Author: Jim Wang

I have always loved psychology and behavioral economics because it’s like a cheat sheet for human behavior.

While it may have helped me in life, business, etc – it’s helped the most in dealing with our kids. One of the key ideas I’ve tried to remember is that of overjustification (or more accurately, the overjustification effect). It’s the idea that if you pay someone to do something they already do for intrinsic rewards, the extrinsic reward replaces the intrinsic reward.

For example, if your kid enjoys reading, don’t start paying them to read more books. Eventually, the payment becomes the new reward and it replaces the intrinsic reward. I think that’s a bad outcome.

Like many things in psychology, it’s controversial because the line is not always so clear. We believe it happens more easily in children than with adults, for example, but is a child someone who is 10? 15? 20?

Either way, I wanted to share a new study that adds a wrinkle to the idea:

Do Monetary Incentives Undermine Performance on Intrinsically Enjoyable Tasks? A Field Test [MIT Press Journals] – “Economists have long been intrigued by an influential literature in psychology positing that monetary pay lowers performance on enjoyable tasks by crowding out agents’ intrinsic interest in them. But typical experiments in this literature do not report a full set of performance metrics, which might reveal conflicting evidence on crowding out. Further, they may suffer from confounds. To evaluate these issues, we review over 100 prior tests and run a field experiment building on the canonical two-session test for crowding out wherein agents receive pay for an interesting activity in session one that is withdrawn unexpectedly in session two. We test whether pay harms performance using a comprehensive set of performance measures, and if so, whether unmet pay expectations might also contribute to this decline. Our results on output, productivity and quits are most consistent with a standard economics model than with a crowding out one. Additional, though more speculative, evidence suggests that unmet pay expectations may harm output quality.”

If you want to continue with me on the behavioral highway, I recommend this video by Simon Sinek:

It talks about the role of EDSO – endorphins, dopamine, serotonin, oxytocin (and cortisol) – within the context of work. I think it applies to a lot of areas in our lives and it’s important to know why we do the things we do. (ie. why do you check Facebook or your email so often? that’s ole dopamine at work)

Finally, a fun little article about how the uber rich in Silicon Valley are enjoying the quarantine. 🙂

“All These Rich People Can’t Stop Themselves”: The Luxe Quarantine Lives of Silicon Valley’s Elite [Vanity Fair] – “Travis Kalanick is throwing (outdoor) parties, private-jet owners are hopping from safe zone to safe zone, and dinner party hosts are administering 15-minute COVID-19 rapid tests—all business as usual. “Coronavirus is a poor person’s virus,” says one source.” Yikes.

See you tomorrow!

Time is such a precious commodity. We don’t know how much time we have on this Earth but we do know it’s not unlimited.

And we fill it with activities of varying “value.” Sometimes we spend it doing the things we love with the people we love and time seems to stand still. Other times, we spend it doing the things we must so that we can pay for the things we love … and time seems to stand still, but for other reasons. 🙂

Experts estimated that, as a species, we have about a billion and a half heartbeats during our lives:

Size Matters: The Hidden Mathematics of Life [NPR] – “Though big and little creatures look very different, below the surface there is a surprising unity. Biologists have compared the heartbeats of mammals and discovered that on average (this won’t apply to any individual, just to groups) elephants and shrews and most of the critters in between have a limit of about a billion and a half heartbeats in a lifetime and then they die.” (emphasis mine)

Despite its title, this next post isn’t so much about wealth as it is about time management:

True Wealth is “never feeling rushed” [Rad Reads] – “If time is the currency of achievement, why are some able to cash in their allocation for more chips than others? And in a world of rapid fire Slack messages, daily episodes of The Daily and Zoom calls up the wazoo – who on earth has the right to not feel rushed?”

Accentuate the positive, eliminate the negative [Get Rich Slowly] – “When Kim and I go to bed each night, we spend time casually browsing Reddit on our iPads. It’s fun. Mostly. […] But here’s the thing. After browsing Reddit for thirty minutes or an hour, I’m left feeling unsatisfied. In fact, I’m often in a bad mood. After browsing Reddit, I have a negative attitude. My view of the world has deteriorated. Why? Because for all the fun and interesting things on Reddit, it’s also filled with a bunch of crap.”

Finally, here’s a post that will take you 21 minutes and suck you into the world of Masterclass:

How to Learn Everything: The MasterClass Diaries [Longreads] – “One day, when MasterClass sends its millionth paid ad into my Facebook feed, I decide this is the answer to the Walter Mitty lurking inside me. MasterClass seems to offer everything: from writing seminars with over a dozen famous authors to celebrity-driven inspiration to take my hobbies further. Clearly, all I was missing were the right teachers, filmed professionally and beamed into my living room. I may not become a surgeon or a pilot, but what if the renaissance woman I’d hoped to be is just a $200 subscription away?”

What will you cut or add to your day today?

I rely heavily on mental models as a way to coalesce my thinking around particular ideas.

The world is complex and models help me organize ideas and concepts into packages I can remember with relative ease. In many ways, they’re like games. Games are filled with rules, pieces, tactics and strategies – but we don’t remember how to play a game piece by piece, rule by rule. We remember our tactics and our strategy as it is refined over the times we’ve played.

We learn new games by relating them to old games… and life is one big game, just has more significant consequences. And they’re all based on putting complex situations into mental models that are easier to understand and use.

And today, I want to share a few resources that I find helpful whenever I build and renovate these mental models.

First, a refresher on mental models:

Mental Models: The Best Way to Make Intelligent Decisions (109 Models Explained) [Farnam Street] – “This guide explores everything you need to know about mental models. By the time you’re done, you’ll think better, make fewer mistakes, and get better results.”

The Five Pillars Of Wealth Building [Darius Foroux] – “Any type of pursuit in life consist of a few fundamental ideas and concepts. For example, theory and experiment have been the two pillars of science for centuries. Those fundamental concepts have solidified our understanding of the world.

It’s the same for wealth building. I’ve identified five pillars that support our understanding of how to responsibly build wealth. You’ll see these concepts everywhere personal wealth is created.”

This ties in nicely with the idea of mental models and this 30-minute video by Ray Dalio on the Principles of Success:

I like to watch that video once every few months as a good refresher.

And before you go, something fun — It’s been a while since we’ve gone to Trader Joe’s but we’re a fan of a lot of their products in our home. Some of the products on the list feel like filler (bananas? organic brown rice? c’mon…) but it has a few goodies on it.

The 50 Essential Trader Joe’s Foods [Thrillist] – “There’s a reason Trader Joe’s has become America’s favorite grocery store, and it has nothing to do with those Hawaiian shirts. The chain has come a long way since opening in Pasadena, California back in 1967, growing to an empire and drawing hordes of shoppers on the strength of its affordable, store-brand offerings, which rotate often and include everything from coffee and booze to healthy meals, unexpected snacks, incredible cheese, and internationally focused entrees that have helped evolve the American palate. It has legions of devoted fans. Even haters can’t help but find something to love within its aisles.”

Happy Monday!

If so, don’t miss this first post. It may resonate.

The 7 Things the Most Successful People I Know Struggle with to be Happy [Leo Widrich] – “I dug into my memory and notes of having coached hundreds of people, often millionaires, some pro athletes, successful and wealthy entrepreneurs. I wanted to summarize the main points that most of them struggle with to become happy and fulfilled.” FWIW, Leo co-founded Buffer.

In personal finance, we talk a lot about emergency funds and rainy days, but what about sunny days?

Save for the Sunny Days, Not just the Rainy Ones [Budget Savvy Bride] – “But more than just saving for a rainy day, are you saving for the Sunny Days, too? Are you setting aside time and resources to experience new things, travel, and generally enjoy your life? Being on a budget doesn’t mean you can’t indulge now and then! This is why it’s just as important to have a sunny day savings fund as it is to have an emergency fund.”

I like the spirit of this post and I agree – it’s good to save for those moments of indulgence.

I Made One Simple Financial Change and It Lowered My Spending [The Atlantic] – “As a matter of fact, after writing that piece I came up with just such an un-fun, disciplined rule and applied it to my own spending—and it has mostly worked. The rule is simple: After I buy something, I log the transaction on my phone, recording the price and what I bought. The idea is to increase the pain of paying, especially with a credit card, by forcing myself to take note of what I’m spending.”

Finally, something fun… let’s enter the world of black market bourbon:

Inside the World of Black Market Bourbon [Whisky Advocate] – “I’m in Paul’s home, just outside New York City. We connected with each other via a Facebook bourbon group and I’ve come, as agreed, with cash to buy a store-pick Four Roses Single Barrel. Downstairs in his ramshackle basement, Paul’s bunker of 300-plus bottles is divided between two shelving units, one containing every coveted bourbon and rye you’ve dreamt of owning and the other containing rare scotch—holy grail whiskies like Brora 25 and 37 year olds—and Japanese whisky, including Yamazaki Mizunara Oak from 1984. These are the same whiskies that appear in glossy international auction catalogs. Paul yanks out various bottles he calls “fire,” including Willett 12 year old, 2007 Hirsch, and 2006 Van Winkle. “There used to be a lot more,” Paul gestures to his prized collection. “But a lot of it was sold to buy this house.””

Enjoy the weekend Apexian!

For personal finance content creators (bloggers, video, podcasts, etc.), the Plutus Awards are our awards ceremony. J.D. and myself have both been honored a few times and it’s always a fun event to attend during FinCon, a massive industry conference for personal finance content creators.

Earlier this week, the finalists for this year’s Plutus Awards were announced and we wanted to invite you to check out a few of the blogs that were nominated – if you’re looking to add a few new sites to your bookmarks, it’s a great place to start.

A few of today’s posts are Finalists so I’ll indicate it.

A Case for Grieving the Mundane Losses of a Pandemic [Brave Saver] – “And yet I anxiously watched my inbox, willing new assignments to appear. This is it, I thought when they didn’t. My last clients are dumping me. Refresh inbox. I’m losing work and don’t even have the time and resources to get it back. Refresh. How far is this going to set me back financially, professionally? Refresh. Is this what getting laid off feels like? My writing career, 10 years in the making — gone overnight?” (nominated for Best New Personal Finance Blog)

Modeling a Wealth Tax [Paul Graham] – “Some politicians are proposing to introduce wealth taxes in addition to income and capital gains taxes. Let’s try modeling the effects of various levels of wealth tax to see what they would mean in practice for a startup founder.” It’s a quick post that talks about a tax on net worth but when you think about it, this also explains why it’s important to keep investing fees as low as possible. If you’re paying a 1% expense ratio on your mutual fund, over 60 years, it’ll have eaten up 45% of the value of that investment.

How To Budget When You Have A Fluctuating Income [Literally Broke] – “One size doesn’t fit all when it comes to personal finance. But a really great rule of thumb for beginning budgeters is 50/30/20, a budgeting technique based on percentages that was popularized by our girl Elizabeth Warren.” (nominated for Best New Personal Finance Blog)

Finally, ever wonder how many people it might’ve taken to build the Great Pyramid of Giza?

How Many People Did it Take to Build the Great Pyramid? [IEEE] – “Given that some 4,600 years have elapsed since the completion of the Great Pyramid of Giza, the structure stands remarkably intact. It is a polyhedron with a regular polygon base, its volume is about 2.6 million cubic meters, and its original height was 146.6 meters, including the lost pyramidion, or capstone. We may never know exactly how the pyramid was built, but even so, we can say with some confidence how many people were required to build it.”

See you tomorrow Apexian!

When I started Apex with J.D., I didn’t realize what I was doing.

I was keeping a version of a “commonplace book” but instead of my ideas, it was capturing other people’s ideas in one place. It’s a bit like what J.D. used to do on del.icio.us, before it was sold and sold and sold, but I like the idea of a commonplace book even more.

It’s a collection of your thoughts and ideas.

How And Why To Keep A “Commonplace Book” [Ryan Holiday in Thought Catalog] – “When I read this, I immediately began a ritual that I have practiced for many years–and that others have done for centuries before me–I marked down the passage and later transferred it to my “commonplace book.” Why? Because it’s a great line and it stood out to me. I wrote it down I’ll want to have it around for later reference, for potentially using it in my writing or work, or for possible inspiration at some point in the future.”

What if We Could Live for a Million Years? [Scientific American] – “The good news is that over a lifetime as long as a million years, space travel can take us to the nearest stars using existing chemical rockets. It would take merely 100,000 years to arrive at the habitable planet around Proxima Centauri with a space vehicle that travels at the speed of NASA’s New Horizons spacecraft. For passengers who live a million years, such a trip would appear just like the decade-long journey of New Horizons to Pluto within our current life span. Of course, the spacecraft will have to provide an enduring ecosystem and comfortable living conditions over this long journey. And the passengers will have to maintain a stable mindset for their journey’s goal and not lose faith, like a fisherman who, after a long hiatus without finding any fish, asks whether ‘the real purpose of fishing is catching fish.'”

ATM Hackers Have Picked Up Some Clever New Tricks [Wired] – “So-called jackpotting attacks have gotten increasingly sophisticated—while cash machines have stayed pretty much the same.”

Jackpotting is such a great name.

See you tomorrow!

The rent vs. buy question is one of the oldest in personal finance debates. If you’re my parents’ generation, the advice was to buy if you could afford it. No question about it. Renting was “throwing money away” and you wanted to buy to build equity.

But it’s rarely so clear. There are obvious advantages to both.

We own our home because we prefer stability. As an owner, your housing payment doesn’t change significantly (only increases as property taxes increase) and no one can kick you out. There are other advantages of but those are the biggest ones.

But renting has advantages too, as we’ll see in the first post:

Advantages of Renting: Why I Rent Instead of Buy [Life and My Finances] – “One day, I imagine owning a home where my husband and I can raise a family. But right now, I’m a happy renter and I plan to rent instead of buy for at least more five years. Here are my top five advantages of renting…”

There’s no one size fits all advice in the world. And this applies to sleep as well. 🙂

Individual Circadian Clocks Might Be the Next Frontier of Personalized Medicine
[TIME] – “Although the federal government recommends that Americans sleep seven or more hours per night for optimal health and functioning, new research is challenging the assumption that sleep is a one-size-fits-all phenomenon. Scientists have found that our internal body clocks vary so greatly that they could form the next frontiers of personalized medicine. By listening more closely to the ticking of our internal clocks, researchers expect to uncover novel ways to help everybody get more out of their sleeping and waking lives.”

24 Places to Get Free Books Online [A Dime Saved] – “I absolutely love reading! I am a real bookworm. There is nothing better than curling up with a great book. Books can get pretty expensive so I am constantly searching for the best ways to get free books online.”

Meet the psychic that big-money Wall Street traders depend on [NY Post] – “When it comes to playing the stock market, buttoned-up bankers are turning to a new form of market analysis before hedging their bets: A New York City tarot-card reader.”

Have yourself a great day!

As we enter our fifth (sixth?) month of isolation because of the pandemic, we’ve spent a lot of time looking at the things in and around our home. Little things that were minor annoyances were quickly dispatched, since we would deal with them more frequently.

One thing that I’ve come to appreciate more are all the little tchotchkes around the house.

They are subtle memory triggers of a different time and, more importantly, a different place.

We will always have the memories but the little souvenirs trigger those memories – it’s kind of nice.

232 sand dollars [Derek Sivers] – I’ve long been a fan of Derek Sivers’ thinking, which he captures quite eloquently in his writing, and I won’t excerpt this post because it’ll take you only two minutes to read. I recommend it.

This next story is fun because it’s how I’d imagine things going if me and a few of my own friends decided to build our own cabin.

We Quit Our Jobs to Build a Cabin—Everything Went Wrong [Outside] – “We were two or three weeks into building a cabin when the first two-by-four became the target of a sudden, white-hot flash of anger. It was the summer of 2018, in the middle of Washington’s emerald-soaked Cascade Range, and I was on the phone with my father, seeking advice about some framing conundrum, while my longtime friend Patrick (who goes by Pat) was wrestling a 16-foot board toward a miter saw. When the whir of the blade stopped, it became immediately clear that he had cut it wrong. The sawdust still airborne, Pat reached down, grabbed a two-by-four with the conviction of a Baptist preacher, and sent it flying into the forest with a short, crisp, ‘Fuck.'”

And to end it on something a little weird…

A Highway Pickle Mystery Is Preserved in Missouri [Atlas Obscura] – “WE ALL HAVE OBJECTS THAT we notice every day, that ground us in our communities. Maybe it’s a particular mailbox, or a nice street tree. Maybe it’s a sign on the way to work that makes you laugh. Or maybe it’s a pickle jar, perched on a concrete wall next to a highway ramp.”

The story ends with the last sighting in 2018 but if you go to the Facebook group, someone posted last week that there are now three pickles there!

See you tomorrow!

On August 7th, I thought it would be fun to share a post from Retire by 40 and Joe’s 7 Phases of Retirement!

How fitting, right?

I like this post not because it’s seven phases and today is August 7th, I like it because it shows you a glimpse of how he sees his retirement progressing. He’s right in that it’s not a singular moment in time in which all work stops. It’s more like a transition and he shares what his family has done so far and where he attempts to predict what the future will be. It’s a way healthier vision of retirement than the traditional “hit 65 and full stop.”

Updated Joe’s 7 Phases of Retirement [Retire by 40] – “… we shouldn’t think of retirement like jumping off a cliff. Retirement would be much easier if we take it in phases, one step at a time. This way we can gradually work toward full retirement and enjoy the journey along the way.”

(this is also a good time to share with you Tanja’s post on the first two years of their early retirement because it shows a slightly different transition)

This Man Owns The World’s Most Advanced Private Air Force After Buying 46 F/A-18 Hornets [The Drive] – “For the last 30 years, Don Kirlin has been flying for the airlines, working on real estate deals, setting up the world’s biggest skydiving meets, and building a private air force the likes of which even he has a hard time believing is possible.” 35 of the 46 are already flying and the remaining 11 just need to be inspected. Wild!

Put on your seatbelts because the private air force thing is wild in a way that wouldn’t make for a good movie… but this next one is wild in exactly that way:

Tea Boy to Tattooed Trader: A Secret Tipster’s Life and Death [Bloomberg] – “By the time the concierge reached James Harris last June, he was lying in the hallway outside his apartment, arms and legs shaking, gasping for air. Although an ambulance crew raced in and administered an antidote for opiate overdoses, Harris’s pulse returned only briefly. Three minutes later, the 42-year-old British trader was dead.”

That’s it for me Apexian, J.D. is back next week with your gems!

Being quarantined has been challenging but it does highlight what is important in life – the people closest to you.

It’s easy to look at the things we cannot do and get upset, especially after you read the 3rd article, but I implore you to think about what this pandemic has enabled and to be grateful for the things we still have.

Make time for what’s important [Gentleman’s Family Finances] – “e told a story about how when he was a kid he used to meet with his Granddad every Friday evening to play a game of chess and chat. When he went to university he started to get distracted by dancehalls and line-dancing (or whatever was popular in the 80s) and didn’t get to his Granddad’s for a few weeks his Granddad asked him where he’d been. “I’ve just been busy with…” was the answer and what his Granddad said has stuck with me to this day “well son, you make time for what’s important”.”

10 Daily Habits to be Happier, Healthier and Wealthier [Debt Free Guys] – “We go on to share our top three habits for improving your wellbeing and challenge you to do little things that will better your mental and physical health. Listen in for advice on implementing simple money habits that will build wealth over time and learn what you can do TODAY to be a happier, healthier member of the queer community—well on your way to financial freedom!”

How the Pandemic Defeated America [The Atlantic] – “In the first half of 2020, SARS‑CoV‑2—the new coronavirus behind the disease COVID‑19—infected 10 million people around the world and killed about half a million. But few countries have been as severely hit as the United States, which has just 4 percent of the world’s population but a quarter of its confirmed COVID‑19 cases and deaths. These numbers are estimates. The actual toll, though undoubtedly higher, is unknown, because the richest country in the world still lacks sufficient testing to accurately count its sick citizens.”

The Cold War Bunker That Became Home to a Dark-Web Empire [The New Yorker] – “In the mid-nineteen-seventies, the West German Army, the Bundeswehr, built a vast underground bunker near the town of Traben-Trarbach. It was five stories deep, had nearly sixty thousand square feet of floor space, and was designed to withstand a nuclear attack. Eighty days’ worth of survival provisions were stored inside, including an emergency power supply and more than a million litres of drinking water.”

Happy Thursday!