Jan 252016

Mental Contrasting

Mental contrasting is a visualization technique to help people get what they want. :) It was developed by Gabriele Oettingen, a psychology professor at New York University. This technique has strong empirical support. :) Over the last decade in studies conducted by Gabriele and other researchers, mental contrasting has been shown to increase attendance and academic performance for low-income school children in the U.S. and Germany. In other studies, people who practiced mental contrasting increased their fruit and vegetable consumption by 30%. Maintaining a healthy diet is very important. Some people like to preserve fruit and vegetables because they ‘can‘. 😆

Mental contrasting begins with creative visualization, thinking positively about the future and imagining the ideal outcome. 😀 But daydreaming alone won’t get us very far in reality. What we also have to do is mentally contrast where we want to be and where we currently stand. For example, maybe we want to increase our monthly retirement contributions by $300. We have to embrace our current reality and accept that we need to work hard to reach our goal. By focusing on this gap between where we are and where we want to be, we create a necessity to take action.

Here’s how to implement the mental contrasting technique.

  1. Think about an ideal outcome for yourself in the future.
  2. Determine the main internal obstacles that will probably get in the way of your desired outcome.
  3. Formulate a if-then plan for what you’ll do to overcome those obstacles.
  4. Follow through with the plan and don’t give up.

16-01-never-give-up-so-close mental contrasting

Exercising mental contrasting with implementation intentions means that we believe we can achieve our goals and also realize that we have to put in effort to make it happen. When determining potential obstacles in step 2 it’s important to focus on internal factors like laziness, procrastination, or other personal habits. External obstacles like what our boss does, or how the stock market performs are not things we can control the outcomes of. Strong motivation has to come from within. If we are not willing to improve, then no one can help us. On the other hand, if we are determined to improve, then no one can stop us. 😉

Continue reading »

Jan 112016

Here in my apartment, just got this new Hot Wheels here. It’s given me countless hours of fun and imaginary play time. :)


But you know what I like more than materialistic things? Knowledge. In fact, I’m a lot more proud of my library card, which gives me access to tens of thousands of books. It’s like the billionaire Warren Buffett says, “the more you learn, the more you earn.”

Now maybe you’ve read my post where I talk about how I read at least one financial news article everyday. You know, I read an article a day not to show off. It’s again about the knowledge. In fact, the real reason I keep this Hot Wheels here is that it’s a reminder. A reminder that dreams are still possible, because it wasn’t that long ago that I was deep in student loan debt and had less than $100 in my bank account. I didn’t have a college degree, I had no opportunities.

But you know what? Something happened that changed my life. I learned about people like me who became successful. They demonstrated what it took to become multimillionaires. Again, it’s not just about money. It’s about the good life; health, wealth, love and happiness.

A little knowledge and wisdom can go a long way. Recently Forbes released its 2016 edition of the top 30 under 30. These are bright individuals under 30 years old who have made it big in their respective fields.

16-01-forbes-30-under-30 Annie Lawless

Being in the same age category myself, I can relate to a lot of what they have to say. Below are some quotes from individuals who made it onto the list. The green words are my own reactions to their quotes. Let’s learn some knowledge!

I realized if I didn’t love the woman I saw in the mirror then there was no way I was actually going to be successful.” ~Ashey Graham, 28. Model-designer.
As a size 14, plus-size model, Graham landed five magazine covers in the last year plus a bikini ad in the 2015 Sports Illustrated swimsuit issue. She calls herself a “body activist,” advocating for the 50% of American women who wear a size 14 or larger, an $18 billion market.
What you tell yourself everyday will either lift you up or tear you down. Self acceptance and confidence can be the key to unlocking your true potential.

“People perceive investing in the market as risky. The bigger mistake is leaving a lot of money in your savings account.” ~ Vlad Tenev, 28. Finance. Co-founder of Robinhood.
Tenev dropped out of UCLA’s math Ph.D. program to build high-tech trading software for hedge funds and banks. 
Investing too conservatively can backfire and actually lead to less financial security down the road due to opportunity cost.

 “When I found out that 0.1% of actors are working, I was like, ‘You know what? I’m going to go for it anyway.’ You only live once.” ~ John Boyega, 23. Entertainment. Actor.
As the new male lead in “Star Wars: The Force Awakens,” Boyega should get used to seeing his likeness on action figures and lunch boxes.
Nobody gets a second chance at life so seize any opportunity you come across.  

“I’m very much a risk taker. I don’t have experience on my side, but I have persistence.” ~ Tyler Haney, 27. Retail and E-Commerce. Founder of Outdoor Voices.
Haney created an activewear apparel company based on minimalism, and technical aesthetics.
This is pretty much my investment philosophy in a nutshell.

“My biggest moment? Maybe yesterday. Seriously, man, I’m 17, so I’m still doing it for fun.” ~ Shawn Mendes, 17. Music. Electronic musician.
The Canadian singer follows the path of countrymen Justin Bieber and Drake, parlaying an online fan base into a major-label record deal.
Remember to have fun. Nothing will ruin your teens or even 20s more than thinking you should have your life figured out already.

“To actually have something that we created on a Whole Foods shelf was so unbelievable. I still get chills just thinking about it.” ~Anne Lawless. Food & Drink. Co-founder of Suja Juice.
Suja Juice is a brand that is valued at $300 million. It has surged in popularity thanks to its rejection of added sugar, genetically modified fruit and other manufactured chemical additives.
Use the satisfaction of prior accomplishments to motivate future plans. 

Continue reading »

Jan 072016

Learning About Incentives From The Big Short

An incentive is something that motivates us to do something. The study of incentive structures can help determine economic activities. If our goal is to have money then we are motivated to work and get paid. :)

Understanding how incentives and disincentives work is important to analyzing the financial markets. The subprime mortgage crisis of 2007 in the U.S. was largely predictable for anyone who understands the incentive structures in the world of high finance. :) In the early 2000s the banks started to securitize riskier and riskier mortgages. They sold these mortgages to other investors and claimed the loans were safe when in fact they were filled with toxic and sub-prime mortgages. Sub-prime refers to a borrower with poor credit history and has a relatively high probability of not paying back their mortgage. Around 2007 the entire house of cards collapsed which lead to a global financial crisis. All of this happened because of incentives.

  • Bank executives made a lot of money by underwriting risky mortgages. They lacked the incentive to guard against such risks because they were protected from the negative consequences thanks to insurance and the high probability of government bail outs.
  • Mortgage brokers earned higher compensation from selling variable rate loans than fixed rate loans, even though floating rate loans were more risky.
  • Potential homeowners were motivated to apply for variable rate mortgages because the introductory rates were lower than fixed rate loans.
  • People who didn’t even have jobs or steady incomes still received home loans because some mortgages offered a delayed payments program.
  • The credit rating agencies who were suppose to assess the financial risk of these mortgages gave these funds triple “A” ratings despite the high probability of default because rating agencies are funded by the banks who put together the mortgage funds. That’s like if a health inspection agency was paid by a restaurant to conduct a health and safety inspection on that same restaurant. 🙈 What are the chances the health inspector is going to write up a negative report? lol. If a credit rating agency such as Moody’s decided to not comply with the bank’s self interest, then the bank will just pay some other agency such as Standard & Poors to rate their mortgage funds instead and Moody’s will lose out on that paycheque.

So in every part of the system people were motivated to take unsubstantiated risks due to the incentive programs that were in place. There’s a book called The Big Short written by Michael Lewis which explains how the sub-prime mortgage crisis unfolded. Lewis says that people see what they’re incentivized to see. If you pay someone not to see the truth, they will believe your lie. Wall Street is organized in a way where sometimes people will pay to see something other than the truth.


The handful of individuals who understood how financial incentives work were able to predict the great recession. In 2006 a trader from Deutsche Bank paid $11 million to insure against $4 billion of triple A rated bonds from a U.S. bank. About 11 months later his bet paid off to the tune of a mind-blowing $3.7 billion! Holy ham sandwich! That’s an annualized return of more than 30,000%. 😲

Continue reading »

Dec 072015

Breaking Through the Mental Barriers

For most of humanity the world believed that it was not physically possible for humans to run a mile in 4 minutes or less. This was a universal belief because the challenge had been attempted by athletes across many generations throughout human history but no one had ever succeeded. :(

But then something miraculous happened in 1954. A man named Roger Bannister stunned the world when he ran an entire mile (1.609 km,) in 3 minutes and 59.4 seconds! 😀

Later that year during the British Empire and Commonwealth Games hosted in Vancouver, B.C., Roger Bannister and Australia’s John Landy both ran a mile in less than 4 minutes. The race’s final moment is memorialized in a statue of the two placed in front of the PNE entrance plaza.


But here’s the amazing part. Since 1954, over 1,000 people, including high-school students, have successfully broken the 4 minute barrier. Nobody could run a mile in 4 minutes prior to 1954, but now new runners are joining the 4 minute club every year. So what the heck changed in the last six decades? 😕 I don’t think a bunch of people suddenly developed super-human speed and endurance, although that would be pretty cool. 😉

What actually changed was people’s beliefs. Bannister didn’t just become the first person to run a 4 minute mile. His most significant achievement was changing the world’s perception about what a person is capable of doing. Prior to 1954 a 4 minute mile was simply considered impossible. But after 1954, everyone knew it had been done, so it must be possible. The psychological barrier had at last been shattered. Everyone believed that if someone else can do it then I can do it too. If someone else can make their dream into a reality then so can I! :)


The biggest barriers to financial enlightenment that most people face are not physical, but rather psychological in nature. Michelangelo once said, “the greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.” This is why it’s important to set ambitious goals.

Continue reading »

Nov 162015

Exploring the Myers-Briggs Type Indicator in Personal Finance


Table of Contents: 

The importance of knowing your type
How personality affects your financial habits
How rare is your personality?
Most common types for Personal Finance Bloggers
How personality affects your income and career
In Closing and Sources


Intro to the Myers-Briggs personality test

In order to master our finances, we have to develop a solid understanding of our personalities. The way we think dictates how we save, how we spend, and how we manage our money in general. Our temperaments can also affect our income earning potential. With a little self-discovery we can discover our financial strengths and weaknesses so we can focus on the skills and actions that we naturally excel at. 😉

One popular personality test is the Myers-Briggs Type Indicator (MBTI.) Through a series of short questions, the MBTI measures our affinity towards four pairs of personality traits. The result is a 4 trait combination, one trait from each pair, that gives us some insight on how we think and perceive the world. Here is an explanation of each pair of traits.

Myers-Briggs Personality Traits

Extraversion (E)
-People's person
-Feel comfortable and enjoy working in groups
-Sometimes jump too quickly into an activity without thinking
Introversion (I)
-Reflective and somewhat reserved
-Feel comfortable and like doing things alone
-Prefer to know just a few people well
-Sometimes spend too much time thinking, and not take action quickly enough
Sensing (S)
-Remembers details based on facts and physical reality
-Works through facts to understand problems
-Pragmatic and looks at the bottom line
-Start with facts to form a larger picture
-Trusts experience over words and symbols
Intuition (N)
-Remembers events by reading between the lines to find their meaning.
-Leaps between different ideas and possibilities to solve problems
-Focuses on the big picture first before finding out the detailed facts
-Trusts impressions and metaphors more than actual experiences
Thinking (T)
-Logical, calculated, not emotional
-Notices inconsistencies
-Looks for logical explanations or solutions to problems
-Sometimes seen by others as too task-oriented, uncaring, or indifferent
Feeling (F)
-People or communications oriented
-Concerned with harmony and care about what other people think is important
-compassionate, make decisions with the heart
-Sometimes seen by others as too idealistic, indirect, or mushy
Judging (J)
-Prefers to have things planned out in advance
-Likes to be task oriented
-Likes to make lists of things to do
-Likes to get work done before playing

(note: Judging has nothing to do with being judgemental in this context.)
Perceiving (P)
-Prefers to go with the flow
-Likes to keep opportunities open to respond to new circumstances
-Appears to be loose and casual
-Keeps planning to a minimum
-Works in bursts of energy
-Tends to rush projects at the last minute

Each pair of traits is a spectrum because personality is not binary. For example, nobody is purely introverted or extroverted. The resulting trait is whichever one the person has a stronger tendency towards. So if someone’s temperament reflects Introversion, Sensing, Thinking, and Judging, then his MBTI personality type would be ISTJ for short. There are 16 possible outcomes for the Myer’s-Briggs personality test.


If you don’t know your personality type you can take a free test here.


Why It’s Important to Know your MBTI

Increasing our financial self-awareness strengthens our relationship with money, so we can prioritize what’s important to us. For example, there are two primary ways to save more money for retirement. ENTJs are better at increasing their incomes, while ISTJs tend to have an easier time cutting back on spending and being frugal. Understanding our natural tendencies lets us choose financial management strategies that suit our needs. 😉 Once we know our 4-letter personality type we can do a lot of practical and useful things with it, including the following.

  • Discover new career opportunities or side hustles to make more money.
  • Narrow down which financial experts or famous investors to follow based on how similar their personalities are to our own.
  • Better understand where gender stereotypes in society comes from.
  • Find personal finance bloggers that think like us and learn vicariously through their stories and experiences.



What your Personality says about your Financial Habits

The 16 MBTI types can be grouped into 4 general personality categories. This gives a broad overview of how the personality types can affect someone’s financial behavior.

  • Protectors (SJ)

    These people all have the Sensing and Judging (SJ) traits. They are known as protectors because those who fall into this category are more financially conservative and want to protect their principal investment regardless of opportunity costs. They see wealth preservation as the main priority. Most protectors make average income or higher. As natural planners, they are good at saving for emergencies and for retirement, but sometimes have trouble accepting some calculated risk with their investments. Protectors generally have high savings rates to make up for their conservative risk tolerance on their portfolios.

  • Creators (SP)

    Sometimes also called players, creators like to live in the moment because they are Sensing and Perceiving (SP.) They like to work hard and play hard. Many creators are entrepreneurs and they tend to take bigger risks with their money than other groups.

  • Intellectuals (NT) 

    Intellectuals embody the traits Intuition and Thinking (NT.) Also known as planners, intellectuals like to look at the big picture and plan for the future. They are willing to accept thought-out risks in order to achieve their long term financial goals. Similar to protectors, intellectuals are avid savers. But sometimes they focus so much on the future that they miss out on short-term opportunities to splurge or have fun in the present.

  • Visionaries (NF)

    This group of people tend to be emotional around money. They possess the Intuition and Feeling (NF) traits. Visionaries view lending money to or borrowing money from friends and family members as a very personal matter. They often see money as an extension of who they are. Most visionaries earn average income or lower. Their spending habit revolves more around emotions, relationships, compassion, and ideas, rather than strict pragmatism.



How Rare is your MBTI Personality Type

Most people are Sensing so they prefer to deal with detailed facts and physical reality rather than big-picture ideas and abstractions. Men tend to be slightly more aligned towards introversion while women lean slightly towards extroversion.


Almost 1 out of 5 females in the world are ISFJs. This supports the studies that claim women tend to be more risk-averse than men when they invest. Meanwhile INTJs and ENTJs are the rarest personality types among females. More than half of all females identify with the traits Sensing and Feeling (SF.) This combination lends itself very favorably to working in careers that require a sympathetic approach to people. They are commonly found in the clergy, teaching, health care, child care, sales and office administration work, and personal services.

2 out of 5 males are Introverted Sensors (IS.) They are good at remembering stored memories of previous sensory experiences. This allows them to carry out tasks such as quality assurance because they can compare new products with memories of existing products. Introverted Sensors tend to be good at remembering details. They can easily recall specific things they are interested in, such as names of actors or football players, numbers, percentages, specifications, stock prices, and sports scores.



What Personality Types are Personal Finance Bloggers?

With so many PF blogs out there it’s not always easy to find compatible bloggers who we can relate with. I cover stocks and the financial markets. But what about readers who want to learn about lower risk investment options, or how to get out of debt?

Well earlier this year I surveyed over 100 bloggers to find out about their Myers-Briggs personality types. :) The data has been compiled in the following graph.


Discover which PF bloggers have the same personality traits as you, so you can narrow down which blogs might be more relatable to you.🌟

For a detailed explanation of each personality type, please see the “MBTI Personality Types for PF Bloggerstable below. The types are numbered to make them easier to find. They are roughly placed in order from most common to least common in the blogging community.

1 INTJ the strategist15-11-myer-briggs-personalty-types
2 ENTJ the chief
3 ISTJ the examiner
4 ESTJ the overseer

5 INFJ the confidant
6 ISFJ the defender
7 ENFJ the mentor
8 ENFP the advocate

9 ESFJ the supporter
10 INTP the engineer
11 ENTP the originator
12 INFP the dreamer
13 ISFP the artist
14 ISTP the craftsman
15 ESFP the entertainer
16 ESTP the persuader

Continue reading »