Happy Day to you! This is Ken Kaufman and I’m thrilled you’re here for Episode Number three, Iterate Mindset and Process.
Last episode I went over the IMPACT Your Net Worth model. I use IMPACT as an acronym, with each letter identifying one of the six key principles for building net worth and getting ahead financially. As a quick reminder, here they are.
The I impact is for iterate mindset and process, and I’ll cover that one today.
The M is for maximize, which is for maximizing income and joy.
P is for prioritizing the waterfall.
A is for aligning with partner and waterfall.
C is for cultivating assets.
T is for terminating debt.
So today my focus is on the I – iterate mindset and process. So what does it mean to iterate? Let me tell you how I learned what iterate means up close and personal.
When I went back to MBA school to the University of Georgia, I followed finance and entrepreneurship tracks. Dr. Charles Hofer was my professor for all of the entrepreneurship and strategy classes that I took.
He was intense. He had the students write business plans to compete against and against teams from other schools. Every three weeks he brought in a group of private equity investors, angel investors, venture capital, bankers, and others who looked at business plans all day long. These people would judge the written plans and our verbal presentation of the plans.
After the first three weeks preparing for the first round of this judging, I thought I had written a beautiful business plan. I was convinced that it was just the best thing in the world. I presented it, got good questions and some good feedback. And overall, I felt great about it. This was on a Friday afternoon.
After the weekend I came into the student lounge on Monday morning. In my mail slot I found a cassette tape. Yes, I’m going to date myself with this here. But there was a cassette tape that could record a total of 90 minutes of content. When I found it I wondered what it was. And then it said Dr. Charles Hofer business plan competition on it. So I went to my car, which was the only cassette player I had at the time, and I started to listen to it. Dr. Hofer proceeded to tell me everything that I did wrong in that presentation. What I said wrong, why the order of the slides was wrong, why the slides needed to be reorganized and completely redone in so many different ways. And I just felt like I was taking a beating as I was listening to this cassette tape.
And then the tape finally ended. And I thought, wow, that was painful. Well, then, the other side of the tape started to play. And yes, the entire other side of the tape was full as well. I listened to this feedback come in.
Once it was done, I felt beat up. I felt angry. But then I realized, no, wait, there’s a lot of good information here, there’s a lot of good suggestions, I’m going to internalize it, I’m going to figure out what I think makes the most sense. And I’m going to come out with a better product three weeks from now when I have to present again.
And sure enough, we did that presentation and it was much better. And the following Monday morning I found another cassette tape in my mail slot. Only it didn’t go all the way to the end on the second side. And I found each business plan presentation that we did every three weeks, the amount of negative comments I was getting from the professor were getting smaller and smaller. And before I knew it, they only fit on one side of the cassette. And then only halfway through the first side of the cassette.
And wow, it was so wonderful to not get so much negative feedback, or what I call constructive feedback.
The importance of iterating is what I learned from this experience. I should never rest on your laurels, I always need to be looking for ways to improve. However, I also need to stop and celebrate the successes along the way, as well.
Iterating indicates that you’re trying to get better, but you’re not beating yourself up so badly or pushing to improve so hard that you can’t think, can’t sleep, or you’re making yourself sick.
So I want to be really clear about this about this balance between improvement but not putting so much pressure on.
I first learned this principle from the New Testament.
Now I am a religious person, it’s a big part of my life. I’m not using this podcast as a platform to preach. But there’s something from the New Testament that I think really relates. And there was a man named Paul who was an apostle of Jesus Christ. And he wrote a letter to the people of Phillipi, it’s known as the book of Philippians in the New Testament. In chapter four, he delivers this jewel of information that we need to understand when we think about iterating.
Paul said that he learned to be content in all things.
Now content does not mean complacent, meaning you just sit around and do nothing.
But content also doesn’t mean that you kill yourself trying to improve and get better and ruining yourself in the process.
This information is just so critical to understand when we iterate. And Paul made this statement: he said “I have learned to be both hungry and full.” What do you think about what that means?
Have you ever felt hungry and full at the same time? It’s actually a very hard thing to do concurrently.
Think about that Thanksgiving dinner, you eat that dinner, you’re full. The last thing you’re thinking about is looking for food or finding something to eat. In fact, you might even feel a little bit repulsed by food if you eat too much.
Whereas if it’s been a day or two since you’ve eaten and you’re hungry, boy, that’s all you can think about. And you’ve got to get food. Paul said, you have to be both, you have to be hungry and full.
The process of iterating is a process of finding this contentment that Paul talks about. And thats what I started to learn from my professor in MBA school, because he balanced the positive with with the constructive feedback.
You have to be able to feel full, meaning to look back and say you feel good with your progress. You don’t need to beat yourself up. You have made mistakes, but you’re doing better than you were and you are moving forward.
But you also need to feel hungry. Because if you don’t, and you just fall into that place of complacency, then you never actually try to improve and you never try to make yourself better or make your financial situation better.
So I think the key takeaway here from iterating mindset is to learn to be content like Paul talked about. Be full and be hungry at the same time. Look backward and realize you’re making progress – and tracking net worth, by the way, is a phenomenal way to do that. But don’t be complacent, be hungry, looking for ways to get better and looking for ways to improve.
So as you think about iterating your mindset, one of the things you need to iterate away from is burying your head in the sand when it comes to difficult or trying financial matters. Maybe you have some letters coming from the IRS for some past due taxes. Or maybe some other gnarly situation. Burying your head in the sand does not solve anything. Iterating to a mindset, a new mindset, says you take it on, you do what you can and you give yourself credit for the progress.
I realize we all have money trauma from the past, we’ve made mistakes, we are frustrated at ourselves for letting certain things happen, get out of control, or incurring too much debt. But iterating to the new mindset is a healthy, healthy place to be if you tell yourself: “I’ve made mistakes. But look at the progress I’ve made since then. I’m iterating to continue to make progress.”
Another mindset you could benefit from shedding is paralysis by analysis.
Wow, I’ve seen this happen before, where so much effort goes into looking at and researching and understanding something that you end up not able to make a decision and you don’t move forward with anything. That is not a healthy place to be. You have to eventually break out of that and start making those positive, forward-moving decisions. Even if you make mistakes, you are learning and iterating instead of being stuck.
Now once you get into this right mindset, we’ve iterated our mindset into this mode where we’re continually iterating, we are content not complacent, and not so hungry that we’re just always going crazy trying to make improvements. Once you get to the right mindset and right balance of contentment, the next step is to iterate your financial processes to make your life easier, more simple, more automated, more brainless.
Here’s an example: You say to yourself, I want to put $500 a month into my Roth IRA account. You could make that really, really complicated and difficult, where you have to remember to write out a check, handwrite the mailing details on an envelope, buy a stamp, mail it, and then wait for it to be received by the company you sent it to. Then you go online and check and make sure that it got deposited correctly, and then reconcile that check from our bank account. That is painful. The way we iterate our processes to achieve our goals is we would go online, set up an auto investment with wherever we’re putting that Roth IRA money, and then just let it go. We can take our brainpower away from having to do this manual process. And we can take our brainpower and go to highest and best use. You’ve automated that process, simplified it as much as possible through the iterative process. Now you can go find another process to iterate and simplify that will help you get ahead with net worth. You’ll figure out how to make that more simple and as easy as possible. So then you can take your mind and go and figure out the next one.
All right, there is iterate mindset and iterate process. In the next episode, I’m going to get into the second letter of the impact acronym, which is M for maximize income and joy.
Make sure to subscribe to the podcast so you don’t miss it and the following episodes on the Impact your net worth model. Many, many thanks to you for joining today. This is a wrap for Episode three. Happy Day!