.Thisbooksharesmyantidotestothetrapofmore.Asyoudiscoveryourown,writethemdownandsendthemtome(!).Withinmylife,Imalwayslookingtobalancetheinfluencesofthemedia.Becausetheyhavebeensohelpfulwithmyrelationshipwithmoney,Illrepeatmylifelessons:

Thequickestwaytoincreasedisposableincomeistoreducepersonalexpenditure.

Thefastestwaytoimprovemyperceivedstandardoflivingistoassociate

withpeoplethathavealowerone.

Collectexperiencesnotpossessions.

Liveasimple,healthy,outdoorlifewithgoodfriendsandexcitingchallenges.


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MystudentscometomeandItraveltothebestteachers

IfindoubtthenWAIT

IdencourageyoutoexploreyourtruemotivatorsandcreateyourownThingsToRemember.Writethemdown,reviewthembeforemakinginvestmentsandrememberthatyoualwayshavetheoptiontowait.Whetheryourtruemotivatorisfreedom,acceptance,loveorsomethingelsemoneycanhelpbutisapoorsubstitutefortherealthing.Byfailingtounderstandourtruemotivators,weoftenspendourlivestrappedinacycleofconsumption,wonderingwhyexternaltreats(food,luxuries,assets)bringlittlesatisfaction.Yourannualreviewcanbethecatalysttohelpyoubreakfree.


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TipsToProtectYourselfFromFraud

Withinmycorporateandpersonallife,fraudisthemaincauseoffinanciallossanddistraction.Somememorableexamples:

Personalloansfromacompany Renovationstoamanagersresidencebyacompanycontractor Borrowingmoneyagainstanassetthatdidntexist Infidelity Unauthorizedprepaymentsandadvances Sellingassetsandfailingtodeliverthem Misappropriationcompanyfundsbyoverpayingforassets

Ingoodtimes,youwillbetemptedtoshortcutthesetips.Pleasedont.1Watch,andcontrol,thecash:

Gobeyondbudgetsandfinancialstatements.Makesurethatyoucontrol,andoversee,allthewaysthatmoneycanenter,andleave,yourlife.Forfinancialhealth,nothingismoreimportantthancashflow.2Askquestions: Weshareaninhibitiontoaskingquestions.Fraudsterswilltakeadvantageofthissharedtrait,outlinedextremelywellbyCialdiniinhisbook,Influence.3Takereferencesandcheckfacts:

Ifyougetabadreferencethenwalkaway.Bypayingattentiontoredflagsyouwillsavetime,moneyandprotectyourreputation.Beopentobadnewsandinformation

thatgoesagainstthegrain.Itistheonlywaytocounteractourprogrammingtoseekoutinformationthatconfirmsourhopes.4Getinside:Ifyouareinvestingmorethan10percentofyournetworthinaproject,orcompany,thengetinsidesoyouhavesuperiorinformation.Ifyoucan'tgetinsidethendon'tinvest.VentureCapitalcompaniesandPrivateEquityfirmshaveactedonthis"secret"foryears.

5Speaktotheauditors:Thisphonecallrarelygetsmadeandthatisashame.

Ifyourfinancialhealthreliesonaspecificbusinessthenverifybeyondwhatyourebeingtold.Whenyouspeakwiththeauditorsdoitindependentlyandspeakwiththeaccountantthatdidthework(notthepartnerincharge).Questionstoask:

1. Tellmeonethingthatyoufoundthatconcernedyou.2. Whatwasyourmaterialitythreshold?


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3. Didyoutieallinvoicestobankstatementsforeverythingaboveyourthreshold?

4. Whatconnectedpartytransactionsdidyoudiscover?5. Didyoureconcilelargepaymentstocontractualdocumentation?6. Didyoureconcilelargepaymentstoanapprovedbudget?7. Whatistheapproval/paymentprocedureforlargetransactions?8. Whichtransactionswerepaidoutsideofthenormalapproval/payment

procedures?Questionnumberoneisagoodwaytoformquestions.Peopleareextremelyreluctanttogivenegativefeedback.Soyouaskthemdirectly,butfor"onlyone"point.Thatopensthemupandgetstheconversationgoing.Writeyournotesofthatmeetingupandsendthemtotheaccountantthatworkedonthecompany--fortheirfileandyourown.Theaccountingfirmwilllikelycomebackandtellyouthatansweringthesequestionswasoutsideofthescopeoftheir

work.Insistonhavingtheworkdoneindependently--itwillsaveyoumoneyoverthelongrun.Avoidpeoplethatseektopreventyoufromimplementingthesestrategies,as

theyarelikelytohavesomethingtohide.


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BuyingRealEstate

OneofthemorecommonquestionsthatIreceiveis,WhereshouldIputmymoney?

Myanswerhasbeen: Cash RealAssetsmainlyproperty OperatingBusinesseswhereIhaveanimpactonperformance

Thelargestinvestmentthatmostofuswillmakeisourpersonalhome.Itsimportanttodoyourhomeworkbeforebuyingandthissectionwillexplainwhy,andhow,todothenecessarywork.Realestatehassignificantcosts,manyhidden,thatyoumustdiscoverbeforelockingyourselfintoaspecificlocation.

Giventhatweareallsellers,eventually,considerwhysomeonewouldbuyyouout.Studythehistoricalrateofsalesinthelocationyouareconsidering.Howlongdoesittakeforpropertiestosell?TheprocessIusetoevaluaterealestateisthesameregardlessofenduse:

Figureoutthetruecostofownership Preparearealisticviewonincomepotential Comparetomyalternatives Settleonavaluationindependentofaskingprice

Eachstageoftheinvestmentevaluationprocessisimpactedbyassumptionsandmyownpersonalbiases.Aswell,itsreallydifficultnottobeswayedbyemotionandcommonhumanmisjudgments(seeMungerinBestBooks).Myidealcharacteristicsforarealestateinvestment:

Cheaprelativetolocation Moreland,andsquarefootage,thanIneed Easytorent Easyforsomeoneelsetomanageforme ClosetoalocationwhereIspendlotsoftime(homeorofficeformostofus)

Cheapdoesntmeanasmallpriceandyouneedtobecarefulofalackofdisciplinewithsmalldeals.WhatImlookingforisapurchasepricethatslowrelativetodifferentmeasuresofvalue.Iconsider:

Lowentrypricepersquare/foot Abilitytosubdividethelot Impliedvalueofthelandsubtractingthereplacementcostofthebuilding Likelihoodofrealeconomicgrowthinlocaleconomy Renovationandredevelopmentopportunitiesbasedoncurrentzoning


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PotentialforchangeofuseoraplanningvariationValueiscreatedbyconvenience,whichisafunctionoflocation.Askyourself,Howconvenientwoulditbetolive/workatthislocation?Somebodywillalwayspayforalocationthatssuperconvenient.

Ifyoucantfindtherightpropertythenwaitbecausethetruecostofowningisnearlyalwayshigherthanthecosttorent.Heresmyinformationchecklist:

CostofCapitalWhatdoesitcostyoutobuyandwhatisitlikelytocostthenextownertobuyfromyou?

TaxesTransfertaxes,citytaxes,countytaxes AssociationFeesOn-going,specialassessmentsandtransferfees InsuranceBuilding,contents,generalliability DeductiblesSomethingwillgowrongeventually,Imakeanallowancefora

portionofmydeductibleeachyear RepairsMakeanallowancetoupgradetheroof,furnaceandapplianceson

acquisition.IfIgetextralifefromtheexistingonesthenItreatthatasabonus.

CapitalAllowance(Roof,Building,NewRegulations)Thereisabigdifferencefromthecostofownershipbetweenanewbuildingandanoldone.Havethepropertyinspectedbeforeyoubuy.Assumethattherearehiddenliabilitiesthatyouneedtofindinadvance.Thereisalwayssomething!

Repairs&MaintenanceThemorecomplexthelandandbuildings,thegreaterthetimeandcosttomaintainthem

UtilitiesPotentiallysignificantcostsifbornebyyou FurnitureExpensivetostoreandloadedwithhassleifyouhavetosellina

hurry Time,Hassle,ManagementFeesIalwayssubcontractasmuchofthe

managementaspossible.Whiletemptingtobringin-house,Ivefoundthatthetime/costisntworththehassle.

LimitsonfreedomYouwillbetiedtoanylocationwhereyouhaveaninvestment.Makesurethelocationisonewhereyouwillwanttobetiedforfive,tenandtwentyyears.Foranyinvestmenttoworkwell,itneedstobealong-terminvestment.Thisonedisciplinewillsaveyoutensofthousandsofdollarsoveryourlifetime.

Iftheabovelistofinformationseemsliketoomuchworkthendontbuybecauseyouarelikelytodoabaddeal.Ideally,toreducetheimpactofbias,gatherasmuchoftheinformationbeforeyoustartlookingatpotentialacquisitions.Onceyoustartyoursearch,youwillhaveatendencytoseekoutinformationthatconfirmsthedirectionyouwanttogo.


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Afteryoumakeanoffer,youwillhaveapowerfuldesiretowin.Thedesiretowinshouldremainseparatefromyourtrueneedtodoanoutstandingdeal.Frequentlyrepeatthatyoudontneedtodoadeal,youneedtodoagooddeal.Istatethispointrepeated(tomywifeandadvisers)whennegotiatingwithothers.

Sowhybuy?Whatarethebenefitsofownership? Placetolive Placetostoreyourstuff Storeofrealpurchasingpower Fallbackplan,formofself-insurance Forcedsavingsviamortgagedebtrepayment Potentialtoearncapitalgainsifyoubuywisely

Imgoingtousesomecasestudiestoillustratethebenefits,andpitfalls,ofownership.

Inthecasestudies,payattentionto: Holdingcostsoftenignored Areasofupsideoftenhiddentosellers Impactofvacancyperiodsoftenignored


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VacationCondos

Forthisexample,IveaveragedbetweentwosimilarunitsthatIpurchasedinTucson,Arizona.

AnnualExpensesare=$7,600(8.3%ofcost) Cost-$91,500purchase+upgrades Taxes-$1,400 AssociationFees-$2,400 Insurance-$300 Repairs&Maintenance(Appliances,Furnace)=$500 Utilities(Gas,Electric,Cable,Internet,Phone)=$3,000

$9,850grossincome(10.8%grossyield)$2,250netincome(2.5%netyield)

Thegrossincomevariationbetweenthetwounitsislarge:$3,500versus$16,500thegrossincomenumberabove($9,850)isanaverage.Theincomevariationisduetoalongvacancyduringthesummerinoneoftheunits.Thiswasaknownriskforvacationrentals,whereshort-termrentalsdryupintheoffseason.Priortopurchasing,Ipreparedfinancialprojectionsandforecastthatthecondoswouldearn7-8percent(net).MyprojectionsturnedouttobeincorrectbecausethevacancyratewasmorethanIexpected.Withtwounits,myannualexpensesare~$15,000andthatsabigchecktowriteinaworst-casescenario.Whatcausedacollapseintherealestatemarket

(2009/2010)wasacombinationofthefixedcosts(shownabove)with100percentdebtfinanceonacquisition.Thepreviousownersofthesepropertieswouldhavehad~$15,000ofannualinterestexpenses,$7,500perunit.Forseasonalrentals,dontfoolyourselfwithyourrentalprojections.Ifyouplanonusingthepropertyduringpeakseason(Ididntinthisexample)thenyoullmissoutonthebulkofyourrentalincome.Whenyouconsiderafullyearofexpensestoown,itsoftencheapertopayapremiumforashort-termrental.IfIfocusedonlyonthegrossincomefigurethenIwouldhavegreatlyoverestimatedhowthepropertiesweredoing.Ultimately,Imadethedecisiontoselltheseunits

becausetheyunderperformedmyexpectations.


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ResidentialHouse

ThisexamplecomesfromaresidentialpropertypurchasethatcameupatshortnoticeinmyneighborhoodinBoulder.Bymovingquickly,asacashbuyer,Iwasabletopurchaseatanattractiveprice.

AnnualExpensesare=$7,000(1.0%ofcost)

Cost-$700,000purchase+upgrades Taxes-$4,000 Insurance-$1,150 Repairs&Maintenance(Landscaping,Building,Appliances,Furnace)=

$2,000 ManagementFees-$850

$27,000grossincome(3.9%grossyield)$20,000netincome(2.9%netyield)

Thecostofownershipisamuchlowerpercentageduetorentingunfurnished,withoututilities.Executiverentalsareexpensiveforthelandlord.Whileownershipassociationsareconvenient,theyareinefficientforcostmanagement.ThisdealmadesensetomebecauseIexpectedthatIwouldbeabletoholdlandatayieldsimilartolong-termgovernmentbonds;10-yearrateswere2.5percentatthetimeofpurchase.Overa10-yeartimehorizon,Ifiguredtherewasaverygoodchancethatthecapitalvalueofthelandwouldincreasematerially.Thereisanopportunitytosubdividethelotandreducemyinvestmentsignificantly.

IfIsubdividethenIllbeabletorecover60%ofmycostandhavea8.5%netyieldonmyresidualinvestment.Finally,Ihavetheoptiontomoveintothehouseandfreethecapitalthatistiedupinmycurrenthouse(whichismuchlargerthanthisproperty).Thisfinalpointisanexampleofhowcertaininvestmentsareworthmoretocertainbuyers.Investmentsthatcontainimbeddedoptionscanbemorevaluablethanstrictfinancialanalysismightindicate.


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UnderstandingYieldShifts

Ifyouhaventhadformalfinancialoraccountingtrainingthenthis

sectionrequiresaeffort.Readingitslowly,andworkingthroughthe

examples,isextremelyvaluableforlearninghowfinancialassetsare

valued.Evenprofessionalinvestorscanmisstheimpactofgradual,long-term

trendsinperception.

WhenIstartedmakingpropertyinvestmentsinthemid-90s,netyieldsweregreaterthanourcostoffinanceandthatcreatedthepossibilityforafavorableyieldshift.Putsimply,therentIreceivedfromowningwasmorethanmyexpenses,includinginterest.Along-termshiftinvaluationperceptionisoneofthemostimportantconceptsin

investing.Thetailwindfromafavorableshiftcanmakeyou(incorrectly)thinkyouareagenius.Likewise,theheadwindfromanunfavorableshiftcancrushyou,especiallywhenyouhaveborrowedmoney.Letscreateasimplecasestudytoreviewtheimpactofayieldshift:

Thenetannualincomefromatargetpropertyis$25,000;and Thecostofcapitalforthebuyeris5percent.

Ifthebuyerinvests$500,000($25,000/0.05)tosecurethepropertythentheexpectedyieldis5percent(netincome/purchasecost).Sotheexpectedyieldisequaltothecostofcapital.

WhenIstarteddoingdeals,wewereabletopurchasepropertiesatanexpectedyieldof7.5percent.Tobuy$25,000ofannualnetcashflow,wewouldhavetopay$333,333($25,000/0.075).


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Overtime,theyieldrequiredbybuyersdecreasedandwelookedlikegeniuses.Thepropertythatcouldbeboughtfor$333,333continuedtoappreciateasyieldsfelltowardsto2.5percent.Theyieldshiftwasseparatefromthespecificqualitiesofanydeal.Inotherwords,wecouldmakemoneyfrombaddealssimplybecausetheworldwaschangingthewayitviewedpropertyassets.Diggingalittledeeper,therearesomefiguresthatimpactthevalueofyour

investment: Thecostofcapitalforyourcompetition Theavailabilityofcapitalforyourcompetition Thenetyieldrequirementsofyourcompetition Theperceivednetcashflowfromtheinvestment

Inaboom,weseethefollowinghappen:

Thecostofcapitaldropsforallbuyers Debtisfreelyavailableforunsophisticatedbuyers;sothenetyield

requirementsdrop Numberoneandnumbertwocreateapatternofrisingcapitalvalues;soa

largenumberofbuyersignoretheneedfornetcashflow.Whenthebubblebursts,marketforcesswingtheoppositedirectionandfeedourcollectivefearofloss.Youwilldoyourbestdealswhenfearishighbutyouwillneedcashtobuybecausenobodywillsupportyou.


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Letsrevisitourexampleandassumethatthebuyerexpectsyieldstofallto2.5percentwithintwoyears.Whatsthepropertyworth?

Thepropertythatcouldbeboughtfor$333,333(whenyieldrequirementswere7.5percent)isprojectedtobeworth$1,000,000.Thechangeinvalueisduetoashiftintheyieldrequirementfrom7.5percentto2.5percent.Thiseffectiswonderfulwhenitgoesinyourfavor,farlesssowhenitgoesagainstyou.Overthelast29years,whathashappenedtolong-termmortgageratesinthe

UnitedStates?

Long-termmortgagerateshavedeclinedfrom~15percentto~3.25percent.Formyentireadultlife,financialassetshaveenjoyedasustainedfavorabletailwind.Backtoourexampleandusingmortgageratesforyieldexpectation,weseethatthepropertywillshowavaluationrangeof$166,667(at15percent)to$769,000at3.25percent).

Makingaccuratepredictionsforyieldsandinflationratesisimpossible(seeTaleb,TheBlackSwanintheBestBookssection).However,spendingtimetoprojecttheimpactofvariousscenariosissmart.Forexample,whenIlivedinHongKonginthemid-90s,Iranmyprojectionsanddiscoveredthatnetyieldswereapproaching1.5percent.GiventhatIcouldearn5percentbyleavingmymoneyinthebank,Idecidedthatpropertywasntworththe


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riskorhassle.Thatsaid,thepeoplethatboughtwhenyieldswereat3percentmadealotofmoneyanditstoughtositonthesidelinesduringaboom.Toprotect,andproject,thenetincomeofyourinvestment,focusonpropertylocationswhereyouexpecttoseelong-termrealeconomicgrowth.Real

economicgrowthisthekeydriverofthecashflowfromyourinvestment.Todobetterthaninflationyourpropertyneedstobenefitfromalocaleconomythatsgrowingfasterthaninflation.Thetipsaboveapplytoeveryclassofinvestmentyoumightconsider.Remember:

Assess:Cashflowafterallexpenses Understand:Yourpersonalinvestmentgoals Consider:Long-termtrendsinvaluation Negotiate:Amarginofsafety

Ifindoubtthenwait.


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HowItCanGoWrong

Inlate2012,withmortgageratesathistoricallows(3.3percentAPR),thereistremendousdownsideifratesincreasebyshiftingbacktohistoricalnorms.

Letsimaginewhatwouldhappenifmortgagerates,andyieldrequirements,increaseto7.5percent.Usingoursimplevaluationformula:

Condos:$2,[email protected]%=$30,000Valuevs.$91,500Cost Residential:$20,[email protected]%=$266,667Valueversus$700,000Cost CityCenter:$29,[email protected]%=$393,333Valueversus$850,000Cost

ThisdoomsdayscenarioassumesmortgageratesthatarehalfofthepeakratesthatIveseeninmylifetime(~15%).Whetherornotthisoutcomeislikely,itispossiblebasedonconditionsthatIveseeninmylifetime.Wecantpredictwhatis

goingtohappenbutweneedtounderstandhowallscenarioswillimpactourlives.Forme,theriskofshort-termcapitallossesinmypropertyinvestmentsisworththebenefitofapotentialhedgeagainstlong-terminflation.Becausetheinvestmentsareheldwithoutborrowings,Ihavetheabilitytowait-it-outthroughanydowncycle.Thepropertiesaredesignedtomeetspecificneeds:

Storeofvalueinthecaseofunexpectedinflation Createoptionsforgraduallydownsizingmylife Lifeinsuranceformyfamily Yieldssimilartolong-termgovernmentbonds

Otherconsiderations,whicharecommonlyoverlooked:TaxesInmostcountries,youwillbeabletodepreciatethevalueofyourinvestmentproperty(buildingonly)againsttheincomethatyoureceive.Aswell,futureprofits,takenascapitalgains,oftenreceivefavorabletaxtreatment.OwnversusLeaseAlwaysmakethecomparisonbetweenowningandrenting.Inmanyneighborhoods,youwilldobestbyrenting.LossofFreedomIhavespentconsiderabletimeinCanada,England,HongKong,

NewZealand,Bermuda,Scotland,France,AustraliaandtheUnitedStates.Earlyinmycareer,mostofmypeersweretiedtoasinglegeography.BeingmobilewasahugeassettotherapiddevelopmentofmycareerinPrivateEquity.Owningpropertyreducesyourmobility,ormakesitveryinconvenienttomove.SwitchingCostsIfyoumakeamistakethenitslikelytocostyou15-35percentofyourinvestmenttogetoutquickly.Ifyouareunsurethenwait.


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LuxuryandvacationpropertiesAsidefromanengagementring(!),donotcapitalizetheluxuriesinyourlife.Lifeisfullofunexpectedsurprisesandtheabilitytorapidlycutexpensesisvaluable.Remembermycondocasestudy,dealswithhighcostsofownershipcanbiteyouinthebutt.

IlliquidTheonlytimepropertyinvestmentsareeasytoselliswhenyoullbetemptedtohangon!Remembertoleave-something-in-the-dealforthenextowner.SizedownandlocateupWhenIwasyoung,therewasnowayIcouldaffordtoliveclosetowhereIworked(London,HongKong).SoIrentedaroom,notahouse,atapricethatwasafractionofmycostofownershipandsavedmymoney.PatienceIntheearly90s,thepartnersofmyfirmboughtmostoftheunitsataCity-CenterdevelopmentinthebestpartofCentralLondon.Thepropertymarkethadbeenhorribleforafewyearsand,ascashbuyers,theyhadtheopportunitytodoaonce-in-a-generationdealforthemselves.Aboutonceadecade,Ivehadthe

chancetodoaonce-in-a-lifetimedealYouwillbesavingandinvestingfortherestofyourlife.Atsometimeoverthenext10-20years,therewillbegreatdealsthatnobodywantstobuy.Whenthathappens,youwillwantthecapitaltotakeadvantageofthoseopportunities.Ahandfulofgreatdealsmakeasuccessfulinvestmentcareer.Mostofinvestingisaboutsayingno,waitingandresearching.Asaninvestor,oneofourgreatestfearsismissingout--it'stoughtositonthesidelineswheneveryoneisparticipatinginaboom.

Inarisingmarketthereisplentyoftalkthatleadsustofeelgoodaboutjoiningin.Marketsaboundwithstoriesofmakingmoney.Rememberthatweonlyhearaboutthegooddeals--peopledon'tbragabouttheirdudinvestments.


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DownsideScenariosIfyouarethinkingaboutborrowingmoneythenyoushouldalwaysrundownsidescenarios.

Consideryourdebtserviceobligationsasapercentageofyourtotalfamilyexpenditure.Evenifyoudontown,considerrentasapercentageoftotalexpenditure.Doyouhaveanideaofwhatsrequiredtoputyourfamilyinfinancialjeopardy?ThisisarealisticdownsidescenariothatIliketoconsider:

Knock20percentoffthevalueofyourrealestateinvestments Setallyourasset-backed(mortgage)debtservicecoststo10percentper

annum Setallyourunsecured(creditcards,etc)debtservicecoststo20percentper

annumAreyoustillsolvent?Loseyourjob--howmanymonthsuntilyouloseyourhouse?Iveseenleveragesinkgoodfriends.Acrossalifetime,wewillexperienceunexpectedsetbacks.Whileyouwontbeabletoavoidsetbacks,youcanlimittheirabilitytowipeyouout.Mostofushavelittledirectpersonalexperiencewiththecombinationofasset

deflation/wealthdestructionandhighinterestrates.Rightnow(2012),everyoneexpectsthatrateswillstaylowformanyyears.Whatifthatdoesnthappen?


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TheCostofTimeHowdoesaninvestor,parentoremployer,quantifythetruecostofapoordecision?Abadinvestmentcostsyoumoney,butthebiggestlossesstemfromtheaspectthat

neverhitsyourbankaccount.WhatdoImean?

Thenumberonecostofapoordecisionisthetimelostsortingoutthe

situation.Specifically,nothavingthetimetofocusonthehighestreturnareasofyourportfolio,orlife.Wemakeafargreaterreturnfromfocusingonourstrengths,ratherthangettingboggeddownwithlosersandweaknesses.

I

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