4 Reasons I Don't Buy Individual Stocks

Investing in stocks has become increasingly popular over the last few years. Many people love the thought of owning part of their favorite companies/ Mobile apps such as Robinhood, Stash, and Acorns have made doing so seamless and easy. Although buying, selling, and trading stocks in the hopes of making a profit can be captivating, it may not be the smartest thing to do financially. Here are 4 reasons I don’t purchase individual stocks:

1. There are too many companies to choose from. There are thousands of different publicly traded companies in the world. This means there are many different stocks in a variety of different industries from which to choose. With so many options and a limited amount of money to invest, how do you choose which companies to invest in? Many people simply choose to invest in the industries and companies they have heard of the most. However, just because a company is well-known doesn’t mean it’s a good investment. There are too many options and many of the companies we have heard of may not be a the best investment. This brings me to my second point…

2. It is difficult to predict which companies will do well and which won’t. As the common investment saying goes, “Past behavior doesn’t predict future performance.” Just because a company has done well in the past, does not mean it will continue to do well in the future. You make money investing by purchasing stocks from companies that will continue to grow and make money over time. Although popular companies may continue to increase in value over time, it is also possible that some of these companies may have already hit their peak. If you make the mistake of purchasing stock in a company that doesn’t grow much over time, then you will have spent money on the stock without getting much in return. If you purchase the company stock and the company actually goes down in value, then not only have you not made any money, but you also may have lost money, which is the exact opposite of what you want to do when investing.

My point is that there are very popular companies that may go down in value in the next few years and there are also relatively new companies you may have never heard of that could increase in value over the next few years. It can be difficult to predict how each of the thousands of companies with stocks for sale, will do in the future. This brings me to my third point…

3. Useful and timely information that could serve as clues, is hard to find. Since predicting which companies will do well in the future can be challenging, large investment firms on wall street, like Goldman Sachs, Morgan Stanley, Barclays Capital, etc have hired entire teams of people in their “research” division to find information that could serve as clues about a certain company or industry. They do different types of extensive analyses in order to predict how well a certain industry will do in the future. For example, they may conduct surveys, talk to various industry experts, and examine behavior patterns to make investment recommendations that will increase their odds of making a profit and decrease their risk of losing money. Many people in the general public who like to invest try to do the same thing. They may read the Wall Street Journal and glean information from a variety of news sources to also get clues on which companies to invest in and which not to invest in. The problem with this information is that it isn’t always timely, which means it isn’t always useful.

Oftentimes, the investment firms on wall street, with their large research divisions and teams of experienced investors, have access to key information about various industries and companies long before it is published or spoken about in news sources that people in the general public have access to. In fact, there is a common thought among investors that by the time information is given to the general public it is “too late.” In other words, by the time you and I find out about a certain company that is struggling, many experienced investors have already sold their shares of those stocks. By the time you and I find out about an up and coming company, investors on wall street have already purchased those stocks at the lowest price and made their own profits. Investment information is just not as readily available to members of the general public to allow us to make the best investment decisions at the best times. This brings me to my last point…

4. Purchasing individual stocks can decrease investment diversity and increase risk. Even if you did have access to timely information, purchasing individual stocks is still risky. Human behavior isn’t always rational so our rational predictions about what items people will purchase over time and which companies will grow as a result don’t always line up. In fact, many people who have investment portfolios that are actively managed by investors at the biggest wall street investment firms still lose money. Only one third of actively managed funds (in which investors pick certain stocks for their clients to purchase) actually beat the market index. This means most funds that are managed by experienced investors at the largest investment firms who have access to lots of information still do not out-perform people who simply invest in index funds.

An index is a group of many different companies in a variety of industries. An index fund is an investment fund that follows an index. In other words, instead of picking and choosing which individual stock to purchase, an index fund will simply purchase all the stocks in that index, which includes hundreds or thousands of different companies. By investing in an index fund, you are a partial owner of all the stocks in that index. There are many different types of index funds such as the Total Stock Market Index Fund (that includes all of the major stocks in the United States) and the Total International Stock Index (which includes all of the major stocks around the world). The benefit of purchasing an index is that you are a partial owner of almost all of the stocks. if one stock does really good then your investment increases in value but if another stock does poorly you have not lost that much money since you have so many other “good” stocks that can cushion the blow. In other words, index investing creates diversity (since you are invested in so many different companies) which protects investors from the risk of losing too much money. Purchasing individual stocks is the opposite of that. Buying individual stocks decreases the diversity of your investments (since you have a larger portion of your money tied up in the stock from one company instead of having that money distributed among many different companies).

My point? I don’t purchase individual stocks because I don’t have a crystal ball. I can’t predict the future or accurately tell which companies will do well and which won’t. The safest way to invest and still make money when you can’t predict the future is to limit your risk. You limit risk by purchasing a piece of all the stocks, that way if one company does poorly the other companies can help mitigate the risk and the make up the difference.  

5 Financial Moves to Make This Fall

As you continue to mature you may begin to think about money in a different way. Instead of viewing money as something you can use to buy the things you want, you may start to consider the opportunities that money affords you and start thinking of ways to accumulate more. Here are 5 things you should consider doing this fall to take your finances to the next level.  

1. Start investing in the stock market. Whether you are in your early 20s and just got your first salaried job, or are about to reach your 10 year work anniversary, investing in the stock market is something everyone should consider doing at all stages of life. Many people have opportunities to invest in the stock market through their jobs via a 401K or 403b retirement plan. Some companies may even offer a retirement “match” to incentivize you to invest through these venues. You should make it a goal to invest at least 10% of your income in index funds through your 401K, 403b or IRA retirement plan. If you’re able, consider investing even more money into your Roth IRA or using some of the money you have left over each month to invest via apps Robinhood, Acorns, or Stash. Investing in the stock market by purchasing index funds through retirement plans or brokerage accounts will allow your money to make money (aka “interest”) and after awhile, that interest will begin to make even more money for you (aka “compound interest”). One of the best things you can do for your financial future is invest your money and let the magic of compound interest work in your favor.   

2. Reconsider what car you drive. Another decision that can have a huge impact on your finances is what car you choose to drive and more importantly, how you choose to pay for it. Many people love to purchase brand new cars. They love the new car smell, updated features, and the peace-of-mind in knowing they have reliable transportation for many years to come. Despite these benefits, there are downsides to buying a new car. One of the main drawbacks of buying a new car is that it loses its value fairly quickly in the first few years. This means it will continue to depreciate (or lose value with time). Thus, you end up spending a lot of money and having pretty hefty car payments for many years on a car that will lose value. If you are trying to invest money for retirement, spend money on other things, or save money for future trips and vacations, having a $500 car payment for the next 5-6 years may preclude you from doing so.

Other people choose to lease cars. They like being able to drive a different car every few years and don’t want to pay the full price of a car that will lose value over time. However, the downside of leasing a car is that you will still have a monthly payment each month of several hundred dollars for the next 3-5 years. When your lease is finally up, you will have to give back the car, and take out a new lease with a new set of monthly payments so that you can continue to have transportation. The most sound decision to make is to pay cash for a slightly used car. Cars that are 2-4 years old tend to still be aesthetically appealing, reliable, and are more reasonably priced. Paying for a slightly used car in cash can also prevent you from having a big car payment each month. Because the car is cheaper, you can get a much smaller car loan with much smaller car payments that you can pay off quicker, even if you didn’t have all the cash you need to pay for the on day 1. My point? Car payments can be a rather large monthly bill, so reconsider what you drive and think of ways you can reduce this payment or prevent yourself from having the payment in the first place.  

3. Prioritize paying off your credit card debt. Credit card debt can negatively impact your finances in numerous ways. It charges you extreme amounts of interest each month if you don’t pay back the money in a timely manner. Since many people are unable to pay back all the charges in one month, they keep accumulating interest, on top of what they already owe. By the time they finally pay off the credit card, they have paid hundreds if not thousands of extra dollars in interest payments. If you are spending money paying off credit card debt, and the interest you owe on that debt, that’s less money you have to invest. One of the best things you can do for you finances is make a plan to pay off your credit card debt as soon as possible and try to avoid accumulating more.

4. Think twice about your living situation. Buying a house is a major goal for many people, especially young families. The idea of having something of your own to build memories in is quite alluring. In contrast, living in a high-rise apartment is extremely attractive for many young professionals who live in the city, especially if they do not have children. The convenience of being able to walk to bars and restaurants and having short commutes to other forms of entertainment can be quite attractive. While there’s nothing inherently wrong with your desires about where to live, it’s important to remember that where you choose to live, and how much you decide to pay each month for housing, can have a big impact on your financial future.  Be wary of buying a house that is too large or too expensive. Be wary of renting an apartment with rent that is too high. Housing is one of our largest expenses each month. How much you choose to pay for a mortgage or rent can have a big impact on how much money you are able to save, invest, and spend on other things in your life.

5. Set up automatic savings. One of the best things you can do to ensure you meet your financial goals is to set up automatic savings. This means having a set amount of your paycheck automatically sent to a different savings account. Ideally, this savings account would be separate from the checking account that the rest of your paycheck goes into. By having it automatically deposited into a separate account you essentially “pay yourself first” and protect yourself from spending the money you were supposed to be saving. Doing this will help you build your savings each month which will increase your net worth over time and allow you to save money for an emergency fund, upcoming vacations, and other large purchases like a home, wedding, or college fund for your children. 

What do you think, which of these 5 financial moves do you plan to make this fall?

Should you turn your starter home into an investment property?

Contrary to popular belief, not all homes make good investments. An ideal real estate property will provide you with extra cash in your pocket each month or allow you to increase your net worth in a tax-efficient manner. Some homes have both of these benefits, but many homes have neither. You can evaluate where your starter home falls on this spectrum by asking yourself these 6 questions:

1.Do the numbers make sense? Before you list your home as a rental property you must “run the numbers.” The first calculation you should make is the “cash-on-cash return.” The cash-on-cash return helps you determine how much money you’ll make on the investment based on how much money you spent to buy the investment. In other words, it will help you see whether investing money into this starter-home-turned-investment-property is more lucrative or less lucrative than putting your money into something else like index mutual funds. The second thing you need to calculate is your monthly cash flow. Computing the monthly cash flow will help you see how much money this rental property will put in your pocket each month after you pay the mortgage and account for repairs and other taxes and fees. Some properties have a high cash-on-cash return and positive cash flow. Others do not. Run the numbers for yourself to see if your home provides an ideal cash on cash return (at least 10%) or enough monthly cash flow to make it worth your while.

2.Are you planning to make expensive aesthetic changes or upgrades? If you purchase a home and pay the mortgage each month, you will build “equity” or value in that home. However, the more money you spend on upgrades and costly aesthetics, the less equity you may keep. Don’t get me wrong, there are certain upgrades that may add value to a house, but oftentimes when we purchase things that are more aesthetically appealing, we do so for our own self-gratification. As a result, many of the upgrades people make to their homes (modern cabinets, renovations to a basement, the addition of a pool, etc.) cost more money than they add in value to the home. Increasing expenses (through costly upgrades) without an identical increase in home value, decreases the overall profit you could gain from using the home as an investment property. 

3.What is the housing market like in your area? Before you purchase a starter home with the intention of using it as an investment property, look at local housing market trends. Have houses been going up in value or down in value? Is it sellers’ market, in which houses are being sold for more than they are worth? Or, is it a buyers’ market in which the supply of homes exceeds demand, so houses are being sold for less than they are worth? Purchasing a home in a sellers’ market makes the home more likely to be a cash-flow negative investment property. Purchasing a home in a buyers’ market makes the home more likely to be a cash-flow positive investment property.

4.Will you be able to secure (and afford) two mortgages? In an ideal world, you’d rent out your starter home to a reliable tenant and use that rent money to pay down the mortgage. You may even ask the bank for a second mortgage to purchase a larger home for yourself in the meantime. Unfortunately, life doesn’t always go as planned. Asking the bank to loan you money for a second home when you haven’t paid off the first home and may also have a significant amount of student loan debt may be more challenging than you realize. Plus, it may take a few months to find a reliable tenant and there’s a good chance this starter home will have an occasional vacancy between renters. Do you have enough money to cover costs during these transition periods? Can you afford to pay the mortgage on the starter home while you find a tenant AND pay the mortgage on the other home you live in? If the answer is no, then planning to maintain two houses may not be financially feasible.  

5.Can you or someone you trust effectively manage the property? Managing a rental property as someone’s landlord is no small feat. You have to be diligent about collecting the full rent on the due date. You also have to be available to receive and coordinate maintenance requests at inopportune times. Do you think you have the time, experience, or energy to do this yourself? If not, you may want to consider hiring a company to do it for you. Keep in mind that paying for a management company may significantly decrease your monthly cash flow. 

6.Have you already maxed out less-cumbersome investments? If you’ve never owned a rental property, let me be the first to let you know, it’s a lot of work. Securing responsible tenants who will make on-time payments requires more background work than you may realize. Spending hours negotiating the buying price and loan terms with real estate agents and loan officers can last a lot than you may have anticipated. Unless your return from this investment is significantly better than what you could get elsewhere, it may make more sense to max out other investments (like your employer retirement accounts and Roth accounts) first.

The decision to turn your starter home into a rental property should not be taken lightly. For some people, renting out their home may be a lucrative investment strategy. For other people, renting out their home may require more time and money than they can provide. Thoroughly evaluate whether turning your starter home into an investment property is the right decision for you.

Your living situation can affect your net worth, here are things to keep in mind:

As we continue to grow and mature, our living situations may change. Some of us may go from living in college dorms to moving into our first apartment. Others of us may go from sharing apartment space with a roommate to buying a house with our spouse. As we progress through life and make these changes, we must remember that our living arrangements can impact our finances and overall net worth. Here are some things to keep in mind:

1. Be weary of buying a home that’s too big. As someone who relaxes by watching HGTV, I love looking at nice houses. Many of my physician colleagues live in mansions and I marvel every time I walk into their homes. Although it’s perfectly fine to want to purchase a home, think twice before getting one that is too big. Despite how much the bank may lend you, there are lots of other costs associated with buying and up keeping a home that can add up to quite a lot. For example, a larger home usually comes with a higher mortgage payment, higher yearly property taxes, and high insurance costs. These expenses can prevent you from being able to save or invest money at an optimal rate. Plus, a larger home and more space, means that you need to furnish more rooms and purchase more items fill up that space. With more expenses come less savings and less saving/investing can severely impact your ability to increase your net worth.

2. Be weary of an apartment/home that’s too expensive. Similar to not purchasing a home that’s too large, also be careful not to rent an apartment that’s too expensive. In most cities, there are apartment homes that are fairly cheap, reasonably priced, and extremely expensive. Be careful of the later. It can be tempting to rent a place in the middle of the city with the high-rise apartment, scenic views, a rooftop pool and modern amenities but be mindful of cost. I know many people who rent apartments like these which costs them almost 3 times as much as other apartments in the same city and are over twice as much as the average mortgage price in their area.

While it’s okay to “pay for convenience” be mindful that doing so may preclude you from being able to spend money on other things or save the down payment needed to purchase a home, pay off your student loans at a reasonable rate, invest money for retirement, or take the types of vacations you’d enjoy. The general rule of thumb is to not spend more than 30% of your gross (pre-tax) income on housing. While that may be quite challenging for those who live in high-cost-of-living areas like Seattle or New York, it provides a general framework we can use to determine which apartments we should think twice about renting.  Although most people sign leases for 1 year, committing to such a huge fixed cost can be a financial catastrophe if our income changes, the coronavirus pandemic has made this even more true.

3. Be weary of a work commute that is too long. Along with the size and cost of our housing, we also need to be mindful of the distance our home is from the places we go to most. Having an affordable place an hour away from our job might save us money in rent but cost us a lot more in gas and car maintenance. It may also take away valuable time we could spend with our families or decrease the time we could spend working on other side projects that could help us bring in even more money. Jonathan Clements’ in his book How To Think About Money, mentions that long work commutes can be one of the main things that actually decrease our overall happiness in life. This suggests that finding housing that is too far away from our jobs can even affect our mental health and well-being.

4. Consider a roommate. Those who are single might want to consider having a roommate. Although this can get a little challenging as we age and begin to want our own space, it is something I urge everyone to think about, especially if they are still young and unmarried. Having a roommate will allow you to split the rent and will cut all of your other housing costs in half. Although having to share an apartment with someone else can be inconvenient at times ask yourself if you this inconvenience is worth saving an extra $500 to $1,000 per month. For me, it is. I’m a resident physician who lives with a roommate.

I share an apartment with one of my co-workers. We each have our own bedrooms and bathrooms but share a common living room and kitchen. Since we both work 60 to 80 hours a week, we are rarely in the apartment at the same time which makes things a lot easier. Plus, sharing this space allows us to split all the bills and saves us each over $1,000 per month. With this extra money I’m saving, I’ve been able to invest a lot more towards retirement, put away cash in an emergency fund, and save money to go on international vacations. Having a roommate is one of the best financial decisions I’ve made as a resident.

5. Consider house-hacking or renting a room. For those who have a spouse or may purchase a home soon, consider house hacking. House hacking is when you rent out part of your house to another person. Typically, this is done when people buy a duplex or a multifamily property with multiple units or apartments. They may live in one of the apartment units on one side of the duplex and rent out the other side. This is more ideal for singles or young couples who prefer their own living space but still want to save some money on the rent or have some additional income coming in on the side. Other people may decide to buy a place that has an extra bedroom and rent out that room during certain times of the year for a few weeks at a time. While this may not be ideal for everyone, it may be a good option for those trying to find ways to decrease their housing costs.

6. Consider a rental property. For those who live in single-family homes with their spouses or who have their own place and love their person space, another option is to consider a rental property. Perhaps there is an affordable home in your city you could purchase, fix up, and rent out to others. Maybe you already have a home but are thinking of purchasing a newer one to have more space for your growing family. Instead of selling it, consider renting it out to someone else. Renting out a home can be a great way to build wealth since it allows you to use the renter’s monthly payment to pay off the mortgage and save a portion of the leftover money for yourself. There are lots of other responsibilities associated with becoming a landlord, but this process may be something to consider.

My point? Our living situations can affect our finances in a number of ways. We should be careful of buying a home that is too large, renting a place that is too expensive, or finding housing that is too far of a commute to our jobs. We should also consider living with a roommate, house hacking a duplex, renting out a room, or purchasing a rental property. Tell me, what living arrangement do you have currently have and how do you think it’s impacting your finances?

Affordable Ways to De-stress During a Pandemic

It’s been over 5 months since our country first shutdown from coronavirus and many of us are still dealing with the impact. This global pandemic has affected our lives in countless ways and may continue to do so for quite some time. The rapid changes we’ve been forced to make can add anxiety to our already hectic lives but here are a few affordable ways to de-stress during this pandemic.

1. Therapy and Meditation. As a medical professional who is always trying to find ways to maintain my mental health, I’m a huge fan of therapy and medication. I explain my support for therapy in a previous post, but in short, therapy can be helpful for anyone. Therapy helps us reflect on our lives and examine how certain events in our childhood may have affected the thoughts and behaviors we have today. It also helps us understand how our relationships, personal goals, lifestyles, and beliefs influence almost everything we do. Going to therapy can equip us with the tools to overcome some of our past traumas and disappointments and gain the skillset needed to thrive in the future. I once heard someone refer to therapy and mediation as “exercise for the mind” and this couldn’t be more true. Just like we go to the gym to keep our bodies in good shape and improve our cardiovascular health, therapy is great for helping us optimize our mental health. While the pandemic may have limited our interaction with others, there are several alternative options we can pursue.

For example, there are several apps that can help you meditate more effectively and increase relaxation like Calm, Headspeace, and Stop, Breathe, and Think. You may also consider socially distanced or online yoga classes. If you prefer more personalized attention and private sessions with a licensed professional you should also ask your primary care physician to refer you to a therapist. I was able to find a therapist with plenty of experience who takes my health insurance which made things very affordable and who works in the evenings so that I can have the sessions without needing to take additional time off from work. You may be able to do the same. With the pandemic, many therapists have even held sessions via platforms like zoom and Doximity to increase access.

2. Exercise and Vitamin D. Sitting inside and constantly listening to the news or burying ourselves in work may increase our anxiety. One way to decrease these feelings of uneasiness is to spend some time outdoors. Simply going outside or being around sunshine can increase our mood and improve our current outlook on life. If you’re working from home, you may try setting up a home office or workstation near a window to allow for more natural lighting or sit a in chair on your back porch or balcony for a change in scenery. I even go to my neighborhood park to read books and listen to music. I’ve also spend a few hours on the weekends walking around the city to clear my mind or listening to podcasts to help me learn new things. Either way, being outdoors and getting a bit more Vitamin D has been helpful.

Along with going outside for more sunshine, you can get even more benefits by exercising. The endorphins we get from exercise can improve our mood and mental health even more than we realize. Although it may be challenging to wear a mask at a gym or find a socially distanced workout class, there are other options to consider. You can try taking a walk around your neighborhood in the early mornings, evenings, or on your lunch break. You can also try completing an at-home workout in your garage, downloading fitness apps on your phone, or looking on YouTube for various ways to maintain your fitness in non-traditional settings. The options are endless.

3. Virtual Happy Hours and Game Nights. One the things I’ve missed most during the pandemic is social interactions with my friends. Before the coronavirus hit, I’d hand out with my co-workers at local eateries and meet with friends on the weekends for various activities and entertainment. Although I miss going to concerts, sporting events, and gatherings at my friends’ homes, there are other ways we can get some social interaction in a safe socially-distanced way. One option is to host a “virtual happy hour.” You can invite all your friends on zoom and have some girl chat or talk about the latest basketball games while drinking homemade cocktails. One of my friends mentioned that his job gave all the employees a voucher for 3 different bottles of wine and various cheeses then had them all join on zoom for a virtual wine tasting. One of the physician conferences I attended last month mailed us all “welcome packets” and supplies to participate in a zoom game night so we could all connect online in an interactive way. If you’re extroverted like me or simply miss some social interaction of before, don’t hesitate to get creative.  

4. Netflix (Hulu, Amazon Prime, YouTubeTv) and Chill. Not surprisingly, many people have been watching television and streaming more shows and movies than they ever have before. Doing so may help people escape their current realities and this break from our current lives can serve as the perfect reprieve. Although being productive during the pandemic can have its benefits, we should not underestimate the effect scheduled breaks and short get-a-ways can have on our mental health. Stepping away from our work to relax or do something we enjoy can give us the space our brains need to recharge and become even more productive when we resume work. Since many of us can’t safely connect with all of our friends and family in person, one option is to share our streaming experiences. My brothers and I schedule a zoom call each month with our friends to discuss the latest Netflix series or movies we’ve watched. This gives us a chance to see other virtually and share our opinions on everything from sports to movies and current events in our city in a safe and fun way.

My point? The coronavirus pandemic has changed our lives in such drastic ways that many of us may have increased stress and anxiety. One way to combat this is to find ways to de-stress and pursue safe ways to interact with others. Whether it’s getting more sunshine, going for walks outside, hosting virtual game nights, or doing zoom therapy sessions, we all may have to look outside-the-norm to find ways to lower stress and increase happiness. Tell me, what are things that have helped you?

Ego is the Enemy, Part 2: Dealing with Failure

Regardless of who we are, what family we grow up in, how much education we have or how much success we achieve, we all experience failures. From time-to-time, we may encounter an unexpected loss or disappointment that can rock us at our core. Ryan Holiday’s book Ego is the Enemy has several pearls of wisdom to help us deal with these unfortunate events and emerge from them as better versions of ourselves. Here are some of my favorite life lessons and quotes from Ego is the Enemy in the section on Failure.

Lesson 1. Don’t be so attached to positive outcomes because sometimes, despite our best efforts, we will fail.

“In life there will be times when we do everything right, perhaps even perfectly. Yet the results will somehow be negative: failure, disrespect, jealousy, or even a resounding yawn from the world…but we must carry on. The less attached we are to outcomes the better. Do you work. Do it well. Then ‘let go and let God.”

Reflection: As ambitious young professionals we can be obsessed with the need to have control. We do all we can and plan our lives in a way that increases our chances for success. Although well-intentioned, we can begin to feel entitled to achievements, feeling as though we deserve success and this sense of entitlement can make things even more earth-shattering when we unexpectedly fail. With the quote above Holiday reminds us that we need to be less reliant on outcomes. Our goal is to do our best and hope for a positive result, not feel entitled to it. Failure, disappointment, and loss happen to us all.

Lesson 2. How we react to unexpected events is important.

“There are two types of time in our lives: dead time, when people are passive and waiting, and alive time, when people are learning and acting and utilizing every second. Every moment of failure, every moment or situation what we did not deliberately choose or control, presents this choice: Alive time. Dead time.”

Reflection: With this quote Holiday reminds us that while we may not be able to control the things that happen to us, we can control our reaction to them. When a disappointment or failure occurs, we have a critical choice to make. Are we going to stand by idly and remain in our sorrows? Or, will we make the most of the situation by trying to learn something from our experience? The choice is ours. Making the decision to learn something from the experience is not only a better use of our time, but it also alters our perspective on things, improves our mood, and allows us to emerge as a better, more resilient person.

Lesson 3. Failures help grow us and keep us humble.

“We cannot be humble except by enduring humiliations. People learn from their failures. Seldom do they learn anything from success.”

Reflection: Here Holiday quotes an inevitable truth: We gain knowledge and are more motivated to change when we face failure. When things go well, we often do not feel the need to change, since we often assume that what we are doing must be working well. We feel no need to change course. Adversity shakes this mindset. Failure comes and causes of us to enter a period of reflection. We begin to wonder what we could have done differently, what can we do better, how can we improve. It’s a forceful reminder that we are not perfect, and we need to work harder to be better than we are currently. This revelation gives us a new level of humility. With a healthy dose of this humility, we are better prepared to enter success more gracefully.

Lesson 4. Change the definition of success. It’s more about effort.

“Success is peace of mind, which is a direct result of self-satisfaction in knowing you made the effort to do your best to become the best that you are capable of becoming.”

Reflection: Similar to the point above, if we view success as achievements and external rewards, we will be disappointed because those things—the outcomes, rewards, and recognition—are beyond our control. We must instead take Holiday’s advice and change our definition of success. It’s not about what we achieve, it’s about putting in our best effort and doing everything we can on our end. Once we do that, we can be happy with ourselves, regardless of the results. All any of us can do is try.

Lesson 5. Don’t stay stuck. Move pass the hurt.

“The events he endured weren’t exactly fair, but at least he didn’t let it ruin his life.”

Reflection: One of the worse things we can do is be so shocked and dismayed by our failure that we wallow in pity. Doing so, causes us to waste precious time. Constantly reflecting over what could have been and what we feel should have been can preclude us from finding the motivation to get through our current struggle and may even prevent us from reaching our next destination. Life isn’t fair, but make up in your mind that you won’t allow the unfortunate event or series of events, from ruining your life.

Lesson 6. Emerge from the experience with your character intact.

“Let’s say you’ve failed and let’s even say it was your fault. Shit happens and sometimes shit happens in public. It’s not fun. The questions remain: Are you going to make it worse? Or, are you going to emerge from this with your dignity and character intact?”

Reflection: I personally love this quote. Every time I read it, it reminds me that I’m not alone. As Holiday puts it, sometimes sh*t happens. It sucks, especially when it happens in front of other people. We are embarrassed and often want to crawl under a rock or disappear entirely. Those feelings are normal. However, it’s up to us to make the best of this moment and refrain from letting our bruised ego cause us to act in ways that exacerbate the blow. Yes, we hate that this happened. Yes, we are embarrassed. But we must commit to making the most of this experience. We must try to find the silver lining and remember that this too shall pass.  

My point? We all face disappointments and failures. Ryan Holiday, in his book Ego is the Enemy has so many great quotes that help us put things into perspective. We are reminded that failures happen to us all and the important part is for us to search for the lesson in the midst of our disappointment and use the experience to become a better person. Which quote above resonated with you the most?

5 Things I learned After Paying Off My Credit Card Debt

1. It is much easier to get into debt than it is to get out of it. I racked up a significant amount of credit card debt during my years as a graduate student. I moved to a city I couldn’t afford, accepted a job that didn’t pay well, and used credit cards to make up the difference. Needless to say, I accumulated debt pretty quickly. It’s not like I was “balling out of control” taking fancy vacations or living some lavish lifestyle but the cost of basic expenses in a high-cost-of-living area took its toll. Although it was fairly easy to rack up this debt, I had to make some hard sacrifices to pay it back.

2. Paying off debt takes a lot of sacrifice and behavior change. I delayed paying off credit card debt when I got into medical school simply because I couldn’t work during that time and was already living on student loans. Once I graduated and started working as a physician, paying down that debt was one of my top priorities. The interest rate on my credit card was about 12% and although that’s great for a credit card, the longer I kept this debt the longer I was going to be paying at least 12% more for the things I purchased years ago. In order to pay it off as soon as possible, I literally threw money at this debt. Each month for the first 6 months I was a physician I had a chuck of money automatically sent to the credit union that issued my credit card. Every month I saw money that I could have spent on a nicer apartment or a fancy vacation go to pay back debt I had accumulated well over 6 years ago. I was jealous of my classmates who ate at restaurants all the time or were always traveling to nice places when I was essentially living like a broke college student trying to back this debt. Trust me, it was tough.

3. The temptation to avoid paying it off can be hard to resist. There were so many times where I’d want something (like a nice lamp for my apartment, a fancier bed spread, or a newer cellphone) and I realized that I could probably purchase those things easily if I didn’t have so much money going toward paying off my credit card. I contemplated delaying paying off the card by a few months in order to experience some gratification now. While doing so may not have totally derailed my financial goals, it would have created a dangerous habit that could cost me even more down the line: delaying debt repayment to purchase material things. I’m a firm believer that the habits, mindset, and discipline needed to pay down debt are the exact same traits needed to save, invest, and build your net worth. Delaying gratification is never easy, but learning to do so had such a positive impact on my finances and ability to build wealth.

4. The debt was costing me more than I realized. I decided to prioritize paying down my debt because I realized I was paying drastically more for things that I purchased years ago. In other words, the credit card company was charging me monthly interest of over 12% per year on the total balance of the card. The longer I delayed paying it off, the longer I would be paying interest. When I started learning more about personal finance, I realized the debt was costing me even more than extra interest payments. It was also delaying my ability to build wealth. Every dollar I was spending on this credit card debt, was a dollar that wasn’t going into retirement accounts to be invested in a way that actually earned me more money. Instead of EARNING 8% per year on money invested in retirement accounts, I was actually PAYING 12% more on debt. The sooner I paid off this credit card, the sooner I could get more money invested and start earning interest instead of paying it.

5. Paying down the debt improved my quality of life. Now that I’m credit card debt free, I’m so much happier. I no longer have a large chunk of money going toward a bill I accumulated years ago. Instead, I’m investing more money into retirement accounts and saving more money in my emergency fund. I’m also planning a couple international vacations that will be paid for in cash. To be able to live my life without relying on credit cards is such a freeing feeling. Plus, it took so much sacrifice to get it paid off that I literally never want to go back.