Conversely, have you ever met someone whose life is a total disaster? Every problem is twisted into a complicated and seemingly inextricable knot with all of their other problems. Even if they could summon up the requisite courage to stage an assault on their tribulations you wouldn't have a clue where they should begin.
In both of these cases the question invariably arises, "How does someone get like that?"
Within the first context, we might answer this question with a sigh of longing and perhaps a "I don't know, but that will never happen to me..." In the second, we might answer with a sigh of relief and another chorus of "I don't know, but that will never happen to me!" Becoming like these individuals seems extremely unlikely because their reality seems so far away from our own. However, I think that we are far closer to becoming like either of these people than we might think! Here's why...
The effects of all the decisions we make compound!
Good decisions create favourable conditions which help us to make more good decisions. Bad decisions create unfavourable conditions that make it easier to to make more bad decisions. Our positive and negative decisions compound on one another just like investment returns or interest on debt. It is one of life's little ironies that despite the prevalence of the compounding effect in our lives, it is very difficult for us to understand how significant it can be and just how quickly it can work for good or ill. I think this is one of the reasons why great success and gut-wrenching disaster may seem so far removed from one another. Therefore, if we can start identifying and understanding the aspects of our life where decisions compound the most, we can focus our efforts where they will have the most impact and catapult ourselves towards success! Here are a few examples that I think we should be paying very close attention to!
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1) Finances
By default, ALL financial decisions are subject to the effects of compounding. This is because the alternative to consumption (spending) is either investing (saving) or paying down debt, both of which are subject to the rules of compounding. Consider the following.
Assume you enjoy a $15/week (5 cups/week) coffee habit from Starbucks but could make equivalent coffee at home for $0.50/cup (pricey for homebrew!). Let's also assume that you either have a fair bit of debt with an annual interest rate of 5% or are able to invest and get a 5% annual return.* Now, we'll compute the TRUE cost of this habit over the alternative by considering the effects of compounding over, say, a five year time span. If you make the coffee yourself you have an extra $54/month to pay off your debt or invest. Compounded at 5% over 5 years, the "convenient" choice to pay someone to prepare and serve you the coffee instead of making it yourself cost you an extra $3660! And this is one of the LEAST significant examples there is!
If someone gave you the extra money today, would you set it aside and use it over the next five years to buy Starbucks coffee or would you re-purpose it towards your more significant priorities (e.g. something awesome)? So what's YOUR coffee? Can you think of any big or small expenditures in your life where the purpose can be satisfied using an alternative method or perspective that costs less money? "Future you" will thank you.
2) Health
Here we get a bit less quantifiable, but the effects of compounding are still large and in charge! Ignoring nutrition, fitness, or health problems is like only making minimum payments on a credit card. It works for awhile but if you wait long enough those minimum payments quickly skyrocket out of control because the interest compounds on itself. Health compounds on itself!
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| Badass old dude |
For example, a weight problem can drain your energy and put a lot of extra
wear and tear on your joints. This makes it harder to be active which further encourages weight gain (among many other health problems). Negative feedback loop complete! Flexibility is another prime example. It's extremely important for preventing injury in activities of daily life and is vital to keeping proper form
during many lifting type exercises (e.g. the all important squat). It can take a long time to come back from certain injuries and some
can be chronic, impeding further activity forever. I have never been very flexible, but I did not know just how bad it was until I tried this test back in February. If you fail miserably like I did, then you're in the fast lane towards becoming more and more physically impaired as you age. This was a huge eye opener for me because I figured youth takes care of everything. Fortunately flexibility deficits are reversible!
Finally, nutrition is a huge aspect of health that should not be ignored! Poor nutrition can bring on a whole host of health problems that compound on one another and increase your risk for many diseases (e.g. adult onset diabetes). Not to mention it can suppress your overall mood and energy level which will have a pretty negative effect on your day to day and your physical activity levels!
3) Relationships
This one took awhile for me to figure out since I fall into the "other-wise abled" camp when it comes to social skills and relationships. Simply stated, the influence of compounding in initiating and maintaining relationships is off the charts. It plays a huge role in professional relationships, friendships, and romance!
Professionally, the influence of compounding is manifest in networking. Building and maintaining healthy professional relationships is extremely important for ensuring you are continually exposed to new people and opportunities that help you grow. The new people then provide still more opportunities and introduce you to more people. A strong professional social network is like having a free advertising firm, job-hunter, and cheer-leading team working for you year round.
Compounding and traditional friendships also go hand in hand. People tend to meet the friends of their friends. Chances are, they probably enjoy each others company and become friends. When friend groups collide it's fantastic! However, putting in time to create and especially maintain friendships is wildly important not just for its own sake. A strong social network or sense of community is associated with longevity and preservation of function. Unfortunately, it's very easy for people to lose touch and stop actively making new friends. Some hectic years climbing the ladder, a couple of kids, and geography can make it all very challenging. However, during these busy years it's more important than ever to build and maintain friendships. They keep you centered, remind you of your identity, and can lend you a hand during turbulent times. Without them, you may also put too much strain on your significant other since they effectively become your entire support network. Such a role is far too much to ask or expect a single person to fill effectively! This brings us to romance! Ever have a huge argument over something that seemed to come out of nowhere only to later find out that it was due to the culmination of many small deficiencies over time? This is an example of the unpredictable compounding effect of relationship negligence. Conversely, small thoughtful gestures can go a very long way towards maintaining and strengthening a partnership! I'm far from an expert, but I'm pretty confident that a combination of limiting the negligence and making small routine gestures is a pretty good strategy for making sure there's a hand that keeps on holding yours!
4) Outlook
The happiness reminder really got me thinking about how a person's outlook can compound. When your base assumption tends to be that something will go wrong each day then your brain will automatically search for and emphasize negative outcomes while leaving positive outcomes unidentified or unappreciated (i.e. minimized). With all that practice, you will naturally become very adept at it and find there is no shortage of things you could feel miserable about. Of course this tarnishes the quality of your life so you don't get as much out of it. This reinforces the appearance of a negative reality which further reinforces your general negative outlook. Sounds like compounding to me!
Fortunately, the process works in reverse too! The whole idea behind the happiness reminder is to try to change your base set of assumptions. At least something, if not many things, will go right each day! Instead of tarnishing your life, this habit polishes it. If you feel better, you're more likely to appreciate things going well. You try to identify how you can continue feeling good, or even better, each day. Practice makes perfect!
Outlook has a huge external compounding component as well. As I try to become a more positive individual, I've started to notice that there are quite a few people out there who ritualistically engage themselves in lengthy fatalistic or hate-type conversations.
Fatalistic - "X is bad because Y is bad and Y will never be good. So X is out of my control forever and there's nothing I can do about it so life will continue to be bad...snarf."
Hate - "Isn't X terrible? Let's discuss all the ways X is terrible. And since Y is pretty close to X, let's extend the conversation to all the terrible things about Y...and even unrelated Z if there's time!"
I'm definitely guilty of initiating these conversations from time to time but I've found that I try to avoid them more often, or when they are initiated by someone else, try to direct them to more constructive ends. Without the constructive component the conversation is only reinforcing a generalized negative perception of reality which does no one any favours! Misery may love company but so too does happiness! Happy people tend to gravitate towards folks who are trying to build a positive outlook because, well, they're just more fun to be around. Having more positive people around makes it a lot easier for you to be positive too! Happiness compounds. I find this to be a very encouraging thought!
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To close off this post I want to mention one final and very important connection. All four of these compounding aspects are highly inter-dependent. Efforts in one aspect can promote gains in each of the other aspects! Therefore, small routine efforts in all of the categories should produce some pretty wicked outcomes. So, how DOES someone get like "that?" While my response will still contain the words "I don't know", I think I've decided it will no longer include the word "never." With a little patience and dedication, small positive steps are giant leaps in a compound kind of life!
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*A 5% interest rate on debt is definitely very low. Historically mortgage and line of credit interest rates tend to be higher, and run of the mill credit card interest rates are MUCH higher (e.g. 21%). However, a 5% rate of return on investments may not seem at all like a conservative estimate! More on why 5% is attainable in a future post!
wise words from mr. lausch
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