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Happiness Mindset

Happiness Through Hardship: The Rewards In Doing Difficult Things

BLUF: I’ve found that overcoming difficult experiences can be a source of both short term and long term happiness. You can do this intentionally by choosing to attempt physically and mentally demanding challenges. Short term it can make normal life feel more extraordinary. Long term, it can build mental toughness and provide experiences that you can reflect on with gratitude and pride.

I participated in my 4th ultramarathon trail race recently. It was 32 miles in mountainous central New York with 7,200 feet of elevation gain over the race. That’s like climbing up a small mountain over the race and going up (and down) inclines that would rival the steepest black diamond downhill skiing trails at times. There were plenty of moments where my legs ached, my stomach hurt and I mentally doubted my desire to keep going on. But go on I did, and I finished my 3rd ultramarathon in around 8.5 hours.

The experience after finishing a race like that is in some ways as unique as the event itself. After something that long and grueling you feel disgustingly dirty from the dust, sweat, water and dirt along the way. You’ve burned close to 6,000 calories so your body feels depleted and is craving food. You’re so tired that aside from eating you just want to rest and sleep.

A funny thing happens for me, though, when you go through something that difficult. Every bite of food tastes that much more flavorful and satisfying. The shower I take post race feels so refreshing and rejuvenating that I often just sit there and let the water run over me. I can’t keep my eyes open and my body is craving the feeling of that soft, glorious bed. In other words, everything feels better and I feel happier.

Often people think about making life happier by seeking out an easier, pleasure filled path with less pain. In reflecting upon this post race I wondered – can doing intentionally hard or grueling things on purpose make us happier? Could there be a path to happiness by persevering through pain? That’s an idea we’ll explore today.

Take A Spin On The Hedonic Treadmill

photo of person using treadmill
Photo by Andrea Piacquadio on Pexels.com

We all have a “base” level of happiness in our lives. The day to day happens in life and we feel some normal or average level of happiness. Studies have shown that for some reason this “base” level of happiness for people is usually around a 7 on a 1 to 10 scale. The hedonic treadmill or hedonic adaptation is the notion that after a positive or negative event things revert fairly quickly back to our base level of happiness. It’s great to adapt and revert to that baseline when something bad happens. Not so great when something good happens.

Here’s a real life example of this in action. You have a cute little starter home in a great neighborhood. Life is good and you’re happy at a base happiness of 7. But, you have big dreams. You always wanted a mansion in the hills and through hard work and luck you make it happen. Your happiness spikes to a 10 when you close on the house and move in.

A funny thing happens though. You get used to coming home to the dream home and each day you live in it it’s normalized. It’s just home to you now just as the starter home was previously. Happiness reverts to a 7 except the baseline 7 level of happiness is now living in a mansion.

You can see how this cycle can be problematic when you’re constantly chasing happiness and expecting that level 10 to stick. When you chase after nice things to make you happy it just raises the bar for what is normal in your life making it harder and harder for something to make you feel good. It’s one of the reasons that buying stuff is all just short term spikes of happiness that then stop feeling good.

However, I’ve found that the same phenomenon seems to work in my favor when I do hard thing.

Doing Hard Things: The Hedonic Treadmill in Reverse?

I’ve noticed that for me, the process of training for and completing something really hard is like making that hedonic treadmill work for me.

My everyday life might feel like that comfortable level 7 of happiness but when I’m attempting something really hard like an ultramarathon, it’s not a 7. When I’m 25+ miles into an ultra it gets pretty rough both physically and mentally.

My feet hurt. My body aches. My stomach is usually upset. I’m likely either overheating or cold depending on the race. I’m on the pain train and there’s no getting off of it unless you quit. Oh, and boy are there times when you want to quit. It’s a mental struggle at time to just put one foot in front of the other and keep going. That 7 level of happiness is long gone and I’m in the 3-4 range if not lower.

When I’m in the worst of things, the everyday life level of happiness seems like a far away dream. When I finish doing the hard thing, though, that happiness returns to 7 and then flips positive. Why? Well there are a number of reasons:

  • Everything feels better by comparison – When you’ve punished your body in a number of ways, everything by comparison feels good. Every bite of food that I put into my mouth tastes flavorful. Taking a shower after being disgusting for 8+ hours feels luxurious and rejuvenating.
  • Feeling of accomplishment – There’s really nothing quite like the feeling of overcoming something that is really hard or even something that you though was impossible for you. The sense of personal pride is amazing. It feel great to share your accomplishment with family and friends.

Long Term Positive Effects:

The short term positive effects of doing that hard thing are great. However, you can’t escape the hedonic treadmill and before long your body and mind will revert back to it’s baseline happiness level. Despite that, there are longer term positives to draw from that hard experience:

  • Memories of the AccomplishmentAs I mentioned in Happiness Dividends, our experiences pay us back long after they’re over. Looking at that finishing medal and seeing social media reminders from that race in the future will all me to draw pride and happiness from that event for years to come.
  • Building Mental Toughness – You just overcame something really hard. How much easier does the hardest work day seem by comparison? When you do hard things, it’s building mental muscle that lets you handle life more easily in the future.
  • Another Cookie in the Cookie JarDavid Goggins has a concept in the book Can’t Hurt Me called the cookie jar. When you overcome something hard, you have that “win” captured in your mind like putting a cookie into a cookie jar for later. Later in life, when the shit gets tough, you can reach into your mind (cookie jar) and recall that past victory (cookie) and use it as mental motivation. It’s a great way to summon mental and physical strength in the present from past victories.
photo of chocolate cookies in jar
Photo by Lisa on Pexels.com

Find Your Hard Thing- Incorporating Hard Things Into Your Life

You may be thinking to yourself “that’s great, but I don’t want to run an ultramarathon.” Great, don’t do it! Hard is relative. Endurance sports is where I am now on my journey of hard things but you don’t have to start there. Hard to me is anything that mentally, physically or emotionally pushes you way outside your comfort zone.

  • Complete something that forces you to overcome a fear that you have: fear of failure, fear of public speaking, fear of flying, fear of heights, fear of small spaces.
  • Build up to running a 5k
  • High intensity short exercise – High Intensity Interval Training (HIIT) / CrossFit X days a week
  • Complete an endurance race of some kind.
  • Complete a 24 hour (or more) fast
  • Try Skydiving

Action Steps

  1. Think about something hard that would put you outside of your comfort zone.
  2. Make a plan and do the hard thing.
  3. Make sure you hold yourself accountable to doing it. Sign up for a formal event if you can to ensure you have something concrete to work towards.

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Mindset

Rational vs. Reasonable: Financial Decisions Are Not Always About The Money

BLUF: Financial decisions aren’t just about math and logic because humans aren’t robots. The most rational decision isn’t necessarily the right one for you if you can’t handle it emotionally. Our money choices just need to be reasonable. They need to allow us to feel good about them, stay the course and sleep well at night.

What Should I Do?

There’s a question that causes internet debates, and sometimes arguments, almost daily in the personal finance space. The question is: “what should I do?” or “what would you do?” and then insert a financial situation here ________. The financial situation varies but a few common ones are:

  • Should I use extra money to pay down my mortgage faster or invest it?
  • I came into a large amount of cash, what should I do with it?
  • Should I use the debt snowball or the debt avalanche to pay off my debt?

There are typically two sides squaring off: the most financially optimal decision in the situation (what make or saves you the most money) versus some less financially optimal decision.

One group of people will be behind the financially optimal choice explaining the situation in terms of what the math “says”. Another group of people will offer up a choice that isn’t as financially optimal on paper but one that they’re very happy to have made and would make again. Which side is right? Which side is wrong? What should you do?

Rational vs. Reasonable

Psychology of money book cover

These two sides represent a conflict in financial decision making. Morgan Housel presented these two sides in one of my favorite books: “The Psychology of Money” as Rational vs. Reasonable. Rational being the most mathematically optimal decision and reasonable being a less optimal decision that is still financially sound and feels good. I found this to be the most impactful concept in the book and it’s what we’ll explore in depth here.

The Elephant And The Rider

Before we talk about rational vs. reasonable, I think it’s important address the elephant in the room (I know, I couldn’t resist). There is more to decision making than just unemotional logic and reason.

In the book Switch by the Health Brothers I was introduced to the concept of our thinking and feeling brains. There are two different decision making forces inside of us as complicated human beings: the thinking brain and the feeling brain.

The thinking brain is the logical, rational part of our brains. It’s the part running calculations and spreadsheet to determine how much house we can afford based on our budget, down payment, interest rate…etc. It’s the part of the brain at the grocery store buying the cheaper tuna fish based on unit price.

The feeling brain is emotional and is making decisions based on how we feel about the decision. It’s the part that walks into an open house for a home that you can’t afford and makes you say: “screw the budget, this feels like home.” It’s the part that sees that shiny black corvette on the car lot and now all you can think about is how awesome it will feel to drive that each day.

A wonderful metaphor for the power of these two decision making forces is an elephant with a human rider on top. The feeling brain is actually the massive, powerful elephant while the thinking brain is the puny rider on top.

man riding on gray elephant near trees
Photo by ফাহিম মুনতাসির on Pexels.com

That thinking brain rider may think that they’re in control because the elephant often listens to their commands. However, when the elephant doesn’t agree with the command the rider quickly learns who’s in control and they’re just along for the ride. The feeling brain elephant is in control and if there’s a conflict between the two it’s going to win. Every. Single. Time.

We like to think of financial decisions as something purely mathematical where logic can be applied to determine our decision. Being an engineer, I always assumed that all of my decisions were coming from a place of logic and reason in my brain. However, both thinking and feeling brains are involved and that feeling brain holds the power.

Rational vs. Reasonable vs. Emotional

I like to think about our financial decision making as a spectrum with pure math on one end and pure emotions on the other.

  • Rational – A decision that’s based on what the logic or math says. The financially optimal choice to make without taking feelings into account.
  • Emotional – A decision that’s based on what feels right. You don’t really know the financial implications (good or bad) of your choice because they haven’t been considered.
  • Reasonable – A financially sound decision that’s a compromise between what’s most optimum financially and what feels right based on a persons experiences, goals and risk tolerance.

I think it’s important to recognize that while the rational decision, the financially best one, could be the same for a range of people, the emotionally best decision is highly personal and will vary widely. The feeling part of our brains brings into our decisions all of the life experiences that we’ve had along the way to shape us.

A retired person that sold all their stocks at the bottom in 2009 and never recovered is going to feel very different about the stock market than a younger investor who rode the subsequent bull market. A person that went bankrupt and lost their home in 2009 will feel very differently about mortgages, debt, leverage and risk than someone that’s never been foreclosed on before.

Rational vs. Reasonable – Real World Examples

With that framework in mind, let’s talk about some commonly debated decisions that show both sides of rational vs. reasonable argument. For each I’ll show the commonly argued rational choice along with some perfectly reasonable choices. It’s important to keep in mind that just because you wouldn’t choose one of the reasonable choices below doesn’t mean that it isn’t reasonable for someone else.

Invest Extra Money vs. Pay Extra To Your Mortgage

white and red wooden house with fence
Photo by Scott Webb on Pexels.com

You have no debt except for your mortgage and you have extra money at the end of each month. Should you invest that money for retirement or make extra principle only payments to your mortgage to pay it off faster?

Rational Choice Argument: If your mortgage interest rate is 2-5% (or less), then paying extra to your mortgage is going to build wealth slower than investing that money in an S&P500 index fund that averages 8% returns historically.

Reasonable Choice Examples:

  • Pay some extra to the mortgage and invest some of the extra.
  • Put all extra extra cash to the mortgage to pay it off as fast as possible.
  • Reducing your retirement contributions to let you pay off your mortgage faster.

It might be really important to someone to be debt free. I’ve heard people describe the feeling of paying off their mortgage as being one of the best feelings ever and that they wouldn’t trade it for the world.

Lump Sum Investing vs. Dollar Cost Averaging (DCA)

space grey ipad air with graph on brown wooden table
Photo by Burak Kebapci on Pexels.com

If you received a large chunk of money, should you invest the entire amount into the stock market at once (lump sum) or stretch out the investment of that money over weeks, months or years (dollar cost averaging (DCA)).

Rational Choice Argument: The S&P500 over time goes up on average, and you can’t time the market, so performance will be best if you put the whole lump in at once and give the money the maximum time in the market.

Reasonable Choice: Dollar cost average the money into the stock market. Come up with a schedule to invest that money over weeks, months or even years and put it on auto-invest.

The pain of losing money is far greater than the pleasure of increasing it. Studies have shown that the pain of losing $1,000 is twice as great as the pleasure of gaining the same $1,000. The goal here is to get the money invested as quickly as possible and keep it invested, but in a way that won’t make you do something irrational.

If you invest $100,000 as a lump sum, the market drops 10% and you sell and sit in cash for the next year then you aren’t going to come out ahead. I’d rather someone invest $10,000 a month for 10 months because they feel more comfortable doing than do a lump sum that will make them very nervous.

Debt Avalanche vs. Debt Snowball for Debt Payoff

The debt avalanche payoff method means that you pay off debts in order of the highest interest to the lowest. The debt snowball method means that you pay off the debts in order from the smallest balance to the largest, regardless of interest rates on the debts.

Rational Choice Argument: The avalanche method will get your debt paid off while paying the lowest amount of interest possible.

Reasonable Choice: Using the snowball method or some combination of the two methods to ensure that you get some quick wins and stick with the process.

Paying off debt can be analogous to trying to losing weight on a diet. If you choose a method where it’s hard to see some progress right away it’s discouraging and you may give up altogether. For example, if the first debt you tackle is a large one that takes a year to pay off by the avalanche method then you might just quit. If the first debt is a small $500 debt on a 0% interest offer but you get to eliminate that bill in one month then it’s reasonable to go for the easy victory. That feels good and can re-energize you to keep going.

Figuring Out What’s Reasonable For You

woman with credit card pondering while buying online with laptop
Photo by Liza Summer on Pexels.com

All of this is well and good, but knowing that we’re each uniquely messy emotional beings, how do we make the most reasonable choice for us? Here is my suggestion for working through a decision:

  1. Make a list of your big goals that relate to the decision at hand – It can be easy to get into the details of a situation and forget about the larger picture. If your big goal is to retire early, sell your house and travel the world then that will heavily influence the decision to pay down your mortgage versus invest.
  2. Really understand the arguments for the mathematically “optimal” approach – Even if you don’t take the perfectly rational option, I think it’s key to fully understand what that choice would be and why. Why does the math show that lump sum investing will outperform DCA historically? Through that education it might actually change your feelings about the risk at play and what the most reasonable choice is for you. You could also run some “what if” scenarios.
    • For example, if you’re unsure about lump sum versus DCA, simulate what would have happened in a scenario. For example, if you lump sum invested $150,000 into the S&P500 in January of 2019 how would the performance today compare to investing $50,000 on 1/1/2019, 1/1/2020 and 1/1/2021?
  3. Write down any fears or worries that you have about the decision – It’s important to self reflect and understand that there are emotions at play with financial decisions. If there are certain outcomes that you’re afraid of happening then you need to acknowledge that. By identifying and acknowledging that worry you can then come up with options to address that fear.
    • As a simple example, if one spouse is the breadwinner and the other takes care of the household then the household maintainer might be worried about what happens if the breadwinner dies. This risk and concern can be mitigated with term life insurance.
  4. Consider options that aren’t just “all or nothing” – Sometimes people get paralyzed because they only think in terms of decision extremes. In the pay down your mortgage example, I either pay nothing extra to the mortgage or I aggressively put everything extra to the mortgage. Life isn’t about binary decision making (2 choices). If you really aren’t sure what to do choose an option that does both. Take 50% of extra pay and put it toward the mortgage principle and invest the other 50%. One way to get ideas is to ask other people what they would do in your situation. Just be careful to use the responses as ideas, not to make the decision for you.
  5. Make a decision but don’t be afraid to revisit it – Many financial decisions can be reversed or adjusted if you don’t feel good about your decision. Don’t be paralyzed by a decision that can be easily adjusted in the future if it doesn’t work out as planned. Make a decision but then check back in periodically to see how you feel about it. If you have anxiety and check a new investment daily perhaps you’ve taken on too much risk and you need to change course.

Key Takeaways

  1. Financial decisions aren’t just about math and logic because humans aren’t robots. The most rational decision isn’t necessarily the right one for you if you can’t handle it emotionally. Our money choices just need to be reasonable. They need to allow us to feel good about them, stay the course and sleep well at night.
  2. There are a wide range of reasonable choices out there so be careful about giving or receiving one size fits all advice. What’s reasonable for one person based on their experiences, goals and risk tolerance might be completely unreasonable for another person.
  3. Nobody can tell you what’s the most reasonable decision for you, except you. Keep that in mind when asking others what they would do in your situation. A good fixed fee financial planner might be the most skilled at doing this for other people as they are trained to understand your goals, risk tolerance and worries and then offer up options that they think align with that information.
  4. It’s okay to choose reasonable over rational. Don’t let others get you down because your rational choice didn’t maximize your wealth. Financial metrics aren’t the only indicators of a good decision.

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