Happiness Exercises: Take Action To Improve Your Well-Being

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As I reach the end of the 10-week free Yale Happiness Course, I definitely recommend this course if you are ready to commit time and effort into making yourself feel better mentally. One of the key points is the G.I. Joe fallacy, which is the false notion that knowing about a mental bias is enough to overcome it. Knowing isn’t enough! Taking repeated action is required to achieve lasting change.

As such, much of the course is based on “rewirements”, but I think of them as “happiness exercises” because they only work temporarily for me. When I do them, I feel better immediately and for a little while afterward, but the effect wears off. This is similar to my experience with diets, in that diets don’t work.

Once you go back to your original eating habits, you’ll go back to your original weight. Therefore, any changes you make should be something you can maintain for the rest of your life.

Can you really change your life to include these habits? Well, here are the happiness exercises, along with a short description from the Yale course. Try each one for a week and discover which ones work best for your personal situation. I found the prompts to commit acts of kindness and initiate social connections were the most helpful, and a really do hope to keep them up forever. (I’ve already been working on the sleep and exercise bits for a while.)

Savoring

Savoring is the act of stepping outside of an experience to review and appreciate it. Often we fail to stay in the moment and really enjoy what we’re experiencing. Savoring intensifies and lengthens the positive emotions that come with doing something you love. For the next seven days, you will practice the art of savoring by picking one experience to truly savor each day. It could be a nice shower, a delicious meal, a great walk outside, or any experience that you really enjoy. When you take part in this savored experience, be sure to practice some common techniques that enhance savoring. These techniques include: sharing the experience with another person, thinking about how lucky you are to enjoy such an amazing moment, keeping a souvenir or photo of that activity, and making sure you stay in the present moment the entire time.

Gratitude

Gratitude is a positive emotional state in which one recognizes and appreciates what one has received in life. Research shows that taking time to experience gratitude can make you happier and even healthier. For the next seven days, you will take 5-10 minutes each night to write down five things for which you are grateful. They can be little things or big things. But you really have to focus on them and actually write them down.

Random Acts of Kindness

Research shows that happy people are motivated to do kind things for others. Over the next seven days, you will perform seven acts of kindness beyond what you normally do. You can do one extra act of kindness per day, or you can do a few acts of kindness in a single day. These do not have to be over-the-top or time-intensive acts, but they should be something that really helps or impacts another person. For example, help your colleague with something, give a few dollars or some time to a cause you believe in, say something kind to a stranger, write a thank you note, give blood, and so on.

Social Connection

Our social connections matter. Research shows that happy people spend more time with others and have a richer set of social connections than unhappy people. Studies even show that the simple act of talking to a stranger on the street can boost our mood more than we expect. Over the next seven days, you will try to focus on making one new social connection per day. It can be a small 5-minute act like sparking a conversation with someone on public transportation, asking a coworker about his/her day, or even chatting to the barista at a coffee shop. But you should also seek out more meaningful social connections, too. At least once this week, take a whole hour to connect with someone you care about— a friend who’s far away or a family member you haven’t talked to in a while. The key is that you must take the time needed to genuinely connect with another person.

Exercise

Research suggests that ~30 minutes a day of exercise can boost your mood in addition to making your body healthier. For the next week, you will spend each day getting your body moving with at least 30 minutes of exercise. Set aside a location and time (write it in your calendar!). Then hit the treadmill at the gym, do an online yoga class, or throw on some headphones and dance around your room to cheesy pop songs. This isn’t supposed to be a marathon-level of activity; it’s just to get your body moving a bit more than usual.

Sleep

One of the reasons we’re so unhappy in our modern lives is that we’re consistently sleep deprived. Research shows that sleep can improve your mood more than we often expect. For the next week, you must get at least seven hours of sleep for at least four nights of the next week. I know, I know. You’re super busy this week. There are deadlines to meet, friends to see, errands to run, etc. But sleep is going to make you feel better— both physically and mentally. So pick four nights this week, note them in your calendar, and get ready to get some much needed sleep. Also be sure to practice good sleep hygiene too— no devices before bed and try to avoid caffeine and alcohol on the days you’re getting your sleep on.

Meditate

Meditation is a practice of intentionally turning your attention away from distracting thoughts toward a single point of reference (e.g., the breath, bodily sensations, compassion, a specific thought, etc.). Research shows that meditation can have a number of positive benefits, including more positive moods, increased concentration, and more feelings of social connection. For the next week, you will spend each (at least) 10 minutes per day meditating. Find a quiet spot where you won’t be disturbed while you’re meditating. If you are new to meditation, you can try one of three guided meditations available on SoundCloud. And remember— meditation isn’t about the meditation itself; it’s about building a skill that we can use later. Lots of people find it hard at first, but stick with it and see if it allows you to feel a bit calmer over the course of the week.

For all of these exercises, you should find a way to track them – physical notebook, Notes smartphone app, daily planner, or the unpolished-but-free ReWi app (iOS, Android). By keeping track, you make it much more likely that you’ll maintain a streak and eventually make it a life-changing habit like eating healthier foods or regular exercise.

Also see:

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Influence: How Salespeople Use Your Mental Shortcuts Against You

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Although not technically a “personal finance” book, Influence: The Psychology of Persuasion by Robert Cialdini should be required reading if they ever create a standardized curriculum for personal finance. In addition to being a professor of psychology, the author was hired into several jobs where sales professionals have carefully honed the ability to use your own psychological tendencies for their benefit:

For nearly three years, then, I combined my experimental studies with a decidedly more entertaining program of systematic immersion into the world of compliance professionals—sales operators, fund-raisers, recruiters, advertisers, and others.

While a NYT Bestseller and on Warren Buffet’s reading list, I put it off as it seemed a little bit stuffy and dry, and besides I’d probably read about all the things discussed already, right? I was wrong! This book contained enough new and valuable information that I plan on making my kids read it as soon as they can. The amount of carefully-targeted marketing being thrown at them is only increasing.

These six psychological principles (mental shortcuts) have been used recently to influence your purchases, donations, and votes. I’ll still do my own brief summary below to help me remember the highlights, and there are many other summaries of the book online, but I recommend reading the entire thing in the original form. The book is older, so there are lots of copies at my library.

1. Reciprocation. If I do a favor for you, then you will feel the urge to repay me by doing me a favor in return. This tendency helps us work together in positive ways, but it can also be exploited.

  • Free in-home trials with “no obligation”.
  • Free samples at Costco.
  • Free custom mailing labels or even a nickel/dime in charity mailer.
  • “Free rewards” if you leave an Amazon product review.
  • “Free” steak dinners when selling expensive insurance products.
  • Upfront sign-up bonuses for trying out a credit card. (Ahem)

As a marketing technique, the free sample has a long and effective history. In most instances, a small amount of the relevant product is provided to potential customers for the stated purpose of allowing them to try it to see if they like it. And certainly this is a legitimate desire of the manufacturer—to expose the public to the qualities of the product. The beauty of the free sample, however, is that it is also a gift and, as such, can engage the reciprocity rule.

The confidential Amway Career Manual then instructs the salesperson to leave the BUG with the customer “for 24, 48, or 72 hours, at no cost or obligation to her. Just tell her you would like her to try the products…. That’s an offer no one can refuse.” At the end of the trial period, the Amway representative returns and picks up orders for those of the products the customer wishes to purchase.

For instance, the Disabled American Veterans organization reports that its simple mail appeal for donations produces a response rate of about 18 percent. But when the mailing also includes an unsolicited gift (gummed, individualized address labels), the success rate nearly doubles to 35 percent.

Defense? Mentally, you must redefine any “trial” or “gift” as a sales device. It is not a gift, and thus you owe them nothing in return. Choose to use a product or service on its own merits only.

2. Consistency. We are strongly wired to be (and to appear) consistent with what we have already done.

If you must leave your laptop in a library or valuables on the beach temporarily, your best bet would be to ask a single person directly “Will you please watch my things?”. Once that person has committed to that responsibility, your stuff becomes pretty safe, as indicated by experiment:

In these incidents, before taking his stroll, the accomplice would simply ask the subject to please “watch my things,” which each of them agreed to do. Now, propelled by the rule for consistency, nineteen of the twenty subjects became virtual vigilantes, running after and stopping the thief, demanding an explanation, and often restraining the thief physically or snatching the radio away.

Once you state something publicly, it becomes very hard for you to back down from it, even if later you realize your statement is wrong and refuted by nearly all evidence. Even worse, small wrong commitments can also open the door to larger wrong commitments. Answering “yes” to something as innocuous as “Are you a spontaneous person?” can get you do later do some stupid and dangerous things. “Why not do [dangerous thing]? You said you were spontaneous!”

What the Freedman and Fraser findings tell us, then, is to be very careful about agreeing to trivial requests. Such an agreement can not only increase our compliance with very similar, much larger requests, it can also make us more willing to perform a variety of larger favors that are only remotely connected to the little one we did earlier. It’s this second, general kind of influence concealed within small commitments that scares me.

Defense? Be very careful before agreeing to anything (even if it is small), especially publicly (like on social media). Don’t let a small commitment automatically lead you to more extreme commitments.

3. Social Proof. We tend to look to and follow the behavior of others, especially if we are unsure and/or they seem similar to us.

  • Infomercials will always have someone else come up and show an enthusiastic response.
  • During a sales presentation, there will usually be “plants” in an audience with a rehearsed response.
  • Immediately after a high-profile suicide, overall suicide rates will rise.

Bartenders often “salt” their tip jars with a few dollar bills at the beginning of the evening to simulate tips left by prior customers and thereby to give the impression that tipping with folding money is proper barroom behavior.

Defense? This shortcut can makes sense at times (Yelp/TripAdvisor/Amazon reviews), but be aware that sometimes it may be artificially generated. Also, be aware of how this tendency will affect others around you:

I have been sufficiently affected by these statistics to begin to take note of front-page suicide stories and to change my behavior in the period after their appearance. I try to be especially cautious behind the wheel of my car. I am reluctant to take extended trips requiring a lot of air travel.

4. Liking. We tend to say “yes” to people we like. We tend to like physically attractive people, as well as people that appear similar and familiar to ourselves, even though those factors may have nothing to do with why you should vote for them or buy a car from them.

The clearest illustration I know of the professional exploitation of the liking rule is the Tupperware party, which I consider the quintessential American compliance setting. Anybody familiar with the workings of a Tupperware party will recognize the use of the various weapons of influence we have examined so far: reciprocity (to start, games are played and prizes won by the partygoers; anyone who doesn’t win a prize gets to reach into a grab bag for hers so that everyone has received a gift before the buying begins), commitment (each participant is urged to describe publicly the uses and benefits she has found in the Tupperware she already owns), and social proof (once the buying begins, each purchase builds the idea that other, similar people want the product; therefore, it must be good).

Defense? Acknowledge this tendency, and try to focus solely on the merits of the situation.

5. Authority. We tend to follow symbols of authority as a mental shortcut, for example titles, uniforms, business suits, and celebrities. The problem is we do this even in situations where it shouldn’t be applicable. Why should an athlete tell me what life insurance to buy? Think of the many instances of abuse and harassment performed by people in positions of authority.

Planes have crashed because the junior pilot didn’t want to question the senior pilot. In one study, nurses were convinced to administer a lethal dose of a drug by an unknown stranger that simply firmly and urgently claimed to be a doctor over the phone.

There were four excellent reasons for a nurse’s caution in response to this order: (1) The prescription was transmitted by phone, in direct violation of hospital policy. (2) The medication itself was unauthorized; Astrogen had not been cleared for use nor placed on the ward stock list. (3) The prescribed dosage was obviously and dangerously excessive. The medication containers clearly stated that the “maximum daily dose” was only ten milligrams, half of what had been ordered. (4) The directive was given by a man the nurse had never met, seen, or even talked with before on the phone. Yet, in 95 percent of the instances, the nurses went straightaway to the ward medicine cabinet, where they secured the ordered dosage of Astrogen and started for the patient’s room to administer it. It was at this point that they were stopped by a secret observer, who revealed the nature of the experiment.

Defense? Don’t shortcut your own thinking and power by allowing the authority figure to take over. Question authority. Sometimes, it is your duty to be a safety check and protect others.

6. Scarcity. Simply being scarce makes something more desirable. This may also be linked to loss aversion – we hate losing something more than we like gaining something. “While supplies last.” “Limited-time offer.” No matter what time you land on the website, the sale will always be “ending in only 23:54 hours!”

For similar reasons, department stores holding a bargain sale toss out a few especially good deals on prominently advertised items called loss leaders. If the bait, of either form, has done its job, a large and eager crowd forms to snap it up. Soon, in the rush to score, the group becomes agitated, nearly blinded, by the adversarial nature of the situation. Humans and fish alike lose perspective on what they want and begin striking at whatever is being contested.

Defense? Question the actual amount of scarcity, especially in high-pressure environments like a live auction, Black Friday, or car sales department. Buy now or lose it forever? In reality, another train may arrive shortly.

Final thoughts. An important point in the book is that these tactics won’t always work, but they will alter the odds of success. The tactics will often be used in combination with each other for added strength. Finally, we are more likely to fall back on these mental shortcuts without thinking when we are stressed, rushed, tired, or hungry. Hopefully, the ability to identify these tactics in action will help us avoid making poor decisions, including financial ones.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Happiness Test Questions? The Components of Happiness and Well-Being

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As part of the first week of The Science of Well Being (AKA the “Yale happiness” class), I was assigned two psychological surveys meant to measure my baseline happiness:

  • PERMA Profiler (Positive emotion, Engagement, Relationships, Meaning, and Accomplishment), “Measures Flourishing”
  • Authentic Happiness Inventory, “Measures Overall Happiness”

How happy am I? The types of questions asked were interesting, as it revealed what the creators believed were the components and characteristics of happiness and high levels of well-being. I have a hard time believing that anyone never feels lonely or that they always for excited and positive about life, but…

Here’s how the world’s happiest person might answer these questions:

  • I consistently feel that I am making progress towards accomplishing my goals. I have direction in my life.
  • I consistently become absorbed in what I am doing. Time seems to pass quickly when I am working.
  • I rarely feel anxious.
  • I consistently achieve the important goals that I set for myself. I am successful at what I do.
  • I am in excellent health and am satisfied with my level of health.
  • I consistently lead a purposeful and meaningful life. I spend my time on things that are important.
  • I consistently receive help and support from others when I need it.
  • I consistently feel that my life is valuable and worthwhile.
  • I am consistently excited and interested in things.
  • I rarely feel lonely.
  • I consistently feel positive and rarely sad nor angry.
  • I consistently feel loved.

If aren’t part of the online class, you can sign up for a free account at the UPenn Authentic Happiness website to take them yourself. They list many other happiness assessment options as well.

My own measured happiness levels ended up somewhere a bit above the middle of their scales. I hope you didn’t think I was deliriously happy, I definitely could do better – why else would I sign up for this course?

Topics not addressed. Neither survey asked about any of the following items. Perhaps they don’t correlate with happiness and well-being? Perhaps they do but just not as much as the topics they did ask about? Perhaps something else altogether.

  • Salary/income
  • Net worth
  • Marital/relationship status
  • Number of children
  • Prestige of job title
  • Quality of stuff (size of home, brand of car, model of smartphone)
  • Physical beauty or attractiveness.
My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Money and Happiness: Happiness Keeps Increasing Past $75,000 a Year

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Did you know there was an iPhone app called Track Your Happiness? The app basically does what the name suggests:

A few times a day, you’ll get a notification and be asked some questions about your experience at that moment. The idea is that by measuring your experience at many individual moments, you’ll get an accurate picture of your life and the determinants of your happiness.

After collecting over 1.7 million data points from 30,000+ app users, here is the research paper Experienced well-being rises with income, even above $75,000 per year by Matt Killingsworth, published in the Proceedings of the National Academy of Sciences (PNAS). Thanks to reader Al for the tip. Taken from the “Significance” section:

Past research has found that experienced well-being does not increase above incomes of $75,000/y. This finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience (retrospective, dichotomous reports). Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.

Here is a chart from the paper that illustrates how “experienced well-being” keeps increasing with log(income).

Why do I keep making log in bold? Because even though it was a long time ago, I still remember something about logarithms! The only two charts in the paper emphasize the nice line before and after the $75,000 income marker. This might confuse a quick reader to think that happiness keeps increasing linearly with income. In reality, here is a graphic (source) that shows the difference between rising linearly with n vs log(n). The relationship between happiness as income increases looks like the red line below.

If you read the entire paper, this is addressed (emphasis mine):

When interpreting these results, it bears repeating that well-being rose approximately linearly with log(income), not raw income. This means that two households earning $20,000 and $60,000, respectively, would be expected to exhibit the same difference in well-being as two households earning $60,000 and $180,000, respectively. The logarithmic relationship implies that marginal dollars do matter less the more one earns, while proportional differences in income have a constant association with well-being regardless of income.

In order to match the amount of happiness increase from $20,000/yr to $60,000/yr income, you would have to go from $60,000 to $180,000 year, or then $180,000 to $540,000 a year, and so on. Here a quick sketch that I made of this (gives me a reason to use my new $34 knockoff Apple pencil).

That… sounds pretty reasonable, doesn’t it? Happiness increases with money quickly at lower incomes, and as your income grows the incremental increases are smaller (but still goes up a bit). If you make $150,000 a year now, getting a $25,000 annual raise will still make you little happier, but nearly as much as someone earning $50,000 a year now.

If the past research said that you got zero additional happiness past $75,000 year, that would have been the surprising thing. If happiness forever increased directly in proportion with income, that also would have been surprising.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Skin in the Game: How Much Do You Have To Lose? (Book Notes)

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The central idea behind the book Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb is simple. Never trust anyone without skin in the game. In the real world, behavior changes for the better when you have to pay a price for your mistakes. This is a very handy heuristic to apply in everyday life and applies in many areas. A good example of why we shouldn’t allow people to not have skin in the game is Bob Rubin:

The Bob Rubin trade? Robert Rubin, a former Secretary of the United States Treasury, one of those who sign their names on the banknote you just used to pay for coffee, collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any check—he invoked uncertainty as an excuse. Heads he wins, tails he shouts “Black Swan.”

If someone is giving you financial advice, don’t worry about what s/he “thinks”, ask them what they actually hold in their own portfolio. Sure, what is optimal for them may be different than what it optimal for your own situation, but at least put it out there and let the consumer decide. Predictions are cheap without real risk of loss/pain.

In case you are giving economic views: Don’t tell me what you “think,” just tell me what’s in your portfolio.

How much you truly “believe” in something can be manifested only through what you are willing to risk for it.

Conflicts of interest can be good, if it means skin in the game. Taleb argues that while many people think it is better for CNBC “experts” and/or journalists to not own the stocks or companies they talk about, it’s actually better that they do.

There are two types of “talking one’s book.” One consists of buying a stock because you like it, then commenting on it (and disclosing such ownership)—the most reliable advocate for a product is its user. Another is buying a stock so you can advertise the qualities of the company, then selling it, benefiting from the trumpeting—this is called market manipulation, and it is certainly a conflict of interest.

We removed the skin in the game of journalists in order to prevent market manipulation, thinking that it would be a net gain to society. The arguments in this book are that the former (market manipulation) and conflicts of interest are more benign than impunity for bad advice. The main reason, we will see, is that in the absence of skin in the game, journalists will imitate, to be safe, the opinion of other journalists, thus creating monoculture and collective mirages.

In general, skin in the game comes with conflict of interest. What I hope this book will do is show that the former is more important than the latter. There is no problem if people have a conflict of interest if it is congruous with downside risk for themselves.

Bureaucracy too often means NO skin in the game. We allow people elected for only a few years be allowed to bind all of us into agreements that last for decades. We should also look more closely at the former “civil servants” that conveniently land high-paying jobs soon after their terms are over.

Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

More critically, people with good lawyers can game regulations (or, as we will see, make it known that they hire former regulators, and overpay for them, which signals a prospective bribe to those currently in office). And of course regulations, once in, stay in, and even when they are proven absurd, politicians are afraid of repealing them, under pressure from those benefiting from them. Given that regulations are additive, we soon end up tangled in complicated rules that choke enterprise. They also choke life.

Employees have skin in the game, but perhaps not in a good way.

A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man—that is, he has skin in the game.

What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing. […] The more you have to lose, the more fragile you are.

It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.

People whose survival depends on qualitative “job assessments” by someone of higher rank in an organization cannot be trusted for critical decisions.

How can you achieve true freedom?

Financial independence is another way to solve ethical dilemmas, but such independence is hard to ascertain: many seemingly independent people aren’t particularly so. While, in Aristotle’s days, a person of independent means was free to follow his conscience, this is no longer as common in modern days.

Intellectual and ethical freedom requires the absence of the skin of others in one’s game, which is why the free are so rare. I cannot possibly imagine the activist Ralph Nader, when he was the target of large motor companies, raising a family with 2.2 kids and a dog.

I have held for most of my (sort of) academic career no more than a quarter position. A quarter is enough to have somewhere to go, particularly when it rains in New York, without being emotionally socialized and losing intellectual independence for fear of missing a party or having to eat alone. But one (now “resigned”) department head one day came to me and emitted the warning: “Just as, when a businessman and author you are judged by other businessmen and authors, here as an academic you are judged by other academics. Life is about peer assessment.”

You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.

Embrace taking some risk (those that don’t endanger your survival). Starting a business is one way.

Yes, take risk, and if you get rich (which is optional), spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move the descendants of Homo sapiens away from the macro, away from abstract universal aims, away from the kind of social engineering that brings tail risks to society.

Doing business will always help (because it brings about economic activity without large-scale risky changes in the economy); institutions (like the aid industry) may help, but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming). Courage (risk taking) is the highest virtue. We need entrepreneurs.

By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

A final summarizing quote:

Recall that skin in the game means that you do not pay attention to what people say, only to what they do, and to how much of their necks they are putting on the line. Let survival work its wonders.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Sapiens: Are We Happier And Better Off Than Our Ancient Ancestors?

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Financial independence means freedom with your time, as you no longer need to spend it working for money. But the ultimate goal is really satisfaction and happiness in our lives. What do we need to get there? Are humans happier now than when we were foragers or subsistence farmers? The bestselling book Sapiens: A Brief History of Humankind by Yuval Noah Harari weaves together various facts but also adds his own interpretations, resulting in an interesting story of how the human species has evolved from 100,000 years ago until today. There are three major events: the Cognitive Revolution, the Agricultural Revolution, and the Scientific Revolutions. Here are my notes.

The power of cooperation. As Scott Galloway says often, the superpower of the human species is cooperation. We are different from other animals because we are able to work together across a large number of individuals, families, and groups. Bees cooperate, but only between other bees from the same hive. Being able to maintain mutual trust between complete strangers is special. Without it, we wouldn’t have trade, art, science, medicine, corporations, and so on.

Population growth. This cooperation also helped humans take control over their environment through their immense population growth. When we were all foraging for food in small tight-knit groups, we needed a ton of space and our population size was self-limiting. We had to make some big changes in order to create this level of population density. An important observation is that we had to change how we lived in order to support our current population. We can’t go back to foraging, and we can’t go back to all farming all of our own food.

But are we actually any happier? A human forager probably worked less hours per day on average than the modern US citizen. On the other hand, infant mortality was incredibly high and what we consider a minor injury today could quickly lead to death. If a medieval worker couldn’t pay back their debts, they or their children would be sold into servitude. Today, we have low infant mortality and no debtor’s prisons, but we still find ourselves “busy” as ever and filled with anxiety about the future.

The book contains many insights into the psychology of happiness that have been pointed out elsewhere, but it is interesting to view it from the perspective of a nomadic forager (30,000 years ago), a peasant farmer, or early factory worker.

Hedonic treadmill. This quote hits close to home for many seeking financial independence:

It happens to us today. How many young college graduates have taken demanding jobs in high-powered firms, vowing that they will work hard to earn money that will enable them to retire and pursue their real interests when they are thirty-five? […] But by the time they reach that age, they have large mortgages, children to school, houses in the suburbs that necessitate at least two cars per family, and a sense that life is not worth living without really good wine and expensive holidays abroad.

We thought we were saving time; instead we revved up the treadmill of life to ten times its former speed and made our days more anxious and agitated.

Money and happiness. More money does makes you happier, but only up to a certain point where you are safely out of poverty (roughly $75k a year in the US).

One interesting conclusion is that money does indeed bring happiness. […] But only up to a point, and beyond that point it has little significance.

Health and happiness. We actually get used to most physical disabilities.

Another interesting finding is that illness decreases happiness in the short term, but is a source of long-term distress only if a person’s condition is constantly deteriorating or if the disease involves on-going and debilitating pain. […] People who are diagnosed with chronic illness such as diabetes are usually depressed for a while, but if the illness does not get worse they adjust to their new condition and rate their happiness as highly as healthy people do.

Relationships and happiness. Good interpersonal relationships make you happier.

Family and community seem to have more impact on our happiness than money and health. […] An impecunious invalid surrounded by a loving spouse, a devoted family and a warm community may well feel better than an alienated billionaire, provided that the invalid’s poverty is not too severe and that his illness is not degenerative or painful.

Pleasure vs. meaning. Meaning makes you happier.

Another [option] is that the findings demonstrate that happiness is not the surplus of pleasant over unpleasant moments. Rather, happiness consists in seeing one’s life in its entirety as meaningful and worthwhile. […]

A meaningful life can be extremely satisfying even in the midst of hardship, whereas a meaningless life is a terrible ordeal no matter how comfortable it is.

Happiness = Reality – Expectations. Keeping your expectations modest makes you happier. A peasant farmer rarely bathed, but that was their expectation and it is unlikely they dreamt of hot showers and fruit-scented shampoo.

Prophets, poets and philosophers realised thousands of years ago that being satisfied with what you already have is far more important than getting more of what you want. […] Still, it’s nice when modern research – bolstered by lots of numbers and charts – reaches the same conclusions the ancients did.

Mass media raises your expectations, and thus lowers your happiness. Consuming less advertising and unrealistic social media makes you happier.

If happiness is determined by expectations, then two pillars of our society – mass media and the advertising industry – may unwittingly be depleting the globe’s reservoirs of contentment.

Nature vs. nurture. How much of happiness is genetic (as opposed to environmental)? Accept that at least part of it is genetic, but not all of it. We each seem to have a “thermostat set point” for happiness that can change, but we tend to go back our set point.

Unfortunately for all hopes of creating heaven on earth, our internal biochemical system seems to be programmed to keep happiness levels relatively constant.

Evolution does not seem to have optimized humans for happiness. Perhaps we need to be a bit dissatisfied to keep reproducing. However, by understanding our natural tendencies, we can work with and/or around them to create a more content life. We need to find “enough” in terms of consumption, focus on participating in meaningful activities, and maintain good personal relationships. Financial independence isn’t necessary for any of these items, but it can allow you more to time to develop it. Finally, the book warns that given our burgeoning ability to tinker with genetics, the near future may be much different.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Online Shopping: Are You Being Tricked By These 15 Dark Patterns?

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

During these stressful times, many of us are doing a lot more shopping online (unfortunately for local retailers). The competition to get you to spend as much as possible has evolved to take full advantage of all of our psychological weaknesses. This Wired article discusses The Subtle Tricks Shopping Sites Use to Make You Spend More, including the deceptive tactics called “dark patterns”. They linked to an academic study Dark Patterns at Scale: Findings from a Crawl of 11K Shopping Websites, which carefully broke things down into the following 15 dark patterns which usually target at least one cognitive bias.

If you’ve bought anything online recently, you should recognize many of these tricks, but there were a few that were new to me. I was intrigued and tested out many of the sites myself. I no longer plan to shop at certain retailers like Proflowers and CellularOutfitter due to their use of certain shady tactics.

“No, I don’t want become smarter and wealthier”

  • Confirmshaming: Using language to steer your choices
  • Cognitive bias: Framing effect

“YES! vs. no

  • Visual interference: Steering users using visual design.
  • Cognitive bias: Anchoring, Framing effect

“Uncheck the box if you prefer not to receive lots of spam”

  • Trick questions: Steering users using confusing language
  • Cognitive bias: Default, Framing effect

“Do you really want to cheap out on the flower bouquet for your mom?”

  • Pressured selling: Most expensive option is the default.
  • Cognitive bias: Anchoring, Default Effect, Scarcity Bias

“Free shipping with (trial) membership!”

  • Hidden subscription: Charging a recurring fee which isn’t clearly disclosed.

“⏲ Sale ends in 00:15:36 ⏲”

  • Countdown timer: Suggests that deal or discount will expire soon using countdown timer
  • Cognitive bias: Scarcity bias

“Only 3 left in stock. Order soon!”

  • Low-stock message: Suggests that limited quantities are available
  • Cognitive bias: Scarcity bias

“🔥 Selling Fast! 🔥”

  • High-demand message
  • Cognitive bias: Scarcity bias

“‼ Sale ends soon! ‼”

  • Limited-time message
  • Cognitive bias: Scarcity bias

“43 other people are viewing this item” or “Joseph in Maryland just bought these masks!”

  • Activity message: Informs that someone else did an activity or purchase
  • Cognitive bias: Bandwagon effect

“These yoga pants are the most comfortable ever! – Jane from IA”

  • Testimonial
  • Cognitive bias: Bandwagon effect

“Care & Handling Fee: $2.99” (Looking at you, Proflowers!)

  • Hidden cost: Adding new fees or charges at the last page of checkout, after you have submitted address and payment details.
  • Cognitive bias: Sunk cost fallacy

“You must create an account to continue.”

  • Forced enrollment: Must create account or share information to complete task
  • Cognitive bias: Sunk cost fallacy

“Oops, how did that item end up in your shopping cart?”

  • Sneak into basket: Additional products placed in shopping carts without consent, like accessories (CellularOutfitter) or warranty/insurance.
  • Cognitive bias: Default effect

“Please call 1-800-NOT-OPEN between 1:34 and 1:36 AM to cancel.”

  • Hard to cancel: Easy to sign-up, hard to cancel.
My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Reminder: Nobody Can Predict Future Interest Rates (Especially the Experts)

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The financial prediction industry is simply mind-boggling to me. There is zero long-term memory or accountability. You can make all the predictions you want about the stock market, gold prices, and interest rates, and nobody remembers your bad calls. You get a contrarian call right, and all of a sudden you’re on all the TV interviews and news articles.

Allow me to remind you of what the Wall Street Journal’s panel of economists predicted in January 2019 as to what interest rates would look like the rest of the year (WSJ source). I have updated the chart with the current rates (click to enlarge). This was less than 10 months ago!

Apologies for the sloppy graphics, but you can see that 10-year rates dropped down to 2% in July, down even further to 1.5% at the beginning of September, with a slight bounce up to around 1.75% today. Not a single prediction was even close to reality.

When I was stocking up on 4% APY 5-year CDs last year, I was reading comments like “Why lock in such a low rate? You’re going to see much higher rates soon!”. Now, all of the comments are “You better lock in that 3% CD before rates drop further!”

Predicting interest rates even only as far as the next 12 months, is incredibly hard. You can’t do it reliably. Nobody can do it reliably. You might get it right, but that is called luck and not skill.

Individual investors don’t have an advantage in predicting future rates, but they do have their own set of special advantages. As an individual investor, you can purchase certificates from any FDIC-insured bank or NCUA-insured credit union if the interest rate is better than the comparable US Treasury. Over the last couple of years, I was able to buy multiple 5-year CDs at 4% APY when the 5-year Treasury was well below 3%. You have to act decisively, but any individual can do it. Pension funds and other institutional investors can’t.

I have a ladder of 5-year CDs. Each year, I buy a 5-year CD when a compelling interest rate arises. I don’t care about the rate direction, as long as I get about 1% above US Treasuries. After 5 years of doing this, you will have a ladder of CDs such that each year one CD is maturing and you can simply reinvest the funds each year. If I managed to put one year of expenses into each rung of this ladder, I now have 5 years of expenses in the bank, fully-insured and ready to go in case of financial emergency. An extra 1% on each $100,000 is $1,000 a year. That’s real money.

If this sounds like too much trouble to open accounts at multiple banks, you can always still with a Total US Bond fund (like AGG or BND). You’re essentially buying an ladder of bonds. BND has an average effective maturity of 8 years and average duration of 6 years. You might also buy it automatically inside a Vanguard Target Retirement Fund. Just keep buying it and ignore any talk about “The Fed”. Keep the chart above in your mind.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Charlie Munger 2019 Wall Street Journal Interview Transcript

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The best thing I read today was definitely Charlie Munger, Unplugged, the full transcript of a 6-hour interview with Charlie Munger about his philosophies on business, investing and life, as conducted by Jason Zweig and Nicole Friedman of the Wall Street Journal. (I’ve tried to share a link via my paid WSJ subscription, but there may still be a paywall. Articles like this definitely help make me feel that my subscription is worth the money.)

I enjoy Munger’s direct and open take on many things. Honestly, I think reading his advice helps make me a better person, not investor. Also, he’s a 95-year-old billionaire – can you imagine anyone more incentivized to do exactly what they want with their remaining time? The article is rather long, so while I recommend reading the entire thing for yourself, here are some selected highlights.

How do you spend your day?

Well, I have always sought, since I quit law practice [in 1965], to have a lot of time in every day to read and think. And talk to a few friends about this or that. And I don’t do that because it will make me more money, I do it because it’s my nature. And I had to use that nature because I needed a living for a big family. But it’s just my nature.

Warren’s the same way. We both hate too many appointments in one day. We both have long segments [of free time]. The lives we live would look to anybody else like academics.

Will Berkshire Hathaway beat the S&P 500 in the future?

I think it we’ll beat it a little. But that’s not bad with a market cap of over $600 billion. That’s difficult! Most people won’t do as well as we will. I talked to Warren today. We’re buying one little company…as we sit here. And we haven’t bought anything big for a long, long time. It’s really getting hard for us. These other people will pay a lot more.

Q: If there were one company other than Berkshire you would recommend for the next decade or two, what would it be?

In America it would be Costco. Other than in America, buy the strongest companies in China.

Q: A lot of young Americans seem to be turning against capitalism, on the grounds that income inequality is out of control. What can be done about that?

The world as I know it, from personal experience and from reading, has always concentrated power.

Without the inequality, you don’t get modern private-ownership capitalism, which is what produces the plenty. And so even your kids, if they tried to make an equal civilization, and farm the land that way, would end up with not enough to eat. You’ve got to have individual ownership of a lot of things, with somebody getting and gaining for himself, because otherwise you don’t get the plenty. And the only option you have is to make the social safety net big or small, and you can make it stupid or [you can make it] wise[r], the richer you are.

In other words, the better your inequality-producing civilization that produces the plenty is, the more you’ve got to put into the social safety net. Now if you get a place like Denmark or Sweden or something, a lot of these modern students would like it better, free education, free medical care and so forth. And if you have to bet, the United States will be way more like Canada pretty soon, in terms of more free education at the university level and more Medicare and some kind of medicine for all. And that we can afford without ruining the productivity of the civilization.

…. We can afford [a higher minimum wage]. If you make it too high it will be counterproductive but yes, a prosperous civilization can have a higher minimum wage the way it can have a social safety net. Don’t make it too great and you can afford it.

I have more Democratic children than I have Republican children. I’ve got both.

On Jack Bogle.

You’ve got to remember, Bogle happened to be right about something important. But that [was] his only advantage. He was a monomaniac. And so that’s an odd characteristic. I would not pick Bogle to have the run of the place. He just was very right on one very important subject [the importance of minimizing investment costs], and therefore he’s been very useful.

On payday lenders, the lottery, and legalized gambling.

These goddamn payday lenders, they’re the scum of the earth. Everybody’s working on it but not hard enough. That’s a group that ought to be forced out of existence.

And the way we abuse the poor with the lottery! Think of how contrary it is to the interests of the poor to play the lottery. It’s like a tax on ignorance. They’re vulnerable. I don’t think we should be doing that, but of course everything like it I’m voting against. I always vote against legalized gambling. I just lose all the time. I feel like I’m pushing on a straw and somebody is just pushing back harder every time.

On selfishness and the value of a good reputation.

Another thing that really helps is people, a lot of people think that real selfishness, very extreme, is what works. But it doesn’t.

If you have a reputation for being decent to work with and unselfish, you make more money, not less. And at Berkshire, I can’t tell you the things that we have bought where the people wanted a good home for something that they love and they trusted us to take care of their loved one. That sounds ridiculous to talk about, in that language about businesses. But why wouldn’t you love something you spent your life building up? It’s very natural to love it – it’s your own creation. Of course you want it in good hands.

On his ability to delay gratification (aka “frugal cred”).

The first 13 years I practiced law, my income [from practicing law] was $300,000 total. At the end of that 13 years, what did I have? A house. Two cars. And $300,000 of liquid assets. Everyone else’d have spent that slender income, not invested it shrewdly, and so forth.

I just think it was, to me, it was as natural as breathing, and of course I knew how compound interest worked! I knew when I saved $10 I was really saving $100 or $1,000 [because of the future growth of the $10], and it just took a little wait. And when I quit law practice it was because I wanted to work for myself instead of my clients, because I knew I could do better than they did.

On opportunities.

You only get a few opportunities, and you have to grab them aggressively when they come because even in the most favored life, they’re really rare. My mother listened to all this stuff, and it meant nothing to her. She was never interested in money or worldly success, but she just appropriated the stories to me because they’d amused her.

I always feel that the opportunities are rare. I only get a few and then I have to seize them aggressively.

This last quote is definitely something that I strongly associate with Munger. Even in this interview, you notice he says it twice. It’s something to keep in the back of your mind, whether is applies to an investing opportunity, a career opportunity, or even finding a life partner. Work hard, do your analysis, but in the end you’ll have to take action to get the big results.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

A Sense of Urgency: Money Can’t Buy You More Time

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Over the weekend, I read the NYT Magazine article America’s Professional Elite: Wealthy, Successful and Miserable about the rich and unhappy, which included a man who earned $1.2 million a year in Manhattan and hated his job:

“I feel like I’m wasting my life,” he told me. “When I die, is anyone going to care that I earned an extra percentage point of return? My work feels totally meaningless.” He recognized the incredible privilege of his pay and status, but his anguish seemed genuine. “If you spend 12 hours a day doing work you hate, at some point it doesn’t matter what your paycheck says,” he told me. There’s no magic salary at which a bad job becomes good. He had received an offer at a start-up, and he would have loved to take it, but it paid half as much, and he felt locked into a lifestyle that made this pay cut impossible. “My wife laughed when I told her about it,” he said.

Based on a short conversation in a class reunion, it’s easy to extrapolate endless stressful hours at work, a huge mortgage, fancy private school tuition, expensive vacations, and a high-maintenance spouse. Such a picture makes all of us not earning $1.2 million a year feel better about ourselves. But is he really that miserable?

I suspect it is more like the same situation a lot of people are in. They aren’t happy, but things aren’t bad enough to keep them from still doing the same thing. It’s easy to just say OMY (One More Year) because change is scary. I’d certainly rather be in that position while earning a million bucks a year, rather than earning $40k. He has a lot more optionality than most.

Ever since my post on Retirement Nest Egg Calculators: Running Out of Money vs. Running Out of Time, this following statistic has been stuck in my mind:

If you’re 40, you have a 10% chance of dying before even reaching 65.

What is your likelihood of dying within the next 20 years? Here are mortality tables based on Social Security actuarial data for US citizens, sorted by age and gender. Below are the rough numbers, along with an edited screenshot of the source at the very bottom.

  • A male, age 30 has a 1 in 20 chance of dying in the next 20 years (age 50).
  • A male, age 40 has a 1 in 10 chance of dying in the next 20 years (age 60).
  • A male, age 50 has a 1 in 5 chance of dying in the next 20 years (age 70).
  • A female, age 30 has a 1 in 35 chance of dying in the next 20 years (age 50).
  • A female, age 40 has a 1 in 15 chance of dying in the next 20 years (age 60).
  • A female, age 50 has a 1 in 7 chance of dying in the next 20 years (age 70).

I try to use these numbers to motivate myself and create a sense of urgency. I’m 40 years old now. There is a 1 in 10 chance that I won’t be old enough to see my daughters even finish college. The person profiled in this article is also probably around 40 years old (15-year reunion of business school). I’m sure there are plenty of 60-year-olds who say “60 isn’t old!” and it isn’t, but that is literally survivorship bias. We all know people who didn’t make it to 60, and these are the overall odds.

Time is your most precious resource. It doesn’t matter what your income is, you only have so much time. Therefore, you should spend it in a way that aligns with your values. Look for ways to get closer to that. If you can’t quit, do the same job with a better employer. Keep working, but switch to a different job within that field/skillset with more personal meaning. Saving more can mean you can get by working fewer hours. If you think you can retire but just can’t seem to pull the trigger, you need to directly confront those last few worries.

Are you unhappy with your situation and still in the same spot as a year ago? Try to find something psychological that will create a sense of urgency. I tell myself “Why am still wasting my time with [insert task]? 1 in 10.”

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

DietBet Review: Using Money To Motivate You To Lose Weight

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dietbet180It’s that time of year, and since I eventually lost 50 pounds with the help of this and other weight-loss betting sites (and have kept it off since), and I wanted to share my experiences including both positive and negative aspects.

DietBet.com runs weight-loss challenges where I bet my own hard-earned cash that I could lose 10% of my body weight within 6 months. More specifically, a group of folks (strangers or friends) agreed on a weight loss goal, put money into a community pot, and the winners split the pot. Here’s a look back at how the process worked along with some helpful tips and detailed numbers.

Game basics. You pick from a list of available “games” that are starting soon. All of them have a goal of either losing 4% of your body weight in 4 weeks (Kickstarter), or 10% in 6 months (Transformer). I chose the 10% goal and picked the group with the most participants because Dietbet uses the poker rake model where the winners take money from the losers. This is smart because Dietbet doesn’t risk any of its own money (also doesn’t have any incentive for you to lose).

dietbetfinal0

Weigh-in rules and tips. Your weight is verified each round by uploading two pictures: one with your feet on a digital scale, and another of your entire (lightly-clothed) body on the same scale. You are given a special keyword to ensure that the weigh-in is done during a 48-hour window. Here are my tips:

  1. Use the smartphone app. Having the smartphone app made it so much easier to snap the pictures and upload with a few taps. iOS and Android only.
  2. Check the dates with your work schedule. During one of my weigh-ins, I was on the road. Dietbet says digital scales are “preferred” but the only thing at my hotel’s gym was a non-digital balance scale. My submission was still accepted. If my hotel gym didn’t have a scale at all, I would have had to search for a Wal-Mart or something.
  3. Know the rules and give yourself time for rejections. One of my submissions was initially rejected because I was wearing running shoes (in that same hotel gym) and I forgot that shoes aren’t allowed in the pictures. You only get a 12-hour grace period after a rejection to re-submit a qualifying weigh-in.

Overall, I felt that Dietbet was fair and quick when judging my weigh-in pictures. You may also be “audited” and be required to submit a video verification. I did not get audited.

Money details. The bet amounts can vary by game, but mine was for $25 a month times 6 months. I was offered one month free ($25 discount) if I paid $125 upfront, but since this is all about the behavioral component for me, I wanted the monthly charge to show up on my credit card bill. Players who have chosen to place their bets on a monthly basis may drop out at any time and avoid being charged for future, unplayed rounds.

There is one round per month; Rounds 1 to 6. Half of the total money bet is put towards Round 1 through 5. That is $25 x 6 / 2 = $75, split across 5 rounds is $15 per round. The other half is put toward the final weigh-in round. So $75 is bet on Round 6. Here’s a screenshot that shows my actual winnings from each round:

dietbetfinal2

  • Round 1 Breakdown: $16.09 (7% ROI on $15 bet)
  • Round 2 Breakdown: $26.94 (80% ROI)
  • Round 3 Breakdown: $31.36 (109% ROI)
  • Round 4 Breakdown: $31.50 (110% ROI)
  • Round 5 Breakdown: $30.42 (103% ROI)
  • Round 6 Breakdown: $152.87 (104% ROI)

I ended up winning $289.19, for a net win of $139.18. That’s a solid 93% return on my $150 initial bet! According to their documentation, the average “win” is 50% to 100% of your contribution. I would venture to guess that the 6-month games have a higher overall payout due to a higher difficulty level.

As noted above, Dietbet makes their money by taking a cut of the gross pot before distribution, between 10% to 25%. In a previous post, I erroneously assumed that the numbers being reported above were before fees were taken out. The numbers are actually net of fees. (You are always guaranteed never to lose money if you win, which otherwise technically could happen if enough people win.)

Your winnings can be withdrawn either via PayPal or paper check, but you have to pay a $5 fee and make special request for a paper check. When withdrawing via PayPal, you won’t pay any fees, and I was sent my money within a hour. Here’s screenshot proof of my winnings payout showing no fees.

Warnings. When signing up for a challenge, Dietbet will automatically add $20 of “Official Weigh-in Tokens” to your cart. These are not mandatory. I think using the word “Official” is misleading. They should use “Optional” or “Additional” instead. You should treat them as extra raffle tickets for prizes like Fitbits and such. If you want that, fine, but otherwise be sure to remove them otherwise it’s just wasted money.

Bottom line. I committed to a Dietbet Challenge to lose 10% of my initial weight over 6 months. You can see upcoming Dietbet games here. I lost the weight, completed my verifications without hassle, won the bet, and was paid my winnings. There were a lot of factors that helped me lose weight and change my eating habits:

  • Loss aversion is quite a strange thing. Even though 25 bucks a month isn’t all that much money, the prospect of losing it was a powerful motivator.
  • The Dietbet community board for my challenge was quite positive in supporting other people towards their weight-loss goals.
  • I created extra motivation by telling people about the challenge as I didn’t want to admit publicly to failure.

While Dietbet was not there to cook my healthy meals, exercise for me, or keep me away from the late-night Doritos, it was the missing catalyst that I needed to get my health back on track. For other people this might be a heart attack or other medical issue. I’m glad I didn’t have to wait for something like that. Even if I “lost” the challenge but also lost 5% of my body weight, I might have still seen it as an overall positive experience.

See my separate Healthwage Review, a similar service. You can do both at the same time.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Gene Hackman and Dustin Hoffman on Mental Accounting

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Richard Thaler won the Nobel Prize for Economics this year for his pioneering work in Behavioral Economics. Of course, he promptly said he would spend the prize money “as irrationally as possible”. Here’s a light-hearted Q&A from the NY Times. Linked was a funny example of mental accounting, told by Gene Hackman about Dustin Hoffman. (Warning: There is a single f-bomb.)

Well, Hackman says when they were both young actors he was over at Dustin Hoffman’s house and Hoffman asks him for a loan.

Hackman goes into the kitchen and sees all these Mason jars with labels — “entertainment” and “books” and “rent” — and they all have money in them. Except for one, the one that says “food.” So he says to Hoffman: “You have plenty of money, why do you need money?” And Hoffman says, ‘There’s no money in the food jar. I can’t touch the other money. ”

They laugh, they go on, it’s funny but you know, it’s serious. Because we all do that.

If you can’t see the embedded video, here is the YouTube link.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.