Using Systems to Dominate Learning (And Anything Else)

The MIT Challenge

Recently read a guest post by blogger Scott Young, who stunned the world by doing the impossible. Scott completed MIT’s notoriously difficult Computer Science curriculum, which usually takes bright MIT students four years to finish, in one year. Watch the TED talk on his MIT Challenge here:

To do this, Scott adopted a carefully constructed learning system that let him compress the concepts of a 4-year education into a short span of time. This wasn’t simply a matter of cramming for exams. Scott not only passed all the exams but also completed all the programming projects, which require a deep understanding of the material. How did he do it?

First, he watched all the lectures online to get a birds-eye view of the material. By watching the video lectures at 1.5x-2x the normal speed, he managed to go through a semester’s worth of lectures in a couple of days.

Next, he spent a lot more time developing insight and drawing connections. He’d first take a piece of paper and write the concept that he was trying to understand at the top. He then wrote out his own explanation, as if he was teaching it to someone else. When he came to a gap in his knowledge, he’d go back to the textbook or find it online. In this way, he systematically filled in all the knowledge gaps until he had a deep, complete, understanding of the material.

Third, he went through practice problems with the solution key in hand. He’d check his work question-by-question, getting immediate feedback for every question he did. Compared to other students who might have to wait weeks before they got back their graded assignments, Scott’s system gave him a tight feedback loop which dramatically improved his effectiveness.

As Scott wrote in a guest post describing his journey: “…the method you use to learn matters a lot. Deeper levels of processing and spaced repetition can, in some cases, double your efficiency (emphasis mine). Indeed, the research in deliberate practice shows us that without the right method, learning can plateau forever.”

In short, Scott wasn’t studying harder; he was using a system to study smarter.

The Power Of Systems

Scott’s MIT Challenge forms the premise of the book I’m currently working on: That adopting the right systems can help you to achieve much, much more than the average individual.

You can use systems to create a desirable habit, deliver happiness to people, get fitter, be more productive, negotiate better.. pretty much anything you want to achieve in life.

Most people don’t know how to improve their own lives because they rely solely on “trying harder”. How many of us make New Years resolutions to go to the gym more often, only to fail miserably before February comes around? How many of us resolve to be more productive at work, but end up online shopping and Facebook stalking before lunchtime? And how many of us resolve to saving and investing more this year, only to have all our extra cash wiped out by a year-end vacation?

Instead of trying harder, applying systems is infinitely more effective. Here’s why:

1. Systems remove the need for “willpower”

The trouble with willpower is that it’s easy to lose steam. We burn out. John Tierney, coauthor of Willpower: Rediscovering the Greatest Human Strength, describes willpower as a finite resource that runs out just as easily as a fuel in your car tank. Systems, on the other hand, take control away from you. They force you onto a certain path so that you don’t have to use willpower. It sounds counterintuitive, but we’re more likely to be successful at something when we are willing to hand over control to a system.

2. Systems are much simpler to follow 

If you’re trying to lose weight, think about the barrage of information out there on weight management. Hundreds of articles and blogs give handy “tips” and nuggets of advice, but they’re often conflicting and confusing. A system, on the other hand, is based on rules. Step 1, 2, 3. Go to a personal trainer and he’ll tell you exactly what you need to eat, how to exercise, and all that jazz. You don’t have to think – all you need to do is stick to the system, and you’ll succeed.

3. Systems are smarter

Think about Scott Young’s system for accelerated learning. It’s a simple formula, but it’ll save you a lot of time and effort when it comes to studying. Think about how much easier it is to set up a GIRO standing instruction that automatically helps you to save every month, instead of putting in time and effort to “save harder”. Finding the right system can help you to do things a lot more efficiently and effectively than most people.

Viewing the world from a systems perspective

Systems are effective, more so than many of us realize. That’s the premise of this blog, as well as the upcoming book. So far, I’ve showed you how to use systems to improve your savings and investments, find the right types of insurance, and spend more efficiently on the things you love. The book will delve a little more deeply into the psychology of saving, spending and investing, and will describe more detail on the systems that will help you tackle your personal finances.

You start to see things differently once you look at life from a systems perspective. Large challenges suddenly don’t seem so daunting anymore, and possibilities start to open up.  Are there any problems that you’re currently stumped by, but could possibly be solved by applying a system? I’d love to hear from you, even if you haven’t found a solution yet. Leave a comment, or send me an email at cheerfulegg@gmail.com.

Cheers 🙂

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Don’t Save For Retirement

It is close to midnight on December 29, 1972, and Eastern Air Lines Flight 401 is making its final approach to Miami International Airport. 163 passengers are onboard, most hoping to enjoy their new year in sunny Miami.

As it approaches the airport, the landing wheels are lowered and locked into position. At this point, the captain notices something amiss: the green light linked to the landing wheels has failed to light up. This could mean one of two things: Either the wheels have failed to lock into position, or the light is faulty. The pilots report the situation to Air Traffic Control, who orders the plane to circle back and try their descent again.

At this point, the pilot and co-pilot fixate on the light. They take it out of its fitting, blow on it to remove dust, and try to jam it back. Their conversation goes back and forth as they try to figure out what the fault is. They become so fixated on the light, that they fail to notice the 300-pound gorilla in their midst.

The gorilla, in this case, is the fact that their autopilot is disengaged and that they are rapidly losing altitude. They don’t notice that they are dropping rapidly because it is a moonless night and they can’t see the horizon. The altitude warning alarm rings through the cockpit and the altitude meter is dropping crazily, though neither pilot notices. They are too fixated on the light. Only when the aircraft is 7 seconds to impact, do the pilots realize that something is very wrong. They take evasive action, but it’s too late. The plane crashes, killing 101 people.

Crash investigators later found that the wheels had indeed locked into place – it was the light that was faulty. “The crash occurred due to the failure of a $12 piece of kit,” one journalist pointed out. However, the true cause of the crash was deeper than that – it was the pilots’ fixation on one particular problem, which blinded them from the true danger they were in.*

*story taken from Bounce by Matthew Syed

What other gorillas are you failing to see in your life?

Like the pilots who were overfocused on the green landing gear light, most people are fixated on one goal when it comes to personal finance: retirement. They believe that in order to retire, they need to hoard as much cash as possible, starting now. But they fail to realize the huge gorilla charging towards their bank accounts: inflation.

Two posts ago, I wrote about how inflation would slowly but surely destroy the buying power of your savings. If you’re young, letting your cash sit in your bank account (or in your fixed deposits / CPF / mattress) is like putting it in a nest of termites: it’ll eventually get eaten up.

So here’s my advice when it comes to inflation: Don’t save for retirement.

Say what?

Hear me out for a second. If you’re young and wild and free, there are other, more important things you should be focusing your attention on. Instead of saving up for “retirement” and getting a lot less bang for your buck, there are three more useful things you should be directing your money towards:

1.Save for assets

The best way to tackle the inflation gorilla is to put your money into assets that will grow faster than inflation: Stocks and real estate. Stocks are the most accessible because they don’t require a huge cash outlay, they’re easy to understand, and if you live in Singapore, they’re tax-free. Woot woot! Real estate is pretty nifty too, if you can afford the huge downpayment (or if you can’t afford the huge downpayment, you can also look into REITs – more on that later).

The biggest bonus of all is that if you plough your cash into assets that exceed inflation, you will, in fact, be prepping yourself for retirement.

2. Save for life chapters

Here, I’m talking about big, life chapters that you were planning on spending on regardless of what happens. I’m talking about your wedding, your first house, and your daughter’s upcoming college fees. If any of these are going to be happening within the next 10 years, then you should be saving up for them. Don’t act as if you didn’t know they were coming: If you know you’ll be getting married in 3 years, you should be saving up for your hypothetical $30,000 banquet and $15,000 ring… now.

A caveat: I’m not talking about cars, or vacations, or that new washing machine, that you “know” you’re going to spend on anyway. I’m talking about the big, necessary, life chapters here, people.

3. Save for emergencies

Sh*t happens. You’ll need cash to deal with it. If something bad happens, (like losing your job) the last thing you want is to be dipping into your investments to pay for your meals. If you don’t have an emergency fund of 3 months of income parked in an easily accessible bank account, then you should totally start saving up for one now.

In short…

Don’t bother saving for retirement – inflation will render your efforts futile. Other than cash set aside for emergencies and stuff you’re going to spend on within the next 10 years, everything else should be directed towards assets – Assets that keep pace with inflation. If an insurance agent / banker tries to sell you a fancy schmancy 50-year savings plan, run as fast as you can.

Don’t get too fixated on the wrong things. Just because personal finance “experts” tell you that you should be saving for retirement, doesn’t mean that you should be blindly stuffing cash into a bank account. Keep an eye out for the inflation gorilla in your midst, and take action to deal with it.

PS: the topic for this post came from a friend who replied to my previous post on spending money. To everyone reading this, keep the comments coming! They totally give me the inspiration for future blog posts.

As a young person, what do you think about the 3 ways you should be putting your money towards, instead of saving for retirement? Leave a comment, or drop me an email at cheerfulegg@gmail.com. Hope to hear from you soon 🙂

How I Save Hundreds of Dollars a Year On Books

Fun fact: It takes TWICE the amount of time for me to commute within Singapore from Yio Chu Kang to Changi (25km away) compared to someone commuting from New Jersey to Manhattan (67 km away). I know, it really defies the laws of Physics.

Anyways, I love the fact that it takes me 1.5 hours to get to work in the mornings because it gives me a long, uninterrupted stretch to read. Other than doing the gungnam style in the middle of a crowded subway and embarrassing my friends, reading is one of my favorite hobbies in the world. And it’s way better than playing angry birds or watching Korean dramas.

Another fun fact: Reading can make you rich. The average person reads one book a year, while the average millionaire reads two books a week (Though their reading lists probably consist of titles other than Harry Potter).

The only problem with reading? Physical, paper books are crazy expensive, especially in Singapore where book prices are marked up to ludicrous levels. Libraries help to get around this issue, but popular books are usually almost always loaned out, and it’s a pain to refer back to them once you’ve returned them. When I first started work, I used to go to Borders to browse through entire books over the course of several months. I know, I know, Borders is bankrupt because of people like me.

 E-Readers for Voracious Readers on a Budget

And then I discovered the Amazon Kindle. I wasn’t the first to jump on the Kindle bandwagon – I had my reservations about e-readers too – but buying a Kindle two years ago pretty much changed my life. Since then, I’ve quadrupled my reading from 1 book every 2 months to 2 books a month, spending an average of less than $8 on each of them.

Price

My Kindle has saved me hundreds of dollars on reading. Ebooks are way cheaper to produce than physical books – there are no printing, distribution and storage costs, so cost savings are passed on to consumers.

I did the math: A Kindle device costs between $69 – $139 USD, depending on which version you get. In 2 years, I’ve downloaded 49 books for an average price of $8. Assuming that I bought those same physical books for $25 retail at a bookstore (pretty conservative considering some books can go up to $50-$70), that works out to savings of $833 over 2 years. Amazon also regularly promotes good-quality books for free (yes, free!!) or for a nominal price like $0.99.

 Convenience

The Kindle weighs lighter than a paperback, and is even smaller in size. This, in addition to being helluva sexy, has the advantage of allowing you to bring your books everywhere.

The only time I really get to read is when I commute, so I like having my books with me all the time. This also allows me to devour a book bit by bit in those annoying pockets of time when I’m traveling short distances, like a 10-min bus ride.

Common Objections to Getting an E-Reader:

“But I really like the ‘feel’ of a real book”

Okay you’re not buying a G-string here, why are you feeling up your book for, you perv? E-Readers are more like real books than you think – they use a technology called E-Ink, which looks and reads just like real paper and doesn’t hurt your eyes when you read.

Besides, the “feel” of a book is overrated – After reading a Kindle for 2 years, I can honestly say that I don’t even miss physical books anymore. And is the enjoyment of turning a page really worth $400 a year?

“But I already have an iPad”

Zomg. Every time I hear someone say that, I feel like running into an Apple store, stripping myself naked and yelling, “YOU CAN’T COMPARE AN IPAD TO A KINDLE!!!!” The two devices are made for very different purposes: the iPad is made for media – videos, internet, games, and pictures, while the Kindle is made for reading. Period. You try reading the entire Lord of the Rings trilogy on an iPad with a backlit screen and tell me if you don’t go blind in the process.

So how do I get one?

If you’re in anywhere in the world besides Singapore most countries, getting a Kindle and downloading books from amazon.com should be pretty straightforward.

If you live in Singapore, getting and using a Kindle is a little more complicated, but it can be done. Jeffery’s blog provides excellent instructions on how Singaporean users can obtain one and download books (scroll down to the section on “How to get a Kindle in Singapore”)

Also, you could totally go with other e-readers besides the Kindle (Eg Barnes and Nobles’ Nook is a good choice), but I just picked Amazon because it has the best selection by far.

Happy Reading! 🙂

Just In Case

So I’m just gonna say it – I’m a really big wuss when it comes to personal finance.

Some of my friends get a big kick by bragging about how they lose like thousands of dollars every day on their own accounts. I totally get it. Hell, I’ve been there before. I used to watch the futures and forex markets all the time, throwing my dad’s money down and watching with nail-biting intensity, mentally willing those little candlestick charts to go in the direction I wanted, as if I could control the markets if I just concentrated hard enough.

Some of my other friends take their entire life savings and throw them into commercial properties, apartment-flipping, businesses, and art. It’s a helluva sexy isn’t it? Like it could totally be the plot of one of those rags-to-riches movies. (Raspy-voiced narrator: “He started with nothing. Life was tough on the streets. But one man would overcome the odds, take all the risk… and emerge a winner” Cue: inspiring music)

Some people view investing with a “go hard or go home” philosophy – by throwing everything into it. But just because you did a heroic Hail Mary pass doesn’t mean that the market, or your investments, are going to romantically work out for you in the end. If you throw your entire weight behind one, glorious, inspiring, guns-blaring Blitzkrieg, you’re going to be caught with nowhere to run if it doesn’t work out for you.

I’m all for investing, but let’s be smart about it. First, I’d recommend building a hugeass emergency fund. Like 6 months of your income would be good. A year’s worth would be better, but not necessary if you’re young since it’s probably not gonna be that hard for you to find another job if you lose yours. But yeah, there’s nothing more reassuring than having a cool pile of cash sitting in your bank account.Totally baller.

One more reason why having an emergency fund is awesome – it helps you to keep a cool head. And having a cool head is absolutely critical to your success in investing. Here’s a fun fact: the number one reason why most people don’t succeed in investing is because they care too much about it. When the market tanks, most people panic and sell their holdings, which is almost always the wrong decision to make. With an emergency fund, you’re not dependent on your investments to pay your bills, so you won’t go making stupid decisions with your investments.

Secondly, make sure your savings are covered. If you’re planning on buying a house, or getting married, or having a kid, save for those and keep them separate from your investments. Investments, by nature, involve a certain amount of risk, and depending on what you invest in, you don’t want your kids’ college fund to disappear when the stock market takes a nosedive. I have a separate long-term savings account that I contribute towards every month, and I never, ever touch that, not even to buy more stocks.

Next, split your salary and work towards building your emergency funds, your savings, and contributing towards your investments. Personally, I concentrated on building up 6 months’ worth of my salary for my emergency fund first. With that done, I could focus on allocating my money purely towards savings, investments, and expenses.

Lastly, if your investments are relatively low-cost like stocks or bonds, I’d recommend using strategies like dollar-cost averaging to diversify your risk over time.

That’s it! No sexy strategies, no Hail Mary passes. Just smart, common-sense investing, which, in all likelihood, will let you come out ahead in the end.