Challenge Everybody (Or How I Lost $150,000)
Posted by Ryan Neal
Challenge Everybody (Or How I Lost $150,000)
Publication: RidiculouslyExtraordinary. Posted by Ryan Neal
A friend of mine once asked me if I would give him advice on his finances if he won the lottery.
My response was simple: "Don't take financial advice from someone who has less money than you."
Let's say you come into $5 million. Would you then take investment advice from an adviser who earns less than $100k/year? (Most advisers earn far less than that.)
I definitely wouldn't.
I'd trust myself more than the adviser and I hope you would too.
But I'd also trust someone who has a proven record of making a lot of money. This could be anybody. An entrepreneur, Warren Buffet, a grandmother. It doesn't matter who it is as long as they've had success with large sums of money.
This concept holds true for anything in life.
If you're a prospective basketball star would you take advice from coaches who haven't coached future college and NBA stars?
If you're an entrepreneur would you take business advice from people who haven't run successful businesses?
If you want to be a world class chef would you train at a fast food restaurant?
If you want to get fit are you going to take advice from a fat person?
Bad Advice Breeds Bad ResultsIt seems like common sense, yet most of us, myself included, take advice from people who have no business giving advice. Usually, at least in my case, it doesn't work out positively.
For example, years ago when the housing boom was hitting hard everybody was saying to get in now because housing prices are going to keep rising. Deep down I knew that wasn't true. But what was happening was so crazy my thinking became unclear and I joined in on the frenzy.
It also didn't help that I was earning more money than I knew what to do with.
So I purchased a house that is now worth ~$150,000 less than when I bought it. (I rented it out last year so I could live anywhere.)
To write that makes me sick to my stomach, but I'm not one to run away from the truth.
Who To Blame For Bad AdviceI could blame the people I was taking advice from. I could blame the President, the banks, the real estate agents, my family, and my friends.
But there is only one person to blame for that mistake.
Nobody put a gun to my head. I didn't have to listen.
And ever since then I've told myself "never again."
Challenge EverybodyThese days I challenge all advice I receive.
Buying that house was an expensive lesson, but I don't regret learning it in the absolute worst way. It is tattooed into my hippocampus. I will never forget.
Where Does Bad Advice Stem From?
Ninety-nine percent of the time (guesstimation) bad, unwelcome advice comes from three places:
- Other Family Members
Granted, all of these people are well intentioned.
But intention means nothing.
How you live your life should be up to you.
"I'd rather go my own way and fail miserably than go their way and make it." - Henry RollinsI'm not saying we shouldn't take advice from anybody. I'm saying we need to be careful who we're taking advice from.
Persuasive people can easily lead us astray.
People you respect can do the same.
How I've Overcome Taking Bad Advice1) Accept the advice with gratitude. Most people don't mean any harm and like to chime in whether they should or not. Accept their advice. Thank them. Then...
2) Analyze where the advice is coming from. Is the advice from someone well suited to giving you that specific piece of advice? Yes? Great, consider it. It might be very useful to you. After all, the easiest way to learn something is from someone who has already made the mistakes for you. If they can save you from making a mistake or two that is perfect.
BUT, and it's a big CAPITALIZED BUT, if they are giving you advice based on opinion and speculation then what you should do is simple:
It won't be easy. Especially if it's a Parent, family member, or close friend. But forget it anyway. Be congruent and stick to your guns.
If you fail without their advice you will only be able to blame yourself. No ill feelings towards the well-intentioned advice givers. And if you succeed, it will be the result of your own genius.
Make a pact with yourself that you will flat out not accept advice if it's coming from someone who shouldn't be dishing out those specific life lessons.
Does that mean you shouldn't take advice from me?
Yes and no.
Don't take my advice in areas you don't think I have the proper experience.
For example, although I always get pretty good deals on flights, I'm not the best person to ask about that. For the most part I use FareCompare.com (BTW, their CEO Rick Seaney is awesome) and what I've learned from Chris Guillebeau's travel products.
But I can tell you how to travel cheaply, how to eat vegan on the road, how to live anywhere, among many other things.
Take my advice in areas I have experience. Everything I write on this blog is based on personal experience.
It's pretty black and white.
Do you have examples of situations where you took advice from the wrong person and it worked out unfavorably?
Do you have examples of situations where you took advice from the right person and it worked out favorably?
Or do you have examples of situations that contradict everything I've stated?
Leave it in the comments. I'm incredibly interested.
P.S. I just realized the photo to this article makes no sense. Originally it was called "Who To Listen To" but I changed it at the last minute and forgot to change the photo! haha ;)