Month: July 2024

The equations that matter when we manage money – for our personal lives or our organizations – are simple:

(1) Viability = Our Income – our Expenses/”Burn”

Implications:
(a) If we aren’t viable, we must get viable by reducing our burn.
(b) The closer our burn is to our income, the more attention we must pay to it. Micro-optimizations go a long way. The reverse is also true.

(2) Wealth = when viability is generated from our principal/investments.

This is the powerful thing about thing about being wealthy. If you have a low burn and have enough in savings/investments that covers your spending with a little to spare, you are wealthy. Any income from work or projects is upside that goes into making the principal bigger.

The flip side is also true. You could be earning in the highest tax bracket. However, if your burn isn’t paid for by the money from your principal, you aren’t wealthy.

Implications:
(a) The younger we are, the more it makes sense to invest aggressively. This means reinvesting our dividends and savings back into making our principal bigger for future years. The best analogy is climbing up a mountain. It is hard on the way up and correspondingly easy on the way down. There’s no middle ground.

(b) The second is that it helps to have a cushion for unforeseen circumstances when we’re attempting to build wealth. The size of this cushion is a personal preference and will depend on life circumstances – depending on kids, mortgage, etc. There are rules of thumb – e.g., 6 months in your early 20s, 12-18 months in your 30s – but your mileage may vary.

First, be viable. Then intentionally work towards getting financially wealthy.

Along the way, you’ll likely realize that financial wealth isn’t the only kind of wealth that matters. More on this soon.

“Rhoades [zoologist and chemist] had watched a nearby forest be decimated by an invasion of caterpillars. But then something suddenly changed; the caterpillars began to die. Why? The answer, Rhoades discovered, was that the trees were communicating with one another. Trees that the caterpillars hadn’t yet reached were ready: They’d changed the composition of their leaves, turning them into weapons that would poison, and eventually kill, the caterpillars.

Scientists were beginning to understand that trees communicate through their roots, but this was different. The trees, too far apart to be connected by a root system, were signaling to one another through the air. Plants are tremendous at chemical synthesis, Rhoades knew. And certain plant chemicals drift through the air. Everyone already understood that ripening fruit produces airborne ethylene, for example, which prompts nearby fruit to ripen too. It wasn’t unreasonable to imagine that plant chemicals containing other information—say, that the forest was under attack—might also drift through the air.” (From Zoe’s Atlantic piece)

I read this excerpt just after learning about how giraffe’s feed on Acacia trees. When a giraffe begins feeding on a tree, it releases ethylene gas as a distress signal. As soon as the gas reaches the next tree, it increases Tanin levels in its leaves, immediately making them bitter. This ensures they save their community from overgrazing.

As time passes, I expect us to ascribe traits like intelligence and consciousness to plants – just as we do with animals today.

Much to learn about all this magic, we have.

Joy doesn’t come from having everything. It comes from making the most of what we have. 

We find clarity at the balance point between simplicity and nuance.

“Everyone fails at being who they are supposed to be, Thor. The measure of a person, of a hero, is how well they succeed at being who they really are.” | Frigga

This resonated.

Performing at the top of any field is often just an exercise in raising our pain threshold.

This pain might be physical, emotional, or mental. But the willingness to endure extraordinary pain to perform at the highest level is often the one thing that professionals at the top of their game – whether they’re athletes, entrepreneurs, artists, researchers, or executives – have in common.

A good friend and I were catching up a few months ago and he shared that the book “Die with zero” inspired him. Outside of a few financial planning tips, the central thesis of the book was that we are too attached to accumulating wealth.

Instead, our goal should be to die with as close to zero dollars left as possible, having spent our money on memorable life experiences and giving to loved ones and causes we care about.

He was on a career break and shared just how disconcerting it was to see his bank account go down instead of up. And even though he had “enough,” it still didn’t remove that discomfort. Old habits and programming are hard to change.

I haven’t read the book but I have thought about that conversation a few times over the past months. Personal finance and spending is a complex topic. Any discussion requires dealing with nuance as our circumstances vary.

But I’ve also come to realize that any answer that is along the lines of “I’ll be happier when….” is the wrong answer.

That doesn’t mean indulging our every whim. It does, however, mean being intentional about spending on experiences that are within our means in the current moment.

Don’t keep postponing the good stuff.

Time does fly… and life can be shorter than we think.

I was on a continuous set of calls while at Newark airport recently and absent-mindedly left my bag at security. I got food and reached my gate with plenty of time to spare.

It was only when the calls were done that I realized that my bag was not with me. I had walked around plenty while on the phone – so, I traced my steps back and didn’t find the bag. I checked with airport police – no dice. I walked back to security check and asked two guards who weren’t helpful either.

So I went back to the gate and asked around – starting with the attendant at my gate. It wouldn’t have been possible for someone to be more unhelpful. “Not my problem” sounds painful when you’re dealing with said problem. I asked a few more people – nobody really knew who could help.

A gate helper at a nearby gate shared that my flight was going to be delayed an extra half an hour. That was a relief – and I was grateful to her for sharing that.

Still, I was getting increasingly desperate as I continued asking airport staff. That’s when a gentleman named Eduardo – also airport staff – walked by. He said he’d just helped someone find a bag and he’d help. He asked me questions about where I’d been and we began retracing steps again. Again, no luck. But Eduardo was calm, patient, and collected.

There was a moment during the questioning when I said – “Eduardo, I think I didn’t have it then.. but at this point, I’m feeling like an idiot. So I don’t really know whether I’m right.”

To which, Eduardo simply replied – “It’s okay man. You’ve just lost your bag.”

His message was loud and clear – don’t overreact. It’s just a lost bag – we just have to go through the process step-by-step. Something about that message got me back to problem solving mode and gave me home. As we’d exhausted all our options, I asked if it made sense to go back to security.

That was the only logical option. But we’d have to run as the flight looked like it was about to board.

And so we did. This time, I walked past the unhelpful first set of agents to the next set. Did they have a gray bag in their lost and found?

Voila – they did.

I thanked Eduardo, scanned the airport’s compliments website and left him as nice a note as I could.

4 reflections –

(1) Multi-tasking always has a cost. Stay extra vigilant with your stuff in new places.

(2) Focus on the problem vs. your feelings about yourself or what caused the problem. It will help you solve problems faster.

(3) Often, our days and weeks are made positive by the kindness of strangers. Eduardo saved me so much trouble. And he did so by simply being kind – kindness that gave me hope. His kindness will remain etched in my memory. Thank you, Eduardo.

(4) I’m not generally thankful for flight delays. But, if it wasn’t for the delay, I wouldn’t have found my bag.

As the saying goes, good? bad? who knows?

The law of squeaky wheels: When more grease and care is given to squeaky wheels within organizations, the more likely it is that ordinary wheels turn squeaky.

Incentives drive behavior.

Last summer, I had the opportunity to spend two days in Lauterbrunnen valley. Beauty is in the eye of the beholder and we all have different ways of perceiving beauty. In my eyes, it was hands down the most beautiful place I’d ever been to.

Snow-capped mountains, stunning green meadows, and waterfalls – Lauterbrunnen valley is, in a word, incredible. It reminded me of Yosemite valley (the topic of another post) – except larger and – against all odds – prettier. Below are a couple of photos clicked on an iPhone.

The name “Lauterbrunnen” translates to “loud springs.” The valley has 72 waterfalls. The most stunning of these – in my opinion – is the Trummelbach falls. These falls are on the inside of the mountain and their power is awe-inspiring.

These falls are made possible by melting glaciers from the tallest Alps – Jungfrau, Eiger, and Monch. At a time when the warming climate is reducing the glacier coverage on this planet, places like this remind us of the importance of finding ways to stop and, hopefully in time, reverse the impacts of climate change.

Both sides of the valley have picturesque car-free villages. I loved the idea of car-free villages. We need more of those.

And, a fun fact, this valley was the inspiration for “Rivendell” in the Lord of the Rings saga.

I hope to return.