3055: Everyone Else Could Be Wrong by Steven Keys of Trip Of A Lifestyle on Intentional Living

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[00:00:30] This is Optimal Finance Daily – Everyone Else Could Be Wrong by Steven Keys of TripOfALifestyle.com When a major decision needs to be made and you're no expert on the issue at hand, you probably do the same thing most people do – ask around. Like, if you don't know the first thing about what investments to pick in your 401k, it's pretty normal to ask a few coworkers what they think and then maybe compare their answers to what they think.

[00:01:01] It makes sense. I call it the journalist method. When a reporter has to write a story about something really complicated, like some new discovery in particle physics, they need to do some research first. But they can't possibly learn physics from the ground up just for one article. Instead, they grab three or four people who know about the topic, ask them to explain it, and summarize what they hear. This usually works pretty well.

[00:01:29] There are two big problems with the journalist method, though. The first is that sometimes, by only checking with a few sources, really important info gets left out. Actually, when you're just asking a few friends or scanning the first few results of a Google search, it's pretty easy to reach the wrong conclusions.

[00:01:50] The second problem is even worse, though, because it's part of the way you think. Even if you ask more people or find more resources, you'll have a psychological tendency to ignore the outliers, even when they're actually correct. If nine people say the same thing, while a tenth says something totally different, you'll probably just assume that the tenth dude is a weirdo.

[00:02:16] Popular things flourish, sometimes only because they're popular in the first place. I mean, just look up the peak chart position of Baby by Justin Bieber and try to disagree with me. Heard thinking can be detrimental. Think about recent high school graduates preparing for college, having never made a financial decision more important than a couple hundred bucks.

[00:02:41] Imagine yourself in those same shoes, wondering if taking on $100,000 in debt over the next four years is a good idea. To figure out your answer, you ask your other 18-year-old friends what they're doing. When they all say they're signing up for loans, you feel reassured. Everybody's doing the same thing. What could go wrong? When I was a public school teacher, we were given the option to receive our paychecks over the 10 months we worked each year,

[00:03:08] or to spread the same amount of money across 12 months, including the summer instead. Most new employees didn't know what to choose. They asked more experienced teachers, and the 12-month option was overwhelmingly more popular. So that's what they did. It didn't matter that they were essentially just withholding their own money from themselves for no good reason, missing out on investment gains or earlier debt repayments. If nobody else was taking the 10-month option,

[00:03:37] it seemed like it was probably wrong. Other times, our decisions are made based on social norms, without even having to ask for advice. The alternatives are just so uncommon that we never even give them the time of day. Most people who live within five miles of work never consider commuting by bicycle, even though it's cheaper and healthier than any alternative. The decision is just made implicitly, because nobody bikes to work around here,

[00:04:06] and that's pretty much all there is to it. A precarious position. Our website is full of a lot of really unpopular ideas. Like, really good vacations can last around three to nine months each. $5,000 is a reasonable price to pay for a safe, reliable car, and you probably only need one of them for every two adults in your household. It's a good idea to save at least 50% of your income.

[00:04:34] Retiring from full-time work in your 30s is doable with less than a million dollars. If you do a few Google searches or flip on the news, you'll find overwhelmingly elsewhere that the ideal length of a vacation is eight days. Most middle-class Americans spend $15,000 to $20,000 on a used car, or $30,000 to $35,000 on a new car, and most adults don't share their car with anyone else.

[00:05:02] Financial advisors recommend saving about 10% to 20% of your income, and the national average savings rate is closer to 8%. And early retirement means quitting your job at age 55, and you need at least $5 million to do it. As a reader, that puts you in a pretty awkward position. I mean, should you trust us, the two random strangers from the internet, or just dismiss us because almost everything we say is totally out of the ordinary?

[00:05:31] Write your own story. You really shouldn't go along with anyone, majority or minority, blindly. When you're making big decisions in life, keep this stuff in mind. Number one, seek out weirdos. You're always going to encounter the most popular opinions. Make sure you find a few dissenters and hear what they have to say too. Number two, value logic above all else. Ignore the popularity of the options you're considering.

[00:06:01] If one choice makes the most rational sense, chances are it's the right one. Other people don't always get it right. And number three, be bold. Life isn't a multiple choice test. You can write in your own answer, even if nobody else has ever done it before. Aside from being good fact-finding advice, there's a deeper meaning here too. When you open yourself up to the possibility of thinking differently from everyone else, you set yourself free.

[00:06:31] Try considering things from your own unique point of view, and forget about how other people might judge you for it. You're gonna come up with some great ideas. Think about all of this as you listen to our other articles. We're not expecting you to imitate our entire lives or agree with everything we say. But it'd be cool if you didn't dismiss us, just because we say things that are a little different. You just listened to the post titled,

[00:07:01] Everyone Else Could Be Wrong, by Stephen Keyes of Tripofalifestyle.com. And now, a word from our sponsors at Betterment. When investing your money starts to feel like a second job, Betterment steps in with a little work-life balance. They're an automated investing and savings app, which means they do the work. While they build and manage your portfolio, you build and manage your weekend plans. While they make it easy to invest for what matters,

[00:07:29] you just get to enjoy what matters. Their automated tools simplify the complex and put your money to work, optimizing day after day, and again and again. So go ahead, take your time to rest and recharge. Because while your money doesn't need a work-life balance, you do. Make your money hustle with Betterment. Get started at Betterment.com.

[00:07:55] That's B-E-T-T-E-R-M-E-N-T dot com. Investing involves risk. Performance not guaranteed. You sign up for something. Forget about it after the trial period ends. Then you're charged. Month after month after month. The subscriptions are there, but you're not using them. In fact, I learned that 85% of people have at least one paid subscription going unused each month. Thanks to Rocket Money,

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[00:08:54] saving members up to $740 a year when using all of the app's premium features. Cancel your unwanted subscriptions and reach your financial goals faster with Rocket Money. Go to rocketmoney.com slash OFD today. That's rocketmoney.com slash OFD. Rocketmoney.com slash OFD. What I liked about this article is the encouragement to think for yourself. You're the only person

[00:09:22] that can see the full picture of your unique circumstances, skills, and preferences. And so what works for someone else simply might not work for you. It's one of the reasons I love hosting this show. We're exposing ourselves to so many different conflicting ideas about money here. And it's up to us to decide which advice applies to us specifically and which doesn't. This article also made me think about cryptocurrency,

[00:09:51] which is incredibly popular right now. It seems like everyone else is investing in crypto, but every time I look into it, I come to the conclusion that it's not for me at this moment. But of course, I reserve the right to change my mind. Recently, my friend Money Honey Rachel did an Instagram post about why she doesn't invest in crypto. And it captured my feelings exactly, so I thought I'd share here. She starts out by saying that she doesn't invest in what's hot or the latest trend.

[00:10:20] And she also doesn't invest in something she doesn't fully understand. She's not going to put her money in crypto until she's 100% comfortable. And she's become immune to the FOMO that's been created by this trend. Now let's be clear, there is nothing wrong with investing in crypto. Just like there's nothing wrong with investing in real estate, which is something I also don't do. If you've done your research and this type of investment meets your risk profile

[00:10:49] and you fully understand what you're doing, more power to you. I'm just personally not in this camp and that's okay too. And that's a wrap for another Thursday show. Have a great rest of your day and I'll be back tomorrow as usual where your optimal life awaits.