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The Best of Tim Ferriss

Posted By damien on December 15th, 2010

Tim Ferris

(image courtesy of The Next Web)

Ever heard of the term “lifestyle design”? How about the “deferred-lifestyle plan“? These are both terms coined by Tim Ferriss, a man on a mission to upend the way we look at work and life in general.

Tim Ferriss is the prolific author of the The 4-Hour Workweek, a #1 bestseller on The New York Times, The Wall Street Journal and BusinessWeek book lists. The book challenged the way I look at work-life balance and entrepreneurship. I have written about it a few times previously.

Tim runs a blog at fourhourworkweek.com/blog/ which showcases his “experiments in lifestyle design”. His posts are always interesting and often applicable. Many are written by Tim himself, but he also has a wide array of guests post on their areas of expertise.

Here are 6 of my favorite posts, either from Tim or his guests. Each one of these has challenged my assumptions about the status quo and made me reevaluate the way I live my life.

How It Works: Clinton’s “Reality Distortion Field” Charisma

Super-insightful post about interpersonal skills, specifically the power of eye contact. The guest author presents Bill Clinton as the master of eye contact and uses a clip from the 1992 presidential debates to make his point.

Watch the video on mute and you’ll see how much Clinton owned that debate by using eye contact and charisma.

From CEOs to Opera Singers – How to Harness the “Superstar Effect”

Tim’s guest in this post uses Pavarotti to illustrate the outsized gains that can be realized when one is recognized as the best in their field. He also shows how a high-school graduate with mediocre grades and test scores got into Stanford by using the superstar effect.

Read the post and look for areas at your workplace or in your social circles where you can stand out as the superstar.

The Psychology of Automation: Building a Bulletproof Personal-Finance System

Ramit Sethi, one of my favorite personal-finance authors, makes a guest appearance on Tim’s blog with this massive, informative post. Ramit unpacks the psychology behind personal finance and ways to trick our brains into winning with money.

Its full of sweet diagrams and the best part comes at the end: a 12-minute video outlining exactly how to automate your finances by circumventing your behavior. A must-read.

Cold Remedy: 18 Real-World Lifestyle Design Case Studies (Now It’s Your Turn)

Tim sent out a request for videos from anyone who had used principles from his book to create a small business, free up their time, and live a fuller life. He received tons of submissions and posted 18 of his favorites on his blog.

I like the guy who combines investing in gold bullion with fashionable belts. Fun idea.

Engineering a “Muse”: Case Studies of Successful Cash-Flow Businesses

Tim showcases 4 entrepreneurs that created their “muses” using the principles from The 4-Hour Workweek. A muse, in Tim’s words is “a low-maintenance business that generates significant income.”

The products are high-fidelity ear protection, foldable pedicure sandals, shampoo for thin hair, and snowboarding-specific boot insoles.

I love these posts because they give an inside view of running a very small business.

Engineering a “Muse” – Volume 2: Case Studies of Successful Cash-Flow Businesses

Edition two of Tim showcasing of successful entrepreneurs who followed his model.  The products shown are a laptop stand, butterfly repellent (funny idea), and a time-tracking service.

In addition to Tim’s awesome blog and book The 4-Hour Workweek, he just released a new book titled The 4-Hour Body. I can’t wait to read it.

Posted in Business, Interpersonal Skills, Selp Improvement
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Never “Loan” Money to Your Broke Relatives!

Posted By damien on November 30th, 2010

Angry Sisters

Have you gotten the call?

The phone rings, it’s your brother-in-law and he’s out of cash again. He needs you to spot him $2,000 bucks to make it to the end of the month and then he’ll pay you back “real soon”.

Should you loan him the money? Should you refuse since the chances of him paying you back are about as slim as Lindsey Lohan actually graduating from rehab?

It’s a trap! Either way, you lose. “Loan” him the money and kiss it goodbye forever, all the while harboring resentful feelings for your cheap relative. Or, refuse it and  1) he hates your guts,  2) your wife calls you a heartless penny-pinching miser and  3) no one invites you over for Thanksgiving.

Ouch. What if there were another option? The best option?

There is. In fact, your brother-in-law doesn’t need the money as much as he needs your help.

Let me say that again, and more forcefully:

Your broke relatives don’t need your money, they need your help

When you loan money to family members, bad things happen.

Lending to Family Changes the Relationship

First of all, there is a very slim chance you will see your money again. And even if you do get paid back, the relationship has changed.

Proverbs 22:7 says, in part, “The borrower is servant (or “slave”, depending on the translation) to the lender.” I don’t care if you deny the divinity of the Bible, that statement is true.

Once you loan money to someone, you are constantly watching over their actions, wondering why they bought a new toy instead of paying you back. Loaning money to family changes your relationship in negative ways.

Lending is Treating the Symptom, Not the Cause

In medicine, there are medications to treat the symptoms of an illness and medications to treat the illness itself. One makes the pain go away temporarily, the other goes right to the source and attacks the cause of the pain.

When you simply give/loan money to family members, you treat the symptoms of their pain. You are giving them a temporary fix for their misbehavior. The more effective solution is to treat the cause of their pain, to alter their behavior.

You’ve heard the saying, “Give a man a fish and he eats for a day, teach him to fish and he’ll start a chain of fast-food fish restaurants the likes of which the world has never seen.”

Or something like that, you get my point.

How to Treat the Cause of Money Pains

Let’s get back to that call from your brother-in-law. He needs help. He can’t make it to the end of the month without getting his electricity turned off. You’re a caring person. You’re not going to let him and his family suffer.

But what’s the right way to do it? You don’t want to ruin the family relationship and you don’t want to see him back in the same place next month.

Teach him to fish.

Instead of loaning money, gift him money with strings attached.

Give the money away as a gift with conditions. Tell him that you love him so much that you’ll help fix his immediate need (by gifting him cash) and his long-term need (money management skills).

How will you fix his long-term needs?

By attaching conditions to the gift. Tell him that he needs to visit with a financial counselor. Better yet, gift him a money management course such as Financial Peace University. Make him sit down and write out a monthly budget. Help him determine and fund his emergency fund. Help him create his debt snowball.

You get the idea. Teach him to fish!

I guarantee it will improve his situation lightyears more than “loaning” the $2,000 bucks and hoping he’ll repay someday.

What are your experiences with loaning money to family?

Posted in Interpersonal Skills
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Take It or Leave It! Improve Your Negotiating Skills Now

Posted By damien on November 23rd, 2010

Outdoor market bartering

Bartering.

Haggling.

Negotiating.

What comes to mind when you read those words? I think of a sleazy used-car salesman. Most Americans have a negative view of bartering. We’re used to seeing a posted price and paying it.

Living abroad for two years, I attended lots of outdoor markets and saw the difference in shopping habits. Posted prices meant little–they were a place to start bartering from. The merchants weren’t offended if a customer attempted to work out a deal.

I made a few minor attempts at bartering on the French streets. I don’t remember if they were successful or not but I do remember how uncomfortable I felt doing it. Negotiating is not an inborn skill of mine.

But it’s one I want to develop.

So, I’ve been studying the art of negotiation. Here are some highlights of what I’ve discovered so far:

Detached Involvement

To negotiate effectively, one must practice what Herb Cohen, negotiating guru, calls “detached involvement”. Meaning that you care, but not very much. The more emotional investment you have in a transaction, the more you are willing to sacrifice for it. The more you are willing to sacrifice, the easier it is to take advantage of you.

Effective negotiators (such as used car salesmen) can smell desperation from miles away. Your desperation is the “blood in the water”. The sharks smell it and come in for the kill.

Use the principle of detached involvement in two ways: first, care about what you are negotiating, but not that much. Don’t let your emotions be your “tell”, the thing that gives you away to the other side.

Second, watch the other side and asses their emotional investment. If they are deeply and conspicuously involved, then you have the advantage. You now know that you can be more aggressive in your requests.

Slow Down, Partner

Put time on your side. If you need it now, and advertise that need to the other side, you are at the disadvantage. The other side will see your need and offer fewer concessions. By being impatient, you have become emotionally invested and violated the previous rule.

The more time you spend looking at options and letting the “I want it now!” impulse die down, the better deal you’ll find.

Often, experienced salesmen will attempt the “hard sell”. They present offers as once-in-a-lifetime opportunities, one-of-a-kind deals, or other methods to get you to buy now. Don’t go for these high-pressure tactics. In these situations the only thing you need to buy yourself is some time.

Buy yourself this needed time to think things over by limiting your own authority. Say something like, “Thank you for the offer, I will present it to my board/CEO/wife.” By making someone else’s word final, you can’t close the deal right then, when the salesman is breathing down your neck.

If the salesman won’t give you time to think it over or discuss it with someone else, walk away. The deal is almost certainly not worth it.

Information Superweapon

You won’t have any idea what a good deal looks like until you do some research first. Never take the salesman’s word on how much of a discount you’re getting. Look on the internet, check competitor’s prices, look at what comparables have sold for recently.

In negotiating, information is power. Walking into the dealership armed with facts and figures cuts down on the likelihood of getting swindled. Once the dealer sees that you know your stuff, his prices will have to come down to earth or you’ll be out the door.

Miss Congeniality

Always, always begin your negotiations in a friendly manner. You can move to playing hardball if needs be, but don’t start there.

Why? Two big reasons:

The norm of reciprocity is very strong in humans. We mirror the behavior of those we interact with. If someone approaches you smiling, complimenting you on your shirt, do you frown and curse them under your breath? No way.

Now, what if that same person approaches you with a scowl and middle finger? Different story.

The second reason to start out friendly has to to with adjusting your approach. It’s easy to move from friendly to confrontational and nearly  impossible to move from hardball to nice. If you start out red-faced with your voice raised, the other side puts up thier walls. Good luck trying to get any flattery or smiles past those 10-foot thick barricades.

You know how the saying goes, “You can catch more flies with honey than vinegar.” Don’t rule out using a firm, confrontational approach, just don’t start that way. Start out friendly and then move to hardball if the situation demands.

Go Forth and Conquer

Well, now you know all of the tricks I’ve learned so far. Most of it has to do with going into a negotiating situation armed with information, detached from strong emotions, and in a friendly manner.

What negotiating skills have you learned?

Posted in Interpersonal Skills, Selp Improvement
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The Johari Window: Almost Jedi Mind-Control

Posted By damien on March 31st, 2010
Young Jedi Padawan

image courtesy of turoczy

Time for another big idea in a bite-size portion.  Some would say that an honest person, a person with integrity, will act the same no matter the situation. But I believe that someone can be the same person, can be their authentic self, and still act differently depending in their situation.

I agree that a person with integrity will be honest in all situations, but I don’t think someone has to act the same in every situation.  Do you act the same way around your in-laws as you do with your guy or girlfriends?

Probably not. In fact, I’m going to propose that in order to succeed in business and personal interactions, you need to adjust your behavior based on the audience.  A person who is the same to all people will fail.

Let me explain.

The Window to Your Soul (oooh…ahhh)

I’m going to assume you are pretty relaxed around your pals but clean up your language around the mother-in-law.  In fact, you probably don’t tell the same jokes in both settings.  What you may not know, is that by adjusting your behavior based on the situation, you are implementing a “sophisticated” psychological model called the Johari Window.

The Johari Window basically states that we each have a window of “openness” somewhere along the scale of complete introvert on up to uninhibited extrovert.

An Accountant and Car Salesman Walk Into a Bar…

If we want to take business stereotypes, an accountant would generally have a more closed Johari Window, meaning they were less open to unknown people or situations.  A sales rep on the other hand, would have a wide open window, sharing all sorts of personal information with new acquaintances.

I say that successful communication in business and personal settings depends on our ability to adjust our Johari Window to our audience.  If we open it wide up around some accountants, we will make them feel uncomfortable and probably stifle the conversation.

On the other hand, if we keep it closed at a meeting of sales reps, they will probably think us a bore and move on to more interesting conversation.

One thing to keep in mind is that our Johari Windows are not fixed throughout the day.  They are naturally more open around our best friends and at home.  They close a bit when we’re around new people or in unfamiliar territory.

Use the Force, Luke

Here are a few pointers when trying to assess another’s Johari Window:

  • How loudly do they talk?
  • How close are they standing to you?
  • How expressive are they? Do they keep their arms folded or talk with their hands?

By adjusting your actions to match your audience’s window, you will put them at ease and further the conversation.  Your business meetings will run smoother and you will make friends faster.

Now don’t say I never taught you the ways of the Jedi.

Posted in Business, Interpersonal Skills
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How to Ask Great Questions

Posted By damien on March 9th, 2010

Asking Questions

I’m taking a short break from financial posts and exploring other topics.  This post will help you ask better questions in teaching, business and personal settings.

Everyone asks questions, and for many different reasons.

An effective teacher uses questions to see if his student understands, accepts, and applies what is being taught.  A great salesperson asks questions to see if her customer is willing to buy and to determine their objections.  An effective “networker” asks questions to develop business relationships.

Through my experiences, I have come across three different types of questions that we use.  Each category is useful for different reasons.  These types of questions, from least to most effective, are as follows:

  1. Factual questions
  2. Reasoning questions
  3. Emotional questions

Let’s look at each category and see how effective they are.  We’ll apply these questions to teaching situations, but they can easily be modified to work for salespersons and networkers.

Factual Questions

Example: “In what year was the Declaration of Independence signed?”

These questions are used primarily to see if the student is paying attention and understands the lesson material. Factual questions do not evoke much thinking or feeling on the part of the student, but require a mere recitation of what the teacher has already stated. Factual questions are not open-ended, the answers are usually objective, and many times there is only one correct response.

Reasoning Questions

Example: “Why was it necessary for the States to declare independence from England?”

Reasoning questions are the next level up in quality. These questions require more critical thinking on the part of the student than do factual questions. These are used by the teacher to see how well the student understands what is being taught, and whether or not the student accepts it. Answers to these questions are more subjective, they include more of the student’s opinion than do answers to factual questions.

A student, in answering the example question, could follow a couple different paths of reasoning. Perhaps the student does not believe the US should have broken off from England. If so, then the student would answer that it not necessary.

On the other hand, if the student does believe in US independence then she would respond with various reasons as to why.

Reasoning questions are a great way to see if the listener understands and agrees with what you are teaching.

Emotional Questions

Example: “How is your life different because of the American Revolution?”

This is the best type of question. Emotional questions cause the student to tie the material being taught to his or her own life. When learning, students love to ask, “What does this have to do with real life?” When a teacher uses an emotional question, the students discover the real-life application for themselves! To answer an emotional question, the student must link the information being learned to personal experience.

Emotional questions start with a premise (sometimes called “begging the question”) and cause the student to work from that premise to apply the material being learned. The premise in the example question is that the American Revolution had some impact on the life of the student.

If the example question were made instead into a reasoning question, it would go something like this: “Has the American Revolution had any impact on your life?” The difference between the result of a reasoning question versus an emotional question is evident in these two preceding examples.

Better Questions = Better Answers

Every teacher’s dream is to have students who understand, accept, and apply what is being taught.

By using factual questions, the teacher learns if the student is paying attention and understands the material. Answers to reasoning questions show a deeper understanding and acceptance of the information.

The best questions of all, emotional questions, help the student make personal applications of the concepts being taught. By using these three types of questions, teachers will become more effective in instructing and inspiring their students.

So…how do you use questions?

Posted in Business, Interpersonal Skills, Selp Improvement
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Hardball is So Last Century: Why Mean People Lose

Posted By damien on March 4th, 2010

Angry catThe era of mean business is over.

Internet killed the hardball-playing jerk.

It no longer pays to drive a hard bargain.

Why do I say so?  Two reasons:

  1. The abundance of information thanks to the internet
  2. and the abundance of choice in products and business partners

No More Secrets…

The internet and the flood of information that came with it has been a game-changer for the American business model.  Today’s business world is too full of information and opinions for anything to stay a secret for long.

This abundance of information has negative consequences for mean people.  Anyone who acts the jerk in business (or life in general) nowadays will have to face the music on facebook, twitter, blogs, etc.  Mean people just can’t keep their meanness a secret for long.

Eeny, Meeny Miny, Mo

In this new, flat world, your pal in India (or Bangladesh, or Canada) can supply your business with whatever it needs. There is just too much choice in business to be a jerk!  We have no need to put up with bad products or business partners.

My generation, Gen-Y, is especially aware of the abundance of choice and information.  As my friend Brant Choate explains, if you are mean, boring, or incompetent, we’ll drop you in a heartbeat.

It Pays to Be Nice

How can you make sure you aren’t the jerk?  How can you keep your customers (and colleagues) from trashing your name on the internet?  I have just two bits of advice:

  1. Be Sincere: Fakeness has a certain odor to it that is instantly detectable and repugnant.  If you are insincere, people will pick up on it and withhold information, business, and even friendship from you.
  2. Bring Something to the Table: No one likes a person who takes and never gives.  If all you do is take, pretty soon the well will dry up and you will constantly be on the hunt for new “marks”: new people to use.  Give abundantly and it has a way of coming back to you.

Bottom line: in today’s business world, mean people lose.

Posted in Business, Interpersonal Skills
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