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FI Weekly – August 10, 2021

The Power of Incentives

Incentives are one of the most important factors driving human behavior and Charlie Munger speaks eloquently on what he calls the “superpower of incentives” in these short quotes:

  • “Show me the incentive, and I’ll show you the outcome.”
  • “Never, ever, think about something else when you should be thinking about the power of incentives.”

If you have some free time and want to read Munger’s brilliant speech on psychological tendencies including a significant section on incentives, I suggest reading the transcript of The Psychology of Human Misjudgment.”

This will make you smarter.  Full stop, no question about it.

I try to pass along little bite-sized lessons to my daughters which we refer to as “strategy” sessions.  Here’s the most recent strategy session I highlighted on Twitter about incentives:

  1. Ask a barber if you need a haircut. What do you think he’ll say?
  2. If you are paid by the hour to mow a lawn, will you go fast or slow?
  3. If someone gives you advice that goes against their best interests, TRUST THEM FOREVER

Life Hack: Google Maps

Google Maps ranks as the #1 most important app on my phone.  It is truly essential. 

I just realized I have a tip for Google maps I hadn’t even shown to my wife, as we learned the hard way while in the mountains on vacation and her maps navigation stopped working when her phone lost its internet connection.

You can download offline maps BEFORE you go somewhere you may have spotty internet connection, and it’s really easy to download:

  • Open Google Maps, then type the name of the city or town (not the specific address) you’re going to in the search bar.  For this exercise, I typed in ‘Richmond, VA.’
  • On the next screen, just above the blue “Directions” button, you actually click on the name of the city (that doesn’t look clickable, but is!)
  • The next page gives you some city info but there’s also a “Download” button on the right side.  Click that and then you can zoom in or out and download as large an area as you want.
  • Since we live in Virginia, I downloaded an offline version of nearly the entire state so we never have to worry about getting lost. I recommend this for your local area!

ChooseFI Community Taking Action This Week

  • Tyler said, “I made my life (more than) 1% better this week by quitting my job of 17 years to start a new chapter of my life as a Salesforce Financial Analyst at a Big4 company! Having just turned 40 and with two young kids, it definitely is scary/exciting/unconventional to do something different, but as you always mention, if you come at a big decision from a position of strength instead of fear, you are more likely to succeed. I have been on the Path to FI since my first job out of college making $16 / hour and now at 40 I have a net worth of $1.6M and wanted a change. I enrolled in the TalentStacker Salesforce program in December 2020 as one of the early members and now have my ‘foot in the door’ in my first Salesforce Job with nothing but upside to come in the next 5+ years! This will ramp up my path to FI instrumentally and will make working a choice rather than a requirement.”
  • Kate said, “I listened to episode 333 with Jillian Johnsrud this week, and tried out the “Does that sound reasonable?” approach with lots of success. I am a night shift RN. My husband recently started back to work M-F, and we don’t have childcare for our 2 year old (day care waiting lists in my area are 12+ months long). I had been working Friday-Sunday nights, not sleeping more than an hour or two on Fridays and Mondays (so, basically killing myself). After evaluating our financial situation, my husband and I decided I could easily switch to part time, but my manager refused my request because staffing is short at the hospital where I work. So, I followed up with a suggestion of a transition to part time over the next three months, ending my email with a “Does this sound like a reasonable request?” Just like y’all mentioned in the podcast, it was difficult for my manager to call my request unreasonable, and she agreed! Looking forward to more time with my family, and more sleep!”
  • Marie said, “My win this week is that I just bought 3 one-way tickets for my children and I, leaving this August from California to the south of France, and paid only $271 in total. At $1,561 each airfare ticket, this trip would have cost me $4,683. But because I had the required total of 66,000 miles for the 3 airfare tickets in my Air France FlyingBlue account, I saved $4,412. This wouldn’t have happened without listening to your podcast and learning about travel miles, then signing up for the Chase Sapphire Preferred card where I earned over 80,000 points. New to the travel miles concept, I was a bit skeptical about being able to use them for the trip we were planning this summer, but everything went smoothly and the whole process was incredibly easy. In less than two months after signing up, I was able to get the bonus, charging only my regular expenses on the card, and as soon as the 80,000 miles appeared on my Chase account, I transferred them to my Flying Blue account. I then went to the Air France website and using the “Book with Miles” option, I looked for the most direct flights with the lowest miles within my dates. Yesterday, I found exactly what I was looking for. And since the tickets were only 22,000 miles each, I even have enough additional miles left in my account to buy extra luggage, which we will need because my children and I are moving to Europe for several years: my children will be pursuing grad school there and I will relocate to my native France, possibly permanently. I can’t thank ChooseFI enough for this great saving. You guys are amazing!”
  • Joel said, “My 1% better this week is actually about 3% better: I was just approved for a refinance on my student loans! I have a professional degree so have a lot in loans left to pay off. Demand for loan refinances is low right now so the deal was amazing, and something I wouldn’t have dreamed of doing before finding ChooseFI: a 7 year loan. Prior average rate of my loans was 6.5% or so. This is down to a 2.53% APR fixed rate (including 0.25% autopay discount) 7 year loan. This increases the monthly payment amount but drops the expected interest paid overall to 1/4 what it would have been before. Plan on making a lot of extra payments on this once the other loans are paid off. Big thanks to you guys for all of the episodes and ideas on finances. Next job is to finish funding our Roth IRAs for the year!”
  • Ryan said, “Just got back from a week at Maui. Used Chase Ultimate rewards to book the condo, Southwest points (we had the Companion Pass so one less ticket), and rental car through Capital One Venture points so all the major expenses were covered for our family of 4!”

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