Are you emotionally attached to money?

It is possible to completely sever all emotion you attach to money; to understand it to simply for what it is: a tool.

Doing so liberates your mind to think clearly and be decisive in all money-related choices.

My aim here is to encourage those who haven’t already, to jettison their emotional attachment to money to open the door to better decisions.

What am I talking about?

Well…

I’ll provide some examples. Maybe you can relate to one or two of them?

1. Petrified of losses, debt etc – Typically, these kinds of folks will accumulate a mountain of money in an interest-accruing bank account (which can’t even keep pace with inflation after tax) and sit on the sidelines, knowing that they might be able to put the money to better use, but they’re unable to overcome the fear of a having (good) debt, or the potential for a loss. Very common.
   
   
2. Tightarses – Refuse to “spend” money on areas that will provide significant value e.g. professional help, self education/personal development, due diligence and research etc. They’re unable to see over the emotional wall of expenditure to the expansive, positive results they’ll attain if they just invest in the right areas.
   
   
3. Can’t handle rides – Got the courage to start investing but forgot to detach from money and obsessively monitor investments, going through an emotional rollercoaster–feeling great when they’re up, and feeling terrible when they slide or take a loss, questioning whether they made the right decision or the wrong one, whether the money could have been put to better use etc. These folks might even sell in panic at the worst possible time.
   
   
4. Overpaying – Getting carried away at an auction because you HAVE TO HAVE THIS PLACE. There’s plenty of deals just around the corner.
   

Does the idea of losing $50,000 sound appealing?

Probably not.

But guess what.

If you’re building wealth, it will probably happen in your lifetime.

So why not work on your philosophy and extinguish your emotional attachment to money?

At the end of the day, how you interpret events in your life is the ONLY thing that matters. Take a loss and you have options:

1. “No worries, my plan’s on track, back to business.”
2. “I hate my life, what have I done? I’m so stupid. This will take years to recover. What a setback!”.

It’s your choice.

I see my working capital as a unified system–much like a business with different departments. Some will be more profitable than others (or not at all), some will be lower risk, some higher. Some will die. Some will flourish. Some will surprise. Others may disappoint. Instead of worrying about the micro, I focus on the macro.

A small slice of my capital is assigned to high risk/high reward investments.

I’m entirely equanimous to what happens across my portfolio, but it’s most important in the high risk area. I don’t mind taking a $50k loss ten times before I turn one of those $50ks into $2mil if that’s the price of entry in my high risk investments.

Naturally, you can’t be silly with your capital but you can be smart, and that means disconnecting emotions so you can make measured, calculated, objective decisions (suitable to YOUR circumstances) and then be unaffected emotionally, regardless of the outcome.

Money is a TOOL, not a loved-one.

Mindfulness meditation has been a powerful tool in my learning to be unaffected by emotions in many areas, including finance.

If anyone’s curious, a good starting point when you have 10 or 30 minutes: http://www.samharris.org/blog/item/mindfulness-meditation

 

Steven great post and I agree with you completely.

Your on an uphill battle though. Unfortunately there are too many property investors who believe that mindset and philosophical development are a fluffy, air fairy concept that most likely wont translate into improving their chances of achieving and sustaining massive succuss. IMHO its a massive error in judgement. Just my opinion.

Anyway great post mate.

 

Are you emotionally attached to money? Investment wise, yes. Having life partners usually make it a lot harder to let go since if I make losses, it's not only me who's screwed.

There are aspects of my life where money will fly in times of need though.

 

Just a number on a screen.

 

Things have definitely changed as far as feelings towards money for me.
It doesn't excite me like it used to....
It's a bit like a drug where you need more and more to get the same feeling.
But it's not about the money, it's about doing bigger and bigger deals, the money is a side effect.
I don't think I can buy any more resi property for the same reason.
Need a bigger deal, either commercial or another business venture.

 

For me the feeling of losing money is a lot more intense than the feeling of making money.

 

Dis gonna hold you back, scared money never wins.
You can make the change.

 

Biz I hear what your saying mate. imho its a mindset thing. With reasonably intelligent investing that matches your risk profile, you should be fine mate.

 

You take that back!

 

All it is a number that changes each hour each day,24/7 and by the time I finish this post that number will change again,.

 

It's not that im scared. Just the feeling is stronger. If I make 10k I don't bat an eyelid but if I have to pay some unexpected 10k bill for some reason it gives me the *****.

 

"All desire leads to unhappiness..."

 

I think a 10k completely unexpected bill would give anybody the *****....
But even that will change over time as your income increases.

 

Tell that to guys who lost the lot in the GFC or had a business go under due to creditors defaulting. Not fun nor pretty. Losing money comes with consequences making money doesn't.

 

I hear you, perhaps you have read my post on my experience on losing $1m partner's business GFC.

From personal experience you either pick up the pieces or bury your head in the sand, harder to pick up the pieces because you have to face reality. I found it was determination that kept me going as I wanted to reach my end goal.



MTR

 

I did read your story MTR. I had a similar experience around 2009 in my business - lost 300k. Not as much as you but im guessing the 300k was a bigger chunk of my net worth at the time than your 1 mill. It hurt, i recovered but i wont forget it. Losing that money had a more profound effect than the multiples of it i made over the last couple of years.

 

Good for you, you survived
Effects people in different ways I guess

 

People on here say it does but lets see them go through losing a heavy chunk of change and see if they get up in the morning smiling like they just hit the jackpot.

 

Really curious, how did you move forward, were you in a position to move forward financially if that makes sense?

MTR

 

I was ok because i had a lot in my account from doing really well in the couple of years leading up to the problems, basically just ate that and kep rolling but never recovered to the same level in the following years so got out.