Podcast Episode 6 With Scott H. Young

Todd: Welcome to the Financial Mentor podcast, episode number six, with Scott Young. In today’s episode we’ll show you how to achieve some of the biggest goals you have for your life – health, wealth and happiness – simply by changing your daily habits. This approach makes those goals, which feel so inaccessible and large, as easy as just going through your daily life. Announcer: Welcome to the Financial Mentor podcast, where you get unconventional insights into wealth building that actually work. Discover data-driven strategies and learn from a wealth of experience so you can take your financial skills to the next level. With your host – Todd Tresidder. Todd: Today’s guest is Scott H. Young from http://scotthyoung.com Welcome to the show, Scott. Scott: Great to be here. Todd: Scott first came across my radar with something he did called the MIT Challenge. If you’re not familiar, Scott completed the four year curriculum required for a Computer Science degree at MIT in just one year without taking any classes or paying tuition. What fascinated me about this story was two different things – first, the accelerated learning skills and the paradigm destruction involved in completing four years of instruction in just one year. That really intrigued me. And the second thing was this focus on education and not the school. Scott was about learning for learning’s sake – without admissions, exams, a paper degree, giving up four years of your life or piling up college tuition debt. Again, it was total paradigm destruction. Scott’s the author of several books including “Learn More, Study Less”, “Think Outside the Cubicle”, “How to Change a Habit”, “The Little Book of Productivity” and more – they’re all available at scotthyoung.com. I highly recommend Scott’s website – it’s a fascinating resource for all kinds of productivity hacks and ways to get more out of life. To start things off, Scott, why don’t you give us a quick overview of what the MIT challenge was, for people who aren’t familiar with it? Scott: Basically, MIT puts a lot of the material for their courses online for free – it’s called OpenCourseWare, anybody can check it out – and I had been a fan of this as a bystander for a while and I got the idea ‘Would it be possible to learn everything that MIT teaches an undergraduate Computer Science student without ever going to MIT and taking a class?’ That was a nice idea but what made it more interesting to me was what if you were creative with the curriculum and use the material in a different way. You’re not under the same constraints as an MIT student, meaning you can take classes whenever you want to watch the videos, you don’t have to attend them in a particular sequence, you can use the assignments as learning tools but at the same time still pass the exams and do the substantial programming projects, so I wondered if I could do that in less time. So I set the parameters of trying to do it in 12 months and that really structured my efforts around

figuring out how I could actually execute that. Luckily I was able to finish it in just under 12 months a little less than a year ago. Todd: Just to clarify – so you did not get an MIT degree? Scott: No. Todd: But what you did do was you got the learning that goes with the four year degree in Computer Science at MIT? Scott: Yes – I wanted to get the knowledge that MIT imparts to their graduates. I didn’t really care so much about the degree. Having a degree is nice; having a piece of paper is great, but I just found that at the stage that I was at in my career and the direction I was going in, which was more entrepreneurial and less focused on big business, it didn’t seem like it mattered as much. That was just my opinion on it. Todd: Even if you go big business the fact that you did this shows incredible self-motivation, incredible learning ability – even big business would be impressed by that, even more impressed than with just the conventional degree, I would think. Scott: I wasn’t sure how people would react to it when I started. All I knew was that for my own benefit, for my own entrepreneurial ambitions, it made sense. But after I was done and it got a little bit of publicity one of the big software companies was interested in me and said they could probably get me a job. I won’t mention the company because their representative was speaking to me unofficially but this is a company that would probably reject the vast majority of applicants that are Computer Science graduates from most schools. So I think the fact that I was able to circumvent that process shows that employers want skilled, motivated, able people and sometimes a degree is the best way to filter those people but if you can get through that filtering mechanism sometimes you can single yourself out in different ways. Todd: One of the things that really intrigued me about the whole thing you went through was I’ve got a different vision for where education’s going in the future and you probably share it – we haven’t talked about this, it’s a hunch from what you’ve created here. Are you getting any thoughts on where I’m going? Scott: Maybe – why don’t you explain a little bit more? Todd: What are some of the big picture things you learned from this? Scott: The first thing I learned is that self-education is something that is a tool that’s available to everyone, especially nowadays, and I mean in the last five years, there has been an explosion of resources online that are completely free to allow people to learn. I would say it’s much better than even 15 years ago, so we’re not talking about the old adage that self-education is good, like the way Ben Franklin and Leonardo Da Vinci taught themselves things – I’m talking about a very recent shift in what is available that enables self-education for people who might not otherwise be able to do it. Secondly, because you can educate yourself on a wide variety of topics without cost and without going through a lot of formal procedure I think that it levels the playing field, so I think we’re going to see in a lot of ways that this enables people to gain more knowledge more quickly and without a

lot of the overhead costs that universities have and so in a lot of fields I think it’s going to become dominated by people who are able to quickly learn things and teach themselves on their own and the people who get all of their knowledge from a formal environment are going to be too slow to keep up. Todd: Just to clarify, when you use the term self-education, you’re talking about university and graduate level education. We’re not just talking about reading books; we’re talking high level education. Scott: That’s another thing, and this is something that I wanted to prove to myself when I did the MIT challenge – there is a little bit of a stigma that if you’re a self-educator it’s because you’re reading popular books that are light reads and bestsellers. That’s great, I like reading those books too, but I wanted to show that you can learn the really hard, substantial information. One of the classes I did during the MIT challenge was a graduate level proof class in theory of computation, so it’s not like this is restricted to light, informal topics – you can tackle any topic of any difficulty with self-education with the tools that are available now. Todd: This ties in with the Freedman book about the world is flat, in a sense, in that this is leveling the playing field. I’ve noticed it, and you’re in the self-publishing field as well, but the stigma of selfpublishing has vanished – it’s all about quality, readership and platform, and if you can put out a quality product, whether self-published or not, it will develop an audience. My book, as of this publication, is number one for retirement planning over at Amazon. That’s an incredibly competitive field, and I know you’ve had success with your books, so the whole thing is flattening out in the sense that now we’re seeing it in the education field and it’s about these stigmas of the institutionalization that seem to be dropping right in front of our eyes. That’s where I was going in this thing about education – any thoughts on that? Scott: I agree. I think what we’re seeing is the flattening of the hierarchy of a lot of different fields. There used to be layers of bureaucracy – having access to a mass distribution channel like being able to put your book in bookstores and getting people to read it and that kind of thing, but now, because you can bootstrap that kind of access, that kind of distribution, I think it’s a complete game changer. You just mentioned that a good example is publishing – before, self-publishing was really a signal that your book was not of good quality, that you couldn’t get a real publisher to publish it, and the fact that that stigma is evaporating means that because there are quality books that are done through self-publishing now, I would say that that’s similar with education and I believe that maybe we’re not quite there yet with education but I believe that in the next ten years you’re going to see more people who are not just learning the material well but perhaps even better than anybody at universities and they’re able to demonstrate that in unique and interesting ways, so when they get employment or prove to people that they have the skills that they have it’s not going to be just saying ’Look at this piece of paper I have’, it’s going to be ‘Look, I’m doing this on my own, and in some ways that shows I have more motivation, more qualities that people desire than people in the formal environment.’ Todd: In your TEDx Talk you even address some advantages to the self-education route – do you want to touch on those?

Scott: I think what we’re looking at, aside from the fact that you can learn more quickly, is that you can tailor the curriculum to what you actually need in terms of skills, instead of something arbitrarily set by someone who often doesn’t work in the field that you want to work in. One of the big advantages is that the things that you choose are different through self-education than through formal university. Many people argue that the reason self-education is going to fail, that this online education movement is not going to succeed, is because people don’t go to school to learn things in a curriculum, they go to school to show that they are good little workers and they can follow the rules and play by the book that is set down for them. But I think that a lot of employers are not looking for people who can just follow rules. They’re looking for people who can innovate, who can teach themselves things, who are bold and intelligent, so I think the things that self-education signals are different and there’s definitely going to be a market of people who are looking for those kind of candidates, not just people who can check all the boxes and learn things exactly as they’re told, but people who can be innovative and really think outside the box. That kind of ability is maybe even signaled greater in this kind of education challenge than going to university and getting a degree. Todd: I’m seeing a mash up of concepts in here. I’m seeing the rise of entrepreneurism – the people who are succeeding in self-publishing are taking a very entrepreneurial approach, and I’m seeing it in what you did here. It was very entrepreneurial what you did with the MIT challenge and the way you promoted it is what brought that job offer and I’m seeing almost a rise of entrepreneurial spirit through the flattening that we were talking about earlier and that ties into something that Cal Newport talks about. I know you’re connected with Cal, and that’s this thing of becoming so good that they can’t ignore you. There’s this mash up of all of these concepts coming together where you kind of create your own stardom. Scott: I think for my MIT challenge I did have a more publicity-driven focus on the blog – that’s what I do for a living so sharing the story with other people was a major goal of the project. But I think there’s a lot of people who are hidden who have great jobs earning tons of money without formal credentials because they used a similar self-education process but their targeting of who they were going to promote to was a lot narrower. I know a lot of programmers, for example, who have built very successful careers, making tons of money, without formal credentials because they post their source code and projects on open source websites like GitHub so, within a smaller community, they demonstrate their ability and that gets them access to lucrative freelancing contracts or potential job offers that don’t come around to people who are not participating in such challenges. So I think it’s almost a mistake to think that you have to have an audience of 100,000 people or you have to be YouTube famous in order to take advantage of these trends. I think that there is also considerable advantage to having these skills and being more specific in your targeting. I have a friend who went through a similar process with architecture – he was never famous, he was not a huge blogger, he never made a huge splash, but he was getting incredible contact just from focusing specifically on the people he wanted to meet. Todd: Another example is I’ve got a client who’s an engineer who just continued to educate himself, continued to improve his skills, and the competition didn’t, and his career just catapulted and he ended up financially independent from the process.

Scott: The difference mentality, I would say, is primarily taking responsibility for your own career growth, the trajectory you’re going with your learning, and really not just trying to keep up but going way ahead and doing a lot more. I find that a lot of people who are looking to get a skill because they need it are often the people who struggle because everything seems to be coming at them, whereas the people who want to push themselves in a new direction even though nobody’s forcing them to are the people who leapfrog their competitors and peers in that space. Todd: That’s a perfect segue into our topic for today – we’re going to focus our discussion on habits and how to use habits to achieve any success you want in any field. One of my favorite sayings is ‘Your health, wealth and happiness is a result of your habits.’ What do you think of that idea? Do you think that’s important or relevant? Scott: Definitely. I don’t remember what the percentage was, but I remember reading a study about it and there’s an overwhelming percentage of the behaviors that you do every day that are not decided deliberately. There’s no conscious process in your head that is saying ‘Got to do this.’ They just happen because they’re default or a small subset of default. The best example I have of this is to ask yourself what you ate for breakfast over the last two weeks, and out of all the possible things you can eat for breakfast, chances are you ate the same thing on almost every day. I would say that that applies as a rule to so many areas, that what you do is not decided from every possible thing you could do but from a very small list because of your habits – because that’s what you did the day before, the week before, the month before. So what I think makes sense is being critical about the behaviors that you do all the time – which ones are helping you get what you want, which ones are not helping you get what you want? And also building some tools and insight into how you can change those systematically. I’ve done this before and I know many people who have great success with doing this. If you learn a few simple tools for changing your habits you can stack them and often people change a dozen or more habits and that can radically change the direction of your life because a simple behavior, if done every day, adds up to hundreds of hours invested in a new direction over the course of a year or two. Todd: The principle I teach is that it’s just like compound returns with money. If you’re depositing into an account on a daily basis and compounding the growth of that account, over time it turns into astounding sums of money. What’s amazing is that people don’t realize that it’s the same thing with time and with their actions; it’s the exact same principle as compound returns on money. Scott: Definitely. Todd: Another thing that I want to bring into the discussion here is this idea of proactively designing your life. You touch on it in your book but I didn’t feel you elaborated on it and I’d love to have you elaborate on it here. The approach I take with clients is that we actually reverse engineer their lives based on their goals and then we get it down to the fundamental aspects of the core habits that will get that result for them. Do you see where I’m going with this? Scott: Definitely. I think that’s definitely an approach that works. You figure out what the goal is, then the habits that you need to achieve that goal, and then the hard part, which can be a lot easier if you’re using the right methods, is structuring your habits in such a way that you can actually implement them so that two to three months later you don’t give up on them and you forget about it.

Todd: So the structuring of the habits is what we’ll spend the bulk of this discussion on but what I want to do right now is just lay the framework for why anyone should even listen to this – why should they care? It’s about getting what you want out of life. Let’s use the obvious example, since this is a podcast about building wealth, we’ll use wealth as an example. One of the obvious habits is that you need to spend less than you earn and invest the difference wisely, because that results in consistent savings that compounds, so that’s a habit. In order to achieve that habit there are going to be core habits of daily life that come underneath that, that can be implemented in order to produce the result. The idea is that you take the goal and it sounds really big, it sounds hard to get, it sounds unachievable to many people to retire with wealth, when in fact it really boils down to your daily actions. It’s really quite simple once you get the plan right, get the principles right and get the habits right. Scott: Definitely, definitely. I think that’s another thing that is hard for some people – they see a goal and they break it down into all the steps that you have to do. So all of the things you have to make, all the times you have to go to the gym to get in shape, all of the articles you have to write if you want to be a blogger, or something like that. They see all of these deliberate steps but what they don’t see is that the same action repeated multiple times is not worth the same amount of effort, so doing the same action 100 times isn’t 100 times more effort than doing it once, it’s maybe only 10 times more effort because the majority of those times you’re working on autopilot so they don’t require a lot of willpower or discipline to execute. The first few are quite hard to execute but they get easier and easier as you become consistent and they become a habit. Todd: You made a point in your book that I really liked. You said that changing habits is a skill that anyone can learn, like riding a bike or playing a piano. What do you mean by that? Scott: I think the mistake that people make is they think that people who have good habits just have a lot of discipline. If you go to the gym all the time, you eat healthy, you go to work on time every day, you wake up at 6am – if you have all of these habits then you must be very disciplined. That’s what people think in their heads. Sometimes that’s true, but what I’ve learned is that there are specific steps you can take when you’re starting a new habit and if you take those steps the habit becomes much easier to continue with. It sticks more readily and it becomes a habit much faster. So people might spend six months and they’re still struggling to go to the gym every day because of how they set up the habit and for other people it might be three weeks and they’re already doing it on autopilot. They’re not even thinking about it. The skill here is to understand how psychology works, in terms of habits and behavior, so that you can actively work on those habits so that the amount of willpower and discipline you need is much, much less than most people would think it is to get the habits you want. Todd: Playing off of that, then, you talk in the book about the critical nature of the 30 day trial. Can you explain what the 30 day trial is and how that works in terms of forming new habits? Scott: The concept of the 30 day trial is an old one; it’s not a new technique. The idea is that the hard part of making a habit is the first part, sort of by definition. The later parts, once it’s a habit, are relatively easy to execute. When you’re already going to the gym every day, going to the gym the next day is not that difficult because you’re used to it and it’s automatic. Not going to the gym is unusual – maybe something you have to make a decision about. What the 30 day trial is, and this does require some effort, is that for 30 days, you focus on executing that habit flawlessly, meaning

that you do it every single day – so you get 30 repetitions, very consistently, of doing that habit. So if you wanted to go to the gym, that’s a popular example, then instead of saying ‘Okay, I’m just going to start going to the gym,’ that’s an idea you have, ‘I’ll go to the gym now and then for the next while.’ Instead, if you say ‘I’m going to go to the gym for 20 minutes, every day, for the next 30 days,’ then that will make the habit much more consistent than if you do it intermittently or if you do it without a predefined schedule. The second part of that is, because you’re only focused on the first 30 days, it forms a kind of experiment After the 30 days, if you don’t want to continue with it anymore, you’re not under any pressure. Some people, if they’re really serious about a habit, they might try to maintain it after the first 30 days, but I find that, for a lot of people, what makes it difficult for them is they imagine doing it forever. They imagine the difficulty of continuing the habit forever, so by around the 10th or 15th day they think ‘This is difficult’ and as a result they give up, whereas if they’d just gotten over that hump – 30 days is picked arbitrarily, sometimes it’s 20 days for habits, sometimes it’s 2 months – but once you get over that hump it’s much, much easier to continue the habit and it doesn’t take that much effort to sustain from then on. Todd: Okay, so 30 days – what happens if I miss one day in that 30 day window? Scott: It’s hard to say. You have to come up with those rules of thumb for yourself. When I was doing habits at my peak, when I was doing them really well, I had a no-exceptions policy. If you miss a day, it’s done and you have to start over. I found that was very effective for some habits – you could form habits very consistently – and you also were really focused on getting them done. But at the same time it’s not always realistic. Sometimes life intervenes and you can’t execute it perfectly for 30 days in a row. Does that mean that you didn’t make a habit? Probably not. So for me, my rule of thumb is that if I miss more than one day in a row then I should restart. But at the same time you have to be honest with yourself – if you miss 10 days of the 30 days then really you should probably start it again. Todd: So there’s some common sense being applied here. There’s no magic to 30 days – depending on the habit it might be 60 days, it might be 90 days – the point is to get some achievable goal here and work with it to try to practice the habit and build the habit as a rut in your brain. If you miss a day or two that may be a deal breaker depending on the habit you’re trying to form or you might be okay with that, it’s just about trying to build that habit in your brain. Is that a fair assessment? Scott: I would say that that’s fair. For me, I would say that the 30 day amount, using it rather arbitrarily, so all the habits are 30 days, is because it’s a consistent period that works. Focusing for a month is hard but not impossible, whereas saying ‘Okay, I’m going to do it 100% consistently for a year’, that can often be more difficult; that requires considerably more discipline to execute, whereas doing it for only five days or ten days is probably not enough time to start a habit. Todd: You could even commit to, say, eating healthy for six days a week for 30 days and have one day off. Or ‘I’m going to exercise every other day for 30 days’ so it’s not like you’re really, truly implementing the habit every day if your goal is something different. Scott: True, true. I would recommend, though, if you are using an intermittent schedule – six days on, one day off is close to a consistent schedule, but if you’re doing one day on, one day off, you’re going to definitely need more than 30 days, in my opinion, to form a habit, because what really works with a habit is the almost robotic consistency with which you do it. That consistency makes

the habit habitual much faster. If you have intermittent conditioning – sometimes you do it and sometimes you don’t do it – then your body is getting mixed signals about what to respond to, to the environment and what the situation is, whereas if it’s always consistent, you always exercise at 5pm every single day for 20 minutes and you do it right after work, then all of the cues in your environment are reinforcing that habit very consistently. So I would say if you are struggling with an inconsistent schedule, doing it intermittently, then trying to pigeonhole it into a consistent schedule can help. At least it’s worked for me. Todd: I like what you said about it really depending on the habit. Using examples from my own life I would tend to agree with you. The first 30 days is the hardest, that’s where you’re trying to make the shifts in your lifestyle, you have to rearrange things. It takes the most energy just to get it started. It’s like the story of trying to get an airplane from Paris to New York. Most of the energy is spent just getting the thing up into the jet stream. It’s similar with habits. Take breaking sugar as an example – that required perfect consistency for me because any time I brought sugar back in the addiction would kick back in; whereas, my exercise routine is every other day and that habit worked perfectly for me. So my own experience is that it really depends on the habit. Scott: I think you’re right. These are just guidelines. The guidelines that I talk about in my book and on my website are there to help you if you’re trying to implement habits and it’s not going your way. You can use them to tweak your approach and make it easier for you to form the habit, so they’re worth considering. If you can form a habit doing it intermittently, like one day on, one day off, I’ve definitely done that before, as you have. If you can’t, then maybe try tweaking it – and the same thing with other elements of consistency and the ritual that you have before you start the habit. Todd: In your book you explain the stages a person will go through, so why don’t you share them with the listeners so that they know what to anticipate as they go through a 30 day trial – the sprint, the drag, smoothing, etc. Scott: The basic phases that I’ve found that you go through are that the beginning is really difficult but that’s also when you have the most motivation. It depends on the habit but I would say for the first five to ten days you are disciplined, you’re motivated, you have to focus. If you didn’t just decide to do your habit as a passing thing, but you at least had some commitment to it as you went into the 30 day trial, which I strongly recommend, then the first bit is usually when you’re very focused on it, it’s very deliberate, but at the same time you have a lot of motivation. Then I would say there is usually a period after that, after that burst, where it’s becoming more automatic, becoming more regular, but at the same time that’s also the period where you’re more likely to trip up. It’s not usually in the first five days, it’s usually in the last two weeks, because in that period of time the habit is becoming easier, you’ve kind of let your guard down a little bit, but at the same time you’re more likely to allow errors into your process. So you we’re exercising every single day and maybe on week three you were a bit busy and you don’t go to the gym or something comes up in your schedule and you trip on it. So I would say the real key to sustaining the habit is remembering that once you get past that first bit, when it starts to get easier and it gets focused, is when to keep your vigilance up for at least 30 days because there is often something that happens in that period which will cause you to slip up and if you recognize it in advance and prepare for it then you can avoid it. After the first month or 45 days or so then if you slip up the bulk of time you spent in advance preparing the habit means that it’s not that hard to slip back into it afterwards.

Todd: One thing that made your book stand out from some other works on habits was the 30 day trial. Some experts will say that the best way to approach a habit is that you want to start with something small, like let’s use flossing your teeth, as an example. You would start with flossing one tooth a day – something that’s easily achievable – and you would cue it off when you brush your teeth. When you’ve got one tooth done you can add another tooth, then three, then four – whereas, you’re coming at it with the whole habit right at the start with a 30 day trial. What do you say to that? Scott: I think it’s a bit of a false economy. What I also talk about in the book is the idea of triggers and rituals. You can often get a cascade effect, so the idea with flossing, and I’m thinking of BJ Fogg, I don’t know if that’s the person you’re thinking about, but he talks about it for a good reason – because if you floss just one tooth, you’ve already done most of the preparation that you need to do to floss the remaining teeth. It’s almost weird to just floss one tooth and I would say it’s similar if you’re going to the gym. If you bring your exercise shoes, you get changed and go to the gym and that’s all you need to do – you don’t have to work out – well, you’re at the gym, so you’re probably going to have some actual exercise there. So I try to focus on that trigger and ritual part where there’s a certain moment which, if you practice it very carefully and get that conditioned, will tend to cause a cascade effect with the other parts. I start with a full habit in a 30 day trial because I find it simpler but I’ve also found the practicing of a ritual to be effective for a lot of habits. I’ll give an example – when I was training myself to wake up earlier, which I do when I have projects that make that schedule work better for me, one technique that I used was practicing taking a very short nap, setting an alarm and getting out of bed immediately – don’t snooze or anything like that; get up immediately. Practicing this over a short period of time, maybe only a couple of days, you’re practicing that trigger, because often the hardest part of getting up and being awake is just turning off your snooze, getting up and being out of your bed. That is an example of focusing on a very small part of the habit that makes the rest of the habit a lot easier. I think that can also work in conjunction with the 30 day trial, so you can make your 30 day trial to wake up every day at 6am but you can also practice that ritual, that trigger that happens, that forces you to run the rest of the habit. If you are finding it difficult executing a full habit, let’s say exercising every day for a full hour at the gym is too difficult, then you can set a 30 day trial where the only focus is on that ritual, so the 30 day trial is just to go to the gym every single day. No restrictions about how long you have to be there so even if you go there and you only have time for a 10 minute workout, that will still promote the habit better than not doing that. Todd: You hit on a couple of different tools there that you mention in your book. One of them was triggers. So why don’t you elaborate on triggers first, just so people understand in more detail how a trigger works to cause a habit and then you can hit on breaking down the habit. Scott: Basically the idea of triggers and rituals is from the classical conditioning experiment by Pavlov where he had dogs and the dogs got food every day. Todd: We’d like to believe we’re more advanced than dogs, but anyway… Scott: Yes, but the learning mechanisms in classical conditioning are deep and are hardwired in the brains of virtually every animal, so it’s one of the deepest, most ancient and most powerful learning mechanisms that we have in our brains. It definitely applies to humans. We’re not suddenly a different beast; we have classical conditioning in a very deep way. The way it worked was that

Pavlov would ring a bell before giving these dogs their food and he repeated this time and time again and eventually he could ring the bell and the dogs would salivate even if the food didn’t com. So the dogs learned to associate the bell with the anticipation of food. This works in a chaining effect with people – you can start one behavior and then that behavior automatically leads itself to doing the next behavior. So flossing one tooth leads to flossing the next tooth and then the whole set of teeth. Doing a small behavior can trigger a bunch of other behaviors more easily. Todd: Like brushing teeth could trigger flossing. Scott: Right – if you do that regularly. If you regularly brush your teeth but don’t regularly floss your teeth then those aren’t conditioned together so it doesn’t help you, but it is a good principle. The way that this works with triggers and rituals is that it triggers something from your environment, something you don’t really have control over, that’s from outside of you, that would be a point where you can make a decision about which behavior to do. I’ll give an example of that – let’s say we’re using the gym example, because that’s a pretty ideal habit to study because it’s fairly simple. But if you wanted to go to the gym every day, one way we could look at it is – what is the trigger for you going to the gym? You could just go to the gym every day at different times, different parts of the day, just depending on when you can fit it in your schedule, but that isn’t classically conditioning you to any particular set of stimuli. You still have to remember to go to the gym every day and fit it into your schedule. It becomes easier to do that because you’re used to fitting it in your schedule but there’s no particular moment where you’re thinking ‘I have to go to the gym right now’ because there’s no instinct, no drive, because you haven’t classically conditioned it. So one way we can do that is to go to the gym at a very specific set of times – for example, if you go to work and you work in an office, then going to the gym right after the office and doing that every day means that when you’re finishing work for the day that trigger of finishing work becomes associated with this ritual of going to the gym. When you finish one, it automatically leads to the other. You can do that based on time of day. If you wake up early, always waking up at the same time is a lot easier than waking up at different times on different days because your body gets used to waking up at, let’s say, 6am every morning. So the trigger is you look for that little moment before the habit starts and you condition that moment to the habit you want to run – you link up leaving the office with going to the gym. That crossover point is very, very short. You just have to take your gym stuff and go to the gym. It’s not the majority of the habit because the majority of the habit is actually working out at the gym. But it’s that crucial period that happens as an environmental trigger and the behavior that you immediately follow it with. If you condition it, it can be quite effective. Todd: So what the people that are listening need to think about is the idea of proactively designing your life. What goals do you have? What habits do you want to have in your life that you don’t currently have or that you’d like to replace? And what are the triggers that can bring those in, that can cause those to become an automatic part of your day? Let’s go to the second one, which was replacement theory. Scott: Replacement theory is the idea that a lot of our habits, even if they’re not good, are habits that serve needs in our life. They give us things that justify their existence. If you smoke cigarettes, for example, maybe the reason you smoke cigarettes is to socialize with other people who are also smokers or maybe it’s to relax or so you don’t eat as much, on top of whatever physical cravings you have associated with it. The same thing with watching TV – maybe it’s a way for you to relax, maybe

it’s a way for you to escape whatever troubles you have. The problem is that we often try to replace these habits wholesale – like just not watching TV ever again or just not smoking every again. When you remove a habit, when you remove that component from your life, there are often needs that it was fulfilling that are no longer being fulfilled and that creates friction in our lives that makes the habit more and more difficult to sustain. I would say that the intelligent approach to designing habits is to look at the actual needs that it was fulfilling and see how you can replace those in other, more constructive ways. Maybe you found TV watching was your escape but reading books is another way you can do that. Maybe you found that eating a lot of food is a way that allows you to socialize with other people and you can switch to eating different, healthier foods or something like that. This can be a difficult process but it can also help you identify why there is friction with starting different habits. If it fills a certain need in your life and you haven’t found another way to fulfill that need then it will be more difficult to sustain the habit long term. Todd: I think a lot of people really miss out on the idea that you have habits because they serve you. The idea that you’re really bringing home here is to find out how it is serving you, what is that need that is being satisfied, and then figuring out how to satisfy it in a different way with a healthy habit, or in a wealthier way in the context of a wealthy habit. I really like that. I think a lot of people just try blunt force – they just hit straight on with new habits, not recognizing that the old habits served them and they’ve got to recognize in what way they were serving them or they’re going to have this hole, this void. Do you see that? Scott: I think so. I think, more importantly, you should look at the ways in which you can replace the habit or shift direction. That doesn’t mean that every need has to be perfectly replicated. Maybe there are certain needs that you get from smoking cigarettes that you just can’t get from not smoking cigarettes. There’s just something very specific that you get from that. But maybe you can shift your behavior to get a new habit that gives you things that you didn’t have in your old habits and that switch from one habit to another gives you a little bit of a balance. Maybe instead of smoking you’re running and you couldn’t run before, when you were smoking, because your lung capacity wasn’t high enough, and now running gives you a good, positive feeling in your day that you didn’t have when you were smoking cigarettes. So it’s something that you can’t always do perfectly but if you’re aware of what needs are getting taken away then you can try to replace them with other mechanisms in the interim to smooth the transition to a new set of habits. Todd: Another tool you brought into the discussion earlier, that I found really useful in my own work with habits, is breaking down. I’d love to have you elaborate on how that works. Scott: I think what you’re referring to is the process of taking a complicated habit, something that you want to achieve, and breaking it down into very specific components. I’ll use an example from the MIT Challenge because I needed to learn classes. I had these goals that I wanted to achieve, and I needed to figure out how to achieve that more directly. I knew that I had to put in a certain amount of study time so it was which habits would get me the most bang for my buck in terms of actually achieving that. One habit that I settled on was waking up early. I find that that’s a good habit to use if you need to be productive. If you can train it you can get a bit more productive time because I find, in general, the earlier hours of the day, at least for me, tend to be more productive than the later hours. So if you shift your schedule a little bit towards the earlier hours you can get more work done. Another one was not having any internet usage during the day. Sometimes I’ll check websites for

getting my work done, that’s fine, but I found that, because of the schedule I wanted to maintain, breaking that habit down to not using the internet until I had done all my work for the day immediately eliminated a huge source of distraction. That was just one, simple behavior. There are some others, the list goes on, but often you take a complicated behavior that you want to have and reduce it to very specific behaviors that you think are going to be the most useful. You can subdivide it even further – so if you’re looking at waking up early you can look at the specific mini-habits that enable that habit to work successfully. One of them might be not having so much caffeine in the afternoon which is making you not sleep so well at night and is making it harder to wake up. Another one might be not having a snooze button on your alarm clock but setting your alarm clock far enough away that you aren’t able to just turn it off and go back to bed. So there are a lot of ministrategies you can use to break down habits further if you’re finding a habit on its own is too difficult to tackle. Todd: That was the point I was trying to make. A lot of times habits are too difficult to grab in whole on the first pass, so when they’re broken down into their elemental parts it can be a lot more successful for people. Another piece you brought in was accountability. I call it accountability, you call it leverage – do you want to explain how that works? Scott: The idea of accountability or leverage is that you can apply a small amount of force to get a greater amount of action. You are applying a movement over a smaller area to get a force over a larger one. In some ways it can be a force multiplying and I think ways that you can get leverage are ways that you can change your behaviors so that you can automatically increase your willpower. One simple way of doing this is accountability. If you tell everybody ‘I’m going to be doing this new habit and if you catch me not doing it, I’ll give you $100,’ that is a good way to do it very consistently because now everybody is incentivized to be watching you and catching you not exercising the habit. I know there are websites now, I’m trying to remember the name of one, but there are websites where you can find a partner and bet a certain amount of money that you will complete a particular habit. If you fail they get your money and vice versa, so you find these partners to keep you accountable to what you want to do. So that’s one way, being accountable, and another way would be if you’re working on a particular habit to get some leverage just to focus on the habit. A lot of time people will take on multiple habits at the same time. They’ll do four or five 30 day trials for different habits, but then you’re dividing your focus over several different habits. You can achieve more lavage if you say ‘I’m only going to focus on this one habit for the next 30 days.’ That may seem slow for someone who’s very self-improvement oriented because they have to wait an entire month before they can tackle any other problem in their life, but I’ve found that the people who do one 30 day trial at a time achieve results far more rapidly than people who are doing multiple ones because their’s compound. Instead of doing five in such a way that they don’t really become habits you have habits that build on top of each other and after a year you’ve changed maybe a dozen major habits in your life. Todd: I’ve been playing with the reverse reward concept, which is what you’re alluding to with that website that you’re talking about, and it’s proven very effective in coaching. I had a client recently who was having tremendous trouble achieving a certain goal and we placed a reverse reward on it where she was going to donate $250 to a charity that she absolutely despised - a cause she was completely against - if she didn’t meet certain milestones in the goal that she set up for herself. All

of a sudden she got them all – she hit all her milestones on schedule and overcame all the resistance of getting the habit started. I thought it was an incredibly effective tool. Scott: I completely agree. Financial incentives are a good way to do that. Another way would be to give one of your friends $100 or $200 and say ‘Look, this is your money. Give it back to me if I finish.’ Obviously you have to have a friend you can trust not to spend the money but that means it’s already out of your hand. You don’t have it anymore and you have to now earn it back. Because sometimes people make commitments that are not really commitments because they have escape catches in them. They’ll say ‘I’m going to do this. Hold me accountable,’ except for whatever criteria comes up in their life that allows them to escape this problem. When you set it up so that you’re going to lose regardless of whatever excuse you have people will find a way to overcome it without having those excuses. Todd: It was interesting in this case because this client has plenty of money. The money was not the motivation. It was the idea of supporting a cause that she despised and ending up on the mailing list as a supporter that really scared her. She was hugely motivated at that point and just overcame all the resistance, it was fantastic. Let’s hit a couple more tools here quickly and then we’ll try to sum it all up. You had hacked the habit and now let’s hack the thought. Scott: There’s two ways that you can look at changing a particular habit – one way is to change the behaviors in your life, so if you want to become healthier you can work on going to the gym more or eat better – specific behaviors that you want to change. Another way of changing is the way you’re thinking about it, your mental habits about that process. Often I find that the best habits succeed on both of those fronts, so that you’re not just changing what behaviors you are doing but you’re also changing how you think about things. Someone I’d recommend who’s really good at that emotional re-hardwiring, so you get different feelings about different things, is Tony Robbins, he’s a good coach on that aspect of habit change. If you want to stop eating so much food then you have to convince yourself that that behavior is disgusting and what you’re eating is disgusting and it’s just not good. You can convince yourself of this, you can change your associations, the mental associations you make with cause and effects. That, on top of behavioral change, I think is the most effective approach. Those are two different ways of handling the same problem. Todd: I’ve had a lot of success with that, with hacking the thought. I used it in my life recently – one of the habits I’ve been working on is sugar. I had a sugar addiction and I recently saw a video, a one hour presentation by a professor from UCSF, on how sugar is poison – it’s called “Sugar – The Bitter Truth”. I’ll put it in the show notes for anyone who wants to find it, and it broke my sugar addiction, that one thing, because it shifted my consciousness around what sugar represented in my life and how it was completely incongruent with where I was going and how I want to live my life. So it was the shifting of that consciousness that finally allowed me to integrate that habit. Before then I had battled it and battled it, so it was a tremendously powerful tool, in my experience. Scott: An example that was in the news, that was somewhat comedic but otherwise the same, is that someone who wanted to lose weight was allowed to eat whatever they wanted, but they had to carry around a jar of fat and they had to take it out and pet it before they ate anything. It’s so disgusting that you immediately begin to associate this disgusting blob of fat that you’re carrying around with you with whatever you’re eating and that’s going to make you focus on ‘Maybe I shouldn’t be eating this.’ I’m not sure how effective that treatment was, it’s a bit more of a gag than

anything else, but that principle works. You can change your philosophy about something or the emotions you associate with things, and if you change that on top of whatever behaviors you’re changing, I think you’ll get the most impact. Todd: This segues to one final point before we summarize, which is that there’s a real difference between habits that are actions and habits that are thoughts. My experience is that they’re very different to work with – why don’t you go into that a bit? Scott: The problem with habits of thought is the old trick about the polar bears – the goal is ‘Don’t think about polar bears.’ It’s almost an impossible goal because as soon as you suggest the goal you can’t possibly achieve it because trying to not think about polar bears causes you to think about polar bears. So in some ways things like ‘Be positive’ or ‘Have more confidence’ and things like that are very stubborn to change because your attempt to force them in a direction backfires and they go back in the direction they came from. So there’s a couple of ways that you can reverse habits of thought but they don’t generally work in that direct method, at least not in my experience. One way you can change habits of thought, I’ve found, is to immerse yourself in other ways of thinking. This goes back to what we were talking about with the food being disgusting. If you want to make a change in your eating habits, let’s say you want to switch to a vegetarian or a paleo diet, a different eating lifestyle – one way to build that conviction of thought is to just read tons of books that confirm that idea and that excessive confirmation is going to enforce a belief in you that supersedes whatever you think about it in a purely rational sense. I would say that’s the same with many things. If you want to have more confidence or more courage then associating with people who think that way, reading books and things that force that kind of mentality, that inspire you to do things like that, changing your mental diet of what you’re consuming can also change your thoughts and steer them in a different direction. I’ve found that that also works on an analytical level, not just an emotional level. If I want to change how I’m thinking about something then, if I read a lot of people who are very smart on a particular topic, they give me a bunch of mental tools that allow me to navigate that area. So if I’m really interested in starting a business and I want to be more entrepreneurial, if I read lots of people who are entrepreneurs and what they’re saying about things, I copy the mental tools from them for thinking in that way and that naturally shifts my behaviors. I would say that’s one of the methods that’s been more successful for me, for changing habits of thought, although there are others that you can use as well, to work on habits of thought, but I’ve found the strict, direct method, a 30 day trial, to not have thoughts of low confidence is a bit harder to execute. Todd: I’ve had similar experience. I’ve had success with reprogramming my mind, as we talked about earlier, and another one, which you mention in the book, that I’ve had success with is putting behavior before thoughts and forcing yourself to prove the new thought. As an example, if you don’t consider yourself good at saving money then you force yourself to take certain behaviors that cause you to save money and you just repeat those over and over until, at some point, the thought changes and you realize you are capable. Scott: There’s a lot of evidence in psychology that the western notion that our brains control our actions, that it’s one directional, you think a thought and then do it, is not really true. What we do actually influences our thoughts, so it’s a two way street. An example of this is if you smile, the act of smiling makes you happier, even if you just tell someone to smile. That works on so many levels that

if you focused on behaviors, like you want to have more confidence or boldness or fearlessness, then do rejection therapy – you just go up and do things and get rejected. Even if they’re small, those behaviors, you have changed your self-image of how you see yourself and the mental dialogue you have and I think that, again, like we were talking about earlier, if you pursue the habit on both a mental and behavioral level, then they really work to synergize to make the habit much more effectively than if you were just trying to do it using one method alone. Todd: Excellent. We’ve given people a lot of different tools here, a lot of different ideas on how to change habits and work with their habits. Can you give a quick overview to sum things up about how all of this plays out in your mind, about how all of this works in practice? Scott: What I’ve found, for actually implementing habits, is that the best way to do it is to pick a habit that you want to start with and do the 30 day trial for it. I think, as you said, you can work on a more complicated process of breaking down your goals and working on them, but chances are, if you’re listening to this, there’s one habit that you want to change or work on, so make that your only priority for a one month period of time. That particular habit, you’re going to do it consistently every day for 30 days and once you get into the habit of making habits, once you get used to this process, it often runs away from you and you can make many habits and the process of behavioral change becomes part of your life. You’re not just doing the same thing every day, you’re actively changing your habits month to month. If you’re interested in learning how to change habits I would recommend the website of a good friend of mine, we explored some ideas together, and that’s Leo Babauta at Zen Habits, has really good articles on habit changing, and Tony Robbins if you’re interested more in the mental as opposed to behavioral side of things. BJ Fogg, he also has some great material, and of course the book I wrote, “How to Change a Habit”, has some great ideas for how you can implement this process if you’re having some hiccups. Todd: And for people who want to learn more about you, how can they find you? Scott: You can find my website at http://scotthyoung.com . I have tons of free articles on habits and many other topics that I write about. Todd: This has been great, Scott. You shared a lot of great ideas. I really appreciate you coming on the call. Scott: It was great to be here. And if this podcast delivered value to you then a great way to give back is to share it with a friend. Another thing you can do is head on over to Itunes and subscribe and leave a review at https://itunes.apple.com/us/podcast/the-financial-mentor-podcast/id716934852 Thanks for your support! Announcer: Thank you for listening to the Financial Mentor podcast. Get more resources to grow your wealth at http://financialmentor.com.