Optimize Your Life – Page 10

I just finished reading a great book called “The Psychology of Money” by Morgan Housel (linked at the bottom of this blog post.) Published in September of 2020 this book has already sold over 500,000 copies and I’m confident this book will gain even more steam. The author has a very “different” outlook on personal finance and the book takes a much more practical approach to the psychology of how we think about money than any financial advisor would tell you about “returns on your investments.” The author has a background and career in finance but chooses to go against a lot of the fundamental principles he has learned throughout his career and I’ll tell you why.

Finance is simple – spend less, save more, pay your bills on time and live below your means, but it’s not that easy… or is it?

Personal finance is a skill that we are not taught in school. We’re not taught how to save money. We do not learn how the stock market works. We don’t receive any knowledge from our teachers about the power of compounding interest. The public school curriculum certainly doesn’t include how to utilize credit and debt, or the overwhelming yearly task of doing our personal taxes and how we can use tax efficient strategies to stretch our money further. These are the reasons many Americans are either in a massive amount of debt or living paycheck to paycheck. Are you one of these people? If you are drowning in credit card debt or living paycheck to paycheck please schedule a free call here so I can give you a swift kick in the butt!

www.calendly.com/zacharyrance/discovery

INTERESTING FACT:

The average net worth for a 30 year old in America as of 2021 is only $7,000 and this is mainly due to student loan debt, rising home prices, and below average job market.

SAVINGS VS. SPENDING

There are numerous financial coaches and successful investors that we can all learn something from and a lot of these people are smart. So why aren’t we taking advice from all of these people? Why aren’t we doing what they are doing? – well it’s not that easy. Creating financial freedom takes time and hard work but utilize a few strategies and your wealth or lack of wealth will be inevitable.

“Noone wants to get rich slow.” – Warren Buffet

So if you are reading this and currently have a net worth of a million dollars or more meaning you are a millionaire there is a good chance that you earned it and you’re smart. Many of us have a good chance of becoming a millionaire too and it starts with our saving and spending habits.

Good spending habits:

Pay yourself first – put 10-20% of your income into an IRA or 401k account every single month.
Make sure your housing expenses (rent, mortgage, utilities, etc) is under 40% of your monthly income.
Pay your credit cards on time.
Have 4-6 months of monthly expenses saved in a savings account that you NEVER touch.

If you’d like to listen to some audio on healthy personal financial habits I have two great podcasts that go into more detail. I recorded a podcast with a financial coach and we discussed the foundation for a strong financial plan that includes 6 months of bills put away, cost efficient housing expenses, and putting money in a retirement account – you can watch and listen to it here : Mandyy Thomas.

I also did my own spin off on how to properly manage your money and its linked here: E53 – Money Management with Zach Rance

My personal finance mistakes… take the good with the bad

Interest rates are at an all time low and more people are buying houses (borrowing money from the bank) and refinancing their houses than ever before. This is an amazing opportunity to borrow money and utilize debt with historically low rates to leverage your assets or income to create more wealth, if that’s what you want to do. I have spoken to multiple financial advisors, watched hundreds of hours of YouTube videos on finance and have learned the hard way in some aspects of life to make my own decision on what to do with these low rates. So what did I do? I went completely against the popular opinion and instead of refinancing my house or purchasing more property with debt, I chose to pay off my primary residence for “peace of mind” and a “sense of security” which to me is way more valuable than my “return on investment.”

A financial advisor would rarely tell me to pay off my house and I know because they told me it was stupid, however if you asked Dave Ramsey if what I did was a smart choice he would say it absolutely was. This is why creating wealth is so confusing. People have different theories and ideologies on how to build wealth… but its not always about money. Sometimes its about safety, security and peace of mind.

Could I have made a better choice?

Well yes I could have made a better choice but the grass is always greener on the other side and I know what I value most. However, if instead of using the money to pay off my house I chose to invest it in the stock market, let’s say the S&P500 (group of the 500 largest publicly traded companies, and a pretty accurate barometer of the overall health and current state of the US Stock market.), the upside would have been greater and I would be able to build more wealth but only under the assumption the overvalued market doesn’t crash, or have a huge correction, and the real estate market stays strong…? See where I’m going with this?

If you’re wondering…

The average return of the S&P500 over the last 10 years is 13.6% and has a historic annualized return of around 10% (not accounting for inflation.)

In conclusion

Evaluating where you are at right now is the first thing you need to do. A lot of what I just mentioned above are simply numbers, but you are not a number you are a human and this is what Housel talks about in his book “Psychology of Money.” Sometimes your return on your investment is not as important as your peace of mind.

Tips and tricks to optimizing personal finance:

Spend less money by cooking more food at home.
Write down future expenses and things you want to purchase in the future.
Anything over $75 that you want to buy wait 48 hours before you make the purchase.
Print out your credit card statement every month and go through your spending.
Start investing money in mutual funds and the stock market TODAY and put in a comfortable amount every month (even if it’s just $50) and don’t take it out EVER (or until you reach legal retirement age of 59 and a half years old).

To order “The Psychology of Money”

WAKING UP EARLY

After I published my last blog post on Optimizing your life (linked here) I had been asked some great questions. One question that was asked by a friend of mine was “Where do I start?” – great question. You would think that there is an easy place to start and the answer would just fly off my tongue automatically but it didn’t, and it made me think… Where should someone start? Optimization means efficiency – making something easier with less friction and better results. Although there are countless habits, actions, steps, and ways that I feel one can optimize their life, you can’t perform them all at once and figuring out where to start can get very tricky. Before I jumped to answer the question I pondered on my answer and wanted to make sure I was giving helpful unbiased advice. When a friend asks your for advice it’s hard not to be biased and answer as neutral as possible given the past experiences that you have shared with this person. Then it hit me. The one thing, the very first thing that one can do to create momentum towards optimizing their life… Waking up earlier.

I believe with all my might that this one thing, waking up earlier, would benefit and yield incredible results faster than any other thing and the best part about waking up earlier is that you can start tomorrow. Waking up earlier seems like a no-brainer but it’s easier said than done. However, if executed and repeated this one thing can lead to greatness and help you accomplish your goals and dreams faster if implemented every single day. So as bad as I want to tell you that there is a magic recipe or a quick cure on how to start optimizing your life it’s just not that easy but, waking up earlier would be and will be an incredible start and I believe the first thing you should do when starting to optimize your life for greatness. Tim Cook, Richard Branson, and Howard Schultz all wake up at the crack of dawn and it seems to be working for them – most of the top 1% of successful people in the world wake up before 6am. This provides concrete evidence that it’s no coincidence that waking up early leads to more productivity.

So what’s stopping you? Let me guess, “you’re just not a morning person” or you “need your 8 hours.”

Well here are my answers to that, none of us were adults when we were children. So you’re only not a morning person because you haven’t become a morning person yet. Maybe this is a bad metaphor, but you get the point. I wasn’t a “morning person” either until I started waking up at 7am, then 630am, then 6am, and now 5am. It’s a process and it takes time but there is good news and the good news is you can start tomorrow. How great is that?

So when should you wake up? Well it depends what time you currently wake up in the morning and how early you need to be or start work but rising before the sun is extremely powerful. Being up before the sun and getting a jump start on everyone else not only gives you a time advantage but it gives you a “peace advantage.” There is something about waking up early before the hustle and bustle of everyone rushing to work that provides a lot of clarity and invaluable time to think, reflect, plan, and pray. No one expects to receive a phone call or text or have any exterior distractions this early and you sure as heck aren’t expected or obligated to answer any calls or texts before 6/7am so use this time of peace and quiet to your advantage and get ahead of the crowd.

How can you use this time to your advantage? Well this is an opportune time for you to accomplish a lot of the things that you wish you could get done but don’t seem to have the time for during the working day. Write that book, start that side business, meal prep, go to the gym, etc. Whatever you think your life needs more of – do that.

So what’s necessary to start waking up earlier?

Building a World Class Routine – Like I said before, this is important. Nothing screams world class and greatness like waking up at 5am. It takes grit and discipline to get out of your warm comfy bed and onto your feet in the morning but when you wake up with a purpose it gives meaning to your morning.

We are creatures of habit and after a few short days or weeks of getting out of bed when you really don’t want to it will become second nature. You will create a habit around waking up earlier and your body will eventually adapt. Success is hard in the beginning, messy in the middle, and great at the end – remember that. Creating a routine for your first few hours out of bed will allow you to be as efficient as possible and create your new path to greatness.

So what’s my morning routine? I thought you’d never ask! The two activities that I complete without fail, every single day in the morning are reading an inspirational book and meditation. I use my morning of peace and quiet to learn, plan, and reflect. It’s important to choose activities that you can do every single day without any rest or excuses. So creating a morning routine around a 5 mile run might not be sustainable. Your morning routine should be something that you can do every single day for the rest of your life and the act of reading and meditation is something that I know I’ll be able to sustain for the long haul.

My Morning routine

Alarm goes off at 445am – immediately play audible (education book on my phone or positive affirmations).
Get on my feet by 5am.
Walk to my Keurig and start to brew my coffee and chug water.
While my coffee is brewing I go to the bathroom and make my bed.
After I make my bed I grab my coffee, put on clothes, and walk out the door.
I drive to a Tesla charger and meditate in my car while my car is charging.
I then drive to Starbucks and read a book (I do not buy coffee, but I tip the barista every once in a while for using their Wi-Fi).

This is my non-negotiable morning routine – am I perfect at it? No. I’m human and we all make mistakes and don’t always follow through on our commitments but this is a morning routine that I can do and plan on doing for the rest of my life. Creating a World-Class morning routine around how you want to live your life, not how you feel obligated to live your life is key.

Fun Fact: According to sleepcycle.com the average person wakes up at 7:09am… If you wake up just 1 hour earlier at 6:09am then you would get an extra 7 hours a week on the average person which amounts to an extra 15 days a year!