Secret Language of Money

THE 4 R’s: Repeat and Rationalize vs. Recognize and Reorganize

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 01 Nov 2010 10:36:38 -0400

David Krueger MD


Repeat: Are you repeating an old story hoping for a better outcome?

The brain operates efficiently, to expend the least amount of energy to do a task. This efficiency means that the brain takes shortcuts based on what it already knows—the tracks already laid with neurons tailored to certain tasks. The shortcuts save energy. The software developed for past experiences shape current perception and processing. Psychoanalysts call this transference. Neuroscientists call it the efficiency principle. Behavioral economists call it diagnosis bias (physicians should as well, but often do not). For all of us, the brain perceives things in ways it has been trained to do. How we categorize something determines what we see. The challenge is that imagination, which comes from perception, can be limited to what we already know.

Rationalize: Do you dismiss or compromise any aspect of your money story?

A repeating storyline may be as bold as always looking for the next big deal, or as quiet as habitually comparing yourself and your money to others. Or as pernicious as not being able to convert your talent into corresponding income. The internal origin of a process is elusive because an external drama always accompanies it and provides a focus. Some warning signs of this struggle include personal compromise, conflict with other people, limited success, unhappiness, or not living up to a full potential.

Recognize: Are your needs, ideals, passion, and talents all going in the same direction?

If your money story is not satisfying, or if you haven’t attained your objectives, look more closely: You are always reaching your goals, whether they are conscious or unconscious. It is helpful to know consciously and specifically what those goals are. You might be undermining your success by being imprecise in your objectives. Do you fear specifically, yet dream vaguely?

Reorganize: Do all the storylines fit and advance the plot of your money story?

Once becoming aware of actively making choices, you can decide what’s in your best interest, what furthers your story. And what doesn’t. Neuroscientist Gregory Berns examines the science of thinking differently—iconoclasts in particular—to emphasize how we need to put ourselves in new situations to see things differently and boost creativity.

When the brain encounters the unaccustomed or unexpected, perturbation occurs. The brain has to reorganize perception, which influences how we see things. We are pushed to see things in a different way—to be creative. Prompts include a novel stimulus, new information, or an unaccustomed context.

Some suggestions for creative stimulation:

Be aware of the categories that you use for a person or idea—in order to go beyond or outside them.
Seek out environments in which you have no experience.
Bring together ideas from different disciplines and different perspectives to the same subject.
Engage a Mentor or Coach to challenge new ways of looking at things.
Follow intuition and gut feelings: write them down.
Brainstorm and free associate: allow a stream of consciousness not bound by usual categories.


Teleseminar series THE ART AND SCIENCE OF COACHING MONEY MASTERY: Understand Money Relationships and Revise Money Stories
Begins November 1, Mondays at 7:00 PM Eastern Information + Registration: http://bit.ly/c9FMCm

POSSIBILITY THINKING AND YOUR MONEY STORY

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 26 Oct 2010 10:59:05 -0400

David Krueger MD

What we believe is what we’ll see. This means that we are not just data determined, but also hypothesis determined. The brain as computer and as biological evolutionary system determines a story constructed to be called reality.

What is the practical value in this? About decision-making? About how to change some mental models? Some lessons from neuroscience, psychology, and strategic coaching:

1. For any situation, look at the data, but also at the hypothesis—the default assumption that appears as “given.”

2. Since we shape and filter the world by our hypotheses, they need to be continuously tested.

3. Examine the hypotheses that work and the ones that don’t work.

4. Challenge your thinking and assumptions.: Interact with diverse people and keep an open “beginner’s mind” rather than a quick foreclosure to a new idea. Life as a series of experiments keeps a system open to the new. Premature closure occurs by too-rapid judgment, as well as moving a new idea into an already existing model to lose the context of a new model. This style of dismissal occurs frequently among very bright people with significant life experiences who immediately relate something new to something that they already know, absorbing it into an old context or meaning without sufficient examination.
5. We become comfortable and dependent on our old habits; uncertainty and discomfort result when we move away from existing internal models.

6. Use data to test a hypothesis rather than to automatically confirm it.

7. Distinguish between transforming your thinking and being caught up in a new fad.: Focus on the foreground without losing sight of the background’s big picture. Repeat zooming in and out to keep perspective. Both microscopic and macroscopic views offer benefits.
8. The best way to excise something from your life is not to ignore it. The best way to avoid something is to be informed by it.: By avoiding something, you engage it, and keep it central in your life. To ignore takes energy, and moves you from a centered, healthy place. Decide what you want to keep, what you want to avoid, and what you want to let go.
9. You are always free to change your mind.

Teleseminar series THE ART AND SCIENCE OF COACHING MONEY MASTERY: Understand Money Relationships and Revise Money Stories
Begins November 1, Mondays at 7:00 PM Eastern http://bit.ly/c9FMCm

Mindfulness: Psychoanalysis Meets Quantum Physics On the Buddhist Trail to Neuroscience

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 08 Mar 2010 09:46:06 -0500

David Krueger MD

Activation of the self-conscious mind occurs most vividly at the beginning of a new, exciting endeavor. This “honeymoon period” generates the most energetic attention and passionate engagement. The conscious awareness focuses on present attitudes and beliefs. When our conscious minds are more in charge, we generate the behaviors and qualities we most aspire to. Buddhist spiritual practice – now affirmed by biology and physics – terms this mindfulness.

Later, habitual traits programmed into the unconscious mind take over. This switch from mindfulness to habitual behavior parallels the neurochemistry of the excited, honeymoon phase with dopamine and epinephrine transforming to the maintenance system of norepinephrine. See: Sleep On It: The Neuroeconomics of Striking When the Iron is Cold.

Approaches to revising limited and outdated beliefs and rewiring brain pathways require that we keep our self-conscious mind focused in the present, attuned to specific purpose and intent. Otherwise, it slips into the past or future, back to autopilot.

Mindfulness is an awareness of what’s happening while it’s happening. Mindful attention – a full awareness of self – is an inherent human capacity. The Buddhist tradition offers one effective way to access and refine this mindful attention (in Asian languages the words for mind and heart are the same). The coaching application I teach of this mindfulness is self-regulation, with mastery of states of mind.

Psychoanalysis addresses coming to the end of an old story, but not how to strategically create a new story. Quantum physics recognizes the participation of the observer in the creation of reality, but omits motivation. Neuroscience illuminates workings of the conscious and unconscious mind, while disregarding the spirit. Psychology helps us understand the developmental role of effectiveness and mastery, yet remains silent on brain contributions. Early interpersonal development shapes both brain and psyche – our capacity for insight and empathy.

I integrate and apply these perspectives with strategic coaching to help clients systematically rewrite even longstanding behavioral programs. Guided along the pathway of desired intentions, this journey can move from passive to active, responder to initiator, victim to creator.

Your brain and its unconscious programs are not fixed or unchangeable. You can rewrite mind software and rewire brain hardware to create a new life and money story.

Announcing the release of Your New Money Story™: Roadmap for Money Mastery Seminar Series on 5 CDs + Workbook www.NewMoneyStory.com

The Neuroscience of Forgiveness

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 02 Mar 2010 14:47:19 -0500

David Krueger MD

Behavioral patterns and belief systems downloaded especially from parents in the first years of life become automatic, to operate without observation or awareness. Neuroscientists estimate that about 95% of our behaviors and core beliefs are pre-programmed in the subconscious mind, operating on autopilot. We rarely ever observe these behavior patterns and beliefs because they’re subconscious.

Then, we create two stories simultaneously:

The surface story that we run our lives with conscious intentions and aspirations. This dialogue includes “This is what I want from life.” “These are my positive aspirations.” Yet the conscious mind is a tiny processor that controls the mind and brain systems less than 5% of the time.
A subconscious story that ghostwrites behaviors—at times in a different direction than conscious intention. When your life and actions don’t meet your positive aspirations, the dialogue can include, “I can’t get what I want.” “The system keeps me from doing what I need.” “I don’t have what it takes.”

Recognition that you have operated on the download of other people’s beliefs into your subconscious mind presents the opportunity to forgive yourself. Recognition that all the people you have ever interacted with were operating from a similar automatic download of invisible behavioral/belief programs from their childhood subconscious mind may allow you to forgive them. (Maybe not because they deserve it, but because you do). They were personally unaware of much of their own contributions that invisibly impacted your life.

J. K. Rowling said, “There is an expiring date on blaming your parents for criticizing you for going the wrong direction.”
Acceptance – and especially forgiveness – in order to claim all your present energy and attention is a vital component to write a new life story. In the present moment whatever you think, feel, and experience is what you actively create. This recognition requires ownership and present responsibility for that story.

In adulthood, everything you experience you either create or accept.

But, positive thinking in itself doesn’t reprogram beliefs. Positive thoughts are generated in the conscious mind. Using positive self-talk in order to change behavior will have the same impact as talking positively to a software program on your computer in order to change it. You have to know how to revise the software. You have to know what to do with the old program as well as how to write a new one. And you may need a guide.

Excerpted and adapted from Live a New Life Story™: The Owner’s Guide by David Krueger MD, curriculum for New Life Story™ Coaches Training. www.NewLifeStoryCoaching.com and www.NewWellnessStory.com

TIGER AND MASTERY: With Sidebars on Us, Bernie, and Kinky

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 22 Feb 2010 09:57:06 -0500

David Krueger MD

Tiger Woods, called the greatest golfer of all time, stated from the beginning of his career as an amateur, and repeated regularly throughout his professional career, that he can – that he must – become better. He said it after his finest seasons and biggest championships. He still says it now, about his personal and professional life. He understands mastery. He assures himself, with us listening in, that he still pursues it despite his own induced setbacks.

Daniel Pink tells us in Drive that mastery is an asymptote – a straight line that a curve approaches but never quite reaches. Mastery – the urge to get better at something that matters – is a mindset. The motivation of effectiveness, demonstrated in the first months of life, evolves in various expressions throughout the entirety of life. With a mindset of mastery, improvement continues.

Now, what about us? When something bad happens to someone we envy – someone notably famous and wealthy – the result is that we feel a particular kind of good, first cousin to gloating. Neuroscientists at the University of Cambridge found that the news of the downfall of the rich and famous activates the dorsal interior cingulate cortex of the brain. Their humiliation activates this region of the brain that responds to conflict and social rejection. In fact, the studies show that the more we envy someone, the greater the pleasure in his or her downfall. This accounts for our pleasure in seeing a high-powered CEO who earns tens of millions in bonuses get humiliated in front of a congressional committee exposing indiscretion, or in doing the perp walk. When Bernie Madoff got shoved on the sidewalk – be honest – how many times did you rewind?

Our minds are drawn to the stories of the extreme, at times to compare ourselves and feel better. Our minds respond in reaction formation to the envy of their wealth and fame; our brains fire in reaction to their humiliation and shame.

“At least my debt isn’t as bad as hers.”
“I’m glad I’m not him.”
“My problems are nothing compared to that.” (Reality shows regularly take this one to the bank).

And remember the words of fellow Texan Kinky Friedman, smart enough both to run for President and to withdraw before any possibility materialized, “If you look deep enough inside yourself, you will see everyone else.”

What about the rest of the story? For Tiger, Kinky, and us: A perpetual series of occasions for the pursuit of effectiveness and mastery, to personally and professionally get better at what really matters.

(But thankfully not for Bernie—or did my cingulate cortex just diesel a bit?)

The Secret Language of Money is now a business bestseller and translated into nine languages. Thank you for your support and kind words.

THE NEUROSCIENCE OF REVERSE TRUTHS

bill@mountain-ridge.com (Dr. David Krueger) — Thu, 04 Feb 2010 12:04:19 -0500

David Krueger MD


In traditional science, truth is arrived at by proffering a hypothesis, then accumulating data to prove or disprove it. The data force the conclusion. Reverse truths work the opposite -- the hypothesis or belief creates the data. Our assumptions select what we perceive of the world and determine what meaning we attach to our perceptions. Believing is necessary in order to see.

Astute parents have known this principle for generations. The most vital reverse truth is our belief in our children. They look to us as a mirror of who they are, and they become what they see. If we trust and respect them, they become trustworthy and respect themselves.

Some parents have this reverse truth backwards, thinking that they will trust a child only after he or she has proven to be trustworthy. There are forward truths, but this isn't one of them. Our belief in our children is taken in by them and metabolized into their own belief in themselves. We convey to them in an unspoken message: "I'll believe in you until both of us can." When that affirmation isn't there, they may spend their lives looking for outside approval to fill what’s missing inside.

Carlyle was right. "Tell a man he is brave and you help him to become so." As a parent, the trick is that you have to believe what you say, for feigned praise and inauthentic interest are forgeries immediately discernible to a child's expert eye.

Fast forward to adulthood: This reverse truth still holds. Believe in someone and then he or she will show you why you do. Neuroscience has demonstrated that authentic belief in someone activates their brains to create a state of mind that transcends usual thinking and performance. I saw this repeatedly in therapy and analytic patients, as I see in now in coaching clients.

Here are some of the corollaries of this reverse truth:

How much you believe in yourself will determine how much others believe in you.
What you believe will show.
How you are, and how you behave with someone else, shows most in how it affects others responding to you.
What you believe will become true, because you will live it.
You are always creating outside to match inside.
Your experiences are always consistent with your beliefs.


It is vitally important to know your beliefs and assumptions quite well since you are always living them out. Once in awareness, you can change the ones that don’t work, stick with and enhance the ones that do, and generate new beliefs designed for growth.

Ulysses S. Grant said all this much more succinctly: “I succeeded because you believed in me.”

The Secret Language of Money is now a business bestseller and translated into nine languages. Thank you for your support and kind words.

What Does A Client Really Want From A Professional Coach?

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 25 Jan 2010 09:45:45 -0500

David Krueger MD

This question came up in a discussion with some coaches I am training. The obvious answers include understanding human dynamics, strategic planning, playing a bigger game, a good return on investment, an accountability partner, a secret weapon in business.

But for the coaching engagement to really make a difference for the client, to go beyond expectation, I believe it takes something more and different.

The role of storyteller and listener unfolds on the shared lap of the coaching relationship. Part of the experience of story making is the feel, the safety, the trust, and the ambiance of connectedness. The resonance of voice as well as words with a knowing receiver. As Lily Tomlin said, “He listened with an intensity most people have only while talking.”

What, I believe, clients want from a Professional Coach:

Unselfconscious participation in serious work, and sometimes in play

To understand their metaphors as the symbolic language that expresses the hidden wisdom of the unconscious

Acceptance of praise without embarrassment or deflection, so that we can give it back to its creator as a self-statement

Empathic resonance with his or her feelings, without taking anything personally, to never lose sight of the client’s perspective and best interest

To hope that we see the self the client hopes to become, and focus on the evolving new story that sometimes gets obscured from the client’s view

To see a thought, a feeling, or a behavior as an answer to a question its creator has not consciously dared to ask

To recognize the silent intent embedded in the compromised result; to see the possibility camouflaged in the frustrating process

To hope that the coach will not be awkward, self-conscious, or say anything that would distract from the client’s flow and focus

To believe in the client until the client teaches both of us why

This architecture of trust silently forms while you talk about other things. The co-created new story gives oxygen to hope, highlights the relief and release of new experience, and pushes creativity to full flight.

A strategically informed new experience includes the formulation of a new model in which to understand and incorporate those changes.

Old stories have to be mourned. And along with them, the self left behind. No matter how ready someone is to change, to give up a long-practiced habit is like saying goodbye to an old friend. Julia Cameron said it beautifully in The Artist’s Way: “I’m astounded that I could let go of the drama of being a starving artist. Nothing dies harder than a bad idea.”


Dave is Founder and Director of New Life Story™ Coach Training www.NewLifeStoryCoaching.com

Can Happiness Buy Money?

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 18 Jan 2010 10:11:56 -0500

David Krueger MD


Didn’t we already (sort of) settle the inverse of this question in my earlier blog, Money And Happiness: The Real Relationship?

While happiness is a result and not a goal, consider these assorted findings:

Several thousand college freshmen were rated according to their cheerfulness. Two decades later, those who ranked at the top of the cheerfulness measures earned an average income 31% higher than those with lower scores.

A study of employees at three U.S. companies found that those with increased happiness measured over an 18-month period had higher salary increases during that period.

People with greater left prefrontal cortex activity – the area of the brain that generates happiness – produce more antibodies and have stronger immune systems. Greater activity in this part of the brain also relates to lower levels of stress hormone. (Neuroscientist Dr. Richard Davidson)

Dutch men and women who laughed more often and had more positive views of the future had a 25% lower risk of mortality than those less optimistic.

Expansiveness and extroversion correlate with a lower risk of diabetes.

Employees with a more consistently good mood miss fewer days of work.

And happiness can help keep money. Unhappy people – specifically those who are sad – become self focused and spend as much as 300% more for the same item. (Dr. Cynthia Cryder) The act of spending stimulates the pleasure center of the brain and temporarily counters both sadness and anxiety.

Although not definitive, these findings suggest that happiness – a register of positive energy – can increase the most tangible and universal emblem of energy – money.

The Longest Relationship of Your Life

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 04 Jan 2010 10:37:44 -0500

David Krueger MD

You're writing a story that you may not know how to fully tell. It's a very personal story with its own history and language. It's highly visible to others but often not to you. As Loren Eiseley observed in The Unexpected Universe, "Reality has a way of hiding from even its most gifted observers."

It's a story that you talk about every day, think about several times a day. It is remarkably simple yet intricately complex. This story has an internal and external dialogue, a secret language, and encrypted messages.

It's complicated because some important aspects are emotional, unspoken, and even unconscious.

This story is about the longest relationship you'll have in your life. Your parents discussed it before you arrived; people will deliberate it after you die. Maybe you'll get ten years out of a car, perhaps fifty with a spouse, but this story you can never stop writing or living. You can't break up with it, run away from it, or coax into loving you more.

Even though it's unexamined and elusive--you orient life decisions around it.

When I spoke with a well-known self-help guru, his response was, "You know, Dave, I don't know how to tell this story to myself in order to know what to change." You alone determine the genre: fiction or nonfiction; tragedy or triumph. The story tells most about the teller.

This story ghostwrites every aspect of your life story. From what you eat and drink, to what you plan and play. Health, recreation, stresses—even the water you drink—are all impacted. At times you've used this story to regulate your moods, increase self-esteem, influence others, or to soothe emotional pains.

The villain or hero is the most popular legal substance to all people of the world.

It speaks to you. You speak with it.

It's your money.

Your money story is not your income, assets, expenses, or debt—it's your relationship with money. It's how you use money in storylines of what money means to you, says about you, and what you say with it.

And, how you live this story will be what you teach your children, your clients, your important others.

AS GOOD AS GOLD And Other Arbitrary Notions

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 29 Dec 2009 10:42:28 -0500

David Krueger MD


A newspaper columnist asked me recently, “In your book, The Secret Language of Money, you use the phrase ‘as good as gold.’ But isn’t the value we place on gold and ‘precious’ stones arbitrary?”

Of course it is. Same with tulip bulbs, Beanie Babies, dot.com IPO’s. For any stock, the value is very arbitrary—it’s based on what another bidder is willing to pay at that moment.

The stock market isn’t really a market, it’s an auction—which activates the variables of mind and brain. The stock doesn’t even know who owns it any more than war bonds knew about the war.

Here’s a brief, unofficial history of money. Before money, two goats were exchanged for five bags of rice. Then, coins enter as a symbol of value—a tangible equivalent, a unit of exchange. Paper bills replaced coins. Then paper checks. Then plastic. Then a pure abstraction of numbers stored and traded as configurations of electrons.

Gold coins are tangible, real—you can hold them, bite them, wear them—even hide them, and they’re still there. And gold glitters. (Call me a mind reader, but not one of my readers wants an iron Rolex).

Madoff and Stanford didn’t do their sleight-of-hand with gold coins. They used symbols of symbols—derivatives of little-understood equities.

The vast majority of our money management occurs not through our hands, or even our broker’s hands, but inside our minds, in a complex interplay of thoughts, emotions, and neurological wiring.

As money becomes more abstracted, transactions are easier, but our understanding of money fades. And our relationship with it changes.


Dave is offering a new coaching group, Your New Money Story™ Advanced Workshop Group using the Your New Money Story™ Workbook. Begins January 11—limited to ten people. Contact him at dkrueger@mentorpath.com for information.

INVERSE WISDOM

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 15 Dec 2009 10:33:47 -0500

Thanks, Paradoxically, to Mom

David Krueger MD


I came home from college after my freshman year and announced to my Mom that I’d decided to major in psychology. We talked; she was excited for me. Then she mentioned that she made an A in her college psychology course.

I said, “You must have really enjoyed it and studied a lot.” Her reply was, “No, I just answered everything on the tests the opposite of what I thought was right.”

So, in honor of my Mom, who thought it was all opposite anyway, here’s a list of nine inversions of conventional wisdom in writing a new life or money story.

1. Burn your bridges.
Make it impossible to go back to an old habit or way of being. If you decide to quit smoking, make it impossible in some way to restart. Create an uncomfortable scenario if you do start again. Focus on the present without the bad habit. Reward yourself for not going back.

2. Do the opposite of what you’d normally do when you are afraid, worried, anxious, or uncomfortable.
If you’re uncomfortable with public speaking, avoidance will increase the fear, so do more of it. Jump in the water; you can’t learn to swim on paper.
Prediction and expectation based on the past create repetition, but based on the present and future create possibilities.

3. Obstacles reveal desires.
Show me an obstacle, and I’ll show you a desire. An obstacle conceals but simultaneously reveals the underlying desire. When you’re ready to recognize that you create the obstacle, you’re ready to consider the possibility of not creating it.

4. Discomfort can be a sign of progress.
Neuronal pathways and neural networks, the highways and villages in our brain, have become etched by repeated habits to create efficient operation make routine behaviors easy. When these habits are confronted and have to change, the midbrain’s automatic pilot gets disrupted. We feel discomfort. The promise of change is to develop a new, better default mode—the brain just doesn’t know that yet, so our minds have to lead the way with a plan.

5. Lean into the unknown.
People fail to change because they don’t feel safe changing—changing means leaving their home base of reality—the internal map that is synonymous with identity. A new story generates uncertainty, trepidation. The easiest and fastest way to end this discomfort is to go back to the familiar: the old story. You can tiptoe through life very carefully and arrive safely at death.


6. You do not attract what you want; you create what you focus on.
When you focus on what you want, what you don’t want falls away—like your lap when you get up to walk.

7. You only see what you believe.
Our beliefs are the software that writes our behavior. Our experiences are always consistent with our assumptions. And we’re always right—because we write the story.

8. Believe in someone and then he or she will show you why you do.
Neuroscience has demonstrated that authentic belief in someone activates his or her brain to create a state of mind that transcends usual thinking and performance.

9. Don’t believe every thought you have.
Thoughts lie a lot. They’re like my Uncle Ted (rest his soul or I’d have to use a
different example). You don’t have to believe every thought that crosses your
mind. You’re not even stuck with the brain you have—you can make it better.



Excerpted and adapted from OUTSMART YOUR BRAIN: AN INSTRUCTION MANUAL
How Neuroscience and Quantum Physics Can Help You Change Your Life
By David Krueger MD www.NewBrainStory.com

How Much Is Enough?

bill@mountain-ridge.com (Dr. David Krueger) — Wed, 09 Dec 2009 08:42:37 -0500

David Krueger MD

A passage in one of Schumann’s piano sonatas is marked so rasch wie möglich, meaning “as fast as possible.” A few bars later, he adds schneller—“faster”—and a bit later, noch schneller: “still faster!”

The Greek philosopher Epicurus said, “Nothing is good enough for the man for whom enough is too little.”

How do you know how much is enough? Being able to answer this question means having a sense of “good enough” inside, which results in an internal affirmation of worth. If you equate love and self-esteem with money and power, “more” will never be enough.
Much of our challenge with money stems from our difficulty to make one small distinction: what we have from who we are.

A Money Quiz

Answer the following two questions with a single, specific figure.

My current annual income is __________?
In order to insure happiness and contentment financially, with no more money problems and worries, my annual income would need to be _________.

I have given this quiz to hundreds of people. In more than 9 of 10 cases, their answers indicate that their annual income would need to be about twice the current level for them to feel happy and free from money worries. Someone who makes $50,000 a year believes it would take roughly $100,000 a year in order to be financially content; someone who makes $500,000 - five times the first person’s magical number – believes that the figure would need to be about a million a year.

And, in discussions with people after they take this little poll, there is a “trailing double” effect. People who have actually seen their income double over time have at the same time doubled their “happy and content” amount. In other words, once those who earned $50,000 achieve their hoped-for $100,000 goal, they then raise the bar and believe that it would now take about $200,000 to be happy.

Even when you change the numbers, the story remains the same. The story in this case is: “I need twice as much as I have to be happy.” That’s just one example of the common story threads; there are dozens of others, just as irrational, and just as hypnotically compelling.

Making peace with our moving target isn’t about learning how to aim better, or creating a fixed target that doesn’t move even after we hit it. Creating financial targets (goals) is an important part of writing a new money story—but finding peace lies not in the target, but in the shooter. Your new money story begins with determining not what it is you want to have, but who it is you want to be.

Excerpted and adapted from The Secret Language of Money by David Krueger MD (McGraw Hill, 2009) www.TheSecretLanguageofMoney.com

ARE YOU ADDICTED TO LESS?

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 30 Nov 2009 09:55:55 -0500

On The Money Psychology of Scarcity

David Krueger MD


The story of addictive behavior is not always one of more: it can also manifest as the relentless pursuit of less. The flip side of money addiction is addiction to scarcity. This dynamic ranges from an opposition to wealth, to maintaining a comfort zone of focusing on what can go wrong, and even to the idealization of poverty as spiritual. Examples include gifted people who can’t convert their talent into sufficient income, or otherwise dependable people who ignore financial matters until serious.

A comfort zone is a familiar pattern of behavior—one that’s predictable and automatic—so you always know the outcome. It’s a gradual process, but once established, resists change. Think of a comfort zone like your home thermostat. If the temperature increases or decreases, it signals an adjustment to return to the set point—the comfort zone. Our minds and brains both contribute to this default mode. We even have a comfort zone with our weight, what we order at our regular restaurant, or the difficulty of starting a savings program.

Most lottery winners manage to spend or give away their newfound winnings. In the U.S., 80% of lottery winners file bankruptcy within the first five years. Their money changed but their mindsets didn’t.

A “Yes” answer to any of these suggests examination of a pursuit of less:

Do you believe it is more virtuous or admirable to be poor than to be rich?
Do you believe being poor is more spiritual than being wealthy?
When you have an influx of money, do you tend to spend it quickly and/or impulsively and return rapidly to a familiar state of poverty?
Do you often refrain from making needed repairs on your car or your home, or from getting medical care for yourself (such as regular checkups or dental cleaning), because you don’t feel you can afford to spend the money?
Is it more comfortable for you to spend money on others than on yourself?
Do you undercharge for your work or your skills?
Do you fail to collect money due to you?
Is it uncomfortable for you to collect on fees that people owe you for your work?
Does it seem like whenever you are about to get ahead financially, some crisis happens in your life that gets in the way and stops your progress cold?
Do you persistently focus on what can go wrong, or on what you can’t do?


A belief is the mind’s command to the brain. With the same belief, you will continue to have the same results. If you change your belief, you can have different results. The beliefs within us—our own internal map of reality—determine our perception of what surrounds us, including what and how we select, register and process. We construct our storylines from these premises.

We have to bring our beliefs about money, finances, and wealth into conscious focus to assess how well they work in present time.

Next Blog: WHAT IS ENOUGH?


Excerpted and adapted from The Secret Language of Money by David Krueger MD (McGraw Hill, 2009) www.TheSecretLanguageofMoney.com

Sleep On It: The Neuroeconomics of Striking When The Iron Is Cold

bill@mountain-ridge.com (Dr. David Krueger) — Sat, 14 Nov 2009 09:49:08 -0500

David Krueger MD

There are few true emergencies in life. Investing in a stock, deciding on a summer vacation special good until 5:00 P.M., or purchasing mulch from the guy who’s only going to be in the neighborhood selling it until noon—are not some of them. (My 11:15 A.M. decision resulted in a front yard mushroom farm within two weeks.)

In an excited state of mind, the compelling stories of a hot deal will look different in a cool state of mind the next day. A hot stock tip, a business deal gone sour, a family tragedy, all may create an alarm response and an emotional state of mind geared for survival rather than logic. Or, a compelling social interaction may engage a powerful brain circuit that makes us give money to strangers.

Each thought and feeling has a chemical consequence. The chemicals of emotion alter mind and body. Personal experience determines what software program (state of mind) to process the data, and how to proceed.

The following considerations apply to decision-making regarding emotions and choices, catalogued by the chemical mediator.

1. Adrenalin/Cortisol: The Emergency System

When incoming data resembles threat or danger, it triggers an emotional and biochemical response within a fraction of a second. While necessary for survival, adrenalin and cortisol hijack the logical, rational brain. Emotion-based judgments where rational ones should prevail may misjudge information. This automatic alarm system may cause mistaken perception, and reaction.

Additionally, increased tension produces emotional regression. With increased tension and advanced conflict, the stress response reaction can move someone into a more emotional pattern characteristic of an earlier age. Increased emotion also narrows perspective; focus becomes more restricted to the more recent event when emotion prevails.

2. Dopamine: The Pleasure System

Dopamine mediates the excitement of anticipating a reward or pleasure. Someone can create a cult-like following by the promise of great possibility coupled with the vagueness of hazy dreams. The result: People are stimulated to see what they want to see. Like money, people project their own desires onto the story and see their wishes crystallized into an illusion of reality. The essentials here: Dopamine plus a projection screen (a good story).

3. Norepinephrine: The Maintenance System

We believe that certain accomplishments and acquisitions will give us lasting satisfaction. However, a new possession, such as a car, will quickly be assimilated into our bank of possessions and no longer be the subject of intense focus and desire. Receiving a reward shuts down the anticipatory release of dopamine, diminishing the energy and pleasure. The central nervous system shifts to the maintenance mode (necessary from an economic and evolutionary perspective), primarily mediated by norepinephrine.

The fastest way to relinquish a desire, or to stop noticing something, may be to buy it.

4. Oxytocin: The Social Connection System

Social interactions stimulate the release of the neurochemical oxytocin, especially when we are trusted; this induces a desire to reciprocate that trust we have been shown, even with strangers.
People engaged in cons know how to stimulate oxytocin. In David Mamet’s film, “House of Games,” the confidence man played by Joe Mantegna explained to a previous mark, “It’s called a confidence game. Why? Because you give me your confidence? No. Because I give you mine.”

Think about the trust that large numbers of people were given by bankers in the form of credit and mortgages. That trust was reciprocated; both sides suffered, as well as some innocent bystanders.

A Remedy?

“I’ll think about it,” is a decision.

“I’ll get back to you,” is an option.

“I’ll sleep on it,” is a choice.

These decisions allow you to pause between the pick and the purchase. [See 14 Ways to Outsmart Your Brain to Spend Less in this Blog Archives]. “Sleeping on it” allows movement through different states of mind to fresh perspectives the next day. Most importantly, it allows moving these neurochemically-mediated responses from the foreground to the background for a balanced decision

Please join me for Your New Money Story™ beginning Monday, November 16 at 7:00 PM Eastern. For more information on this Teleseminar series and Workbook, go to www.NewMoneyStory.com

The Art and Neuroscience of New Learning

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 09 Nov 2009 12:04:28 -0500

David Krueger MD

Why does someone begin a new endeavor with such excitement, then seem to lose momentum after a few weeks into it? Or purchase a long-awaited item, to have the excitement turn into complacency? The dynamics of new learning involve both mind and brain.

Mind Matters

New learning falls into four phases.

Initial confusion and excitement combine to launch new learning. Awareness of the unfamiliar and uncertain registers as curiosity, or even anxiety, mixed in with excitement, which propels momentum.
Increasing confidence follows, both with the experience of effectiveness and with positive feedback.
Mastery results from effectiveness with movement to its own self-sustaining “flow” and validation.
Entropy occurs when the invigoration of a learning curve’s newness levels off and declines. This leveling off may register as disillusionment.

Brain Business

Dopamine is the brain chemical that induces excitement by anticipating pleasure or reward. The rush from dopamine release motivates, even to take risks. The newness is exciting, adding to the dopamine release. But neuroscientists have shown that anticipating a reward is even more exciting than actually receiving it. Why? Because receiving a reward actually shuts down the anticipatory release of dopamine, diminishing the energy and pleasure. The central nervous system shifts to the maintenance mode (necessary from an economic and evolutionary perspective), primarily mediated by norepinephrine.

This shift explains the paradox that the expectation of an event or a purchase is more exciting than the actual experience.

An investor will feel more positive when expecting a stock to rise, yet feel less excited than anticipated when it actually does.
The purchase of a big-ticket item—such as a new car—isn’t as exciting as expected.
The “hedonic treadmill” described by Danial Kahneman, Princeton Nobel Prize winner, occurs when the brain adapts to a new state of wealth and possessions, and increasing pleasure is sought.
Clients hit plateaus in coaching or mentoring after 1-2 months.


From Paradox to Progression

Both the mind and brain contribute to new learning and its paradoxes. Our minds seek closure and infer causality, accurate or not. Additionally, we then defend our position or decision, rather than examining it, making it static. Our brains attempt to end any dissonance, even prematurely shutting down inquiry.

So what can you do to maintain some aspects of this excitement—or at least ladder it—to generate ongoing creative stimulation?

Knowledge is inert until it is activated, so put it into behavior.
Foster attitudes that promote curiosity and openness.
Recognize and assess emotional couplings that can derail logical choices (such as money equals freedom, evil, or greed).
Monitor choices and question ideas.
Probe your reasoning.
Ask: “What works?” “What doesn’t work?”
Facilitate new behaviors and guide the development of new mental maps.
Program new identity: incorporate your new experiences into your evolving self-concept. You are no longer defined by your habits or your old story.

Continue to look at things in novel ways. Everyone thought Goliath was too big to hit; David thought he was too big to miss.

Please join me for “An Evening With The Author” Tuesday, November 10 at 7:00 PM Eastern to discuss The Secret Language of Money.

Money and Happiness: The Real Relationship

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 20 Oct 2009 09:41:45 -0400

David Krueger MD

Money can solve many problems, or at least make them easier. Someone once told me, “I’ve never seen a problem that money has made worse.” With the exception of drug addiction, he probably has a point.

But then we overreach, to make money address more than it should. It gets pressed into service because it’s a commonly accepted social and personal resource—it makes people feel self-sufficient.

The idea that more money will bring more happiness is one of the most pervasive and persistent money themes in modern culture. Is there any truth to it?

Our relationship with money assumes that we know what money can do for us—that we know what we’re giving and getting for money. Some things do work this way: the more you pay, the more you get, such as a car, hotel, or house. But not so with other things such as happiness, love, and authenticity—which may at times even have an inverse relationship.

Research suggests that money, like Prozac, doesn’t make you happy. Both, however, can prevent certain forms of unhappiness. Money, for example, allows us to afford better medical care, safety, neighborhoods, gadgets, and at times, a better mood.

Dr. Daniel Gilbert, a Harvard psychologist, has demonstrated that both greater wealth and actual purchases have little permanent impact on happiness. His research shows those events we expect to make us happy often prove less exciting than we anticipated. The increased happiness and pleasure that we predict might come from a raise in salary, for example, or a new gadget, typically fall short of our expectations. And even in those cases where financial gain does bring about a better mood, the good news doesn’t last long. University of Illinois psychologist Dr. David Myers found that after an initial excitement with a burst of good fortune, such as inheritance, lottery, or job advance, people revert to their initial set point of happiness or gloom.

Consistent evidence shows that experiences (such as vacations, theater, or dinner) make people happier than material possessions they spent money for. One reason is that the process is more social: when you spent money on dinner with a loved one or a vacation with family, you create an entire experience. When you spend for a possession, you quickly grow accustomed to it and it loses the pleasure, simply because a different neurochemical system takes over once the purchase is made. This drop in dopamine after you buy accounts for buyer’s remorse. (The same drop before you buy is called coming to your senses).

Money is the legal tender of desires. We use to it measure success as well as to try to buy happiness. We use money to communicate, to carry messages. So, in regard to happiness, as well as many other promises of money (of course, money doesn’t promise since it can’t speak—it doesn’t even know who owns it—we project our desire onto it like a Rorschach ink blot), money is the cover story: it offers you one thing, but seemingly promises another.

When we compare our inside to someone else’s outside—we think money can bridge the differences. Money is a ceaselessly renewable promissory note for possibility. But happiness is not a goal or reward. It’s a consequence.

We need money in order to know what can’t be purchased.

French Fries, Credit Cards, and Debt Psychology: The Behavioral Economics of Small Decisions

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 05 Oct 2009 11:55:06 -0400

David Krueger MD

The Tyranny of Small Decisions

How do two French fries weigh 40 pounds?

Putting on 40 pounds over 10 years means gaining an average of four pounds per year
40 pounds divided by 10 years equals 4 pounds per year
4 pounds divided by 12 months equals .33 (1/3) of a pound per month.
This is approximately 1/100th of a pound per day (1/3 pound divided by 30 days)
One pound of stored fat represents 3500 calories
3500 times 1/100 equals 35
To achieve the feat of gaining 40 pounds in 10 years, all you have to do is consume an extra 35 calories every day.
35 calories = two regular French fries

Little things count.

Economist Alfred Kahn described how we become trapped by the series of seemingly insignificant choices that we make – the tyranny of small decisions. And, if we were able to see ahead to the end results of those small decisions, we may chart an entirely different course.

If you are burdened by credit card debt, it probably wasn’t one huge purchase that created the problem. More likely, it was hundreds of small decisions, all along the way. Some were necessary, some justified, some rationalized. “It’s just a couple of French fries” thinking. Internal bargaining took care of others: “Just this one time” or “I’ll pay it off next month.” Segmentation of the pleasure of the purchase from the pain of payment obviated any lingering questions.

The Nobility of Small Decisions

Consider the inverse: the nobility of small decisions.

We recognize in parenting, from the very beginning, that we really don’t know which interactions or words will be really important, or even remembered. Knowing that we don’t know, we have to assume that everything we do is important. Everything matters.

Consider the very small decision of stopping for a $4 coffee each day. Calculate how much that is per year. With interest, how much it would be in ten years. In twenty years.

Epictetus asked twenty centuries ago: “What is a good person?” The one, he reflected, who achieves tranquility by having formed the habit of asking on every occasion, “What is the right thing to do now?”

You can be held hostage by small decisions. Or, you can be effective, achieve mastery, and freedom by small decisions.

All you have to do in life is the next right thing.

The Negative Wealth Effect - Or: How Neuroeconomics Hits a Small Town in Texas

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 28 Sep 2009 13:56:22 -0400

David Krueger MD

I was talking with the owner of one of our favorite antique stores in an area close to our weekend ranch. He said, “People are just not spending money.” The downtown area of the little town was somewhat dead, and the nursery where we frequently visit had few customers.

He continued, “They don’t seem to be out of jobs, no one is making any less money, but people just aren’t spending.”

Since I believe homespun research can come close at times to the neuroeconomics lab, I asked why he felt this was the case.

“Everybody is watching the news too much.”

The positive wealth effect occurs when rising values of homes, stock portfolios, and retirement accounts make people feel wealthy. Even though no one takes a single dollar from these assets, the heightened mood results in spending more.

People feel the impact of the economic downturn in an inverse way: the negative wealth effect. Even though they make the same money at their same job, people spend less.

We spend not according to how much money we have, or even what we need, but we spend according to how we feel.

Neuroeconomists have demonstrated that people who are fearful cling to what they have. Our nervous systems constrict in a primitive but adaptive effort for survival. With this withdrawal and fear, people reduce spending. The condition people seek to avoid becomes what they bring about. When fear is dominant, money may not only be constricted, but horded. Since we make what we do hitchhike on something conscious and logical so that it makes sense, consumers become “risk-adverse” and hunker down. Spending gets a bad reputation.

A study at the University of Toronto demonstrated that when people are in a positive mood, their visual cortex takes in more information. In a positive mood people both see and process a greater number of possibilities in their environment. A good mood enhances the size of the window of their perspective.

The emotional contagion (“collective tilt”) of the economic downturn has the reverse effect on spending of an expanding economy—even without a direct impact on the individual. Increased tension produces both emotional regression and narrows perspective. The stress hormones of epinephrine and cortisol block information processing.

For both good and bad stress, a modicum of balance is crucial to regulate states of mind. Look for opportunities to see the big picture when a natural inclination is to remain hyper-focused. Being grounded and centered allows a state of mind for optimum synthesis of thinking with access to existing knowledge. When you’re relaxed and centered, you have the greatest access to all your states of mind—all the information you possess.

From a Buddhist teaching: “Return to the earth now if your mind is troubled and your heart is uncertain, for it is by returning to the beginning that we can clearly see the path.”


A reminder: The Teleseminar series Your New Money Story™ starts Tuesday, September 29, 2009 at 7:00 PM Eastern for five Tuesdays. It is recorded for schedule conflicts.
Your New Money Story™ Workbook with 48 annotated exercises and work tools will illuminate your money story and systematically guide you to write a new one.
www.NewMoneyStory.com

Money Talks, But Does It Lie?

bill@mountain-ridge.com (Dr. David Krueger) — Wed, 16 Sep 2009 11:57:26 -0400

The Question: Does money really lie?

The Evidence: We know that money speaks to us, that we speak with money, and with each other using money.

We hear promises of love, happiness, pleasure, and freedom.

We hear whispers of worth, control, power, and possibility.

Louis Nizer reminds us, “Some people will believe anything if you whisper it to them.”

Money can convey any message. The wonder of money is that it can represent anything. It’s a stand-in for what we idealize and desire, yet fear and lack; for what we covet, crave, spurn, chase or follow. We use money to show how much we care, or how little. We use to it measure success and buy happiness—or try to. We use it to bolster our self-esteem, to regulate moods, to influence others.

We give money meaning: we breathe life into it, give it emotional value, build a relationship with it and make it bigger than it is. We use money to try to soothe emotional pains, buy the respect of others, and ourselves.

Money can make any statement. What people say and do are inevitable, unavoidable self-statements of their beliefs and personal realities. All that you say is about yourself. A life story or money story manifests through self-statements. The story tells most about the teller.

Aren’t these lies?

The Answer: Money is a simple unit of value. It can’t speak, can’t promise, can’t have regrets, can’t look ahead. Money doesn’t even know who owns it. So it can’t possibly create fiction.

But we may lie to ourselves. We use money to communicate, and it says whatever we tell it to. It is our voice that we project onto money. Money is the universal Rorschach inkblot that we imbue with whatever design or image we create. We imagine all sorts of things using money, and ultimately have to confront the illusion that it is our voice, our hope—nothing that is intrinsic to money.

The more we give money meaning, the more we lose focus on what money means.

Money is the one true metaphor that can stand for anything else. But it can’t lie.

Portrait of a Money Story: How Annie Leibovitz Lost Her Focus

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 31 Aug 2009 08:09:14 -0400

David Krueger MD

If you look deep enough inside yourself, you'll see everyone else.
Kinky Friedman


Annie Leibovitz, perhaps the most famous living photographer, has a contract with Vanity Fair alone worth tens of millions of dollars. Unfortunately, that's also the estimated amount of debt she has. One chunk of that, $24 million, comes due September 8, 2009 to Art Capital Group, and if she doesn't pay up, she will lose the rights to her famous photographs (including well known shots like the naked John Lennon and Yoko Ono, and a pregnant Demi Moore).

Rather than looking more closely at Ms. Leibovitz's dynamics, let's examine what we can learn about our own dynamics from this tragedy. And about how our minds and brains operate to sometimes make money mistakes and financial fallacies.

1. Why are we intrigued by a sad story of a famous woman's misfortune? When something bad happens to someone we envy, the result is that we may feel good. Neuroscientists at the University of Cambridge found that news of the downfall of the rich and famous activates the dorsal interior cingulate cortex of the brain. Their humiliation activates this region of the brain that responds to conflict and social rejection. In fact, the study showed that the more we envy someone, the greater the pleasure in his or her downfall. This accounts for our pleasure in seeing a high-powered CEO who earned several million dollars in bonus get humiliated in front of a Congressional Committee exposing indiscretion, or doing the perp walk. (When Bernie Madoff got shoved on the sidewalk-be honest-how many times did you rewind?)

2. Making or spending money activates the same pleasure center in the brain that cocaine does. This makes the act of spending money potentially addictive. A lifestyle of increasing accomplishment, fame, wealth, and power can all be state-changing, and cumulatively challenging.

3. Good decision-making is a balance in which the right (emotional) brain and left (logical) brain operate together. Stress, whether it's good or bad, can shift decision-making to the right brain, overriding reason.

We are reminded to delay significant financial decisions when vulnerable, such as at times of death in the family, divorce, or job loss. In recent time, Ms. Leibovitz lost her mother, her father, her longtime companion, Susan Sontang, and added two children to the family.

4. Our minds are drawn to the stories of the extreme to compare ourselves and feel better.

To reflect: "At least my debt isn't as bad as hers."
To anchor an envy of fame or wealth: "I'm glad I'm not her."
To watch dysfunctional people on reality and talk shows: "My problems are nothing compared to that."

5. Any thing (like money) or any process (like spending) can become its own story and eclipse its author. Success has made failures of many men, Cindy Adams reminds us.

6. Understanding insatiable appetite does not inoculate to its effects. Ms. Leibovitz's fame as a photographer in the '70s and '80s provided gratification to people's limitless hunger for stargazing.

7. Expertise in one area does not equate with expertise in another. From successful physician to famous artist, people may not translate their accomplishments to money or investment savvy. Different parts of the brain are involved. Even Warren Buffett recognized this about himself: "I don't think being able to allocate capital means you're good at anything else."

8. Money can solve many problems, or at least make them easier. But then we over-reach, and make money solve more than it should. It gets pressed into service because it's a commonly accepted social and personal resource-it makes people feel self-sufficient.

9. We compare our inside to someone else's outside, and perhaps think money can bridge the differences. Stories such as Ms. Leibovitz's confront this illusion. Her creative work has exposed more than just the surface for decades.

10. Money is the legal tender of desires. It becomes the inkblot of the Rorschach test. Emotional valuation can over-write brain valuation. Money can be equated with emotional and social signifiers, such as power, freedom, and limitless opportunity.
11. Credit cards and loans decouple buying and paying: The pleasure of the purchase is segmented from the pain of future payment. Our optimism bias then makes rainy days and repayment an abstraction.
12. Like perfection, "more" is not a goal. It's unreachable-no end point. Ms. Leibovitz was supplied with an almost limitless budget to shoot her increasingly exotic and expensive photographs. Jane Sarkin, a Vanity Fair Features Editor said, "Her demands became bigger...whatever she wanted she got."

Please share your thoughts, reflections, or money stories.

The Cost of Money

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 25 Aug 2009 14:40:48 -0400

David Krueger MD

I snagged my first official job – paid in real money – at age 8. On hot summer days I chopped cotton for my Dad, earning a whopping ten cents a row. (Family farms were under the radar of Child Labor Laws). The work was hot, hard, and dirty.

When school started and I saw my classmates enjoying the sodas and candies they purchased, I joined them. But after my treats were quickly gone, questions lingered. “Was that candy worth one-half a row of cotton?” and “Is this soft drink worth one row of cotton chopping?” I soon answered, “No” to both questions.

That experience was an early lesson about the cost of money. Not its value – I knew exactly how much candy a nickel would buy. The cost of money cost was the personal price I had to pay to get my hands on it. I learned that you don’t only buy things with money; you also have to buy the money.

The next money lesson came in an unlikely way. At age 10, I entered into a joint venture with my Dad. My first business! I fed all of his pigs in return for free food for my pig, Stubby. When the day came for me to sell my pig, my Dad had to console me while I cried at giving up Stubby.

That was an early lesson about how every money exchange involves two prices: financial and emotional. And that internal dialogues have many dialects. “Gifted” money: no problem; cotton chopping money: serious purchases; “Stubby” money: a survivor of all kinds of emergencies.

I developed a cost reference for bigger ticket items. In the fifth grade, when I wanted a motor scooter, it would cost one “Stubby” for a used Cushman scooter. I was one little guy who didn’t spend much money.

By age 13, I graduated to raising cattle – a small herd of registered Herefords. No pleading looks from them, because I didn’t have to sell them.

By age 16, my Dad gave me ten acres of land to grow cotton in return for doing work for him. I can officially tell you that there is no way to get emotionally involved with a cotton stalk.

I learned much later that everyone has internal and external conversations about money. We have dialogues in our minds before making a decision to exchange our money – our time and energy – for something else. When we really listen to those conversations, we can discern cost vs. value, and spending vs. earning comparisons.

Please share your thoughts, reflections, or money stories.

Why Are Our Money Stories So Elusive?

bill@mountain-ridge.com (Dr. David Krueger) — Tue, 18 Aug 2009 12:32:22 -0400

David Krueger MD

An internationally known self help guru said, “You know, Dave, I don’t know how to tell my money story to myself in order to know what to change.”

We struggle to embrace change. Many of the methods to facilitate change are contrary to how the mind and brain work. Neuroscience and quantum physics—and strategic coaching—have a lot to teach us about change. And resistance to change.

Our money stories tell us less about money and more about the human mind and its operations. At times our both our minds and our brains can work against us. When you think with one part of the brain and feel with another, you need a map. So we have to outsmart our brains.

The prefrontal cortex says: “Let’s think about retirement savings.”
The limbic system says: “Ah, let’s have that second cognac and order the 24” iMac.” (My amygdala even specifies the brand of cognac).
Each part struggles over the same dollar, hopefully without tearing it.

The moment we begin to make money more than the simple, tangible thing it is, we stop understanding it. The more we give money meaning, the more we lose what it really means.

Then, we do strange things with money. Intelligent people spend money they don’t have. Sophisticated people scheme and get scammed. Rational people trade in leisure time for money to buy back some of what they just forfeited. Gifted people can’t figure out how to exchange their talent for proportionate income. Otherwise balanced individuals spend extravagantly or hoard compulsively. Reliable people ignore financial matters until they snowball. People with integrity write their own exceptions to rules about money.

The good news is that we can learn about our money stories and change all of that.

What Can We Learn From Madoff?

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 10 Aug 2009 11:17:15 -0400

David Krueger MD

And how was he able to con so many smart people?

We make money mistakes and financial fallacies because of the ways that our minds and our brains work. The Madoff tragedy illuminates some of the more prominent errors.

Exclusivity. The desire to be special, even “chosen” vaults someone beyond common sense to an emotional choice. Madoff appealed to his target’s desire for status by including them in an exclusive club, even turning down potential investors. One investor said, “You had to go to him—he didn’t come to you. The first two or three times he said, ‘Not yet.’ Until finally when he said ‘Yes’ you gave him every penny.”

Transference fallacy. Madoff was believable as an authority figure, especially confirmed by the fact that he was Chairman of the NASDAQ, a philanthropist, and had a huge following of admirers. We tend to idealize figures who portray confidence and manifest wealth in the hope of participating in some of their glory.

Social contagion. People are persuaded to join group momentum in order to participate, especially not to be left out. By reacting to trends, herd mentality creates trends.

Confirmation bias. Once you make a choice, the tendency to reinforce the belief that this is the best choice—to cherry pick data to confirm that you’ve made the right decision—obscures evidence to the contrary. People continued to invest, and invited their friends to invest with Madoff.

Proving your worth. Often the victims of a scam want to prove their worth. Madoff’s scam could have been his self-statement: insiders said he wished he had gone to Wharton or Stanford, but instead went to Hofstra University, so always felt he needed to prove something.

Specialness. Someone who offers an evocative promise that crystallizes vague, hazy dreams to make them seem vividly in reach can generate a cult-like following. The (scam) artist paints a picture to allow people to see what they want to see; then the victims project their own desires onto a promising story that crystallizes a fantasy of magical wealth. The scam artist is half of the co-created scam.

Greed. Emotion and immediacy will trump logic and thinking. The excitement of an opportunity places neurocircuitry in collaboration with a promise—a good story. When someone makes money, the region of the brain called the nucleus accumbens lights up. This is the same pleasure center that responds to other highs, even cocaine. The drive to obtain a reward can resemble the addictive response of cocaine: Both are processed by the pleasure center. When financial incentives present a strong allure, reason as well as motivation can be hijacked by the pleasure center.


What can we learn from the Madoff debacle?

Don’t make significant financial decisions when you’re vulnerable. Greater vulnerability occurs at times of crisis such as divorce, job loss, death in the family, or economic downturn.

Be wary of hearing what you want to hear. Once you make a decision, continue to objectively exam the decision and look for evidence that it is right, and that it is possibly the wrong decision. Notice when you cherry pick data to confirm your decision. If it seems too good to be true, it’s probably too good to be true.

No matter how chosen, special, or select a group you’re in, no matter how exclusive the club you belong to, continue to ask questions. His creation of exclusivity obviated questioning by the time a client was accepted. Jerry Oppenheimer in his book, Madoff With the Money (the best title for a book since adolescent psychologist Dr. Anthony Wolf’s Get Out of My Life, But First Could You Drop Me and Sheryl Off at the Mall) noted that Madoff surrounded himself by associates and staff who would not question him.

Be willing to sleep on it. There are few true emergencies in life, and investing is not one of them.

Following the lead of famous people into an investment is meaningless unless they became famous by investment success.

Three basic tenets of good writing apply to good investing: clarity, brevity, and simplicity. Madoff had a complex investing scheme that even other money managers admitted they didn’t understand.

You are the CEO of your own finances. It’s an ongoing job.

The logic of financial decisions resides at a different neural address than the pleasure center. Since our brains are wired for instant gratification, reason can be hijacked and held hostage—unless there’s a plan and you stick to it.

When a stock portfolio does well, someone may attribute this to talent and smartness. And it could be. Or not. My wife and I play heads-up poker, and she finally confessed that one of my “tells” is that when I happen to draw a really lucky hand, I have an smug look like I think I’m brilliant.

14 Ways To Outsmart Your Brain To Spend Less

bill@mountain-ridge.com (Dr. David Krueger) — Wed, 29 Jul 2009 12:12:43 -0400

by David Krueger MD

1.Don’t use credit cards.
In numerous studies, individuals spend significantly more—on average 23%--when using credit cards vs. paying cash. Credit cards make money an abstraction, as well as relegating payment to a future time. The immediacy of real money makes it a real consideration.

2.Estimate expenses in detail; pay in cash.
Studies at the Robert H. Smith School of Business at the University of Maryland found that people spend less when they have to estimate expenses in detail, as well as when paying cash then when using credit.

3.Pause between the pick and the purchase.
Wants are the language of the initial intoxicating exposure to dopamine. Dopamine releases with anticipation, making action feel compelling. Neuroscientists at Emory University found that this delay disrupted dopamine release. This is the chemical that, once a purchase is made, diminishes to result in “buyer’s remorse.” Create a contemplative pause – a space of time between choosing something and paying for it at check-out. Time cures wants.

4.Simplify your symbolism.
Designer brands are marketed to symbolically represent quality, desirability, and the experience of having arrived. The symbolism of specialness costs more. The qualities that we attribute to brands create a relationship with the brand that results in both desire and the commitment to pay more.

5.Leave emotions at home.
Emotions highjack the logical brain, and along with it, reasonable decisions. Under stress, we may relieve that stress by buying, by hoarding, or by purchasing out of other emotional needs such as insecurity or a desire to win approval.

6.Don’t be special.
Special offers or other indications that you are in a select group — an inner circle of consideration— will make you buy more than you need. Special, exclusive, unique offers induce a desire to respond with gratitude and with purchase. Be suspicious of special offers.

7.Shop alone.
The social contagion of shopping with friends induces a relaxation of usual constraints, as well as the desire to impress friends with purchase.

8.Know what “good enough” is.
Rather than an impossible quest for perfection, or for the unattainable endpoint of “more”, define specifically what good enough is. Having an endpoint lets you know when you arrive, when you can feel satisfaction.

9.Keep your eye on the ball…
Focus on the immediate, the specific and its importance.

10.…And your head in the game.
Be aware of the big picture—the scope of importance.

A study by the Joseph Rowntree Foundation found that wealthy Londoners do not feel rich because they do not mix with less affluent people. When you look at the global neighborhood, that half of humanity lives on less than $3 a day, it puts things in perspective. In the United States about 1% of the people own 96% of the wealth. Keep the big picture in mind.
“Good enough” is the antithesis of “more.”

11.Consider the opportunity cost of your purchase.
Calculate what the money would be worth in five years. In ten years.

12.Consider the absolute value rather than the anchor price.
Evaluate an item you purchase on the basis of the item itself, rather than the stated initial price. Our brains are wired to log in an initial anchor price, then to judge everything subsequently in reference to that anchor price.

13.Consider the actual product and what you will do with it if purchased.
Disregard the brand, the esteem of ownership, and how you will be perceived as its owner. Marketing produces desires we didn’t know we had.

14.Use “free” as a cue to spend more slowly. Evaluate carefully.
“Free” is designed to induce action and minimize consideration.

Please respond with your feedback--I'm interested.

When Lies and Debts Are Similar

bill@mountain-ridge.com (Dr. David Krueger) — Mon, 20 Jul 2009 18:49:54 -0400

by David Krueger MD

The brain has an error detection mechanism that registers when something appears wrong. This innate capacity detects what neuroscientists call “errors”: the differences between expectation and perceived actuality. This portion of the brain plays a central role in detecting mistakes as well as responding to them.

We see what we expect to see—what our radar has been coded for. In fact, when we don’t see what we expect to see, the brain’s error detection mechanism reads as if something is wrong. It’s located in the medial frontal cortex, next to the emotional center of the brain—and you can never totally ignore your next-door neighbor. At times it can be abrupt and explicit: remember the experience of absently-mindedly going to the refrigerator and getting a drink of milk—to abruptly discover when you took a sip that it was orange juice? When this happens, neural firings disrupt expected flow and use brain energy.

Consider the emotional expense of two things.

A Lie. The surface story is the constructed lie. The subliminal story is the recognition of the lie by the error detection mechanism. Then you have to deal with the dissonance. Triple work.
A Debt. The real expense of buying something you can’t afford is that you have to pay more for it. Then the emotional expense of your mind and dissonance in your brain recognize that spending is different from affording. Then you have to pay the interest on both. Triple work.

You can deceive others – even your own mind.

But your brain always knows.

The good news: This neural machinery can both recognize and correct errors—to optimize behavior. So we also respond to mistakes. This is great, if we remember to discern whether it’s a mistake or a neural response and printout to change itself.

A Quiz

bill@mountain-ridge.com (Dr. David Krueger) — Sun, 28 Jun 2009 12:08:25 -0400

Answer all seven questions before looking at the answer.

What is the most popular legal substance to all peoples of the world?
What is the one true metaphor, the single commodity that can be translated into everything else?
What is the story that you write each day, think about several times a day, that you may not know how to tell yourself? Although remarkably simple, is intricately complex and may remain illusive to its creator?
What is the legal tender of desires?
What is the one thing that can make any statement, carry any message, represent any notion?
What is the universal inkblot of each personal Rorschach?
What is the longest relationship you’ll have in your life? The one that your parents discussed before you arrived, and will be discussed after you’re gone? A relationship that you can never stop living each day of your life?

Continue reading "A Quiz"

When Money and Logic Diverge, Part 1

bill@mountain-ridge.com (Dr. David Krueger) — Sun, 28 Jun 2009 12:08:02 -0400

The brain has a mind of its own and we are of two (or more) minds.

Neuroscientists have disproven the long-standing assumption that people have a consistent and predictable set of logical preferences. Different parts of the brain operate in radically different ways.

Money behavior and financial decisions are linked to both mind dynamics and brain activity.

The prefrontal cortex says: “Let’s think about the 12 month game plan and retirement savings.” The limbic system says: “Let’s have that second cognac.” Each part struggles over the same dollar, hopefully without tearing it.

Emotions can corrupt decision-making by short-circuiting attention to focus on the immediate. (But, those who feel no emotion are not good at making certain decisions).

Making people happy is not simply giving them more of what they prefer. The brain’s pleasure center quickly accommodates to new stimuli and expects them to continue.

When someone’s stock portfolio does well, they impute this to their talent and smartness. Gamblers interpret good fortune as skill. My wife and I play heads up poker, and she finally confessed that one of my “tells” is that when I happen to draw a lucky hand, I have a slightly smug look like I think I’m brilliant.

Interview Podcast

bill@mountain-ridge.com (Dr. David Krueger) — Sat, 27 Jun 2009 12:39:00 -0400

Video

bill@mountain-ridge.com (Dr. David Krueger) — Sat, 27 Jun 2009 12:09:00 -0400

When Money and Logic Diverge, Part 2

bill@mountain-ridge.com (Dr. David Krueger) — Sun, 21 Jun 2009 12:07:00 -0400

The chemicals of emotion alter mind and body; personal experience determines what software program (state of mind) to use to process the data, and how to respond. When incoming data resembles threat or danger, it triggers an emotional and biochemical response within a fraction of a second. These chemicals of this emotional state hijack the logical, rational brain—which is a natural survival response. But: Emotion-based states where rational ones should prevail may use information unhelpfully. This automatic alarm system may cause mistaken perception, judgment, and reaction.

A hot stock tip, a business deal gone sour, a family tragedy—any or all may create an alarm response and an emotional state of mind geared for survival rather than the use of logic.
Neuroscientists use functional magnetic resonance imaging (fMRI) to study the responses and functioning of the brain to various emotional stimuli. These studies and their findings can be used to help people make decisions that are in their long-term best interest.

Some additional examples of how, at times, logic takes a backseat in financial decision-making.
Functional magnetic resonance imaging (fMRI) shows that when people feel they are being treated unfairly, a portion of the midbrain called the interior insula lights up and overwhelms the logical considerations of the prefrontal cortex. This is the same kind of disgust that people have when they encounter a rotten apple.
Making an example of people such as Ken Lay and the prosecution of other executives for their crimes does not work and will not work. If it would be sufficient, Ponzi would have been the last to teach us this lesson. To make an example is an abstraction is not how the emotional brain works.
The bubble phenomenon is also a by-product of how our brains work. Example, prior knowledge, and logic are not how the brain creates and succumbs to bubbles.

Commitment Devices

bill@mountain-ridge.com (Dr. David Krueger) — Fri, 19 Jun 2009 12:06:00 -0400

We can counter our own vulnerability and bolster commitment to better responses. Some ways to self-impose and co-create commitments for behaviors that we know are in our best interest.

We help our children do this. A piggy bank is a commitment device, simply because they can’t get at the money for an impulse purchase.

Some adults do this by freezing their credit cards in ice.

In one study, college students were given the option to create their own earlier deadlines for three papers due by the end of the semester. Seventy-five percent of them jumped at the chance.

People find ways of saving themselves from immediate cravings. A study at the Harvard Business School looked at the ways people dealt with purchasing “want” products and “should” products. They would devise ways to put off either purchasing or having delivered the “want” products to ensure they would do what they should do first.

Based on the Harvard Business School study, corporations are challenged to help us bring out our better selves by packaging the “should” and “want” items in unique ways.

Automatic withdrawal retirement funding is a commitment device that requires you to pay yourself first.

The Dynamics of Transition

bill@mountain-ridge.com (Dr. David Krueger) — Fri, 12 Jun 2009 12:04:00 -0400

Change is the event. The situation. You change a behavior, move to a new city, have a baby, take a new job.

The transition is the process. It’s the internal story of change: a shift in orientation. Even self-definition.

Four Components of Transition
1. Every transition begins with an ending.
2. People in transition will create new ways to return to the old story.
3. The new beginning involves changing how you see yourself—even aspects of your identity.
4. Never underestimate the changeback pressure from the system.

Six Stages of Transition
These are not headlines—you won’t see a manifestation of each even with a major transition. These are just to think about as internal conceptual markers:
The myth: That there is a perfect choice.
The illusion: That the perfect choice will solve all problems.
The disappointment: That nothing is perfect—and there isn’t even an ultimate arbiter of fairness.
The development: The recognition that no one is going to take care of it for you.
The growth: To take the next best action
The consolidation: The happy/sad experience resulting; happy about the autonomy of moving ahead and not constructing an obstacle; sad about mourning an old story.