Recognizing Reality

Did you get to read the post from last week when we started talking about common sense? Well while that was about using common sense when getting help and advice from the professionals that support your business, this week, let’s talk about common sense when deciding what financial deals to get in on. Here is just a little more from my old publication, The Financial Freedom Report.

One definition of common sense is “what is sound and prudent but often unsophisticated”. I’ve seen many very sophisticated business decisions that have lost millions of dollars. To avoid financial traps, you need a huge dose of common sense, especially when those all around you are playing sophisticated and getting wrapped up with what is hot or in vogue. Common sense will keep you from being trapped or pushed or bullied or shocked into doing a deal that you don’t want to do.

There are many high powered, complex formulas for success and financial independence, most of which are so mind boggling it would take a PhD to understand them. Many of these formulas were written by people who never actually made big money themselves but sat back and watched others do it. From a spectator’s position they think they know the answers and then they make things so complex and involved that the average person cannot understand them. Take it from me, making a lot of money in a short period of time can be done with a simple game plan. I said simple not easy, since it takes tons of work. You are probably already working very hard but maybe not with the right game plan.

When I studied the lives and fortunes of two dozen millionaires and multi-millionaires, I was looking for a common denominator, something they all did that accounted for their success. I finally noticed factors that were present in almost every fortune. I slowly eliminated those factors that didn’t show up in every case. What I ended up with was basic and somewhat obvious, although it escapes 96 percent of those who look for it.

There are four essential ingredients, and I put them into a formula I call “PSIC”, which simply translates into P=Plan, S=Save, I=Invest, C=Compound. And I will add now in order to compound at high rates you need to use leverage.  

An insistent, fast-talking, and even somewhat logical person many times can persuade somebody to do something he doesn’t really want to do. If somebody asked you if you would like to get in on this super-hot deal that will pay you a 250 percent return without any risk and without a lot of your effort, what does your common sense tell you? Common sense should tell you that if a deal were really that good, the guy trying to sell you the deal and or the promoters behind him would probably not have trouble getting the needed money as a loan from a bank.

The simple fact is, those kinds of returns don’t exist. Yes, it is possible for you to get 100 and 200 and even higher percent returns, but not without a lot of work on your part and certainly not without any risk.  Deals like that don’t come all packaged neat and simple, especially without risk and without great effort on your part. Believe me it won’t happen! If I had a deal with a return like that (and I have had those kind of deals) you’d better believe that I would be able to borrow a whole lot of money, which I have done many times, even if I had to pay 2 or 3 times the going rate of interest. Common sense is recognizing reality and then acting accordingly.

Supporting Roles in Your Success

Last week, I shared with you some great advice from an old publication of mine, The Financial Freedom Report. I quoted from an article published in the Summer of 1995 entitled “Ask Your Barber How to Cut Hair, Not How to Make Money” which was simply saying that people who aren’t a super success as making money are not the people you want to talk to. However, there are some people you will need on the sidelines, but like knowing who to go to for advice on money, know who to go for advice on the other things you’ll need along the way, and when to bring them in.

Generally speaking, I find from experience, attorneys are deal breakers, not deal makers. Knowing that, I usually structure the whole deal before I have an attorney get involved at all. Yes, I want him or her involved. When? Just before I sign the papers. I want the attorney to read the contract to a make sure that everything is legal.

Problems can arise when the attorney steps into a management role. When going to an attorney for legal advice, you should always be sure that you ask very precise questions and not let the attorney overstep his bounds. He will if you let him. He has to play the devil’s advocate, and that is good. The same applies to your CPA, your business managers, and your bankers.

A man by the name of Owen Feltham said, “The greatest results in life are usually attained by simple means and the exercise of ordinary qualities. These may for the most part be summed up in these two words “common sense.”

So what is the bottom line from these words written so long ago? Use common sense when choosing who to go to for advice as well as what advice you take from people, even if they are “professionals” because if the advice doesn’t have anything to do with their profession, your common sense meter should be telling you to set that advice aside and have a word or two with someone that really knows what they are talking about in those matters.

Next week, just a bit more from my old publication but this time we’ll talk about common sense deals and how to avoid getting taken by fast talkers and their so-called ‘advice’.

Surround Yourself with Makers

I happen to pick up an old copy of a publication that I produced for many years called The Financial Freedom Report. It was dated the Summer of 1995 and the article that caught my eye was “Ask Your Barber How to Cut Hair, Not How to Make Money”. I quickly reread what had written all those years ago about that statement and it’s something that needs to be repeated and practiced today. Here’s what I said.

It is amazing how many people seek or listen to financial advice from neighbors who are in approximately the same financial position as themselves. Others run to their bankers to ask if a particular deal is any good or not. What do bankers know about deals? Zip! Sure, a banker knows about loans and checking accounts, and they know a lot about accounting and borrowing and lending money because that is their business. Deals are not. Since people know that there is money in banks, they tend to think that the bankers know how to earn it. Remember they are just custodians; they are just janitors of money. It’s not their own money. It’s yours.

Barbers work on heads, but that doesn’t make them psychologists, because they only work on the outside of the head, so their psychological advice or advice on how to make money is not very credible. Avoid the trap of looking to the wrong outside sources by doing some of your own thinking.

The best way to learn how to make money is with somebody who has made a lot of it. What better place to go than to an entrepreneur who started from scratch and did it all themselves? I wouldn’t even want to go to David Rockefeller. Sure, he has several hundred million dollars and he is the chairman of the board of one of the largest banks in the world, but his grandfather, John D. Rockefeller was the one who made the big bucks.

Everybody needs advisers, but the advisers you need to surround yourself with should be deal makers, not breakers. Sure, you and only you should be the one making the final decisions, but I find that all of us can be influenced and helped by smart people whose opinions we hold in high regard.

Next week, I’ll reveal a bit more about the subject with more from this very same article. Although it was written over 2 decades ago, the ideas in it are still true today. The best ideas do stand up over time!

Baby Steps and Gentle Nudges

 

Ever since I was a teenager, I’ve been very big on setting goals including New Year’s Resolutions which are pretty much at the top of my list. At years’ end, I’ve always been surprised and often disappointed by how many goals I failed to accomplish or fell short of accomplishing during that one year. I’ve always thought that I just needed to set bigger goals and try much, much harder. And yes, I would end up berating and beating myself up for my failures. But now I am learning from Amy Cuddy’s book, Presence, that there is growing evidence and research indicating that most of us having been going at the goal setting and resolutions thing all wrong.

Under the section entitled, “Many Popular Self-Change Approaches Fail–And Even Backfire”, Amy says, “For one thing, New Year’s resolutions are too ambitious. Setting big goals such as getting straight A’s in school or working out three times a week is a positive step in theory, but these goals are not designed in a way that actually allows us to build toward them.  They’re reliant on the success of hundreds of smaller changes and they don’t come with step-by-step instructions showing us how to get there”.

I will say, as I do in my preaching on goal setting and what I almost always do myself, we all need to break down our goals into small steps. But Amy goes further saying we need to break our goals down into ‘baby steps’ and gently ‘nudge ourselves’ along.

Additionally, Amy says, “One of the biggest culprits, as least in the United States, is the repeatedly dispiriting New Year’s resolution, which is riddled with psychological traps, that work against us.”  The problem with big goals, with a time frame that is way in the future, is that we really can’t easily visualize the end results and so it’s easy to get down on ourselves and give up along the way.  Quoting Amy again, she adds “focusing on process encourages us to keep working, to keep going, and to see challenges as opportunities for growth, not as threats of failure.”

In other words, take lots of baby steps.  Amy mentions her ambition to be a runner which at one time in my life I thought I wanted to do also. The problem is, when we set big goals, like maybe running a marathon in 6 months or doing a 3 or 4 mile run our first or second time out, we usually get totally exhausted very early on and we give up or become very discouraged.  I’ve talked to many runners who have had a similar experience. However, if I start with very small goals—baby steps—such as saying to myself, “I’ll just run for 10 or 12 minutes,” or “I’ll just go down to that mailbox or tree,” then when I’ve reached that very small objective I can say, “Hey, I want to see if I can just run another 5 minutes or just to that house down there.”  That approach is such a hugely different experience and it sure seems to fit what Amy Cuddy is discovering in her study of goal setting and resolutions.

So I would challenge all my readers to give more thought to your goals and objectives as we begin this wonderful new year. Think ‘baby steps’ and ‘gentle, small self-nudges’ and we all might find that we stop beating up on ourselves for thinking we have failed and instead find we have made some very big gains in our physical, family, social and financial life.

Accountable Goals for 2016

As pretty much everyone knows, this time of year is so super busy it can be the most stressful time of the year.  There is an automatic built in deadline for all of us and as you read this we’ve just past that automatic deadline that’s called Christmas. The 25th of December is a goal that the world has set for all of us. That date pushes all of us to get many tasks done and in a way that is a good thing.

So now as we finish this year of 2015, most of us start thinking what the next year will be like and what is it that we want to accomplish.  We start thinking about what goals we want to set for ourselves and, if we are wise, we put deadlines on our goals which pushes us to reach those goals within that self-imposed deadline.  If we tell other people what our goals are and the deadline dates, that is usually very helpful because those friends and relatives can help push us and keep us on track by asking how we are doing and if we are on track for completing our goals on time.

I couldn’t help but think of that late last night at a party, when I suddenly remembered that I hadn’t written this week’s blog and I had told my editor that I would have a draft to her by last night. Ouch.  So first thing this morning I got right on the task of writing this blog that you are now reading. Outside help can really keep us on track.

Additionally, last night someone asked me what my goals were for 2016. They knew I was big on goal setting and they also set goals for themselves and push their kids to do the same. My answer was that my biggest goal for the new year was to push myself for better and better health.  Now that I’m almost 72 years old I see, more and more, how important health is. I’m already in darn good shape and came so very close to a 10 mile a day goal I had set for myself in 2015 that included running, walking and playing tennis. But in 2016 I’m going to raise the bar to an even higher level and add some tough weight lifting goals since I know that extra muscle will increase my metabolism and of course make me look and feel better and stronger.

So my challenge to you is take time to think through what you want to accomplish in this coming year and be sure, as I’ve preached over and over again, to write down what those goals are and then be sure to put a time frame or a deadline on your goals. To help yourself along, tell friends and or relatives what those goals are and ask for their help. That combination is a sure fire way to make your goals a reality.

 

Reflections in Lieu of a Christmas Card

Now, a week before Christmas I received this email from a very dear friend of 40 years.  He’s a great guy, now a retired doctor, whose life was turned upside down 2 years ago when he was diagnosed with Pancreatic cancer and given only a few months to live.  After going through a 9-hour surgery and painful recovery he’s still hanging in there and has embraced life with incredible energy and enthusiasm, fully living life every single day.  He is a positive, lovable human being who is setting a wonderful example for all of us, a man I am proud to call a great friend.

Here is his “Reflections in lieu of a Christmas Card”

I stayed out of the hospital this year.

I played golf or pickle ball almost every day.

I enjoyed friendships, new and old.

I’m learning to say goodbye reluctantly to some
friendships that didn’t work.

I made a few new friends.

I love my kids and grand kids who each seem to be
on their own unique journey.

I continue to know less about more.

I own my own faults and will probably keep
most of them.

I travel less and enjoy my home and Robyn more.

I value things less and ideas more.

I totally reject trying to change anyone else.

I seek forgiveness for hurting anyone.

I reject exclusion, pettiness, manipulation, passive
aggressiveness, and revenge.

I love knowledge, insight, information.

I love competition and discussion.

I reject polarization, cliques, political and
group collectivism.

I advocate for things I believe and not for groups,
causes, or labels.

I advocate for health, fitness, and science.

I love animals more than people.

I reject political correctness and distribution of
wealth.  I advocate for self-determinism.

My identity is not in my possessions.

I resolve next year to reduce drama in my
life by avoiding those who need it.

I want to live as long as possible if there is good quality.

After pancreatic cancer, I’m not afraid of much so
I will speak to my beliefs.  You can have yours
so don’t be offended.  I can disagree with you
and love you.  Don’t react with anger.  Just
listen or not.

I can’t be offended unless I choose to be.

Life is short, don’t withhold love.

Don’t take yourself seriously.  Laugh at your
mistakes and embrace them.  Don’t worry
about what others think.  Worry more about
what you think of yourself.  I want you happy.

If this all sounds pontifical, it probably is.  It’s me at my best and worst.

Love to all.

–Craig Davis

Don’t Miss Your Bliss

Yesterday I stumbled across a poem written about this thing we call “Bliss”.  It’s something we all like and we all want in our lives. We try to pursue it as best we can even though it does elude us much of the time.  I read it with great interest because I’ve gone after bliss many times and experienced bliss at times in my life but haven’t had near as much of it as I’ve wanted.  Here’s the poem. I hope you like it as much as I did and that you find it’s helpful to you too in your pursuit of bliss.

BLISS

How many years do we waste as we search for this?
Contentment, peace of mind, a state of bliss.

Young men work to build their bodies strong.
Attach themselves to vanity and stay too long.

Finally, they move on–but now it’s assets, goals and stuff.
They’re so competitive, work so hard and play so rough.

But the end is justified by the means.
Yet when they arrive, the prize is not what it seems.

What have I missed? My wife, my kids, my life is amiss.
Is it now too late to follow my bliss?

What’s it all worth if ‘in the getting’ I lose my soul?
Please let me get it back, the price is too great a toll.

But sometimes life will let you do just that,
change roles, reverse direction, and switch your hat.

For we all must learn in the proper time and season,
for wisdom comes with patience, suffering, and for a reason.

Bliss rarely comes when one is young,
but neither is it guaranteed from an old man’s tongue.

Its secret is buried and is man’s greatest foe.
Simply put, it’s the taming of the ego.

Ego locks you out of your bliss.
God’s one test you best not miss.

But it takes almost a lifetime to get that peace of mind.
Here’s the secret–you don’t have to be right, just be kind.

By the way, the author of this poem, and I had totally forgotten this, is little ol’ me.  I wrote this back in 1998 and as I read all these years later I was quite surprised that it struck me as pretty good. Well, it must have been more what they call ‘inspiration’ because it was too good to come just from my brain.

 

The 66 Day Habit

I thought that changing the habit of driving on the right side of the road to the left side as I did recently in Ireland was a tough habit to change. Well, believe it or not driving my new car here in America is proving to be just about as hard. Ok, I can hear you asking, how can driving a new car on the right side of the road in the country you grew up in require a person to form a new habit?  Well, the car is different from every car I’ve ever had. It’s a Tesla and it can operate almost completely on its own. So why would that require a change of habit? Because all of us are in the habit of controlling our car and it’s counter-intuitive to turn that power over to the car and its computer.

Especially if you are traveling at 80 miles an hour on the freeway in traffic and going around curves.

I’ve had the Tesla for a little over a month and I am still working on shifting my usual driving habits. I remember reading many years ago that changing or developing a new habit takes 21 days. I think I read that in an old classic book by Maxwell Maltz, Psycho Cybernetics. So here it’s been over a month and I’m still trying to relax and let the car take over.

I began to question the 21-day thing and found out that was a bit of a myth started by Maltz all those years ago. A more recent study done by Phillippa Lally, a health psychologist at University college London, studied 96 people as they tried to change a habit. Her research showed that a change in habit or developing a totally new habit takes a little over 2 months–66 days to be more accurate. This is a very good thing to know because our habits, good and bad, really make or break our entire lives and if we held on to the 21-day myth we could easily become disappointed when we failed to change or develop a habit after 3 weeks. This could cause us to give up.

When I look at my own life with its big ups and downs I can’t help but see where some bad habits have held me back, causing me pain and failure. But then again, when I look at the good habits I have, I can see why it was such a good thing that I worked hard to form them. My dad for example, pushed and pushed me to form the habit of reading good books, which I finally did. I also pushed myself to develop the habit of working out, running, walking a ton and playing tennis virtually every single day and now at almost age 72 I am seeing the huge benefit of this habit and it’s not even hard to do anymore.

I also have to attribute my wealth to forming some very powerful and productive financial habits that have served me so well. Some are very simple, like saving at least 10% of every bit of income, which I did even when I was poor and making only $600 a month. Early on I also formed the habit of reading every financial book I could get my hands on as well as investing every penny I could into wise investments.

So I would plead with you to look at yourself and your habits and make a list of both your good and bad habits noting how the good ones serve and the bad ones aggravate your life and your family. Determine to keep up with the good ones but also add new habits and to change the bad ones. Stick with each new or changed habit for at least 66 days and watch the results! Try also to get your kids, significant other, parents and friends to do the same thing. I pretty sure you won’t be sorry.

A well ingrained habit is second nature and we will do it automatically, even those things we don’t enjoy doing all that much. The thing is, we love the results and if you keep your eye on what good habits can do for you, you can do it 66 times and beyond.

 

 

Employing the AB Split

Yesterday I sat down with a young man who asked for a little mentoring from me.  He had started writing a novel and wanted some coaching as to how he could get a publisher and or a literary agent.  I explained to him, first of all, how tough it was to get a publisher.  There are over 200,000 new books published every year and probably 10 times that many books that try to get published but are turned down.  I told him how I eventually got my first book published and how that didn’t happen until I had sold several hundred thousand copies by myself. Of course, he wanted to know how I did that. What I told him is something that can help anyone to achieve great success with almost any venture they are interested in pursuing.

Many years ago one of my mentors introduced me to a very simple but very powerful method of marketing.  In simple terms it’s called an AB split—it’s an easy way to measure anything from what price is the best price to charge to what words in an advertisement, book title, product name or anything else will be the best to use to grab people’s attention.

You can test two prices in a newspaper ad, for instance, by spending just a few extra bucks to have one ad show a $25 price printed in half the newspapers, then list a $45 price in the other half of the print run.  After looking at the orders you receive, you will know which price your customers preferred by simply counting up the orders you received for each price listed. The same AB split can be used with snail mailings or internet marketing, radio, TV or phone solicitations. And that’s just the beginning.  You can test what title would be best for a new book, or the best headline for an advertisement or the best words and story to tell in the body copy of a lengthy ad.

When I couldn’t get a publisher to take on my first book I began using the AB split method and quickly and quite inexpensively found out that the “How to Wake up the Financial Genius Inside You” title of the book and the headline in my advertisements was far superior to the headline “How to Become a Millionaire”.  I then used the AB split to discover what price was best, using newspapers, mailings and TV ads.  Wow, once I found the best price and the best headlines and body copy to use, things went crazy as I began advertising just about everywhere, in newspapers, radio, TV and mass mailings.  The orders came rolling in by the thousands and eventually that money led me to publish a newsletter that morphed into a magazine with over 50,000 subscribers.  All of that, plus some, coming primarily from the use of the AB split method.

I don’t know what the young man who wants to be a big time novelist will do with what I told him but if he applies the AB concept to getting his book out there and sticks with it, I’m pretty sure he’ll soon see huge numbers for his book along with many lifetime rewards and a ton of satisfaction.

Forging Past the Fear

Well I did it! I gave my one-hour presentation to the MBA students at Utah State University on ‘How to Make Millions by Wise Investing’. If you recall from last week’s post, this speech had caused me some fear and anxiety. But after 5 or 10 minutes the fear and anxiety that had been gripping me diminished and finally totally disappeared. The students were great, as was the professor. They asked some great questions and it all went quite well. Yay! I guess I acted out the title of Susan Jeffers great little book Feel the Fear and Do It Anyway.

It’s fascinating to me that a huge percentage of people don’t step outside their comfort zone when it comes to investing as a direct result from that thing we know as fear. It might be fear of the unknown, fear of losing their money or sometimes just plain fear of taking any risks at all. I look back at my younger years (now called “my warrior years”) and remember how quite a few of my peers, people that were just as smart as me and sometimes a lot smarter, knew what I was doing and how I was doing it and, yes, knew that I was having some very big financial gains. However, they didn’t dare step up to do the same thing I was doing. I’m pretty sure the reason was primarily because of fear.

Looking back now I’m pretty sure I didn’t share with them that I had huge fears myself. The thing is, I forged ahead anyways and took the risks and it paid off. I wish I could go back in time and share those fears that I felt with those friends. I think if I had done that then many of those people might have taken a few more calculated risks, pushing past their fears and ending up with the kind of success that I experienced.

I think you would agree that many of our fears come from us thinking  things like “Oh, what if I fail? What will my friends and family think of me? What if I lose all my money?” But like I told the MBA’s, everyone fails from time to time! The key is to learn from your mistakes and be sure not to beat yourself up. It’s okay to fail. No human is immune to failure but if you pick yourself up and keep trying, your success, in investing to create your fortune or just about any part of your life, will far outweigh your failures.

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