



Over the past decades, I have sometimes or perhaps even often come to regret a decision that I have made. Although I take solace in the knowledge that there are millions who have made worse decisions than I have, it does not help me when I come to realize that had I chosen differently, things would have turned out better than they have.In many cases, it has been shown that individuals make pretty bad decisions – ones that they would not have made had they paid full attention and possessed complete information, computer-like analytical skills and complete self-control. Rarely having all of the above, I have chosen wrong many a time.In my resolutions for the year, I have a list of actionable and measurable items, but two things that I did not list and would trump all of them would be to make better decisions and to create better habits while eliminating bad ones.To achieve self-improvement this year, I need a little more than just desire and wishful thinking. I need a nudge in the right direction, and not just a gentle one.Also like millions of other fallible humans, I, too, suffer from unrealistic optimism.Being unrealistically optimistic is better than admitting failure and giving up hope for the future.Why is it that I still think that I will become successful with my writing or launching an ecommerce business when my daily routine is struggling to please others including a young, aggressive boss fifteen years my junior at a middling community?That is not something that a successful Infopreneur would have to deal with.As we overestimate our personal immunity from harm, we may fail to take sensible preventative steps. This may come in the form of leaving a job that you should not have, making an investment that you should not have or doing something that you know you should not, like smoking, drinking too much, gambling, taking drugs, engaging in an extramarital affair or, in some cases, all of the above.In Nudge by Richard H. Thaler and Cass R. Sunstein, the authors write about the difference between a far-sighted “Planner” and a myopic “Doer” lurking within us.The Planner is working toward promoting our long-term welfare. Our inner Planners are able to resist temptation and implement plans for our own well-being, whereas the Doer is heavily influenced by the Automatic Systems within us. The Doer wants the extra drink, does not care about safe sex when aroused or saving money for decades down the road.The Planner knows the benefits of stocking away money for the future, politely declining the extra drink, exercising instead of sitting on the couch and resisting the temptations that are so bountiful before us.Nudge co-author Richard Thaler of the University of Chicago won the 2017 Nobel prize in economics for documenting the way people fail to conform to models that assume they always act in their own self-interest. As one of the founders of behavioral economics, Thaler has helped change the way economists look at the world.I came across his writings and sought Nudge out after reading about his award-winning theories late last year.For those of you who do not want to read all of the self-help information that is out there and has become a multi-billion dollar industry, some of which I seek to benefit from myself, this would be a good one for you to read earlier in the year if you believe in New Year’s resolutions like I do.I, myself, am a victim of inertia, as are many other people among my family, friends and colleagues.We become used to doing something and it becomes nearly automatic.It does not matter your age or your occupation. People, whether employees, homemakers, managers or students, can feel weighted down by depression. The energy necessary to get up and do something is outweighed by the inertia of the depression. The motivation to defy the pull of lethargy and move is minimal.This section of Nudge introduced me to StickK.com , a website by which you can help the Planner within you constrain the Doer.According to CNBC , stickK is a way to put your money or your reputation where your mouth is. It's a way to achieve your goals. You put your money on the line. You make a commitment. If you don't achieve your goal, you pay. Or you can post your goal and notify your friends. Then if you don't achieve your goal, everyone knows.Do you know what fungible means? Of course you do - you read financial blogs.I happen to have known what it means for several years due to my obsessive reading about self-improvement with particular attention to improving my financial life.Fungible means that money does not come with labels. A dollar in your checking account equals a dollar in your trading account. A twenty dollar bill in your purse or wallet equals twenty dollars sitting in a savings account earmarked for your next vacation.The authors cite ample evidence that most of us do the same thing that I do, which is earmarking mental accounting schemes that violate fungibility for the same reasons that organizations do: to control spending.Despite the imminent nuclear threat that Hawaiians are now living under, it has become a dream of mine over the past two years to take a long, inclusive Hawaiian vacation with my family. A vacation of at least ten days with no expenses spared when it comes to meals, touring the islands, renting cabanas and the whole nine yards. One of my decidedly upper middle class colleagues went on such a trip two winters ago with her husband and two children and had the time of their lives. She told me that the whole shebang cost them about fifteen grand.As of now, we have at least fifteen grand sitting in three separate accounts – in my new Capital One money market account, in a GNMA fund with T. Rowe Price that I have long thought of as another savings account, and in a taxable Vanguard account in my wife’s name invested in the Primecap account.If my brother wanted to take his wife and three kids on an all-inclusive trip to Hawaii for a week, he would likely cash out one of those accounts, take them on the vacation and have some money to spare for the next vacation or remodeling project or new vehicle.There are many differences between me and my brother, one of them being that it has taken me seventeen years to grow the $8,000 investment that I made into the Primecap fund to grow into the $30,000+ that it is now at. I have never invested another dollar into it since 2001 and have reinvested every dollar in dividends and capital gains.My brother will likely make $30,000 this month or next month by settling one personal injury case, taking thirty percent of a $100,000 settlement, which is his bread-and-butter. Mind you, I do not disparage him. I love and admire him and envy his ability to do that. For me to accumulate another $30,000 would take me four or five years at my pace.Also, the $30,000+ in our Primecap account is completely earmarked in our minds. Ten grand is earmarked for our son’s college education and ten grand is earmarked for our daughter’s. Whatever remains in that account will remain there until it is absolutely needed. Also, since Primecap has been closed to new investors for several years, I dare not close out the account. If anything, I want to add to it.We have several other accounts earmarked for certain expenses so although I know and write that money is fungible, I dare not use a dollar for our children’s college accounts to fix our minivan, seal the crack in our home’s foundation or replace our tube TVs with a flat screens. Because of this, as our family’s financial person, my mental accounting matters because we treat each of our accounts as nonfungible.As a child, I used to purchase and eat Now and Later candy. One of my childhood friends who introduced me to petty shoplifting at a local corner store stole them quite often. I usually swiped a candy bar like a Whatchamacallit or a Snickers bar.We ate a lot of stolen candy together and both of us spent most of our money at the same corner store on trading cards of various types. I stopped petty shoplifting about forty years ago after being caught while shopping with my mother and her mother. Even as an eight- or nine-year-old, I was extremely embarrassed having been caught and especially out with my grandmother who had taken me clothes shopping at Sears for the beginning of fourth or fifth grade.In 2018, over twenty-five years since both of my grandmothers have passed away, my thinking is more along the lines of making financial decisions that have to do with Now and Later.The Nudge authors explain that at one extreme are what might be called investment goods, such as exercise, flossing, dieting and sending money to your retirement accounts. For things like these, you bear the costs immediately and the benefits are delayed, sometimes for decades.At the other extreme are what they term sinful goods, for example smoking, alcohol and doughnuts. You have a smoke now, consume doughnuts or drinks and you experience the pleasure now but suffer the consequences later.The authors ask how many people resolve to put on more weight, eat more doughnuts, smoke more cigarettes or drink more martinis. Probably not too many.Both types of goods are ripe for giving you and me nudges toward making the right choices. I do not smoke, but other than that, I certainly have fallen short many a time when I have had to make a decision testing my capacity for self-control. It is definitely something to improve upon.Just as the commercials for Now and Later candy urged us, "have some now and save some for later," so should we enjoy some of the immediately gratifying things now, but always remember to stock something away or do something good for yourself now that will pay off later.One of the major challenges that we face in making important decisions is that we do not have many opportunities to practice.Most students only choose a college once. Many of us, myself included, only choose a spouse once.Few people get to try out different careers and, when they do, it is often out of necessity more than preference. Once you purchase a home, it is not so easy to pick up and leave.Typically, the higher the stakes are for our choices, the less often we are able to practice.While it is easy to pick what type of pasta, milk, coffee and bagels that you are going to buy next time you are at the grocery store, what is not so easy is deciding what city you might want to move to, what investment funds you will stake your retirement savings on or if you are going to take a new job that is offered.So what are the authors, including Nobel Prize-winning Thaler, saying in terms of a nudge?What they mean by addressing people's inertia, status quo bias and difficulty in making the right decisions is that, through policy, people can be nudged into doing things better. We can pad our paths of least resistance.People's behavioral tendencies toward doing nothing will be reinforced if the default option comes with some implicit or explicit suggestion that it represents the normal or even the recommended course of action.A simple example of this is having some amount of your paycheck automatically deducted into a savings account. Let's call the amount $100. If the $100 is deducted from every one of your paychecks from day one, you will learn to budget with the net amount that you receive, all the while building up $2,600-plus per year depending on what you invest it in.On the flip side, if your current expenditures take up every dollar and then some, you may find it impossible to do without that extra hundred every pay day.The authors cite an example that I, myself, have fallen victim to. I currently subscribe to about ten magazines at home, down from about fifteen. Years ago, I charged some to my credit card and those have generally been renewed at a higher rate than the $10 per year that I originally got them for.Two years ago, I called to cancel Real Simple magazine, noting that it was a decent deal for $10 but definitely not worth $20 per year. Of course, they offered a $10 renewal, which I took. Last year, I called again, but this time canceled it for good. Perhaps for free I would have kept it, but instead now have one less magazine sent to our home every month.Two more of my magazines are set to expire this spring, and I will do the same thing. For too long, I have allowed my complacency to get the better of me in terms of magazines. It is a very small thing, but it actually kills three birds with one small stone: One, I will save an extra $40 or $50 per year by canceling three or four subscriptions. Two, it will help reduce the constant clutter of paper that finds its way into our home. Three, I will be nudging myself to take a small action.What will you nudge yourself on today?