Even though we like to think of the holidays as a time of fun and family, the truth is that there is also a great deal of stress attached to this time of the year. From entertaining to buying gifts to travel, the stresses on your budget can cause anxiety and worry during a time that is ostensibly about happiness and family togetherness. This time, before you succumb to financial stress, considering these points may just help you enjoy the holidays more.
While some may be feeling financial stresses due to economic realities, such as job loss or some sort of unforeseen financial catastrophe, there are many of us who experience self-imposed stress during the holidays. Some of the reasons that you might be feeling avoidable financial stress can include social expectations, commitments, competition, materialism and lack of planning.
You might feel that your friends and family expect you to entertain them.
You can always make money, but you can never make time.
We talk about money here ALL THE TIME with good reason. Yet, the root of our problems was never the lack of funds. We know how to make money. We already do it every day.
You might not like how you it, but you get up, work and bring home an income. Some people earn more, some less but everybody earns something.
If we had more time, we can always make more money.
Oh I can hear the naysayers already. “Oh I have time. I’m just too tired to earn a side income.” No, you aren’t. You are just lazy.
But let’s forget about laziness for a second too. If you had more time, you can nap every day, and if you STILL had time, you can then work on your side income.
But only if you had more time.
Now, why is this important? Consider
For years, real estate was considered a sound investment by the public. While the recent bubble certainly over-hyped the asset class’s potential, real estate’s investment potential was already widely known. And then came the crash. First, residential real estate prices tanked. Homes that had steadily appreciated for their owners over the years suddenly lost value. And not just a little. Homeowners foolish enough to have taken out interest-only, subprime mortgages faced devastating rate increases, skyrocketing the foreclosure rate and fueling higher unemployment (which in turn led to more foreclosures). And then the commercial real estate market started to go south…
Even now, in the early stages of what I hope is a robust recovery, real estate is an investment few want to own. Sure, there are a few savvy investors who view this as an opportunity to load up on quality properties at bargain prices, but by and large real estate seems to have lost its luster. Just as everybody “knew” real estate was the quickest way to riches just a few years ago, today everybody “knows” real estate is a high-risk investment with more losses to come.
Likewise, everybody “knows” that anybody still exposed to real estate during the crash was wiped out. And yet look at these returns for the Vanguard REIT Index Fund (VGSIX):
| 1-Year | 3-Year | 5-Year | 10-Year | |
| CAGR | 59.04% | -13.44 | 0.59% | 10.54% |
That’s right, over the last decade commercial real estate as represented by publicly-traded REITs has returned just over 10% per year, even including the recent crash. Long-term buy-and-hold investors seem to have done just fine in all this. It is the speculators and short-term traders who lost big. Which camp do you belong to?
How to remove hard inquiries from credit report is the often-asked question. Also called hard pull. Many of you think that removing a hard inquiry or several, will greatly improve your credit score. While having many hard inquiries on your credit report can be quite detrimental to the credit score, the damage is quite limited if you have well-established credit history. Of course, I saw once the credit report of the fellow who was looking for construction loan. He was building, remodeling homes for a living and was quite successful in getting loans and flipping homes. That was till the point when some idiot of a mortgage broker promised him the moon and the sun, and few stars as well. He shopped his credit report with few dozens of different lenders. Each did a hard pull, resulting in close to 40 hard inquiries against his credit report within two weeks.
I consider myself to be a skeptical empiricist, a philosophical position that’s often misunderstood. Common labels for skeptical empiricists for those not in the know are pessimist, doubter, denier, and even know-it-all (this last one tends to be true). In simplified terms, a skeptic is merely someone whose default position in any debate is “prove it.” Meanwhile, an empiricist is someone more interested in the practical results of an action rather than its philosophical underpinnings. That is, empiricists value results over theory. These definitions, of course, don’t exactly match the technical definitions found in the encyclopedia (the topic is much too complex for a mere dictionary) but I think they provide a good working definition for today’s philosopher-on-the-go. Something you can actually use in your day-to-day life.
Neither skepticism nor empiricism have ever been dominant paradigms in the western world (despite science’s claims), but they have been gathering steam of late, mostly thanks to the writings of pop-philosophers like Nassim Taleb (of Fooled By Randomness and The Black Swan: The Impact of the Highly Improbable fame). I mean no disrespect to these thinkers by labeling them pop-philosophers. To the contrary, it is high praise of their ability to avoid the temptation to philosophize about how many angels could fit on the head of a pin.
It’s simple to convince much anybody of pretty much anything. You simply need a hypothesis and a logical-sounding narrative to back it up. It helps if you start with the desired conclusion and work your way backwards towards your initial premise. No worries if the premise is shaky, however, since if you’ve spun the narrative correctly your victim won’t think to question it. The problem is the tendency of the human mind to assume that if an argument seems logical and plausible, it must be true. How often have you heard somebody make a detailed, logical argument only to have their opponent say “well that makes sense to me,” and that be the end of it? It very well may make sense. And it may even be probable. But just because it makes sense doesn’t necessarily mean it must be true.
The real problem is that people use shortcuts to make decisions. In the case above, the logical argument was used as a shortcut to avoid actually having to conduct an empirical experiment. Most times, there’s no need to guess about whether a hypothesis is true or not: it is easily testable! A well-sounding theory is useless if it doesn’t work in the real world and is no substitute for actual experimentation. The debater has already made up their mind what to believe. The logical argument merely serves to solidify the correctness of their pre-conceived notion in their mind. It makes sense, so it must be true. Hence, the search for other plausible explanations ceases abruptly. This is a manifestation of the confirmation bias, whereby people reinforce their existing attitudes by selectively collecting new supporting evidence while ignoring contradictory evidence.
Since you can form a reasonable argument for pretty much anything and then turn around and make an equally-reasonable argument for the exact opposite, it’s obvious that relying on logic and reason alone dooms you to failure. A skeptical empiricist relies only on empirical data, not logic. Logic is all well in good, but in the premise is either incorrect or too simplified, it can lead you far off course.
Here’s how to be a skeptical empiricist in one easy lesson: demand empirical evidence for everything. A skeptical empiricist cannot be persuaded by logical arguments, only by empirical data. By definition, if a person can be convinced by argument alone they are not what I call a skeptical empiricist. People love stories. They love thought experiments. They love to think they are creative, intelligent, and free-thinking. Don’t fall for it. Data doesn’t lie, people do.
For a primer on influencing people, I highly recommend buying Robert Cialdini’s aptly-named book Influence: The Psychology of Persuasion because he clearly illustrates the various so-called “automatic triggers” which compel people to take action without thinking critically about it (Hint Hint, Salesmen).