Afford Anything - PSA Thursday: Kickoff 2021 with a 31-Day Challenge

Episode Date: December 31, 2020

Sign up to take the 31-Day Challenge for an Awesome 2021 at https://affordanything.com/31daychallenge Learn more about your ad choices. Visit podcastchoices.com/adchoices

Happy New Year's. It's the moment we've all been waiting for. 2020 is finally in the rearview mirror. It is behind us. We can move on from the year that took years, the year that none of us will ever forget no matter how much we want to. My name is Paula Pantt. This is the Afford Anything podcast. You are listening to PSA Thursday, which is a weekly-ish bonus segment of the Afford Anything podcast in which we talk about how to handle life in the year 2020. And I am so happy to say that that premise is now obsolete because we are heading into 2021. If you are new to this podcast, here's the deal. The PSA Thursday episodes, which is what you're listening to right now, are absolutely nothing like our normal episodes.

They have no intro music, no outro music, no production value. They're intentionally kept ad-free. We keep each show very short and hyper-focused on one incredibly specific. topic, something that's actionable and something that relates to the circumstances of 2020, which we no longer have to deal with as of finally. If you are a new listener to the Afford Anything podcast, just know that the episode that you're listening to right now, this PSA Thursday episode is not representative of what we normally create. So please search through our archives, listen to some of our quote unquote normal episodes.

That will give you a much better sense of what we do around here. when it's not a PSA Thursday. In today's episode, we're going to talk about looking to the year ahead. And I want to invite you to join me in a 31-day challenge that we have been putting together, a 31-day challenge that is geared towards kicking off the year 2021 with fresh energy and inspiration. So during our 31-day challenge, this is what's going to happen. If you join this challenge, which is totally free, you'll get a deal. email that contains one key lesson or takeaway from a book that we love in the areas of finance,

psychology, entrepreneurship, or productivity, you will get one question related to how you can apply that lesson to your own life. And you will get one daily challenge, one action that you can take that will directly relate to that lesson. So one idea, one question, one action, all stemming from key takeaways from books related to money management, psychology, mindset, productivity, habits. You'll find all of this in our free 31 day challenge and you can sign up for free at afford anything.com slash 31 day challenge. That's afford anything.com slash 31 day challenge. It is a powerful way to start 2021 with support, with encouragement, with guidance, with a fresh momentum. So let's talk about what you are going to encounter on the first five days

of the challenge. That's what we're going to cover in today's episode, beginning with day one, where we talk about the fact that the start of a new year is symbolized as a new beginning. And people, myself included, have a powerful urge to start fresh, clean slate, blank page. We now have the opportunity symbolically and motivationally. We have this opportunity. To make a good go of it, to rise to the level of our ideal selves. But here's the problem. We often want to take on too many things. We want to lose 10 pounds and learn a foreign language and drink more water and boost our income by an extra 20%

and watch less TV and read more books and start running and start lifting and plant a vegetable garden and and and and and the list goes on and on and on and on. and then December 31st rolls around, and we haven't done any of it. So why? And what can we do about this? Now, this question, the question of how to translate motivation into action, how to transition from idea to execution, that is fundamentally an issue that has plagued mankind since the dawn of civilization. So this is not something that we're going to have fixed before lunch. But there are a handful of practices that have been shown to help. And one of those practices is ruthless elimination.

Because the thing is when we try to pursue too many goals, when we fragment our attention and our energy dissipating our incredibly limited reserve of effort across a wide spectrum of new activities, we tire out before we make notable progress at any of it. Scattered attention, scattered energy leads to no forward momentum, no forward progress. And so the solution can be to reduce your focus down to one. one goal at a time. Pursue this and only this goal for a prescribed period of time, maybe 30 days, maybe 60 days, or until it's gelled as a habit. And then, and only then, are you ready to move on to the next goal? This is the central idea behind a book called The One Thing,

and we are interviewing the host of The One Thing podcast on our New Year's Day episode, And the central thesis in the one thing is that chasing too many goals simultaneously increases the likelihood that you won't follow through with any of those goals. So to improve your odds of success, you want to focus on one goal at a time. And in order to choose that goal, ask yourself this focusing question. What is the one thing you can do such that by doing it, everything else will become easier or unnecessary? We're going to elaborate on this idea on our New Year's Day episode, which is the episode

in which we interviewed Jeff Woods from the One Thing podcast. But if you want to jump straight into taking action right now, write out an answer to that focus in question. What is the one thing you can do such that by doing it, everything else will become easier or unnecessary? Write out your answer and then make a specific plan for how you're going to begin doing this one and only this one thing. And within that plan, figure out what you're going to do.

you're going to give up, what you're going to eliminate in order to create time and space for this new thing. So taking a look at your list of resolutions and narrowing those down to one primary thing that you are going to focus on for the next 31 days, that is your challenge in day one of the 31 day challenge. All right, day two, think about the tiny actions that are associated with achieving any goal. For example, the goal, or truly the result that you're going for might be to lose 10 pounds,

but the daily tiny action is to skip dessert and to take a 20-minute jog. That's what you can do today in service of the bigger result that you're trying to achieve of losing 10 pounds. That's one example. Another example is that your goal, the result that you're going for might be to save an additional 5% of your income. But the daily tiny action right now is to cook dinner at home instead of ordering restaurant delivery. That's what you can do in the span of the next 30 minutes in order to be in service to that end result that you're trying to achieve. So it's easy to see that there's an ultimate result that you want and that there are many daily tiny actions that you can do in service of that. But here is the problem.

taking those daily tiny actions relies largely on willpower, and willpower is weak and limited. That is the central idea of the book that inspired Day 2's challenge in the 31-day challenge. That book is aptly named, Willpower Doesn't Work, and it's written by organizational psychologist Dr. Benjamin Hardy, who is a previous guest on this podcast. The idea that he lays out is that in nature, animals adapt to their environments. If it's advantageous for an animal to become smaller or taller or faster or more flexible or nocturnal, the animal will over time do so. As humans, we also adapt to our environments, often in ways that we're not aware of. And so if we want to change our behavior, the most effective strategy isn't to rely on willpower,

it's to change our environment. I'll give you an example from my own life. Oftentimes when I wake up, the first thing that I do is I reach for my phone and I start scrolling social media, and I don't need to elaborate on why that is a terrible first thing in the morning habit. So I've started charging my phone in the kitchen rather than next to my bed. This means that I cannot absent-mindedly reach for my phone from my bed. In other words, rather than relying on willpower and shaming myself to say, hey, Paula, why are you doing this again? You know, stop reaching for your phone from your bed. The minute you wake up,

rather than relying on that willpower and that internal monologue, I just made an environmental change, and that environmental change did the trick. So the day two challenge rests on the idea that if you want to improve an element of your life, whether it's within your finances, within your health, in any arena of life, alter your environment in such a way that that altered environment forces this improvement. The question then to explore is, what is one change that you want to make to your routine, such as not hitting snooze, not checking social media first thing in the morning. What is that one change that you want to make to your routine? And how can you change your environment to facilitate that? That is the day two challenge. All right, day three,

day three, we turn our attention to the challenge of choosing smart investments. And to shed some light on this topic, let's look at lessons that we can learn from legendary investor Warren Buffett, who has amassed a fortune that is, estimated at somewhere between $86 to $89 billion. Now, Warren Buffett states that his role models in the investing arena are Benjamin Graham and Philip Fisher, each of whom are respectively known for popularizing value investing and growth investing. Warren Buffett has described his investment philosophy as 85% Benjamin Graham and 15% Philip

Fisher, which is another way of saying that he mostly, 85%, focuses on the intrinsic value of assets and only very partially 15% considers an asset's growth prospects for the future. Now, why does that matter? Let's zoom out. People often confused speculation with investment. Speculation is a guess about what may or may not happen in the future. So anytime that you hear your cousin Billy say, hey, I think this stock or this house or this neighborhood is going to rise in value, what they're saying is that they're speculating.

They're speculating about broad macroeconomic forces outside of their control. Speculators track changes in the market, such as if a given stock or if a given home value is rising or falling. They track those changes. They make guesses about what may or may not happen in the next three months, six months, 12 months, and then they try to capitalize on forecasting. That's what speculators do. Now, investors who focus on the intrinsic value of assets, meaning how much is this worth today based on its current cash flows? its current revenue, its current economic moat, those investors who focus on the intrinsic value of assets are not speculating. They're not making guesses about the future. They're taking a

look at today's numbers and deciding whether or not an asset creates enough cash flow and, more broadly, enough value in the present moment to justify the purchase. And so if the central thesis of day three of the challenge is to learn the difference between speculating and investing, then the question that stems from that is what are your investing goals for 2021? And how are you going to make decisions about which index funds, which stocks, which rental properties, if any, to invest in? How are you going to make those decisions? And how much does speculation about the future, meaning I think this is going to go up in value,

how much does that speculation factor into your decision making? Those are the questions. I realize those are multiple questions. Those are the questions to ask yourself on day three of this 31-day challenge. And the action that can then stem from that is to practice thinking conceptually about the intrinsic value of an asset. One way to do this is by looking at a particular stock, look at Tesla, look at Amazon, look at Nike, and make a case as to why it is undervalued, fairly valued, or overvalued. I think for Tesla it's very easy to make a case that it's overvalued, but that's an aside. And you don't necessarily have to pick a stock in order to take this practice.

What if you were to rent out the home in which you currently live? Would the unleveraged cash flow from that home justify the current value of the property? This is a thought exercise. I'm not advocating that you rent out the home in which you currently live, nor am I advocating that you buy any one of those given individual stocks. This is simply a thought exercise, a practice that you can undertake that is very quick. it's five minutes, but that gets you into the mindset of thinking about a given asset, any asset of your choice, not based on the framework of what it may do in the future, but rather based on

the framework of what it is doing right now and whether or not its current price is justified by its current performance. And so, encountering that idea and thinking about how to apply it to any asset that you're looking at, that is the day three challenge of the 31-day challenge. Day four, you probably feel time-crunched. There is so much more that you would love to do, but where would you ever find the time? Let's explore this, because there are 168 hours in a week. So let's assume that you work for 45 hours a week. Let's assume that you are not a remote worker and you spend 10 hours a week commuting, or perhaps you spend 10 hours a week driving your children to child care or to

after school activities, right? So you work 45 hours, you are in your vehicle behind the wheel for 10 hours a week. You spend another 10 hours a week getting ready, brushing your teeth, ironing your clothes, showering, putting on makeup. Let's assume that you sleep a full eight hours each night, which is 56 hours a week. Let's assume that you spend 10 hours a week cooking and cleaning and then another 10 hours a week exercising. If you add all of that up, there are still 27 additional hours per week unaccounted for out of 168-hour week. And that's assuming that you get a solid eight-hour night of sleep and that you work out 10 hours a week. Even under that set of assumptions, that still doesn't add up to all 168 hours. That still leaves close to 30 hours a

week unaccounted for. And that is the central idea put forth in a book by Laura Vandercam, a two-time previous guest on this podcast, who wrote a book aptly titled 168 hours. It's a book that explores how much time gets away from people that people can't account for. Because when you actually do the math, when you add up the time that you spend working, commuting, cooking, cleaning, running errands, working out, there are still pockets of time that we don't know what we're doing with those. And the best way to figure out where that time is going, and by doing so to optimize that time, is through the practice of time tracking. So every day for a week, write down exactly what you're doing in 15-minute increments. And if doing this for an entire week

feels like too much, try it for just one day. Jot down what you're doing in 15-minute increments all day throughout one day. How are you actually spending your time and how does this align with how you thought you spent your time? How much time do you ultimately spend on social media or zoning out or puttering around or watching TV or binge reading articles on the internet? I mean, gather this information by virtue of time tracking so that you can see how the way that you spend your time reflects or doesn't reflect the way that you think you spend your time. This is essentially the budgeting equivalent of time management. Oftentimes when people are first getting started with money management, they're often advised to take a retroactive look at how they spent their money over the last

30 days because often how people think they spend their money and how they actually spend their money are two wildly disparate sets of data. And if a person is new to the world of money management, it can be eye-opening to look retroactively at how you've spent money over the span of the last month and see all of the ways in which the way you think you spend differs from the way you actually spend. The same is true with time management. If you could track every minute of your day, ideally for a week, but at least for a day, you may discover how wide the gap is between perception and reality. And so that is both the idea and the action associated with day four of this 31-day challenge. And finally, let's move to day five. And in day five, we're

going to talk about your morning routine. And the moment I say the words morning routine, I'm betting that you have one of three reactions, you're either thinking, oh yeah, my morning morning routine is dialed in and it's optimized. Or you're thinking, you know, mine is decent, but it could be better. Or you're thinking, morning routine. Yeah, that's funny. But here's the thing. Nearly everybody has a morning routine. Even if you wake up at 4.30 p.m. and you watch the Simpsons and scroll your phone for 45 minutes, you still have a wake-up routine. It's just not one that you designed. It's not intentional. And it's probably not. not the routine that you particularly want. It's probably not a routine that sets the tone for creating

the best version of you. Now, with that being said, a lot of the information that's out there related to morning routines can be stressful. The purpose of a morning routine is not to add to your already high stress levels. It is not meant to build out your to-do list or to pile even more guilt onto a growing, gnawing sense of inadequacy. Like, great, I'm supposed to have a morning routine. That's just one more thing that I'm failing to do, right? The purpose of having a morning routine is not to add to your to-do list or to add to your stress levels or to add to the things that you feel guilty about. And a morning routine is not something that needs to be run with military precision. You don't need to meditate for precisely eight minutes and then

spend 11 minutes brewing butter coffee while bullet journaling while also knocking out your daily quota of push-ups. Drop the guilt, zoom out, and ask yourself, what is the purpose of a morning routine? And fundamentally, the purpose is to nurture your mind and to nurture your body so that you can set a tone for a good day. We know that most people, and we can elaborate this on a podcast episode that we previously did with Daniel Pink, who talks about how energy and attention ebbs and flows throughout the day, we know that for about 80% of people, you're capable of some of your best work in the morning.

So in the morning, carve out time to do at least one important thing, whether that important thing is writing or coding or some type of, as Cal Newport would call it, deep work on any project. Carve out that time in the morning. And in order to carve out that time, prep for your morning routine the night before so that in the morning, you're not harried, trying to iron your shirt or pack the kids' lunchboxes or set up for the day. And if you do that, and if you also incorporate something that nurtures your mind and your body in the mornings, like some exercise, some meditation, even some stretching, you may find that your focus improves. But in order to make this happen, consistency is key.

Otherwise, much of the value is lost. And that's where we get into the routine part of the morning routine. And so with that kind of basket of ideas, the challenge for day five, it starts with the question, what is one new habit that you want to incorporate into your mornings? Or conversely, what is one current negative habit that you would like to eliminate from your mornings? For example, maybe you want to start stretching for five minutes every morning, or maybe you want to eliminate social media, checking social media first thing in the morning. Choose just one change and focus on this one change for the next 30 to 60 days, at least for the span of the 31 day challenge.

That is the idea, the question, and the action associated with the day five challenge. So that is an overview of the first five days of the 31 day challenge. And remember, the 31 day challenge for a stronger 2021 is this free challenge that we are doing in which every single day we're going to send you an idea, a question. question and an action that can help you succeed at managing money, investing, building stronger habits, staying productive, and understanding your mindset and success psychology. So it's a powerful way to kick off the year 2021. I invite you to be part of this journey with us. Affordainthing.com slash 31 day challenges where you can go and sign up. It's completely

free. And it is a powerful way to start the new year. So come get. involved with this community, come be part of this journey. And happy 2021. This is, it's momentous. I mean, I understand that from a purely rational perspective, there is nothing about this particular rotation of the earth that makes it different than any other rotation. I understand that a sequence of any given 365 days is not made special by some man-made construct. But at the same time, symbolism is powerful. And to the extent that symbolism creates the motivation that leads to taking further action, which then creates the self-fulfilling prophecy, that is the power of New Year's. So let's celebrate the symbolism of changing the calendar

to a new year, of embracing 2021. This is, let's hope, going to be far, far, far, far better than 2020. And let's come together as a community, support one another, encourage one another, and challenge ourselves to become better versions of ourselves in however each one of us define that. More open, more generous, healthier, wealthier, wiser. Let's embrace that challenge for the year ahead. This is the Afford Anything podcast. My name is Paula Pant. Thank you so much for being part of this journey. Come join us at afford anything.com slash 31 day challenge. I'll see you there. And I will catch you in the next episode.