Oct 292007

I’ve spent a bunch of time lately thinking about how to attract wealth into my life. I’ve got the mental virus that is keeping me broke (great site, btw, the best resource on attracting wealth I’ve found and he thinks/talks a little like me). I highly suggest reading that article because the rest of my post will make more sense. Another great one is Steve Pavlina‘s “Is Becoming Wealthy Inherently Evil?”

1. Money is just a form of holding value. It is neither good nor bad. We make judgements about the people who has a lot wealth.

2. Examine your critiques of other people’s monetary habits and think about it. For example, I think spending over, say, $50 for a pair of jeans is ridiculous, unless they’re going to last a really long time. I found this out because I caught myself thinking that in a store once. I have a very functional sort of understanding of value.

3. Another important way to determine value (other than the FUNCTION, not necessarily the form of something) is by its costs. This is what Paul’s alluding to in his mental virus above. How much did it cost to make this thing?

4. The most important thing about this cost-valuation thing is that that’s how I determine how much I’m willing to get paid—what’s my cost to rendering this service. The hours don’t really matter much to me, because I don’t really get paid to spend time with friends or go to class, so I don’t really tend to think in terms of time anyway. The cost I look at is how hard is it for me to do it. For example, I’d feel weird about taking more than 20 dollars an hour for doing tech-support, but companies like Geek Squad or Nerds on Site regularly charge hundreds of dollars for the same stuff I can do. The reason I believe I feel weird is because its not particularly hard for me to fix computers and do tech support. I feel that I have to sacrifice something more (other than time, although I think I might start charging more for that now), either emotionally or physically to get more money.

This is the same reason that Paul wrote that article and at the end he wrote that when your cost is pretty close to zero (ie, you’d do what you love even if you weren’t getting paid for it), what do you charge?

5. Paul’s suggestion is to charge what the market is willing to pay. That doesn’t really sit right with me, off the bat. Probing into why it doesn’t feel right to me, I come up with two possible reasons why. The first is that I’m afraid of being called a price gouger (sorta like how I’d react if someone charged me every last penny I would be willing to pay) and being greedy. The solution to this is not to go after every last penny, but do charge a fair price (how to determine “fair” value is the tough part here).

I also feel weird accepting more money if I know that they can get it cheaper somewhere else.

6. Also part of my valuation heuristic, if I found out that something cost a lot less to make than I paid for it, I think I’d be pissed. BTW, another that determines your behaviour is how you feel in one part of the relationship. If as a customer I’d be pissed if I was charged a lot more than it cost to make something, I’m likely to think that other customers would be pissed too if I charged them much more than my costs.

7. I’ve started to think to myself that things have value other than their cost or their functional cost. A good looking pair of jeans that costs a hundred dollars has value, just not particularly to me. Same with a BMW, it has other forms of value, if only as a status symbol.

8. The real question does seem how you determine the value of things. So far, I’ve found holes in the way I currently value things, but I’m still thinking about what valuation model I can use to replace it with.

Oct 292007

We human beings are pretty imperfect. That shouldn’t come as a surprise, but I always like to know the limits of human imperfection and the common ways it manifests. To that end, I love reading about logical fallacies, cognitive biases, and the such.

My favourite one is this:

Depressing things feel more like the “truth”. And some people feel compelled to focus exclusively on depressing things.

I’ve had discussions with people where I was focusing on something optimistic and they were focusing on something negative, and even though they acknowledged my point was true, their point was somehow more “true”.

The reason why I like it so much is because it isn’t actually about “truth”. It’s about how you set your filters. We all have filters setup in our minds that filter the literally googol-bytes of data the streams into your sensory filters all the time. See if you can remember a time when you were thinking about a certain car, shoes, clothes, ad, tv show or whatever and then you started noticing it more everywhere.

We need those filters and they do a pretty good job, the real issue becomes whether you set yours consciously or not. Many people have not. Many people simply inherited their filters from society or their families or who-have-you without really evaluating whether they’re the best filters for them. Many people seem to have a pessimistic or negative bent to their filters and thus they see that everywhere.

Honestly, I didn’t really consciously choose to be an optimist, I’ve sorta always been like that. But knowing that I am now, I consciously decided to remain an optimist and perhaps even become more of an optimist and a positive thinker.  Does that make being an optimist the “right” choice? That’s harder to answer. My reasoning is thus:

The objective information does not change (I’m assuming it doesn’t) no matter how I “feel” about it, whether I feel optimistic or pessimistic about it. Perhaps being optimistic actually leads you to more action (i think it does), but we’re going to ignore that for now and just think about our internal representations of events. Being optimistic, in general, feels good, while being pessimistic doesn’t (at least to me), so if I had to make the choice I’d choose optimism because it doesn’t make a difference either way except to how I feel.

Examples! A pessimist might point to the number of people dying in wars and genocides today and worry about that, while an optimist might point to the fact that the number of people dying in wars and genocides has gone down dramatically in the past fifty years, and its a been a downward trend over the past many centuries. Who’s right? Both people are, obviously, but one will probably feel more secure and safe and good about the present and the future and one won’t. Which would you rather feel?