Making transitions in life is probably one of the most under-rated skills. Similar to any high speed sport, the need to change speeds, directions and “run the game at your pace” is a critical skill. This occurs in life as well as we move from cranking long and hard hours to saving/investing to spending as much as we like. It isn’t easy to make transitions because it requires you to learn a new “mental model” or whatever the self-help gurus are calling it these days. Any successful person you meet will talk about numerous big and life changing transitions they have made. We’ll run through this in chronological order.
Shotgun Approach: When you’re extremely young, it is not clear where your skills are. While a few lucky people are born as a child “prodigy”, the vast majority are born with a set of skills that range from 1 standard deviation below to one standard deviation above. The key is to shot-gun approach and try everything you can. After shot gun approaching your life, you’ll find a handful of things where you’re good at the task. The best example is in the physical realm (which is why we will always be interested in sports!). If you find that you’re not very ambidextrous, you’ll probably move into sports like golf and tennis and away from sports like basketball and soccer which require both sides of your body to be used frequently. On the other hand if you find out that this performance difference is immense (for some reason one arm/limb has significant strength), you may end up as a field goal kicker or shot put thrower. Either way, as you learn each and every nuance of how your body works, you’ll decrease the list to select few.
Accepting Reality: This is typically the first failure in making a smooth transition. Many people do not bother to accept the reality of their skillset. If someone would make an excellent tennis player but then focuses on volleyball because they enjoy the sport more… this will typically lead to a disappointing result. Now to be clear, we’re assuming the person is attempting to win and not doing this as a hobby. Since accepting reality now refers to making money, we can apply this to your soft skills. If you’re unable to be a solid software developer/coder, it does not make sense to enter this field today just because it is “making money now”. Instead if you find that sales comes easy to you… it’s time to focus on that segment. Sure a top tier engineer may out earn you, but it’s better than being a bottom barrel engineer and earning less than you would as a top tier sales professional. We’ve seen this mistake many times. We still get the same questions “which career to choose” and the answer is always the same… the one that you will be best at. If you’re going to be one of the best at it, we place the chances of making no money at around 0.0001%. Unless you decide to be a social worker.
Competition Now Goes Up! Assuming you’ve done the first two big steps, you’re now in the big leagues. Competing against other rational people who were able to analyze their own abilities and choose the correct path. Now here is the kicker… The big problems typically begin around this age 18-22. We’ll put a band around it since some of you won’t even bother going to college because you’re already making money! *The Big Problems Are*: 1) getting into a financially responsible situation, 2) avoiding the complete death of your personality, 3) giving up control, 4) sending the elevator back down and 5) re-learning how to spend liberally.
1) Financial Responsibility: This is a big one. It is not possible to know how you’ll react when you start making a good amount of money. This is different for everyone. If you grew up lower middle class and make $100K/year out of the gate… This is going to be a big dopamine rush. We don’t know how you’ll react but most people get a big surge in confidence and… Irresponsible spending and investing. We rarely talk about saving/frugality here because it isn’t the best way to get rich but one thing we can recommend is “learning” how to deal with the large amount of income (large is relative to what you were previously earning).
Interestingly, this happens all of the time from age 20 to age 60. Even if you’re in your 40s… You may get a big one-time windfall and the exact same thing would occur (potential to lose it all through irresponsible spending and poor investments). For those that have made it, you’ll notice that your “friends” or anyone who knows you’re rich will “assume you will foot their bills”. This is how regular people operate. You shouldn’t allow for this and more importantly, if you find yourself doing it … that is an enormous burning Red Flag. People always say “If I had $XXX I would…” this is because they have no idea how much more responsibility they will have. As you move up the chain, it is harder and harder to lay low.
Since you’ll be taking the financially responsible route we continue to recommend Personal Capital. The Company offers *free* software tools that will keep you honest in terms of spending, net-worth growth and portfolio diversification.
2) Maintaining a Personality: This is a topic that is avoided by many: Elephant in the room. For anyone who has at least a decade of work experience (Career and Business owner only), they will recognize that many people give up everything for the all mighty paycheck. They may be incredibly deadly at the negotiation table… But they don’t have much else left after that. Many are trapped in dead-end relationships (marriage or otherwise). Many are out of shape with health problems that will take well over a year to solve. Many live a life of quiet desperation.
We hope that many of our readers already see this (a few years into work or otherwise). If so this is probably the most important pitfall to avoid. We think this life transition is more important than money because a bad investment or two (losing tens of thousands for example, or even a few hundred thousand) can be recuperated. Fixing a bland life that wasn’t living cannot be fixed. We can’t get our time back so there is no way to “undo” the hours of slogging away and living a repetitive life.
Most won’t like this part but we think the easiest way to prevent “personality death” is to spend the first five years (at least) with the following basic rules: 1) stay single, 2) stay out of debt and 3) spend at least two nights a week outside of your work/professional circle. Steps one and three are the hardest. Most are not comfortable with meeting new people on the fly and it is quite easy to get complacent with a normal relationship. The standard path which suggests: 1) college, 2) good career, 3) work hard and meet significant other, 4) locked into a relationship by 30 at latest, 5) kids and 6) death. It seems that this path is so engrained that even financially savvy people fall into the same trap… do the opposite. The best way to avoid it is to follow the outline we gave and watch as your friends and colleagues fall into this death spiral. Once you see how their lives change you’ll have a good grasp of when/if you want to live a more predictable life. *Hint, keep in contact with a few women during your college days to get a good glimpse of what is to come. Generally they will get married much earlier*
If people do not like this outline then we’ll make it easier. Unless you’ve already done everything you would like (personal basis) there is no reason to get trapped in the standard path. Once you’ve done/accomplished everything you wanted to do, feel free to take a look at a more predictable and stable life. For those that are skeptical still, for good measure… Look at the higher ups at your organization (if you have a job/career) and ask if you’d actually want their life. We know what you’re thinking already: No.
3) Giving Up Control: This is where the big money is made. While technology allows us to build massive businesses/organizations with a single person… eventually your time will become incredibly constrained. If you’ve made it to this part of the transition game, you’ve already made it. You’re making good money, you’ve avoided the standard path traps and on top of all this… your personality hasn’t been beaten down by corporate policies (you got out just in time!).
Here you’re going to have to release control of all the items that don’t generate large sums of money. If you can’t do this you’ll be forced to work long hours with nothing to show for it (flat income line). As you can probably tell, this is an important topic to us at this point and has occupied 20%+ of our thoughts lately. There is no real easy solution except for outsourcing the lowest skilled task and moving from there. Experienced people will likely laugh and say it is easy but we haven’t cracked this code yet. Our strategy has been slow and painful (as evidenced by the difficulty in updating this blog). If anyone has suggestions we’re outlining our leverage plan as follows: 1) outsourced admin for the most basic tasks – product returns, payment issues, organizing calendars, etc., 2) new email address to separate important people from less important people and 3) new accountant. While basic at first, this has already opened up several hours per week. The key now is finding a way to maximize those free hours and eventually hiring another employee for conferences/industry updates so the calendar automatically fills itself in.
Pausing here for a second, one item that is probably overlooked here is “separating important from unimportant people”. This may sound rude but it is the reality. It will also happen to you as well. Many of your contacts will fall off the map after making bad life decisions and on the flip side many people will likely reach a new level of success (a good thing). If more and more of your friends seem to succeed it is inevitable for you in the near-future. Ideally, a few will pass you as proof that it is possible and you can succeed in time and drop an email later to catch up once the amount of value you add is roughly equal.
4) Sending the Elevator Back Down: We’ve clearly done this in the form of a blog. As a basic way of giving back to strangers we’d suggest something that is break-even to slightly profitable. The reason is psychological: people don’t take free content seriously. We proved this many times in the past and as long as you over-deliver relative to the measly cost you’re charging you’re helping more people than a free product (no one reads free e-books). This is no different than giving a child something for free versus making him earn it by working for it. Even if it is the exact same product, the product that required work is taken seriously and appreciated (the one that was given for free is treated like trash).
Now starting a basic blog is definitely not the only solution. There are millions of other ways which include: 1) charity work, 2) teaching and 3) the extreme example of adopting kids. The point is that you’ll get a lot out of sending the elevator back down. Even if it seems like something you would never do, we’d suggest you try even for selfish reasons. Many benefits include: learning to communicate better, being forced to understand all the concepts better since you must pass on the information and increased empathy as you watch someone go through the struggles you once had in the past. Of these three the last one is probably the most valuable as you realize there are many people who have to work even harder than you do for the same result, seeing it in front of your own eyes will help you in your personal life.
5) Re-learning How to Spend: Once all of these items are complete you’re essentially “done”. There isn’t much for you to prove and there is limited upside to making the numbers on the screen go higher (net-worth). So you’re now in a new position where you evaluate where your life is going to go over the next 30 years or so. If you want a family… If you want more free time… If you want a dream house/car… so on and so forth. We can’t really answer this one and we’ve already spilled the beans on where we think we are (around three or four – financially independent but not willing to go entirely off the gas yet). The good news is that the end is clearly in sight so it’s at least time to prepare.
A few ideas we have worked with include: 1) ratcheting up spending every other month to find which activities generate the most “utility”, 2) organizing all cash flow items into a single umbrella and automating the deposits and 3) increasing travel to the handful of places that appear “livable” long-term. By doing these three things (and talking to successful people that are 50-60 years old) we think the preparation is largely complete. Note: successful to us is not necessarily successful to other people. We define success as 1) happy, 2) financially independent, 3) growing income and 4) solid social skills.
Summary Stages of Life: Essentially there are several big stages in life and each stage of the “game” offers a different problem that has to be solved. The big stages are: 1) disorder of knowing nothing about your skills, 2) specialization in the correct task that offers the best return, 3) giving up control of basic tasks that you “could” do (learned from step 1) to scale, 4) this leads to accumulation of knowledge, money and status, 4) combining these items you’ll now have a money printing machine to free up *time* which you will never exchange for money again and finally, 5) you begin giving back at a reasonable rate while figuring out how to maximize your happiness. While it appears easy, we’d say there are less than 0.1% that get through this mess. Even the financially rich fail in many of these steps.
another top notch post. saw you guys talking about more success stories from Efficiency on twitter, any chance of those being posted?
thanks
We only post ones if they allow us to.
My sales manager is in the 50-65 age range – he works late every day, and has to travel frequently for cadence calls, business reviews, and client events. Given industry statistics, he likely makes more than the sales engineers but less than the top salesmen.
I asked myself if I wanted his life at 60 – now I’m convulsing. Time to get to work…
I’m so glad that I purchased Efficiency at 18. Last year I was about to enter my first year at university as a CS major for the exact reasons you wrote about in this post. I was so fascinated by how AI/machine learning would shake up all industries that I didn’t consider whether *I* had that ability to do that.
After taking a brutal look at my own skills I realized that I’d be better off doing business/sales. As of this writing I’m awaiting acceptance at a target university for Finance.
You guys are truly a godsend, thank you.
I’m not sure about the death of personality. Most of the people I know who are killing it at work are involved in a wide network that reaches way outside of their company and includes other business leaders, non-profits and even political figures. They get invited to lots of events unrelated to their jobs and end up on charity boards and appointed to state commissions and they develop increased interpersonal skills because managing their brand in the diverse arena’s they take part in gives them a lot of energy and affirmation. Their relationships with their significant others is usually very strong because it is not required to fulfill all of their emotional needs, which no marriage can do. I tend to see many of those movers and shakers as very happy people with diverse interests. I feel like I was until I retired early and still feel that way even though I work much less now.
Fantastic! Sounds like you found several people you look up to that’s a good situation.
Everyone has a different life they wish to lead, if theirs is in-line with your belief stay on track!
Since moving to LA I recently read a blog called firstwefeast about a 21 year old girl selling art in west hollywood making 200k in commission working 40 hours a week then switching to do bottle service at a high end hollywood club still making 200k a year in pure tips alone but working only 10 hour weeks.
Immediately I got barback position and now working my way up to bartender to make 70k-100k a year in tips but working wayyy less than 40 hour weeks so I can focus on my ecommerce company while airbnb’ing out homes to throw parties that you have to buy $25 grey goose for $225 to get in so basically an underground nightclub than move on to helping my roommate reopen his nightclub in new york and be a partial owner in it.
I see this as the only way for me to win at life at age 27.
that’s all fun and games but as you get older…unless you’re cool being a bartender at 40….
Hot 21 y/o probably can’t earn that kind of money as she ages…i’m 100% sure that role is highly dependent on her looks.
Correct. But great idea for side income
Because most clubs are only open on fri/sat for about 5 hours us bartenders can focus on selling a product or service for our own company and scaling up from there. I wouldn’t do this gig for more than 2 years tops.
Most never bother to make it past stage 1 (finding skills).
Would rather file TPS reports and drown in liabilities.
Sad!
>1) outsourced admin for the most basic tasks – product returns, payment issues, organizing calendars, etc.
Hiring a virtual assistant doesn’t cost much vs the time you save. The trick is you get what you pay for. Sure, you can hire someone in Asia for $2/hour, but consider the amount of time spent on “lost in translation” issues.
For the younger people that don’t have much disposable income, I recommend (and use for trivial tasks) Fancy Hands for basic admin tasks such as call a customer service service line and patch me in with a human vs doing that myself, booking appointments/scheduling, etc.
Yo man, how do you like being a software engineer in NY?
I’m attending college in FL and may move up when I graduate in a year.
There is no NY software engineer, it’s an ad.
“*Hint, keep in contact with a few women during your college days to get a good glimpse of what is to come. Generally they will get married much earlier*”
Wouldn’t this make sense, as a girl’s value declines with age? Therefore it would make sense for them to marry on the early side. Or, are you referring to keeping tabs on the males they end up marrying?
Also, in regards to avoiding debt during the early stages, why shouldn’t we lever up to to start our business / expand it? Wouldn’t this be a more efficient way of getting it off the ground?
Cheers,
$Train
We answered all of these already on the blog search my man
Gotcha, I’ll figure it out and get back to work – thanks guys
You wrote “recommend” twice in a row where you mentioned personal capital. By the way, great article.
Fixed thank you Marc A.
The “shotgun approach” and the “accepting reality” stages were definitely difficult things to do for me. As you said many times, it’s hard to accept that you failed at something or aren’t that great at it. In HS, I realized that I sucked at sports and intent but am above average at numerics and synthesis. (I also have a great memory but that’s not a very useful talent. Although it did made my HS years very easy and boring.)
However, I have an incredibly stubborn personality and decided that I should focus on what I’m bad at. So instead of accepting that reality, I decided finance(IB) or sales was the way to go (I think you guys can guess how well that idea worked out). Now, have realized my mistakes and am going the numerics route. Definitely agree on focusing on what you can be good at. Had to laugh at the social worker comment, though. It’s so true.
This was crazy eye opening guys. I see this happen right in front of me.
My biggest challenge is the death life trap. I am financially independent by age of under 30, but burned myself hard during the process. I need a long period of rest and need to pick up with things outside of work.
Thanks for making me extra aware
I’ve noticed a major difference between how average and successful people make life transitions.
Average person: Dissatisfied with their life, makes sweeping but at the same time superficial life change.
(sweeping/superficial may seem contradictory but I’ll clarify with some WSP-esq examples).
Successful person: Dissatisfied with a certain aspect of their life, makes an incremental but meaningful change.
To give some examples:
Average person: Unhappy with their career: “The job marketplace in my city sucks, there is so much more opportunity in (new place).” So they quit, move to a new city (without doing much due diligence or laying any groundwork) and secure a job that is not a whole lot different than their previous position, except now they lack the professional and social contacts they had where they previously lived, leading to isolation and requiring them to start from square one.
Successful person: Unhappy with their career: “I don’t want to be stuck at this place for the next 20 years, time to start building an escape tunnel.” They continue to play the game at work, all the while saving/investing/building business that will allow them to eventually walk away with a substantial safety net and many open doors in place. If a change in geographic location is part of the equation they’ve already spent time in their planned destination, done a fair amount of research and started nurturing some contacts there.
_____
Average Person: Unhappy with their physique: “Man I’ve gained 20 pounds in the last 2 months, time to hit the gym and get back on that diet.” So they start to exercise and diet (after only doing minor research) which leads to small initial gains… that quickly disappear once they fall back into their old habits a month later. The gym owner is happy though as the average person continues to have their monthly membership dues charged to the ol’ credit card because “they were just too busy this week, but will be back at the gym bright and early next Monday.”
Successful person: Unhappy with physique: “I seem to have hit a plateau, why?” They isolate the factors that could be standing in the way of further progress: changes in diet, different sleep schedule etc, do research and start testing out possible solutions until they get results.
_____
Average person: Unhappy with relationship/social life: “Yeaaah… I mean my boyfriend’s great, but I really just need to take some time and do my own thing.” Dumps boyfriend, has new boyfriend 3 weeks later.
You get the picture.
Making sweeping changes without laying the necessary groundwork usually just leads to big mistakes and a lot of wasted time. Generally speaking, real, continual progress requires laying a foundation and building upon it year after year with many incremental changes (some of which will still lead to mistakes) along the way.
When you see a successful person make what appears to be a grand transition (that isn’t in reaction to an unpredictable life changing event), look a little deeper, more than likely there were multiple steps taken beforehand in preparation for the big adjustment.
Welcome back and happy new year!
Funny enough your “build an escape tunnel” comment reminded us of shawshank redemption. Smart guy stuck in prison figures a way out. Not sure if that was on purpose
Wait, WSP have seen a movie? Mindblown.
Hahaha we’re familiar with the most famous ones
Maybe 1x a year or so
Great comment Ownmyhood! My summary:
Successful person: Patient, Has a Vision, Falls in Love with the Process.
Subsumes the Ego: Not Concerned with the “Real Me”TM, Willing to be One Thing at Work and Another Outside (Successfully Manages Cognitive Dissonance), Will Find Joy and Flow in Doing What is Necessary.
Great content as always, thank you for sharing.
Question for anyone from U.K. Is there a Personal Finance website equivalent here?
I got started a lot later in my 20’s than some other guys here (would’ve been nice to have this blog when I was 18!) but I’m making solid progress and if everything goes as planned I’ll be a millionaire well before 35.
“Efficiency” nailed it- Figure out what you’re good at, and spot opportunities where you can make the biggest impact in the shortest amount of time.
After running my own online business for a couple years and learning the ropes, I just got brought on as VP of Marketing & Business Development of mid-sized company in the niche that I had been working in for some time. The company is in some trouble and the owners need some help with some very basic marketing and technology stuff, which is exactly the sort of thing I had been doing on my the past few years.
When negotiating the contract they agreed to a modest base salary, but more importantly I’ll be paid 15% of company revenues (not profits) with an part-ownership opportunity as well. Before I got here the company had been so wasteful and inefficient and still managed to do almost $2 million in sales per year. With some simple re-tooling and basic marketing they could easily triple that inside of 3 years.
The best part is that it’s almost entirely a work from home job, so of course I’ll be growing my other side business as well.
Long story short, figure out what skills you have, but just as importantly, connections matter. I never would’ve been in this position if I hadn’t had the right person introduce me to the CEO.
Just posting here to break the psychological barrier against posting on the WSPs blog.
Age 27. Currently looking for my own business opportunities. Hopefully I can do the “make your own job” route to $100k this year. Note that’s 10xing my earnings in some of the past 2-3 years… yeah. Wish me luck!
current challenges: 1) Finding ways to even create new leads. 2) Establishing trust with the leads I do find (and note it has to go both ways) 3) Securing payment for the few jobs I do have.
Subscribing to Nabeel Azeez’s Dropkick Copy emails feels like it helps me a lot. Just reading the thoughts of someone whos running their own show … very valuable.
Thanks for reading
P.S. “never seen someone read their way to rich” is sort of… ehh. Just gotta read the right KIND of stuff to objection handle your own BS 🙂
Reality-Most people aren’t talented enough in a single area to become wealthy.
Shotgun Approach- A precursor to Talent Stacking and to differentiating yourself.
Financial Responsibility- 1% knowledge and 100% emotional control.
Personality: 1, 2, 3, and keep your Testosterone up.
Control: Time>Money. Deadbeats will cost you both.
Elevator: Legacy, but it’s only as good as its builder.
Re-Learning: People who ignore this step seem to eventually end up dying alone in front of a tv.
By doing a bit of planning, a lot of work, and avoiding life crippling mistakes virtually anyone can be successful. I love this blog because it’s filled with practical advice and avoids feel good fluff. It also makes a great filter. If I show someone a post and their face crinkles in disgust or rage then I know to delete their number.
Not sure if this comment is appropriate for this post – delete it if it is not.
Met a chick at the library on Monday. Started flirting with her. Moved the conversation to cyberspace (fb). Not sure how this gets brought up but she asks … “how do people get all this money for gas?”
Instant turn off. Instant. A few years ago I would have posted some insecure comment here about how I am “too good” for her now (truth was I barely got girls growing up / still do not have a girlfriend) and I am going to ignore her because she is broke.
But. When I read that message I instantly felt such a profound sense of sadness and empathy for this human being. She was being serious (works as a part-time librarian).
Her poverty belief system is literally keeping her imprisoned. It is dooming her to a life of stress and feelings of financial insecurity. What bad luck to be born with that and never escape it.
Did I tell her to come to this website or that she could escape? No.
I now realize that without the internal FIGHT (I will NEVER f****** surrender. NEVER. I may die poor but I will FIGHT EVERY f****** SECOND of my mother f****** life TO GET RICH) to escape the masses – you have no shot. 0 shot. Heard absolutely no fight in her but just this meek acceptance of her condition. BRUTAL.
Feel so grateful that the universe blessed me with that fight and I was lucky enough to come across this website early on in life. Not rich yet but I’ll be alright. I am 10,000 light years away from where I started. Truly grateful for that.
To me, just discovering this type of information is winning enough. Everything else is really just superfluous details.
I’ve graduated college and made my way into corporate America a year ago at a top tech company. Lots of money but I’m definitely feeling #2 being a big challenge. As a software engineer in Seattle, I’m constantly surrounded by tech nerds, SJWs, and people I generally don’t want to be with even outside of work. I haven’t gone out twice a week to be fair, but on average I go once every week and a half. I go out because on one hand I want to be social but on another hand I also need to find a new hobby and haven’t been successful at that yet. I’ve went to all sorts of meetups and conferences and I keep on failing to find the right ‘crowd’. The right ‘crowd’ would be people like the authors in their 20s, decently attractive women, etc. It’s definitely something that you can’t find on the internet on how to break in since it’s politically incorrect.
Go to a high end gym problem solved!
“3) spend at least two nights a week outside of your work/professional circle”
Now see this is where it gets tough for me and I am sure other guys have been in the same situation. It seems like most fun quality people built their social circles up in college and simply stuck with them throughout their 20s and until they got married. They’re sticking with their fraternity brothers and college bros who ended up working the same accounting, real estate, or finance job as them.
One of my biggest issues has been, once you have improved how to move on to that new circle, I feel like I am sticking with my college friends that are not that helpful to my journey because of this and because I don’t want to be a lonely hermit.
At the same time, it is tough to get a social circle going after college of the fun cool people too.
I wonder how bad this gets once you’re in your 30s and actually get rich, a lot of people are married with kids and such.
It’s almost like the curse of making it, where they saying “its lonely at the top” comes from. You might have made it but potential friends are married with kids now so you are left with limited options.
I wonder for those of us who are social people that love being around people, if maybe a post can be done regarding this because I can’t be the only one facing this issue. I know you talked about it in Efficiency but bars are not great for meeting friends, only for getting laid.
Hope you are not kidding if you have just one hobby you’ll meet people in that activity vs. just going to drink booze all day
WSP’s, take a look at Ari Meisel and Chris Ducker for #3 Giving up control.
Sure, they both have virtual assistant/outsourcing companies on the back end but on the front end have great free info that’s actionable without the fluff.
Take a look at Ari’s ‘Less Doing More Living’ books. The concept of OAO (optimising, automating, outsourcing), in that order, helped me a tonne.