Issue No. 54 - $1.91
Saturday, August 7, 2010
When I was first getting into the business of selling educational programs, a famous zero-down real estate guru asked me, "Do you know the thing people who take my courses want most?"
I had a sneaking suspicion I was about to get it wrong, but I gamely answered, "To be successful real estate investors?"
He laughed. "You've got a lot to learn, my friend."
I took the bait. "So what do your customers want?"
"They want to avoid taking action."
I told him I wasn't sure I understood. He was kind enough to clarify. "Most of the people who take my courses and who will be buying your programs want to feel like they are on the road to success. But they don't want that road to end. They like the journey. They fear the destination."
"And why would that be?" I asked.
"To tell you the truth," he said. "I don't know. But I can tell you this. After our real estate students have gotten the knowledge they need to succeed, few of them get out there and get to work. Most of them just buy more programs. If they don't buy them from us, they will buy them from someone else. So we sell them extra programs."
"That's sort of depressing," I said.
"If you give one of my customers – someone who has completed his real estate education and is fully prepared to start investing profitably – a choice between actually getting to work and buying another course to learn more, he will buy the course."
"Are they afraid of failing?"
"Could be that," he said. "Could be they're afraid of success. As I said, I don't know."
Since then I've thought a lot about this failure-to-get-started problem. I've read dozens of books and talked to many of my colleagues and posed the question to hundreds of my customers. The theories as to why people don't take action are many and varied. The three that make most sense to me are:
If these are the main reasons why so many people don't take action when they are ready, what is the solution?
There's no mystery to that. Behavioral scientists know that the way to change a person's behavior is by motivating them through positive reinforcement. This is what B.F. Skinner had to say about it in A Brief Survey of Operant Behavior:
"It has long been known that behavior is affected by its consequences. We reward and punish people, for example, so that they will behave in different ways. ... Operant reinforcement not only shapes the topography of behavior, it maintains it in strength long after an operant has been formed. Schedules of reinforcement are important in maintaining behavior. If a response has been reinforced for some time only once every five minutes, for example, the rat soon stops responding immediately after reinforcement but responds more and more rapidly as the time for the next reinforcement approaches. ... Reinforcers may be positive or negative. A positive reinforcer reinforces when it is presented; a negative reinforcer reinforces when it is withdrawn. Negative reinforcement is not punishment. Reinforcers always strengthen behavior; that is what 'reinforced' means."
Positive reinforcement is a big part of my life. I reward myself constantly and for almost any sort of accomplishment, big and small. By attaching rewards to my desired behavior, I increase the likelihood that I will repeat that behavior in the future.
When I "master planned" my life for the first time, I had to spend some time thinking about how to reward myself. I gave myself all sorts of incentives for all sorts of objectives. Some of them worked. Some of them didn't.
Some success coaches suggest big rewards for big accomplishments. You might, for example, reward yourself with a sports car when you make your first million dollars. Big goals like that never worked for me, because they were too far off in the future. What motivates me are short-term goals. And I have a feeling that short-term goals will be better for you, too.
Over the years, I developed a reward system that works very well for me. Here it is:
These rewards, as you can see, are pretty mundane. But that's the thing about rewards. They don't have to be big or even special. They need only be enjoyable.
It would be easy for me to consider these little things – the stretching, the protein shake, reading a good book – as simply an ordinary part of my ordinary day. But by looking at them differently, by seeing them as pleasurable rewards for specific, desired behavior, they motivate me.
I think that is the key – identifying little pleasures you already have in your life and using them as behavior-changing rewards. It's very easy to do once you recognize that these little pleasures are blessed gifts. Truly speaking, you are lucky to be able to enjoy them. Be happy about that. Use them pragmatically.
[Ed. Note: This essay is an excerpt from Michael Masterson's new book, The Pledge: Your Master Plan for an Abundant Life. The book, to be published by John Wiley and Sons, won't be released until November. But you can get an early look. And sign up to get first chance at buying The Pledge.
Just go here, give us your e-mail address (so we can give you exclusive book updates and a special deal when the book is officially released), and you'll download an excerpt from The Pledge instantly.]
The Guillotine and Sandpaper
I've been buying real estate for the last nine months because it's cheap.
Steve Sjuggerud, whose instincts and research I trust, feels the same way as I do about this investment. In a recent Daily Wealth column, he said:
"Around the office, we have a saying about how the bust of a bubble goes: 'First the guillotine, then the sandpaper.' (It's not our saying, actually. As far as I know, market legend Bob Farrell said it first.) The guillotine is the initial crash -- like the Nasdaq bust in 2000. The sandpaper is what follows -- like a decade of Nasdaq stocks grinding sideways, but going nowhere.
He's right about the sandpaper. I would not advise buying real estate now unless it provides a substantially positive (i.e., more than 5%) return on a down payment of 20%. And that's 5% net of all costs.
I'm getting that -- sometimes considerably more -- on the properties I'm buying.
If you are interested in getting involved in real estate now -- and learning more about how I've done it to protect myself from inflation -- check out my essay in the May 2010 issue of the Liberty Street League newsletter. You can sign up for a trial subscription here. And when you do, you'll not only get instant access to the LSL archives (and that article)... you'll receive a free copy of my New York Times and Wall Street Journal bestseller on business building and entrepreneurship, Ready, Fire, Aim.
I've gotten some great feedback from readers about my recent essay, "The Most Important Thing I Ever Learned About Health."
Quite a few people have asked for further information about the book by Dr. Nortin M. Hadler that I mentioned in the essay. So here goes...
The name of the book is Worried Sick: A Prescription for Health in an Overtreated America. It was published in 2008 by the University of North Carolina Press.
Dr. Hadler, a UNC professor, is a powerful advocate for change. In the book, he sets his sights on separating genuine medical advice from marketing opportunism. Looking at screenings, diagnoses, drugs, and surgeries, he exposes an excessive and expensive industry, and finds its solutions to be ineffective.
He's also written a follow-up book... the equally excellent Stabbed in the Back: Confronting Back Pain in an Overtreated Society. In this one, he gives a comprehensive overview of what he calls the "backache industry." He investigates why modern medicine has failed to properly address one of the most common and debilitating problems of our time... and finds a multibillion-dollar industry getting rich on it. Best of all, he backs up everything he says with real research and scientific evidence. Dr. Hadler tells it like it is... even though that may be tough to hear.
I highly recommend both Stabbed in the Back and Worried Sick.
Talking about back pain, I've also heard from lots of readers praising the free back-pain report given away by Natural Health Dossier. It really is a great report, and I'm glad it's been received so well. If you haven't yet checked it out, you can still claim your free copy here.
Putting Things Into Perspective
Whenever I find myself embroiled in a stupid argument or endeavor, I think about time. This is what I think:
According to the best scientific measurements we have, time began 13.7 billion years ago. Hard to comprehend, isn't it? Maybe it will help if you think of it this way: If the Big Bang occurred on the first second of January 1 and today is the last second of December 31, then:
[Ed. Note: Michael Masterson welcomes your questions and comments. Send him a message at AskMichael@ETRFeedback.com.]
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