Mt. Gox has fallen. Approximately $500 m USD worth of bitcoins “disappeared” overnight. What is a bitcoin? It is a cryptocurrency with a floating price and a fixed supply. Bitcoins can be exchanged for free. No government, central bank, or financial institutions govern, regulate, or take fees from bitcoin transactions. There are many other cryptocurrencies including litecoins, dogecoins, namecoins, peercoins, and the list goes on and on.
Trouble in Paradise
Mt. Gox got its start as an online card trading platform for the game Magic: The Gathering Online. The appeal of cryptocurrencies is the freedom from the perceived control and corruption of the Central Banking system. Mt. Gox provided users with the ability to exchange cash in various foreign currencies for bitcoins. At its height, Mt. Gox held as much as $500 m USD worth of the cryptocurrency and then things fell apart. The exchange suddenly stopped honoring transactions. Days later, the CEO apologized at a press conference where he announced that Mt. Gox was filing for bankruptcy. These actions left Mt. Gox customers broke and befuddled.
What is Money?
This post is not just about Mt. Gox or dogging bitcoin. The fall of one of the largest bitocin exchanges begs the question: “Why are cryptocurrencies any better than money?”. It helps to define what money and currency are. Money is a medium of exchange, a store of value, and a unit of account. Currency refers to a specific type of money. There are and have been many different currencies.
Government-backed currencies like the US dollar, Japanese Yen, or the Euro are backed by the full faith and credit of the respective government. Banks that are based or transact in each country have to follow a set up established rules and regulations. Central banks study trends in the economy and adjust the money supply to maximize employment and control inflation. Inflation occurs when the money supply exceeds the demand for money. Deflation occurs when the demand outpaces the money supply. I did mention that bitcoins have a fixed supply of the currency making them deflationary. However, the price does fluctuate.
The freedom derived from cryptocurrencies not being backed by governments is also its greatest flaw. The US Federal Deposit Insurance Corporation (FDIC) insures customers’ money in banks up to $250,000 in the event the bank fails or files for bankruptcy. Mt. Gox customers had no one to turn to. Rogue exchanges also don’t have to follow best practices for security – leaving them more open to attacks from hackers.
Tulips, Stamps, and Bitcoins
We’ve heard this story before with tulips, stamps, and other bubbles. Tulipmania. The value of tulips skyrocketed to astronomical heights before crashing. Furthermore, Charles Ponzi thought he found a legitimate way to make money by trading International Reply Coupons (IRC) for postage stamps. For a moment, it seems like there was a business opportunity there. However, it just didn’t scale. That didn’t stop Ponzi (or Madoff) from engaging in his scheme.
It only requires a few believers in the bulb, stamp, or cause. Convince a few suckers to invest. Pay off the next set of suckers with the last suckers’ money. Wash, rinse, repeat. In this case, cryptocurrencies address the real problem of corruption in politics and banking. It is extremely important to attain freedom from financial corruption. Unfortunately, without adequate standards and regulations, cryptocurrencies are just tulips by another name.
Imagine that a terrorist organization aimed to poison the water supply with dangerous chemicals, blow up a fertilizer plant in a residential area, or dump nearly 5 million barrels of oil into the Gulf of Mexico. The US Government would waste no time smoking said terrorists out of their holes. However, this is not the case for corporations. The events I mentioned were perpetrated by corporations – corporations that have invested in lobbying and political action committees to reduce or eliminate regulations aimed at keeping the public safe. The fertilizer plant that exploded next to schools and homes occurred in West, Texas. We are all perhaps familiar with the BP oil spill and the recent chemical spill in West Virginia that rendered municipal water unusable.
The major tragedy in West Virginia is two-fold. On one hand, regulations on chemical storage for coal suppliers was eliminated. Thus, companies like Freedom Industries had not had a site visit from State or Federal inspectors since 1991 despite being located right along the Elk River, a major water supply. On the other hand, there was very limited knowledge of the chemical that was spilled. The tragedy goes a bit further when politicians on both the right and the left loudly boasted right after the incident that regulations on the books are sufficient, e.g., Speaker John Boehner and Senator Joe Manchin. West Virginia is a state that is hard-pressed for job growth so this is used as an excuse for lax regulations on coal and coal-related industries. Yet, it seems like profit trumps the safety of citizens.
I founded Spendology because I wanted to bring decision tools used by executives to individuals. I literally wanted to give Decision Power to the People. I am an African-American male. I am very familiar with the concept of white privilege. Dave Chappelle jokingly highlighted this concpt with one of his stand-up routines. Chappelle was with a white friend who was driving under the influence who got stopped by police. His friend simply told the police officer that “he didn’t know that he couldn’t do that” and was allowed to go about his way. Mr. Chappelle hilariously expressed his shock. Stop and Frisk data shows that blacks and latinos are stopped more often and arrested at higher rates than whites. Yet, white privilege emboldened former Mayor Bloomberg to say that black males are not stopped enough.
It appears that the concept of being privileged has somehow extended to corporations. Actions that would be considered terrorism are reduced to the “cost of business”. Companies like Apple proudly proclaim that they must offshore and minimize taxes in the interest of shareholders. Companies like Walmart and McDonald’s depend on US Government subsidies like welfare, food stamps, and Medicare to subsidize their poverty-level wages. Nonetheless, politicians and some people hardly bat an eye because this is somehow what companies are supposed to do. The extent of the privilege appears extreme when we look at what executives and lobbying efforts are pushing for: weakening the social safety net, eliminating regulations, and lowering taxes. The tax issue is huge. We usually hear that taxes are too damn high. In fact, although the US corporate tax rate is 40%, the Government Accountability Office found that the effective corporate tax rate was 13% in 2010.
Moreover, companies have been shifting the burden of training and taxation to the State and its citizens, respectively. At one point in American history, corporations and individuals paid taxes at roughly a 1:1 ratio. At this point, individuals contribute 6-fold more to taxes than corporations. Corporate executives and Governors are pushing for a Common Core curriculum so that students are ready for work on day one – perhaps because internships, apprenticeships, and on-the-job training is on the decline.
Moreover, members of the elite 1% are striking back against calls for a living wage or income equality. Multi-millionaire venture capitalist, Tom Perkins, even joked that you should only be allowed to vote if you paid taxes and that the power of your vote should be in proportion to the taxes paid. There was a time in America when you had to be a white male landowner to vote. Comments like that from Mr. Perkins are a reminder that privilege is not about seeing reality. The 1% don’t just want to be wealthy and successful. They also want reverence and respect despite lacking respect for those who work full-time for little pay and no benefits. However, my biggest problem with corporate privilege is that it is robbing workers of dignity and dollars as well as the right to life, liberty and the pursuit of happiness.
Tom Perkins and Bud Konheim are 2 of the many rich people who have recently lashed out against the 99%, claiming that the rich are demonized, and unfairly taxed. Are these rich-kid complaints warranted, or are the mega-rich completely out of touch with reality?
Living in the US, one must clock-in about $500,000 in annual income to be considered a part of the 1%. After taxes, and depending on where one lives, this might not leave them feeling as rich as they sound. Individuals in the 0.1% bracket are far wealthier, making millions and billions of dollars each year. The class diversity among the 1% is steep, but it’s nothing compared to the spread between the super rich and the average Joe. Separated by city limits, school systems, and gated communities – most of the 1% has created a reality all their own, in which some believe they play the victim.
I doubt Don Thompson, the CEO of McDonalds, lives near any of his employees, the ones that make his business go-round each day flipping burgers, serving customers, and cleaning bathrooms. While Don Thompson earns around $9,200 dollars an hour, most of his employees make minimum wage, not even a living wage. Still some wealthy citizens feel entitled to large paychecks, even if that means those further down the assembly line make next to nothing.
Harvard Professor, Greg Mankiw routinely speaks out for high-paid executives, stating that they deserve the exuberant money they make. Tom Perkins, the founder of successful venture capital fund Kleiner Perkins, got a bit too cozy during a recent interview with Fortune magazine saying the rich were in danger of Kristallnacht, born from the same scapegoat mentality thrust upon the Jews during Hitler’s reign. The fact Mr. Perkins was booked for an interview and not hiding beneath a less wealthy neighbor’s floorboards indicates the exaggerated nature of his words. During this same interview, Mr. Perkins also divulged his desire for more voting power to compensate for paying more taxes. Needless to say, this earned him serious public backlash, at which point he told the press that his comments were made as a risque joke. Yet, as they say, there is some truth behind every joke, and perhaps the rich are feeling unfairly attacked.
The 1% are given a lot of tax breaks, but they are also undeniably forced to pay a lot of taxes. Is it fair that they have to give away nearly half of their hard-earned money? Any mega corporation clocking in billions is doing so only with the help of the larger population, and so giving back is the right thing to do. But how much is too much? Many of the 1% believes the astronomical funding they provide the government should earn them favors, some argue it already does. Tom Perkins will take his reward in more voting pull, while Bud Konheim, the CEO of designer clothing brand Nicole Miller, thinks the 99% should stop complaining. Konheim can’t get past the fact America houses the richest ‘poor’ people in the world, and those that make $35,000 a year are a part of the global 1% richest people. While his facts are accurate they are also irrelevant, especially to any single parent working 2 jobs and barely making ends meet. While the average salary in India is far lower than it is in America, the cost of living is unbelievably lower too. It seems exuberant wealth and prestige can cloud an individual’s reality in more ways than one; the Institute for Policy Studies released a dark secret about the top paid CEOs over the last 20 years: 38% of them conducted white-collar criminal activity on the job.
Despite Tom Perkins’ complaints, or the fact rich CEOs are actually bad people 38% of the time, the rich are far from demonized by public society. Shows like Rich Kids of Beverly Hills wouldn’t exist if everyone truly hated the 1%. We can’t lump the entire 1% into one group of identical people either – some high paid CEOs devote more power to the greater good of society than others. The worst and most greedy CEO is one that does not pay their employees enough money to live comfortably and save. CEO’s that earn millions, but have employees making $7.50 an hour are stealing money right out of needy’s hands just to buy another vacation home or yacht. In order for everyone to thrive, those with the bulk of the resources have to relinquish some of their money and power, otherwise CEOs will continue flying jets while their employees struggle to pay basic bills.
A quote from Oliver Stone’s film, Wall Street, comes to mind: “How much is enough? How many yachts can you water ski behind?” . The so-called class war is not about hating the 1% it is about valuing the hard work of all people. If you work full-time you should not be below the poverty line. Most importantly, paying employees a living wage is about the value of the worker and not just the value of work.
Credit cards are a part of everyday life; and, there are a seemingly endless number of options out there to choose from. Many companies offer rewards cards, where the cardholder receives certain benefits or rewards for signing up for and using their credit cards. With such a wide range of cards being offered, it can be tricky to decide which card is the right one for you. This is why we’ve put together this useful guide to help you get started on the road to the big payback.
First of all, it’s important to remember that a rewards card is essentially like any other credit card, so the same basic rules of credit apply here. You are still going to pay an interest rate, and your credit limit will have an effect on your FICO Score. The key to rewards cards is to ensure that your interest rates aren’t above your FICO score, as well as making sure that your payments are always on time. When it comes to credit, the lower you can keep your balance the more it helps your credit score. Hence, the smart play is to make sure that you use your credit card wisely – only charge when you need to and try to maintain a zero balance every month. Credit is a wonderful thing, but debt is not; so do your best to keep your balance, and your debt, down to a minimum.
Now that the basics are covered, let’s look at some other key factors to consider when looking for the perfect rewards card. There are a few basic varieties:
Cash back cards are cards that earn cash for the user whenever they use their card for a purchase, encouraging the user to earn more by using their card more often. In general, most companies offer 1% cash back on every purchase, though some may offer a higher percentage on select types of purchases, or certain merchants or as further incentive for increased card usage. Most cash back cards have an annual fee attached to them, which can be something to consider when you’re weighing your options.
Travel/Hotel cards are cards that offer points on all purchases with bonus points for travel purchases or hotel stays. Many of these cards are co-branded with a hotel company, airline, or travel agency and offer extra points for money spent with their company. Some travel cards offer additional rewards such as redeeming points for plane tickets, upgrades, theme park admissions, and other travel-related perks.
A sub category in the travel cards is the airline miles card, which can either be attached to a specific airline or offer generic miles. The generic variety earns point on every dollar spent with the card and points are redeemable through any airline or travel company. The airline specific card earns points from all purchases but typically also earns bonus points by flying with the airline offering the card. Many of these also offer additional perks such as priority boarding, free upgrades, lowered baggage fees, and more.
The vast majority of travel cards come with an annual fee, so this type of card is really only ideal for someone who travels very frequently and will make the most out of the benefits offered.
Gas and Grocery cards are cards that earn rewards points on all gas and grocery purchases made with that card. These cards give users rebates of around 1-2% on general purchases and increased rates of around 5% back on all gas or grocery purchases. Some of these can be specific to a certain chain so it’s important to consider your needs. If you’re very loyal to a certain chain, then a company-specific card is your best option as it can offer you certain additional perks. However, many chains can be local to a certain region, and if you travel frequently then you might be better off staying away from something that restricts you to a certain company.
Retail rewards cards are cards that are tied to a specific store, such as Macy’s, Target, Walmart, Amazon, etc. These cards reward everyday purchases with double or triple points for purchases made with that specific retailer. Points are redeemable only with that particular retailer. Be warned! These cards tend to have higher interest rates than the other types of rewards cards, so this is definitely one that is best suited for people who tend to pay off their monthly balance consistently.
General rewards cards are cards that accumulate points through most types of purchases, and points are then redeemed for various types of rewards ranging from gift cards, electronics, and jewelry to plane tickets, hotel accommodations, special events, and more. These cards are generally free to maintain, but the offers and rewards are subject to change, so make sure you read the fine print before signing up.
Another critical thing to remember when signing up is to look carefully at what the restrictions to your rewards programs are. Not all rewards programs are created equal, and uninformed consumers sometime get a nasty shock when they find that the rewards they were looking forward to have been restricted by technical details that they missed when signing up. Look for a card that doesn’t have blackout dates, which tend to fall around peak travel seasons and holidays and can render a seemingly perfect travel card to being utterly useless.
As you can see, there are a wide variety of rewards cards to choose from out there. Each comes with its own strengths and weaknesses, so take some time to carefully consider your needs when choosing the card that is right for you. As long as you’re able to pay off your balance every month, a great strategy is to get a few different rewards cards so that you can maximize the benefits you receive from each one, combining multiple rewards programs to fill in the gaps that each one has individually. Many of the rewards offered are travel-related, so rewards cards are especially well suited to someone who travels a lot for work since they can not only get points, but also be reimbursed for their business related travel costs. Sound off in the comments below to give us your take on the best and worst that rewards cards have to offer.
*Disclaimer: Spendology LLC has an advertising relationship with CardSynergy, a subsidiary of Bankrate, Inc. that includes advertising offers from investment brokerages, insurance companies, and credit card companies.
54% of Americans will celebrate Valentine’s Day this year; and, while the average individual will spend between $60 – $130 – men will spend much more than women. You can drain your entire bank account, but there is still nothing like a gift from the heart. There are many ways to wow your loved one without feeling financially strained. Step away from the fancy department stores with their high interest rate credit card offers, and get back to the reasons you fell in love in the first place with these Valentine’s Day gift ideas from the heart.
4 Great Gift Ideas From The Heart
1. Plan a Romantic Adventure
Valentine’s Day dinner can be an expensive endeavor; especially if your date is interested in white-tablecloth restaurants and purchasing bottles of wine. With some diligent planning you can get around high-priced reservations without sleeping in the doghouse on Valentine’s night. If you live where the weather is nice, create a scavenger hunt through a local trail or park leading them towards the perfect spot for a picnic, in which you will bring along with all of your partner’s favorite foods. Dealing with ice-cold weather? Scoop out some indoor public locations, a library or local museum makes an oddly romantic backdrop for Valentine’s Day scavenger hunts. The hunt can even lead back home, so long as your familiar residence has been turned into an unfamiliar and warm oasis. Light the fireplace, adorn everything with lite candles, and make sure all of your loves favorite foods and beverages are waiting nearby. Going all out for someone like this will mean more than any high-priced meal in a restaurant full of strangers ever could.
2. Put Together A Scrapbook
Go old-fashioned using glue and scissors, or design one of the many affordable print-to-order scrapbooks available online. Any way you put a scrapbook together is sure to delight, just whatever you do don’t put a bunch of photos in an album and call it a day. You should spend a considerable amount of time creating this scrapbook, adding in captions, titles, themes, stickers, and quotes. The more effort you put into this scrapbook, the more your love will shine through the pages.
3. Create A Romantic Coupon Booklet
Creating romantic coupon booklets can be really fun; grab some paper, markers, and whatever else you wish to decorate your coupons; and, then it’s time to get creative! Think of everything your partner would love you to do for them and write these things down onto the coupon cards. For example: One Hour Long Foot Massage, Do the Dishes, Wash the Car, Cook Dinner, or A Bath with Champagne and Rose Petals. Give him or her lots of different coupons to use so that this Valentine’s Day gift keeps giving the love all year round.
4. Personalize Affordable Gifts
Regardless of brand name or price tag, something ‘meh’ can become ‘wow’ with a little personalization. For instance, if you buy your SO a glass box for Valentine’s day they might not be too happy with you, but if you have this same affordable box engraved with a personalized saying and signature, along with a hand-written note tucked inside, this regular-old glass box just became a special gift to treasure forever.
5. Keep Your Romance Red Hot
Don’t let a holiday based on love and appreciation create future headaches for you and your loved one. Nearly 80% of divorces result because of money troubles. This statistic is very telling. Consistently living outside of your means will undoubtedly lead to a stressful financial picture, which will domino into tense arguments between you and your partner. If you want a red hot relationship, keep your finances in the green this Valentine’s Day and show your partner just how much you love them with a gift from the heart.
As Valentine’s Day nears and I begin to think about a special thing I want to do for my loved one, I gain X-ray vision and see right through the event to the other side. After Valentine’s Day comes tax season, spring sports, summer vacation…and the list goes on. I think of all the things I need to save money for, and Valentine’s Day begins to give me angst. Most of this anxiety comes from countless over-the-top dinners, nights out dancing, boat rides, lavish gifts, weekends away and other expensive displays of affection that have come out of my wallet in the name of cupid’s holiday. Somehow, romance and love got lost under a roll of cash.
Does it have to be this way? No! You can show love on a budget. I have learned that displays of romance are far more important on V-day that an exorbitant gift and it is possible to celebrate this holiday without applying for a new loan. This will require more brain power, creativity and resourcefulness; but, I think you are up to the challenge. And if you are not, I have provided a few ideas for you below. Here are a few thoroughly romantic but totally free (or really cheap) things to do for Valentine’s Day:
Have an afternoon date and go ice skating on a local pond/hiking/bicycling. Bring a picnic with heart-shaped sandwiches and bottle of wine
Leave a trail of rose petals from the door to a big bubble bath with candles and champagne
Dress up as your loved one’s personal masseuse and have massaging hands, oils, lotions and potions, white towels, and a makeshift massage table or bed ready
Rent Caligula and dress up in togas. Have grapes, cheeses, and wine ready, lots of pillows and lounging area
Put on your spiffiest, high class clothes, pop some classic crooner tunes onto the iPod and stay at home for your own romantic, dancing fete
Have poker night. Make sure the queen/king of hearts says “I love you” on it
Attend a local art show opening night, a free outdoor concert, amateur night at a coffee house
Pack a basket and a blanket and go stargazing or cloud watching
Have a sledding contest where you can only use household items to sled down the hill, build a snowman, or have a snowball fight. End the day with hot chocolate, oatmeal cookies and a fire
Do a brewery, farm, or winery tour
Go fly a kite, and put a nice message on the kite for your loved one
Love letters and love notes go a long way, so be sure to include them where appropriate. If you are completely tired of focusing on each other during Valentine’s Day and can’t stand the thought of spending another dime, then donate your couple time to a local charity to remind both of you why money isn’t everything, but having health, love and comfort is.
In reverence to the fast approaching Valentine’s Day, it’s a good time to take stock in how to get a date. In today’s world of demanding careers, disparate families, or single parenthood; the majority of single people have run to their computers and joined dating sites in order to meet that someone special. As if dinner and a movie wasn’t getting expensive enough, now you have to pay to find the person to go on the date with you. It’s almost enough to send you right over to a free dating site. Or is it? After some research, and some bad dates, here is the low down on the economics of dating sites.
There are several options for free dating sites out there, such as OKCupid and DateHookup, where you can cruise profiles and find Mr. or Mrs. Right. However, let us have a discussion about quantity versus quality. If the individual can’t afford a dating site, is that going to be a person you want to be with? How about another point of view? If the person is too stingy to spend money on a dating site, can you see yourself spending time with that person?
Only you can answer those two questions, but in general, they are not qualities I admire in a person for a long-term relationship. However, if I am just looking for a warm body to join me for dinner, there are plenty to choose from on these sites. You will find most people on these sites have similar attitudes in that they are looking for someone for tonight, not forever. Let’s just say, you get what you pay for.
Paid online dating sites tend to run between $20 per month to $60 per month, depending on the various discount packages you acquire. You do tend to save money per month the more months you sign on, but I generally warn individuals to dip in their toe first and make sure they like the water.
Two famous paid dating sites are Match and EHarmony. Both claim to have systems that accurately match you up with your true love. I do find most individuals who have joined these sites are looking to start a relationship, not simply flit from dinner table to dinner table. I have heard the new wives tale that one should join Match to go on good dates, and EHarmony to get married. However, I find they are all the same people no matter which site you go on, so please save your money, and only join one at a time.
If you are looking for love and don’t have the network of friends to introduce you to Mr. or Mrs. Wonderful, there is also the matchmaker. There are several matchmakers available around big cities, and for fees of $500 to $3000 for a set period of time or number of dates, they will introduce you to who they think in their network would be perfect for you. These tend to have better luck because all matchmakers require they meet you in person in order to appropriately match you up with a significant other.
The fact is whether you spend money on a dating site or not, honesty is the only way you are going to meet someone. If your profile is accurate and you are honest about what you like and don’t like, you will get more for your monthly payment. Dating online can be a full-time job, and anyone who thinks they are saving time by dating online hasn’t done online dating. I suggest finding one low-cost dating site, be honest, get a date for Valentine’s Day, and see where the internet takes you.
When it comes to saving money, there is a place many of us fall down: learning to say no. It sounds simple, but if you have had to cut yourself off from ordering a cafe latte each morning so you can go on vacation, you know my pain. Think of how many times you have an opportunity to buy something in one day, and you can see the problem. Saving causes you to have to say no to a multitude of spending opportunities, every day.
A good start is to say no to credit card usage. We tend to forget that which we don’t see. It is very easy to happily charge away and blissfully ignore the total amount stacking up. Before you know it, one enormous amount is due, and no money exists for your financial goals. Add interest charges to that, and you can kiss your vacation goodbye. This is especially true when using more than one credit card. Eliminate usage of all credit cards and leave them at home.
If you have to use a credit card, use it for predictable spending amounts that can be repaid each month like purchasing gas for your car. Most credit cards allow you to set “spending limits” and will notify you when the limit is exceeded. Set the limit equal to a 15 to 30 day spending amount and don’t go over.
Another good rule is to say no to anything new. Not purchasing new clothes, furniture or electronics is a no-brainer. But how about some of the smaller new things we encounter? For example, don’t super-size your meal, buy a candy bar from the vending machine, go for drinks with your co-workers, buy coffee at a coffee shop when it’s cheaper at home, or buy brand name when you can deal with generic. Although these may add up to a few dollars here and there, they can add up to big bucks down the drain and not towards your goal.
There are a few tricks I have learned to remind me of my financial goals. One I especially like is wrapping a post-it note around my credit or debit card. I write “vacation in the Bahamas” on the post-it note, so whenever I reach for my card, I am physically reminded of my financial goal.
We talked about leaving your credit cards at home, but have you thought about leaving your debit card at home? Pay all bills online, withdraw the exact amount to spend for the month in cash, and put the rest in savings. Each cash amount is put in an envelope labeled for its purpose (gas, groceries, lunch, etc). By paying in cash, I always know how much is left to spend and I can’t overspend.
Last but not least, I find it helpful to post a picture of your goal, such as your vacation destination or the new car you want to buy, on the closet door, in the kitchen, or in your car and write the words “say no” on it. This will remind you first thing in the morning that you have financial goals to meet, and you need to learn to say no to anything that doesn’t help you meet them.
The way we understand change shapes how we respond to it. For the purpose of clarification, I want to develop a working definition for change so we are all on the same page. Since change is very relative and subjective for each individual, in this context change will be defined as intentional or unintentional experiences that evoke resistance from a difference in life circumstance. The purpose of this is to cover the spectrum of possible forms of changes such as maybe breaking a bad habit that is giving us health problems, financial issues, moving, etc. What I am stressing is the internal response of the external change. These changes are difficult but why are they so difficult or habits so hard to kick? In fact, this difficulty of adapting to change is stemmed in our behavior and habitation being so ingrained in our brains that it is wired for this response. The good news is that the mind has the ability to be rewired. Positive adaptations in behavior and the use of coping mechanisms enable greater emotional and mental resilience to life’s quick turns. This is called neural plasticity, denoting the potential for your brain cells, called neurons to recreate new pathways through experience. Therefore experience can create structural changes in the brain showing us that we have innate capacities within us to adapt and change!
If experience changes the structure of our brain, then how can we optimize are chances for successful change? Often when confronting change head on we can hit a wall of resistance because we are being pulled out of our comfort zones. This is when we might fight change and seek comfort in old habits. Everything is perspective and context, our individual perception of a problem might be different from person to person so our ability to re-frame how we view our problem becomes an important element of successfully adapting to change. The idea being to expand the inner landscape in which this change is arising. For instance, imagine our mind as a pond and a rock as our life circumstance; if we drop a rock in the center of the pond we can see the rippling effects being the effect of this change on our psyche and being. The smaller this pond, let’s say the conscience part of our mind viewing the problem, the effect of the rock ripples through the whole area of the pond becoming an invasive force on it. Perspective allows one to expand this pond – to widen and dampen it’s impact – so as to minimize the resulting impact to the psyche. Understanding certain truths of our lives; although painful, ultimately allows perspective to be accessible and slowly expand this so-called pond of our mind. Life is difficult and will always present problems so if we allow ourselves to change the context in which we view our obstacles, change can become a fluid and seamless flow in our lives. Knowing and embodying perspective can be liberating and change the way we are motivated to confront our life’s issues rather than swimming against the current.
This is when it is helpful to look at our motivations for change to see if they are driven from negative forces such as fear or guilt. Creating and sustaining change is most likely when we are positively charged and self-motivated. This again, can be tied to how our brains are wired: our cognition aka our thoughts consist of a lot of our neural activity therefore connected to our experiences. Looking into the way we think about ourselves and our life situation is pivotal to allow for the best chance for change.
So if we see the power of how our attitude, thoughts and perception impact our chance to bridge successful change, is that it? There are often a lot of waves of positive thinking out there in self-help, positive psychology genres but if it is that easy then why don’t we just turn that switch on? The answer of course is it’s not quite that easy because our neural pathways have trained themselves for this type of thinking and behavior so at this point, our negativity, resistance and habituation is instinctual and impulsive.
How can we integrate and process these perspectives so they actually become real for us? The answer: Mindfulness. Mindfulness has been proven to be an effective mechanism behind neural-plasticity. Mindfulness is a form of practicing present moment awareness through paying attention non-judgmentally to the unfolding of our experience moment to moment. The practice of putting attention into the moment without judgment allows one to strengthen our capacity to be with what is. You know the saying “go with the flow”? Mindfulness is a direct experience of practicing how to roll with the punches of life and transcend our inner resistances.
Adapting to change is not only about changing your perspective; it’s about being and living from this perspective. This transition comprises of practicing states of just being with what is. Sounds strange but we are so wired to stay busy – it is difficult for us just to sit and be still. Breathing and practicing being with our breath consciously is a form a mindfulness that gives us real-time practice of living with what is, meaning we are not caught in our thoughts, narrative of our life situation, we are just present to the instant experience of the moment. Traditionally the breath has been a focal point used for this practice since it is ever-present in our life without our conscious doing – it is therefore used as an anchor for the present moment. Our ability to focus our attention in certain ways activates the brain’s circuitry to neuroplasticity that is not only able to make structural alterations but accompanied by changes in mental experience such as mental and emotional resilience. Therefore, practicing mindfulness is the direct experience of figuring out how to how to re-frame our life as it changes so we can create space within the inner pond of our mind to witness the changes in our life without judgment. Along the path there might be regression, you might have to go backwards to go forwards, we must trust the process and do our best to be consistent and be kind to ourselves through this transition and exploration of ourselves. Integrating our insights from direct experience and widening our lens to how we perceive our life can allow us to face challenges in our life with equilibrium and clarity. Embrace and enjoy the journey of change!
Kabat-Zinn, J. (1990). (1990). Full Catastrophe Living: Using the Wisdom of Your Body and Mind to Face Stress, Pain, and Illness. New York: Dell
Siegel, D. J. (2007). The Mindful Brain. New York, NY: W.W. Norton & Company Inc.
Picture this: As a contestant on a new game show, you are placed in front of a foreign grocery store, given a time limit, and told to find one specific item for sale inside. You race off to find it, confident in your ability to do so. But what if instead, you were asked to find three or four different items within these unknown store walls? Sure, it’s doable but instead of quickly finding one item you will be looking for multiple things, all of which will clutter your brain-which should I find first? What was that last item again? In other words, finding 2+ items will take more time, and be more frustrating. Although at first it might seem irrelevant, this same logic can be applied to saving money and setting goals. Why make things more complicated than they have to be?
One Goal, Many Purposes
In life, everything is interconnected, all of the choices that we make domino into something else. Therefore, while going after one goal at a time might seem like a slower way to success it’s actually the faster route, especially once your goal begins cascading into other areas of your life. For instance, you can make a goal to save for a family vacation, and another goal to save for a new house, or you can make one goal: save as much money as possible. This one goal will change so many aspects of your life, from your financial stability to the quality of your life. Besides saving money there are other types of multidimensional goals, like one of the most popular resolutions people make in America, losing weight. By setting a goal to drop a few pounds you will be improving more than your health – you’ll be eating out less, thus saving money, and also weight loss is known to increase confidence.
The Proof is in the Research
According to an article published by theJournal of Marketing Research, setting one goal instead of many different goals is considered adamant to success. If you save money and then allocate funds wherever necessary when the time arrives, saving money becomes less about thinking and more about doing. To prove this, they conducted a few research examples. In rural India participants who were given multiple savings goals were unable to save as much money as those that were given one goal, to save as much money as possible.
Avoiding The Reasons We Fail At Our Goals
So what causes us to fail when we set too many goals? Humans have a limited amount of energy to dedicate towards behavioral changes; no matter how hard we try it’s a part of our basic biology. When we have a surplus of goals we start rationalizing over which goals we will adhere foremost. Whenever we think too much, results become more about want than need. Perhaps we really want a pair of new shoes and we are forced to decide – save a little bit of money into each savings account for a small change in each balance, or buy the shoes and have instant gratification?
As Barbara Corcoran from Shark Tank discussed on CNBC this month, one can talk all that they want, but without the energy to drive them forward nothing will ever be accomplished. Keep in mind your energy reserves are limited; don’t waste time over analyzing or stressing over how you will ever accomplish all of these goals. Avoid burn-out by setting one cascading goal, or a single goal that will effortlessly impact other parts of your life.
The Psychology Behind Goals
In 1999, Psychologist Peter Gollwitzer first published his research on goal attainment. He details 2 stages to accomplishing goals, the first is creating the actual plan and the second is all about putting the plan into action. It’s the formulation of any goal, or the implementation intention as Gollwitzer calls it, that determines future success rates; those that spend more time formulating goals tend to see better results. If you set three different goals it is time consuming, and perhaps even repetitive, to formulate separate plans using an equal amount of drive and passion. With only one goal in mind more time and commitment can be put into the planning and overall process, guaranteeing better results.
This extra boost of focus guarantees a quicker round of results, which is psychologically a very good thing. When we are rewarded, say by the fast growing balance in a savings account, the pleasure part of our brain lights up, and we naturally want to continue doing the activity that brought about this feel-good boost. On the contrary, when we try to save for too many things at once, goals are achieved at a slower rate-meaning the reward won’t happen as quickly and one risks burning out before the real rewards ever arrive.