I love this video clip from The Empire Strikes Back. It’s rightly famous for the classic line: Do…or Do Not…There is no Try. But great as that line is, my favourite quote from the clip is actually:
You must unlearn what you have learned.
In the Prison Camp we pick up ideas from other people all the time. The trouble is that many of these ideas are rubbish: half truths, propaganda and Chinese whispers. Some of it is deliberately designed to persuade us to spend hard-earned money, some of it is just random noise.
The problem comes when we act on assumptions that aren’t true. Garbage in, garbage out.
As someone brainy once said: It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.
So lets take a closer look at some things that just ain’t so.
1. You don’t always get what you pay for
Marketers, advertisers and economists have lead us to believe that we get what we pay for. But this is a half truth.
The full truth is that price is what you pay, value is what you get. But when we don’t know the value of something, we often use price as a guide. So marketers use pricing and product features to create a consumer hierarchy (bronze, silver, gold etc) that we will slot ourselves into, based on our self image and desire to signal status.
Take cars as an example. I realised that when I chose between a Skoda or an Audi I was getting essentially the same car. This introduces the radical idea that we choose how much we pay for most things.
Remember that when investing in funds, you get what you don’t pay for. Fees saved compound so more of your money continues to grow like the proverbial snowball rolling downhill.
2. Spending does not equal happiness
The reason most people are doing it wrong when it comes to money is that they think spending will make them happier. But scientists have shown that spending does not equal happiness.
We evolved over millions of years in an environment where there was no money, no luxury goods shops and no drive through McDonalds.
So the things that bring happiness are the things that would have helped us to survive and thrive in our natural environment. Like real food, exercise, walking, community, sex, being outside in the sunlight etc. Note that these things do not cost money.
3. Leisure time needn’t cost money
I used to think that my spending would go up if I quit work because I’d need to be entertained. This turned out to be another idea I needed to unlearn.
Yes, its true you have a lot more time after you have quit The Prison Camp….but you can use that time to reduce your spending and find ways to earn other streams of income that are fun.
4. We are not all doomed
The idea that we are all doomed is beamed at us everyday via TV news and other forms of media. This breeds fear initially and, over time, a kind of depressed resignation that its not possible to improve our situation.
So, to make ourselves feel better, we might just as well spend like there is no tomorrow…like it’s Berlin in 1945 and the Russians are fighting their way in via the suburbs…right?
Wrong. If we can accept that maybe, just maybe, we are not all doomed, that allows us to think a bit longer term. We can then try not to fuck up the planet by covering all the fields and forests with shopping malls and suburbs full of SUVs.
5. Shares might be safer than you think (and property might be more dangerous)
Here in Britain we’ve been led by TV clowns to believe that you can’t go wrong with property. And yet we’re always told that shares are risky and we might lose our money etc.
We have a cult of property where we borrow as much as the bank will lend us and vote for politicians that hold interest rates down and print money. This has the effect of reducing mortgage interest costs and artificially inflating house prices. What happens when interest rates go up?
The Escape Artist is all for owning your own house. But if you still have a mortgage, you don’t yet own your house, you are renting it from the bank. And remember they’ve got something of yours in The Banker’s Jar.
When you owning shares, you own slices of businesses with productive real assets like factories, computers, warehouses, production lines, forklift trucks, vans, stock (inventory) etc etc.
Houses are not safer than shares over the long term. If you own a house, its price can fall due to interest rate rises, closure of a local employer, flooding or subsidance. But when you own Vanguard tracker funds, you are diversified from local risks.
6. Sometimes less is more
I hope that we can all agree that less is more when it comes to STDs, concentration camps and heart attacks.
If we agree that, then perhaps we can also accept that less might also be more when it comes to SUVs, holiday homes, ab-rollers, home shopping catalogues, unused home workout DVDs, TV channels and shopping malls?
I also hope we can agree that sometimes more is more. More is more with love, freedom, happiness, natural wilderness and money stored in The Cloud.
7. Sometimes its better not to stay “up to date”
If you want to get rich whilst improving your mental health, I suggest you stop watching TV news, adverts and infomercials.
How will you cope if you don’t know what some politician said? Or what is fashionable in Milan this spring? Or who won X Factor? Or what the latest igadget is. Hint: Probably pretty well. If something genuinely interesting happens, someone will bring it to your attention via good old fashioned word of mouth.
And, unless you are a diplomat, general or world leader you probably don’t need to watch distressing footage of natural disasters, terrorism or foreign wars.
If, having cut out the news, you are missing your regular dose of apocalypse, gore and violence, can I recommend you try The Walking Dead? Its way more realistic than the news.
8. Convenience is not always good
If you think that convenience is always a good thing then here’s a thought experiment for you.
Imagine an iphone app for a service that delivers sugared doughnuts to you 24/7, wherever you are. Lets call it Diabetes DirectTM . You subscribe for a monthly payment debited automatically from your bank account. When you have a blood sugar crash or your boss shouts at you and you are feeling unloved, you hit the button on your iphone.
Diabetes DirectTM then send an attractive nurse (you get to choose which sex) in a white coat to hand deliver your doughnut to your house or your work. Diabetes DirectTM offers a key holding service, so they can let themselves in. You don’t have to get out of bed or out of your chair.
With the bronze service, they leave the donut by your bedside or desk. If you’re lucky, they won’t steal anything on the way out.
With the silver service, they mush up the donut in a little bowl with some warm milk and spoon feed it to you whilst gently humming your favourite nursery rhyme.
With the gold service, they will come to your bedside, mush up the donut, dissolve it in a fizzy drink and inject donut solution straight into your intravenous drip before emptying the contents of your catheter bag onto your pot plants and turning the TV channel over for you.
9. Eating fat doesn’t make you fat
Sugar makes you fat. All through history, starvation was a threat and sugar was very rare. Sugar did not exist in the forms and quantities we are now exposed to.
You can think of processed carbohydrates as just concentrated forms of stored sugar. If you eat a bowl of pasta, your body turns that into a bowl of sugar in a couple of hours.
As sugar spike hits, hormones carry the message to to the rest of your body: BINGO! We’ve hit the sugar jackpot! This won’t last…so lets get busy storing the surplus energy as fat RIGHT NOW!
Eating fat does not make you fat. If you want an argument about that, go find a naturally ripped native Eskimo warrior that lives off seal blubber, poke him in the six pack, call him Mr Fatty and see what happens.
Let me know how you get on with that.
10. Frugality is not mean (and waste is not generosity)
Why is frugality often mistaken for being mean?
Imagine you are a caveman hunter. Some days you catch more food than you need for yourself. But you have no way of storing the surplus meat….no freezers, no preservatives, no warehouses, no money, no ability to export the meat around the world.
The only way you can store the value is via social capital. You hand out the surplus meat to the other members of the tribe. This makes you popular with the other males and doesn’t do you any harm with the caveladies either, if you know what I mean.
If you’re generous with the other members of your tribe, then on the days when you have struck out hunting, they are much more likely to feed you. Everyone wins from this set up and it explains why we are hard wired for reciprocity.
It may also help explain why we’re not very good at encouraging each other to save. Saving is just the storage of surplus resources. Is it possible that in the modern world we mistakenly confuse frugality and saving for meanness because it somehow reminds us of the tribe member that holds on to their surplus meat for themself?
I send out occasional emails out with my thoughts on investing and news of what I’m up to. You can sign up for those emails below 👇