The formula for success is pretty easy. There’s no secret sauce…it is what it is. The path may be a little different for each of us. And the destination (what is success) is unique to each of us as well. But the formula is the same.
How do you define success? Wealth, career, family, retirement, health? What are your goals? Even more important, what is your purpose? What is it you want to accomplish or who do you want to become in this life?
Deep questions. Not always easy answers.
Having a goal is the key to the formula. If you don’t have a destination then the formula doesn’t work very well because, as they say, without a destination any road will do.
So the formula itself is the compound curve.
Einstein called compound interest the 8th wonder of the world. And he’s not wrong. For example, if I were to offer you $1,000,000 today or a penny that doubles in value every day for thirty days, which one would you take? You would be wise to take the penny. Doubling the value of the penny every day for 30 days would leave you with $5,368,709.12. That’s the power of compounding.
The power of compounding exists in every aspect of our lives:
- Wealth building (see the penny example)
- Exercise
- Nutrition
- School
- Learning a new skill
- Career
- Relationships
- Health
We all start at zero and grow to who you are today. Where you are today (in your career, your marriage, your wealth, your knowledge) is the accumulation of all your decisions to date.
Where you are is also an accumulation of your habits. Your philosophy of life. What you choose to do every minute of every day.
Are you where you want to be? Are you on track for being who you want to be and/or for accomplishing your goals?
The compound curve provides a path – the formula – for achieving your goals. Here’s an example from Jeff Olson’s The Slight Edge. A great book, I highly recommend it.
Our choices determine our life paths. The beauty is we have choices. We can choose the compound curve of growth and exponential success, wealth even. Or, we can choose otherwise.
If you want an easy life, make hard choices. It you want a hard life, make easy choices.
The formula for the upper curve is to make hard choices. The choices themselves aren’t hard, but the consistent application of (taking action) these choices is hard.
Do you want to lose weight or get back in shape? There is only one choice. Consistent exercise and healthy foods. That’s it. Making exercise a habit and selecting good food at each meal is simple but not easy. Its hard to break bad habits. Starting to exercise is hard. It hurts. And it hurts for weeks. But if you stick with it (hard choices) then you will feel much better, have more energy, have fewer health problems, live longer and more.
That’s the upper curve. Its slow and hard in the beginning. You see little, if any, results early and it may even be painful. The more you stick with it you will begin to see progress. Then progress compounds and it gets easier and it compounds even more until you see exponential results.
Jack Butcher of Visualize Value illustrates this very well.
But you have to suffer through the pain to get exponential results. There is no other way. That is the formula.
Why do so many people give up?
While the formula is easy most people never achieve exponential results. Why?
In our instant gratification world of likes, clicks and shares we all want to see results today. This minute even. And that just isn’t how it works. There is no short cut.
The first part of the compound curve is slow. It’s a grind. You will barely see results and it may even look like you are getting no results at all. So people give up way too soon.
The Upper Curve works because it rewards consistency and good habits. These good habits build on each other over time to create exponential results.
Consequences of Ignoring the Curve
The opposite can happen as well.
You can’t ignore the curve. You just choose which curve along which you will travel. If not the Upper Curve, then your curve will be relatively flat or even curve downward.
Binge Netflix every weekend. Drink a lot of beer. Never pick up a book. Eat junk food and sugary snacks. Or, just do nothing. Let life happen to you. React. Go with the flow. The decision to do nothing is a habit, too.
These decisions and habits compound as well. But that curve slopes downward. That curve leads to obesity, high blood pressure, diabetes. It leads to not getting ahead at work. To getting a divorce, not making enough money to pay bills (or barely getting by), not being fulfilled. You end up searching for a fix to make you feel better. A fix can come from drugs or from things like shopping, over-eating or alcohol. All which take you further down the lower curve. The bad curve.
But you have a choice and it’s not too late.
For folks like you and me, hitting that 50 mark, there’s not a lot of time left. We have more life behind us than in front of us. Our compound curve has already started.
Where are you on the curve?
For me, I was progressing nicely. I had gotten several promotions, making good money, started a family, flipped some real estate, good savings, no debt, large 401(k). The entrepreneur bug hit me and moved to business owner. Just as I got that going pretty well the financial crisis hit. Suddenly my mortgage company, almost overnight, couldn’t loan any money. There was no money to be loaned.
I remember in October 2007 I was a week away from closing a loan for new construction for a church. The bank funding the loan called me and said they didn’t have any money to loan. Bank after bank, lenders, institutions, funds all dried up. Lehman Brothers went bankrupt. The financial system crumbled.
Surely this wouldn’t last too long. I funded rent and payroll out of pocket for months. No one knew it was last a couple years. I finally closed the business, and my accounts were nearly drained. Even worse, there were no prospects to even get a job at this point. The remainder of my savings slowly left my account to support my family.
Barely past 40 and I was starting over. I got knocked off the Upper Curve.
I remember the stress, the anxiety, the worry just like it was yesterday. I remember the toll it took on my marriage and family.
Financial stress is the worst kind of stress on a family.
I vowed to never feel like that again. To never be in that situation again. And then I made it my mission to make sure no one else would have to feel it either.
It took me about three years to get back on my feet with a solid foundation. The compound curve is the backbone of that recovery and growth. What you are reading is the journey back to financial independence, finding my purpose and creating the freedom I wanted.
It started with a decision.
I made that decision in 2010. It was humbling but set me back on the curve to exponential success.
Decide
To start your path on the upper curve begins with the decision. You must decide this will be your path. A path of hard decisions, good habits resulting in exponential growth.
If you’re like me and are having to start over (or you started over during the last crisis) or you aren’t where you feel you need to be at this point, here are steps to take:
- Where are you right now?
- Assess your life – there are 10 dimensions of your financial life we measure to determine your present position. These include family life, friends, career, health and more. Get real with yourself in all these areas.
- Net Cash Flow – what is your gross income minus all expenses? This is your net cash flow. This must be positive. If it’s not, your work starts here.
- Net Worth – this is a snapshot of all your financial decisions made to date. List all the stuff you own minus all that you owe equals your net worth. This is the barometer I used quarterly to measure my progress when I was starting over. It was extremely helpful for my wife to see as well.
- Where do you want to go?
- Three years – what does life three years from now look like?
- Ten years – where do you want to be 10 years from now in all 10 dimensions?
- Retirement – close your eyes and imagine your retirement date. Who’s there? Where are you? What you most excited to start doing?
- Now you have destinations. Something to work toward. The following is mapping the roads to take from where you are to your destination.
- Identify the problem areas
- From the three items in Step 1 you will readily see areas of opportunity.
- List out all areas of opportunity and prioritize them. Debt may be a big one, increasing cash flow (new job, side hustle), decreasing unnecessary spending, spending more time with your spouse (or kids), scheduling fun time with friends. All of these are important. Determine which are most important for you.
- Plan of Action
- Write down what action you are going to take with each of your top 3 opportunities.
- The key is the write them down. Commitment to doing something tomorrow that is different from what you did today or have done for the past several years.
- Do it!
- None of this matters if you don’t actually do it.
- Get an accountability partner. You and your spouse, or a friend, or a financial advisor, or a mentor. There are plenty of people who will help you keep on track so you can achieve your goals.
The Power!
Turn these actions into habits. Consistent habits are what makes the upper curve so powerful. For example, prioritizing an increase in savings and doing it monthly, increasing net cash flow by focusing spending only on things that align with your values and goals, a date night with your spouse every week/month, and so on.
Here’s the most powerful thing you can do.
Pay yourself first!
This is the number one habit of the most wealthy.
Paying yourself first has several positive effects.
First, it creates a mindset that you are your most valuable asset. And as your most valuable asset you should reward (pay) yourself first. Pay yourself at least 15% of your gross income.
Second, now you have a gross cash flow to work with. All expenses should be applied against this cash flow. Is your net cash flow positive or negative? If its positive, great. Now you have the ability to shorten your curve to create exponential growth faster. Is it negative? (most people) You have some work to do. You either have a spending problem or an income problem. Which is it? Maybe its both. Either way you now know the root of your problem.
Turn the problem into an opportunity.
- You have an opportunity to increase your cash flow.
- You can get a new job.
- Add more value to your current job to earn a raise or bonus.
- You can implement a side hustle.
You’d be surprised at how far an extra $500 per month can go. Anyone can generate an extra $500 per month.
You have an opportunity to reduce/eliminate debt. Debt is a slave master. You will never be free until you are rid of consumer debt. And your home doesn’t count toward this debt. I’ll show you why later. There are several methods to pay down debt – snowball, highest interest first, using insurance products, and more. They all work. Find what works for you and do it. Need help, email me.
Until you get your financial house in order you can’t live a life of purpose and freedom.
Financial stress permeates all aspects of your life. That’s why we start here. The steps you completed earlier are the roadmap to eliminating financial stress. I’m not saying it will be easy. In fact it will be hard. But hard decisions now will result in an easy life later.
You are likely struggling or not where you need to be because you made easy decisions earlier in your life. You are paying the price now. Don’t put it off anymore. Do something about it now.
Which pain do you want?
“Everyone has two pains in life. The pain of discipline or the pain of regret. The pain of discipline weighs ounces. The pain of regret weighs tons.” Jim Rohn
If you are like me at the 50 (mid-life) mark we don’t have much time. But we have enough. The next 10 years are the most critical to our financial success. Our financial success is the fuel for everything else – living your purpose and creating a life of freedom.
I’ve done it and am doing it! Do it with me. You have a friend, a coach, an advisor here to help you on this journey to freedom.
The opportunities for us GenXer’s are incredible! There is so much we can do to shorten our growth curve to achieve exponential results.
The dangers are greater too! There is more at risk and with no time to make up for failure.
Having the right plan and executing it consistently is critical!
Download my guide, Take Control. Finish Strong. to know for sure if you’ve got a firm foundation for your second half.
Need even more help? Look for the next coaching cohort.
