Conventional vs unconventional part 2

Suppose you went to a restaurant with your spouse, usually you order a particular favorite dish that you both like. But today your attention goes to an unknown dish in the menu card. You order it, and it turns out to be a little bad. Then everyone must have guessed it right that it would result in a heated argument that why you chose this dish and ruined our date?

But what if you have ordered the regular dish and somehow it was not having the usual taste, rather it tasted bad?

Then your spouse would not have blamed you. So the second option has no downside in this case. And the first one has little upside (there are chances of one of you or both of you like the dish) but huge downside of a heated argument.

But logically speaking, is the second option really that good?

Well it's certainly a safer one, but would you eat the same dish on every date? It will be boaring. But choosing something different each time just for the sake of trying to be different is also a bad strategy, because you will not be able to explore anything deeply, and everything will be just superficial.

What people do conventionally is try to choose the safer option, and what unconventional people do is analyse different options in front of them and choose wisely.

In the above case, if one finds a good dish, one may continue ordering it on every date till it feels good, but once it starts to become boaring, one can try a different one, till one finds another great dish to continue again.

It's that easy.

Now one can apply the same logic to other areas of life, instead of sticking to the conventional safer choice.

If one is not getting desired results then tweak the strategy, till one gets the desired results. Don't just keep blaming the luck. Try what is in your hands.

For example, if you are having huge loans and no savings, try decreasing your expenses, search for cheaper alternative, start saving more, try to increase your income, try creating passive income sources.

Not happy in your relationship with your spouse/girlfriend/boyfriend? Try searching what's going bad, Confront the obvious, don't delay an open talk, try listening more, don't be controlling, reconsider your thoughts, put yourself in the other person's shoes, say sorry if needed, put your ego aside, accept the reality, rather embrace the reality, prioritize what's important to you. It's not that hard. Rather continuing a bad relationship the way it is, is a hard thing to do.

Change is the only constant thing in the world.

The more one gets it, the more content one be.

This one thought have a great potential to make a difference.

Have a nice day..

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.

Conventional vs unconventional

This blog post is inspired by people around me and my reading habit. Also this blog post is related to all three pillars of life i.e. health, wealth and happiness.

I like reading or listening to the interviews of great achievers, I like reading their autobiographies. So naturally whenever our brain sees 2 things of similar nature, it starts comparing them. Here in this case, extraordinary men (great achievers) in autobiographies or interviews and the common people with common or average achievements.

What I notice is that, world is full of random occurrences. Even if we try to do something good, we take care of every possible glitch, every imaginable problem, but still something unexpected can happen and ruin everything (like we are driving in the road cautiously, obeying traffic rules but a drunk driver comes out of nowhere, breaking all traffic rules and hits us). Or sometimes, we don't do anything but things gets matched on their own and we get a great results(like we see a lottery ticket lying on the street, we pick it up and it turns out to be a winning ticket).

We get following 4 relationships between effort and results-

1) No (or very little) effort -> Poor result

2) No (or very little) effort -> Great result

3) Great effort -> Poor result

4) Great effort -> Great result

 We get fascinated by stories matching with relationship number 2 & 3. That is almost no effort can bring great results and great effort can give poor results. All human beings are suckers for stories. Remember our childhood days when we used to nag our grand parents to tell us stories??

Even grown ups watch TV serials and movie because they tell a story. This fascination about stories brings us to believe that great efforts does not guarantee great results and without any efforts or with very little effort we can get great results. So most of us don't bother putting any efforts even with the things which matters to us and hope that one day everything will align itself and we will get great results. Or some even believe in destiny, they think, if it's in their destiny, they will get it or otherwise no matter how much they try, they won't get it.

Now keep aside the thoughts about the destiny and fascinating stories and think about the following cause and effect relationship in a mathematical, logical way-

1) No (or very little) effort -> Poor result

2) No (or very little) effort -> Great result

3) Great effort -> Poor result

4) Great effort -> Great result

Now logically speaking, here in our world, everything is interlinked, ever heard about butterfly effect?

A thing as small as the flutter of a butterfly can cause a typhoon half way round the world.

In plain English, if conditions favor, a small trigger can cause massive results.

So a cause of devastation caused by a typhoon can be a harmless looking little flutter of the wings of a butterfly.

So no effort resulting in great results and great effort resulting in poor results are bound to happen time to time. 

But what about other conditions? That is, no effort gives poor results and great efforts give great results. Well they are bound to happen when external things don't intervene in negative way.

Probabilistically speaking even if 10% is in our hands and 90% depends on external factors and we put in all our efforts then the possibility of favorable outcome happening will increase by 10%. And generally in my observation, more than 50% of the influence is in our hands and rest are the external factors. But external factors are also 50-50% in nature, that is 50% time they are positive and 50% times they are negative. If we consider only the positive things, that is we are doing our 50% part, and out of the remaining 50% there is 50% chance of positive i.e. 50% of 50% is 25% so, this 25% positive plus 50% by our efforts gives the success rate of 75%.

Isn't it great!! In the contrary if we don't do our part then the success rate is around 25%.

(These are assumptions, but I think I made my point that if we put in our efforts, the possibility of good results increases.)

In real world when such things-

1) No (or very little) effort -> Poor result

2) No (or very little) effort -> Great result

3) Great effort -> Poor result

4) Great effort -> Great result

happens, ordinary people exhibit following attitude-

When I am right I am genius, when I am wrong, it's due to bad luck.

Almost all Ordinary people believe in it, this is the conventional wisdom. Someone have said that,

In financial world people are famous for being right once in a row.

When you read the interviews or autobiographies of unconventional people, you will quickly find out that, they can separate the luck part and effort part of any achievement. If they encounter a failure, they try to analyse the root cause. They don't just blame it on luck, they find it out if they have done their part properly, if they are missing something. In this way they keep on improving themselves, keep evolving. They keep on becoming better version of themselves, day after day, they never stop learning.

Actually we already do this thing, and we have to. Any guesses where??

At our job. We try to stay relevant. We keep on updating our knowledge, updating our skills, we don't say I encountered failure because of bad luck and I can't do anything about it. We find the root cause until we get the success.

Then why not in our personal life?

Have a nice day..

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.

Setting your frame of reference right..

This article is inspired by a friend of mine, who earns a lot, but still don't have a clue why he can't save anything.. I know many people, who are in the same condition.

I suggested him to keep a log of every expense he is doing however minor or obvious it may be. So as to get an idea about where his money is going. Me too did the same when I was in the same situation, and got a headstart in living a frugal, happy, healthy life with lots of investments earning money for me.

Mostly the ideal savings rate is 80% of the income. The more, the better. It has nothing to do with the amount of income. Most people have savings rate of almost 0%.(some also manage to have negative saving rate, that is they spend more than they earn. Obviously they land in to debit trap.)

People give reasons like- my income is small, when it will increase, I will start saving, or this year the expenses are more, once the expenses reduces I will start saving. And savings never happen.

People are not dumb to not understand the benefits of savings and investing. But still they don't save much.

Now why this happens?

The reason lies in our psychology.

Our brains don't have the capacity to judge anything of it's own. We compare anything with something similar, like we judge the temperature of anything with respect to our body temperature, we describe the temperature as hot or cold (with respect to our body temperature), we cannot tell the temperature in degree Celsius or degree Fahrenheit. Or if we see a picture, our brain subconsciously searches for known things and then interprets the unknown things in the picture by comparing with the known things in the picture. For example if we see a picture of a building we can't judge the height of the building (because building can be of any height), but if we see a man standing in the picture then our subconscious knows that a man is generally 5 to 6 feet tall, and we can quickly get an idea about the height of the building with respect to the man.

But what if we have fever? If the man standing in the picture is dwarf (only 3 feet tall)?

Then our judgements will be wrong. If we have fever and our body temperature is 40 degree Celsius instead of 37 degree Celsius. Then we will find things colder by 3 degree Celsius than usual, that's why we feel cold when we catch fever.

Or if the man standing in the picture is only 3 feet tall instead of usual 6 feet tall then we will judge the building twice the size of it's original. But soon we will find other anomalies in our judgement, like we will find something else in the picture which is of normal size and recognize our mistake. That is if we see a Toyota Corolla (a very well known car) in the picture. Then we will quickly think there is something wrong in our judgement, either the car is twice the size of usual (which is quite impossible) or the man may be dwarf (some possibility). So we will come to the conclusion that the man here in the picture is dwarf. And also we will get an idea about the real size of the building.

But if the man in the picture is 5 feet tall instead of 6?

Then there will be a minor error in the judgement of the height of the building. Which will go unnoticed. (around 20% error will go unnoticed.)

Coming back to our topic about savings and expenses. We judge our expenses in a similar way. We compare our expenses with similar expenses of ours or our friends or colleagues. And a 20% increase in the expenses can easily goes unnoticed. And this is how our expenses can easily skyrocket.

But are the reference points right in all above examples?

In engineering drawings it graphical maps or even in the Google maps, a scale is given, that is, this much distance corresponds this much kilometers. This standardized system prevents most of the errors of comprehension.

Now what is the proper reference point to judge our expenses?

I think our expenses must be correlated to our income and not with other expenses, because we just saw how our expenses can skyrocket if we compare with similar expenses but our income has nothing to do with our skyrocketing expenses. It grows with it's own pace.

A simple reference point we can set is how much I earn in a particular time? That is if I am earning Rs. 1000 per 10 hour work day then I am earning Rs. 100 per hour. Then I can think like if I am buying something for Rs. 100 then I would have to work 1 hr. at my job in return. Is the thing I am purchasing worth my spending 1hr at my job?

Suppose I am going to change the engine oil of my bike and the mechanic there is asking for a Rs.100 as service charges for just 15 minutes of work then is it ok for me to spend an hour at my work to change the oil of my motorbike? Of course not... The mechanic is earning Rs.400 an hour, you should rather quit your white collared job and become a mechanic instead. :P

But practically it is very easy to change the engine oil of a motorbike or a car, instead of paying huge service charges and waiting for them to finish the work, you can do it yourself with the satisfaction that I did the right thing, saved money, time, expenses to travel to garage, avoided the headache of taking an appointment, I did it with love and care for my machine, I did it properly.

And trust me the tools and spanners needed are one time expense and you will recover the money in the first time itself. And they mostly last more than a decade.

It is just an example of setting the frame of reference right. It will align your expenses with your income. You have to practice this for 2-3 months and then it will become automatic. Afterwards you will automatically think about any expenses with respect to how much time you have to spend at your job to earn that much money.

So incorporate this habit and start saving your own money. That's the homework..

In the second part of this blog post we will learn about setting the frame of reference right in investing.

See you soon.. Till then have a nice day..

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.

Doing the right thing & Prioritizing the work..

There are two rules to achieve great results in our life-

1) Doing the right thing is doing the thing which is necessary to get required results.

2) Prioritizing the work is giving the highest priority to the work which produces the most important results.

Both these rules sounds like pretty basic, trivial, anyone will understand, everyone knows, every human being must be following it.

Yet in our day today life I see most, including me ignoring these basic rules.

Mostly we are doing what we feel like doing instead of doing what is necessary. For example many of my colleagues have home loans on their head, they feel the pressure, the burden of the loan plus interest costs on their head, they hate paying the monthly EMI of the loan but still they feel I must have a car (in Indian metro City motorcycle is the best way to commute to the workplace because of traffic congestion, and car is only used for some once in a month family outings, using a car everyday is not at all practical even if you have extra money) and they get one (on the loan of course) though they know that the value of the car starts decreasing, the moment it leaves the car showroom. Just because they feel buying a car is the right thing to do.

I have seen even high ranking officers in various organizations doing the same, I have found them concentrating more on the results, trying the tweak the results instead of working on the system which is giving the results. 

Investment legend Warren Buffet have described this condition as fixing all your attention on the scoreboard, when you should be concentrating on your game, which is actually producing the score.

When it comes to prioritizing the work, people also don't give much deliberation and arrange the things in proper order. People just start doing the things which they like to do first or which appears in front of them first.

For example, as most of the people are not doing the right thing, they are not getting the required results, and as they are not getting the required results they are working still harder, resulting in working overtime, bringing office work to home, not having enough time for lunch break, so skipping lunch altogether. But we join a job to ensure enough food for us and our families, what if the job is consuming so much time that you are not even getting time to eat or for your family. Anyone in this situation needs to pause and think about it, whether you are doing job for you and your family or your existence is for the job?

And when an high level managerial person does it, his/her subordinates also have to follow for obvious reasons. Resulting in too much of an indirect damage to many families because of the bad decisions of a single person.

All this can be avoided with doing the right thing and prioritizing the work.

It is not only related to offices or organizations, it is also related to our daily lives, we have to take decisions like, what to purchase, when to marry, whom to marry, which job to join, when to change the job, purchasing a house, making investments, family get togethers etc.

If one is only chasing his/her career and ignoring the family aspect of life i.e. getting married and having children then there remains a void in the life of that person, even if he/she becomes really successful in the career.

Remember this blog is to strengthen the three pillars of life- health, wealth and happiness.

So we have to learn to do the right thing and prioritizing the work. So as to achieve the maximum output in minimum input. (Improving the efficiency of our life.)

Find out what you want and which system is producing those results, sort out the bottlenecks, don't be afraid of failures, change the system if you are not getting the required results, think which is the most important thing to be done, also what is to be avoided. 

That's your homework.

See you soon. Till then, have a nice day.

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.

Early retirement- is it really necessary??

Hello friends,

As you know, samanyabuddhi.blogspot.com is the place to use the common sense (which is not so common :-P) to grow health, wealth & happiness.

Health, wealth and happiness are the the pillars that support a meaningful life. These pillars depend on each other to support the human life. If one is weak, others can not support a healthy life.

Today I am thinking about the wealth side of our life.

Wealth can be defined as anything that is needed by someone..

For example, insect also have wealth, a spiderweb is needed for a spider to catch it's pray. Birds build nest for their little ones. Honeybees make and store honey in the honeycombs. All the things mentioned are needed by someone so can be considered as wealth. These examples also states that wealth can be created.

As far as human beings are concerned, there are many times of wealth a human being can create.

Mostly until our formal education is completed, we consume the wealth created by our parents (we consume our parent's time, food, money, space etc.). After completion of the formal education we start working for some organisation, may it be someone else's or we make our own by consuming more wealth to form the organisation (entrepreneurship), it it can be a self employment. Then we start using our human capital to creat wealth for the organisation. Now after more than 20 years of consuming wealth (only input), For the first time in life we start giving some output.

So our human capital is itself a wealth for the organisation we are working and also to ourselves as we are getting a part of wealth created by us back by the organisation in the form of money.

Money is not actually wealth, it is a medium to move wealth.

So with money we get power to purchase what we need, that is we purchase wealth, so money itself becomes synonymous with wealth.

Now coming back to the human capital, suppose we join a job at the age 20 and the retirement age is 60 (we can work more but considering the health, I think it is a reasonable estimate to retire at 60, which is also the official age of retirement for government servants in India). Well, you can choose whatever age you would like. But considering the above scenario, we have 40 years of working human capital at the time of joining an organisation. As the years pass the remaining human capital goes on decreasing, that is at the age of 40, only 20 years of human capital is remains. But in exchange of your working and wealth creation for the organisation, you are getting paid. So the cumulative (that is total till now) payment you received is goes on increasing and the human capital remaining goes on decreasing with time.

If we don't want to retire, and keep working, we can't do that because the human capital we possess is limited. We can't work till we die, because of health issues, aging etc.

So the inevitable fact is we have to retire at some time.

What if we spend all the money we receive in exchange of our human capital? Simple answer is, we will retire broke. Or we can't even retire, we have to search another job, even for low pay.

But mostly people invest some amount of their salary in some pension scheme, to get the pension after retirement. If your retirement fund is big enough then you can have a good retirement life.

Thus saving for our retirement is necessary or compulsory. Our retirement age is fixed by someone else, that is the organisation we are employed in. And we have accepted it and making planning for building retirement corpus before the retirement date.

This retirement is an unavoidable phenomenon. For most, the retirement date is fixed by someone else.

So why not choose our own retirement date and plan for it? We already know how to make provisions for life after retirement..

Think about it for yourself..

See you later.. till then have a nice day..

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.