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Psychology of Control, Money, and Pleasure


By Chris

I've shared three ways your brain tricks you when it comes to control, money, and pleasure. All of which put up roadblocks on your path to financial independence.

Control


Based on the 7 Habits of Highly Effective People, I wrote about the damage that modern interpretations have done to the original message. Many have conflated control with the idea the author presents about influence.

Why is this damaging? Because we have the ability to influence those around us, especially ones which we care about, but seeking to control them is a path to failure.

One concept in the book that is quite popular is the Circle of Concern. This is everything in your life you pay attention to and care about. Much of it, you have no influence over. Your Circle of Influence is a smaller subset of Concern.
ttl-circle-of-concern-influence-1
The Circle of Concern enveloping your Circle of Influence
Unfortunately, popular interpretations focus too much on shrinking your concern by simply reducing what you care about. While that may indeed be a healthy approach, much of what the author wanted to convey as I interpret it is to reduce our Circle of Concern by expanding our Circle of Influence.

The Circle of Control Is a Myth (Choose to Wield Influence!)

Money


There’s an old statistics joke that goes:

When Bill Gates walks into a bar, everyone inside becomes a billionaire—on average.
ETF vs Stock represented by a bar room comparison of net worth averages being thrown off by extremes.
Imagine if we walked around with our net worth plastered on our head.
The median net worth in that bar continues to be about the same of course, Bill Gates just immensely throws off the average.

That's the tricky thing about investments: a small number of people make a ton of money off of riskier, concentrated investments.
  1. Cryptocurrencies
  2. Individual growth stocks
  3. Startup investors
There's nothing inherently wrong with these investments. After all, you can't beat the market if you just invest in the whole market, right?

But here's the thing: you might not need to take on that additional risk.

If I handed you a million bucks today, then offered you a coin flip to double or nothing—would you take the risk or keep the million? Most people would probably turn down that 2:1 chance at 50/50.

But what about if I offered you three million?

Four?

At what point would you take the risk?

Statistically, it makes sense to take the risk at even a penny over a double because your expected future value is higher. But, perhaps every additional dollar isn't worth the same thing to you. That first million would change your life more than the second, and the third, and so on.

If you could earn the average net worth in Bill Gates's bar while accepting you won't BE Bill Gates, wouldn't that be enough?

ETF vs Stock: Invest to Be Bill Gates (or Just Be in the Bar)?

Pleasure


You think pleasure is a subjective experience, right?

What I mean by that is, you probably had breakfast this morning that you bought from the grocery store and you (or maybe someone in your family) cooked it for you. It's probably something you've had before, and you probably found it to be plenty enjoyable. I'd bet it cost you about $2.76.

What about Richy Rich who had breakfast at about the same time as you but a live-in chef cooked it and the garnish alone cost more than $2.76?

How about the family that lives in poverty in a poor country, but still eeks out the basic nutritional needs of breakfast and is likewise with the people they care about? A month of breakfast for them might be $2.76.

I'd suggest that all three people experienced breakfast, the consumptive experience of gathering nutrition, with about the same subjective pleasure.

To be clear: there's much more to the struggle of life than eating breakfast, but let's just focus on their subjective experience of pleasure from that consumptive action.

If you're with me on this, who's the greater fool in this scenario?

Once you've owned your car for a while, do you think commuting in a Honda derives less pleasure for the driver than one in a Beamer?

In fact, wouldn't it be the case that if the Beamer driver downgraded to the Honda, their subjective experience would be worse than that of the Honda driver who's never experienced a ride in a BMW?

If you don't know what "good wine" tastes like, aren't you shielded from losing the happy pleasure you derive from two buck chuck?

This cycling of happy initial experience at a new, upgraded thing—which is then lost as we revert to our baseline happiness over time is known as hedonic adaptation.
hedonic-adaptation-graph
Spending more money over time on luxuries doesn't increase baseline happiness, but does increase our spending.
As you become more aware of luxury and "upgrades", you lose the ability to appreciate the small things in life.

I call this the Connoisseur Effect and it's robbing you of not only your money but also freedom and options in life to experience the simple pleasures.

The key is finding what "enough" is for you and maintaining just that.

Enjoy the Small Things in Life (Avoid the Connoisseur Effect)

6 Months of TicTocLife!

We missed it about a week ago, but we just surpassed 6 months of TicTocLife.com!

Some fun stats:
  • 48 articles
  • 120,282 words
  • About 39,000 visits
  • 233 comments (thank you!)
  • About $19K donated to our Reader Fund
And still no ads or sponsorships—not that there's anything inherently wrong with that!

Counter to most personal finance blogs, a large part of our goal with TicTocLife is to give our money away in effective ways. It's a cost, and we're perfectly happy with that.

That mission is also what makes us confident there's much more in store for our story. As I write this, there are 33 draft posts for the site (including 3 Jenni is actively working on while I write this newsletter, I can't wait!).

Thanks for being there to witness our story, motivate, and inspire us to keep going.
6 months of blog writing on TicTocLife.com!
We'll crack a free (well, money maker) bottle of wine open in your honor! :-)

World Hunger Relief Organizations: Votes Half Complete!

We wanted to put a giving spin on the major holiday in the US we're set to celebrate: Thanksgiving.

This month's donation topic is world hunger relief organizations around the globe. We're about halfway through the month so be sure to take a look at the choices and submit your choice. It only takes a moment!
  1. No Kid Hungry
  2. Action Against Hunger
  3. The Hunger Project
  4. Heifer International
World Hunger Relief Organizations

Personal Finance Favorites on the Web

Below are the articles we've read since the last newsletter that really struck a chord with either of us. Give them a read, check out the authors, expand your information sources with these quality creators.

  1. Two Years Without Health Insurance (and What I’m Doing Now) - Mr. Money Mustache
    While the talk of Sedera (a health share) has been controversial, the interesting part of MMM's latest is the discussion around Direct Primary Care (DPC)—it could be a good fit as part of your healthcare strategy.
  2. Job Advice You Might Need One Day - Accidental FIRE
    "When someone you respect and who’s in a position of authority believes in you enough to ask you to take a position you’ve never considered or that you think is over your head, you should take it."
  3. Early Retirement Isn’t for Everyone - Retire by 40
    Joe uses a secret identity, Jane, to explain how the "RE" part of FIRE might not work for everyone—due to personality, external needs, and more—and that's okay.
  4. How Financial Independence Changed Our Lives – Pandemic Edition - Financial Mechanic
    A new series on how financial independence has changed lives around the world, Financial Mechanic interviews a couple who explains just how profoundly the choice to reach for financial freedom has changed their lives.
  5. Scary Financial Monsters That Really Exist - Mr. Tako Escapes
    I'm a little late on this one, but we can still have some post-Halloween fun with it! Tako tells us about the personal finance demons that really do exist: Mortgage Zombie, Paycheck Lycanthrope, and Financial Vampires.
  6. What happens when you get everything you want - WhyWeMoney
    Amanda teaches us about the 'fulfillment curve' and achieving balance with our wants. How do we reach enough without going too far? Once you're there, what's next?
  7. Save Money Where It Matters Most - The Fioneers
    Focusing on the big three expense categories can help you provide yourself more freedom by designing your life. Follow Corey's actionable tips to make real dents in your expenses.
For our US readers, Happy Thanksgiving! We've got a long winter ahead, please enjoy your family and friends safely.

Thanks for being part of our growing community of readers for these exciting 6 months!

Chris & Jenni

    See an article from our favorites a friend might like? Forward this newsletter onto them!

    Our Latest Posts


    Incase you missed one, here's our latest posts since our last newsletter:

    Enjoy the Small Things in Life (Avoid the Connoisseur Effect)

    If our goal is to live a fulfilled life and spend money effectively, protect your ability to enjoy the small things in life—avoid the dreaded Connoisseur Effect!

    By Chris
    Learn to enjoy the small things in life and avoid the Connoisseur Effect: our tastes in coffee over the last 11 years have driven up the cost of something we consume daily.

    ETF vs Stock: Invest to Be Bill Gates (or Just Be in the Bar)?

    ETF vs Stock represented by a bar room comparison of net worth averages being thrown off by extremes.
    Investment strategy can make you rich at the risk of losing it all or offer average returns (which might be enough!). What's better for you? Read ETF vs stock.

    By Chris

    World Hunger Relief Organizations (and October 2020 Budget)

    We review world hunger relief organizations for our donation, detail last month's budget, and award a charitable grant to an animal welfare non-profit!

    By Chris
    Our spooky October 2020 monthly FIRE budget update! We also review world hunger relief organizations.

    The Circle of Control Is a Myth (Choose to Wield Influence!)

    The Circle of Control is a myth brought on by the circles of influence and concern.
    The problems you care about fall within a circle of concern, some of which you can influence. But is there also a circle of control in your life?

    By Chris
    If you found an article we wrote that a friend might like, forward this newsletter to them!
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    Thanks again for subscribing to our infrequent newsletter. We both hope you're enjoying TicTocLife as much as we are. If you have feedback about this newsletter, you can reply directly or use our Contact form.

    Warm regards,
    Jenni & Chris