I’m not sure if you noticed but I made a pretty big claim in my last post:
This brings us to one of the great taboos of personal finance which is that most people are self-sabotaging.
This inconvenient truth gets swept under the carpet in the earnest tone adopted in most personal finance content.
This is a view that you don’t often see expressed in mainstream media coverage of personal finance.
Quite the opposite…the implicit assumption is that we’re all hard-pressed working families, everyone is a sensible saver and no one is wasting their money on ridiculous spending.
That’s a nice assumption (nice as in polite) but one which bears no relationship to the real world. That’s because self-sabotage is a thing and I put it to you, dear reader, that most people are self-sabotaging (although not you, obviously).
Let’s start with some small examples. When I see someone sitting in a parked car with the engine idling, burning money as they go nowhere, I see self-sabotage. When I read that about a third of food is thrown away uneaten, I see self-sabotage. When I see an obese person with knee problems, I see self-sabotage. And whenever I see people complaining (but not taking action) I see self-sabotage.
Are those examples too small for you? Well, stuff like that matters because of the incredible power of The Aggregation of Marginal Gains. In forward gear, this propels you into The Sunlit Uplands of Wealth Creation. But in reverse gear, you end up dodging turds in The Septic Tank of Mediocrity.
If you’d like a bigger example of self-sabotage, how does burning down your own house sound to you?
I was once shown around a housing estate in Manchester. The estate was said to be one of the most deprived in Britain. Before we got there, we’d heard horror stories about drug addicts, shootings, arson attacks etc. I’d imagined some sort of urban hell with brutally alienating 1960s concrete tower blocks.
When we arrived, I was surprised by what I saw. The 2 storey houses were newish (less than 10 years old), they looked well built, attractive with plenty of green space. They were roomier than the 2 up, 2 down terraced house I was living in at the time.
Yet all was not well on that estate. Several of the houses were burnt out. The managers who showed us around explained that this had been done by the tenants themselves. The tenants would take drugs, get high, burn some furniture etc etc and things would get out of hand.
The issue here was not public sector funding. The buildings and the infrastructure was actually very good. The state (or local authority) had provided high quality accommodation for the people.
The problem was the people living there. Sometimes they sabotaged themselves, sometimes they sabotaged each other. But the biggest problems faced by the tenants came from their own behaviour. Most problems on the estate arose from the thought-processes of the people living there.
I don’t claim to have easy answers to social problems that have run for generations and have multiple causes. Magic wands only exist in fairy stories and socialist manifestos. My point is that people can be self-destructive and this happens in a variety of ways.
I’m not saying that self-sabotage is always conscious and deliberate: its more often sub-conscious. Often the causes are deep rooted and go back to childhood upbringing. But I am saying that self-sabotage is everywhere once you know what you’re looking for.
We all do it to one extent or another. I’m currently struggling to get this article written as I have a hangover. Yesterday I was floundering around trying to find my house keys, wondering at my own idiocy for not having a set place to keep them. I could list other ways that I’ve self-sabotaged but I only have ~1,500 words to play with here.
Back in the old days we had religion to teach us about self-sabotage. Every Sunday, religion reminded us that we all fuck up on a regular basis. Christianity was built around the idea of humans as sinners, trying to help each other to get better. The church provided a support structure (e.g. get togethers, regular confessions) to help us try to improve our sins and flaws and to overcome our self-destructive tendencies.
Over time, religion faded in The West and it left a hole in society. We lost a way to be honest about our flaws. We lost the transmission of social capital via routine, community and repetition.
Then we got the internet and now we have a bunch of monkeys on social media trying to outdo each other on the virtue-signalling…who can share the cutest puppy photos and the trendiest political causes. Everyone is a saint on the internet.
Why am I telling you this? It’s not to make anyone feel bad. It’s actually pretty re-assuring to know that everyone else messes up and that it’s not that hard to be better than average.
Awareness is the first step towards change. So let’s have a look at some forms of self-sabotage that impact people’s finances:
Sulking / Giving up
I know you don’t do this but hear me out.
Work is often stressful. It involves a mix of co-operating and competing with other people. Team members take duvet days. Customers want everything yesterday and they don’t want to pay for it. People can be difficult. And when I say people I obviously mean other people. 😉
When our egos get bruised it’s tempting to argue, feud or sulk at work. Seth Godin calls this the sour mindset. The mindset of we are not getting what we deserve. The mindset of the world is not fair. The mindset of why should I even bother? It’s probably not going to work.
Promotion comes when we get past sulking. The quicker we do that, the quicker we get promoted.
Where would I even start? Smoking, strip clubs, drugs, bottled water, pre-ripped jeans, designer toilet seats, SUV’s. Ridiculous spending is a form of self-sabotage.
Why would anyone trade decades of their life for a shiny metal object (e.g. a car)? Bad maths could be one reason. Consumerism is obviously another. The inability to defer gratification is another.
Here’s the strange thing: a lot of big spenders know on some level that they’re behaving irrationally but do it anyway. Perhaps they associate money with problems or with greed and so act in a way that removes the surplus money from their life?
Bad investment decisions
Good investing takes a little bit of knowledge and a lot of patience, discipline and self-awareness.
In The Behaviour Gap Carl Richards explores the gap between the returns that investors would get if they just bought and held a low-cost index tracker fund and the average return they get by poor stock-picking, churning, over-trading, paying high fees and buying glamour investments.
I almost blew my own foot off in 2003 when I capitulated and panic-sold in the depths of the massive 2000-2003 bearmarket.
Don’t make the mistake that I did. Speak to a pro before you sell in panic. It’s good to talk.
No one has all the answers by themselves.
Most jobs are team games. You get promoted by being good with people. You are better at sales, motivation and leadership when you are good with other people.
A lot of FIers are introverts (The Escape Artist is INTJ) but when taken to extremes, introversion can turn into self-sabotage. Hermits miss out on valuable opportunities which involve co-operating with other people.
You see a lot of bitterness in comments on the internet.
Bitterness can look worldly (even smart) at first glance. But bitterness comes from the denial of past failure. We all strike out from time to time but people who are bitter have never processed their failure and moved on. We all have a giant toddler inside us that wants to sulk when things don’t go their way. Don’t let the toddler win.
A lot of FIers pride themselves on their scepticism. That’s great, just don’t cross the line into cynicism. Remember: when it comes to personal finance, you create your own reality.
The Victim mentality
There are no rich victims.
Victims blame the government, they blame their employer, they blame society, they blame their partner, they blame their parents. It’s always someone else or something else that is to blame.
Victimhood is now being actively marketed with a huge political and media push behind it. Identity politics divides people into groups as victims and oppressors. Did I mention that its all horseshit? Yes, I think I did.
Procrastination is sometimes dressed up as perfectionism (if it isn’t 100% correct, I’ll do nothing) but its caused by fear…particularly fear of failure.
We prefer to say we haven’t yet tried than to try and fail. There is no failure there is only feedback. You have to get into the habit of making decisions and taking action even when you don’t have a guarantee.
Get rich slowly, get started quickly.
British people love grumbling and complaining. It’s one of our national pastimes.
Like all vices, it can feel fun in moderation but there’s a hidden cost to be paid. Complaining is like spraying yourself with money repellent.
By complaining but not taking action, we give energy and attention to the thing and make ourselves miserable. And, because people naturally tend to hang around other people like them, if you’re a complainer you’ll find yourself surrounded by other complainers. That’s not a winning formula.
To get to financial independence, your beliefs, thoughts, feelings and actions must be aligned (congruent). If you have any guilt or shame about having money, you will find ways to remove it from your life. That’s self-sabotage.
My point is just that getting to financial independence is hard enough without aiming a gun at your own foot and pulling the trigger.
Now…where did I put my beer?
The Escape Manual is explained * here *