The Power of Compounding: How Small Decisions Can Add Up to Big Outcomes

Have you ever stopped to think about the small decisions you make on a daily basis? They may seem insignificant at first, but the truth is that
they can have a profound impact on your life over time. This phenomenon is known as compounding, and it’s a powerful force that can work in both positive and negative ways.

In this post, we’ll explore how compounding can affect our lives for good or bad, and provide practical tips on how to harness its power to achieve our goals and improve our well-being.

The Good: Compounding Our Success

When we make decisions that are beneficial to us, the results can compound over time in a powerful way. Here are a few examples:

Savings: Let’s say you start saving $100 per month at an average annual return of 7%. After one year, you’ll have $1,200. But here’s the thing: that $1,200 earns interest itself, so after two years, your savings will be $1,374. By the time you reach five years, you’ll have over $2,500 in savings, even though you’ve only contributed $5,000 ($100/month x 50 months). This is compounding at work!

Investments: Investing a small amount of money each month can lead to significant wealth creation over time. Even if you start with just $10 per week and earn an average annual return of 8%, your investment will grow exponentially.

Career Advancement: Making smart career choices, such as taking on new challenges or developing valuable skills, can lead to greater job security and higher earning potential. As you progress in your career, the opportunities for advancement and increased compensation compound over time.

The Bad: Compounding Our Problems

Unfortunately, compounding can also work against us when we make decisions that are detrimental to our well-being. Here are a few examples:

Debt: Let’s say you take out a small loan of $1,000 at an interest rate of 18%. If you only pay the minimum payment each month, it may seem like you’re making progress on paying off your debt. However, the interest charges will continue to accrue, and before long, you’ll owe much more than you initially borrowed.

Bad Habits: Engaging in unhealthy habits, such as smoking or overeating, can lead to serious health problems over time. The damage caused by these habits can compound quickly, making it harder to reverse course later on.

Negative Relationships: Surrounding yourself with people who are toxic or unsupportive can have a corrosive effect on your mental and emotional well-being. As you continue to interact with these individuals, the negative emotions and experiences can build up over time.

Why Does Compounding Work So Well?

So, why does compounding seem to work so powerfully in both positive and negative ways? There are several reasons:

Time: The passage of time allows even small effects to add up quickly. As we’ve seen with savings and investments, the interest earned on our money can grow exponentially over time.

Momentum: Compounding creates momentum, which is difficult to stop once it gets started. As we experience success or failure in one area of life, it can have a ripple effect on other areas as well.

Habits: Repeating behaviors, whether good or bad, creates habits that are hard to break. This means that our small decisions today can lead to big outcomes tomorrow.

How Can We Harness the Power of Compounding?

So, how can we take advantage of compounding in a positive way and avoid its negative effects?

Start Small: Don’t try to tackle everything at once. Start with small, achievable goals, such as saving $100 per month or investing a little bit each week.

Make Smart Choices: Educate yourself about the potential consequences of your decisions, whether they’re related to finances, relationships, or career development.

Be Consistent: Consistency is key when it comes to compounding. Make regular contributions to your savings or investments, and stick to healthy
habits like exercise and a balanced diet.

Seek Support: Surround yourself with people who support and encourage you, whether they’re friends, family members, or mentors.

Conclusion

Compounding is a powerful force that can work in both positive and negative ways. By understanding how it affects our lives and taking steps to harness its power, we can achieve great things and avoid the pitfalls of poor decision-making. Whether you’re looking to grow your savings, advance your career, or simply improve your overall well-being, remember that small decisions today can lead to big outcomes tomorrow.

So, take control of your life and start making smart choices today. The power of compounding is waiting for you!

 

* AI tools were used as a research assistant for this content. Based on personal insights and commentary.

How Running a BBS Shaped My Path in Information Security

Today, I want to share with you how my early experiences with Magick Mountain BBS laid the foundation for my career in information security and my role at MicroSolved.

80sIBM

It all started in the late 80s when my fascination with telecommunications and the allure of digital communication systems led me to discover the world of Bulletin Board Systems (BBS). By 1989, I had launched Magick Mountain BBS, a platform that began as a simple operation on an IBM PC clone and evolved into a sophisticated network on an Amiga 500, serving a bustling community interested in everything from programming to hacking.

Running Magick Mountain was like stepping into a new world where information was at our fingertips, albeit not as seamlessly as it is today with the internet. This was a world where modems connected curious minds, and every conversation could spark an idea. The BBS hosted discussions on a myriad of topics, from technology to social issues, and became a central hub for like-minded individuals to connect and share knowledge.

The technical challenges were significant. Setting up and maintaining the BBS required a deep understanding of hardware and software. I juggled DOS systems, dealt with dual floppy setups, and later navigated the complexities of Amiga OS. Each upgrade taught me resilience and the importance of staying current with technological advances, skills that are crucial in the ever-evolving field of cybersecurity.

But what truly shaped my career was the community management aspect. Magick Mountain was more than just a platform; it was a community. Managing this community taught me the delicate balance of fostering open communication while ensuring a safe environment—paralleling the core challenges of modern cybersecurity.

These early experiences honed my skills in handling sensitive information and spotting vulnerabilities, paving the way for my transition into the corporate world. They ingrained in me a hacker’s mindset of curiosity and pragmatism, which later became instrumental in founding MicroSolved in 1992. Here, I applied the lessons learned from BBS days to real-world information security challenges, helping businesses protect themselves against cyber threats.

Reflecting on the evolution from BBS to today’s digital ecosystems, the principles of community building, knowledge exchange, and security management remain as relevant as ever. These principles guide our work at MicroSolved, as we navigate the complexities of protecting enterprise systems in an interconnected world.

To those aspiring to make a mark in cybersecurity, my advice is to nurture your curiosity. Dive deep into technology, join communities, share your knowledge, and keep pushing the boundaries. The digital world is vast, and much like the BBS days, there’s always something new on the horizon.

Thank you for reading. I hope my journey from running a BBS to leading a cybersecurity firm inspires you to pursue your passions and explore the endless possibilities in the digital realm.

 

*AI was used in the creation of this content. It created the final draft based on a series of interviews and Q&A sessions with an AI engine. All content is true and based on my words and ideas in those interviews and Q&A sessions.

How to Use Mental Models to Save Cognitive Energy and Attention in Day-to-Day Life

In the hustle and bustle of modern existence, our minds are constantly inundated with a deluge of data. From sunrise to sunset, we’re faced with a barrage of choices, both monumental and minuscule, that sap our mental stamina. But fear not, for there is a solution: mental models. These nifty cognitive tools help streamline our thought processes, enabling us to tackle life’s daily obstacles with greater ease and efficiency. By harnessing the might of mental models, we can conserve our precious brainpower for the things that truly matter.

MentalModels

Unveiling the Enigma: What Exactly Are Mental Models?

Picture mental models as the scaffolding that supports our understanding and interpretation of the world around us. They take complex concepts and boil them down into a structured approach for tackling problems and making decisions. In essence, they’re like cognitive shortcuts that lighten the mental load required to process information. Mental models span a wide range of fields, from economics and psychology to physics and philosophy. When wielded effectively, they can dramatically enhance our decision-making and problem-solving prowess[1][2].

 Unleashing the Potential: Mental Models in Action

 1. The Pareto Principle: Doing More with Less

The Pareto Principle, also known as the 80/20 rule, suggests that 80% of results stem from a mere 20% of efforts. This principle can be a real game-changer when it comes to prioritizing tasks and zeroing in on what truly matters.

Real-World Application: Picture yourself as a project manager with a daunting to-do list of 20 tasks. Rather than trying to juggle everything at once, zero in on the top four tasks that will have the most profound impact on the project’s success. By focusing your energy on these critical tasks, you can achieve more substantial results with less effort[1].

 2. Inversion: Flipping the Script

Inversion involves approaching problems from the opposite angle to pinpoint potential pitfalls and solutions. By considering what you want to avoid, you can unearth strategies to achieve your goals more effectively.

Real-World Application: Let’s say you’re orchestrating a major event. Instead of solely focusing on what needs to go right, ponder what could go wrong. By identifying potential snags, such as equipment malfunctions or scheduling snafus, you can take proactive steps to mitigate these risks and ensure a smoother event[1].

 3. First Principles Thinking: Breaking It Down

First principles thinking, a favorite of Elon Musk, involves deconstructing complex problems into their most basic elements. By grasping the core components, you can devise innovative solutions that aren’t shackled by conventional thinking.

Real-World Application: Imagine you’re trying to optimize your daily commute. Instead of accepting the usual traffic and route options, break down the problem: What’s the fundamental goal? To reduce travel time and stress. From there, you might explore alternative transportation methods, such as biking or carpooling, or even rearranging your work schedule to avoid peak traffic times[1].

 4. The Eisenhower Matrix: Mastering Time Management

The Eisenhower Matrix is a time management tool that categorizes tasks based on their urgency and importance. By sorting tasks into four quadrants—urgent and important, important but not urgent, urgent but not important, and neither urgent nor important—you can prioritize more effectively.

Real-World Application: Your email inbox is overflowing, and you’re drowning in messages. Use the Eisenhower Matrix to sort through your emails. Tackle urgent and important emails first, such as those from your boss or key clients. Important but not urgent emails can be scheduled for later, while urgent but not important ones (like promotional offers) can be quickly handled or delegated. Lastly, delete or archive those that are neither urgent nor important[1].

 5. Confirmation Bias: Challenging Your Assumptions

Awareness of confirmation bias—the tendency to favor information that confirms our preexisting beliefs—can help us make more objective decisions. By actively seeking out diverse perspectives and challenging our assumptions, we can avoid narrow-minded thinking.

Real-World Application: You’re researching a new investment opportunity and already have a positive opinion about it. To counter confirmation bias, deliberately seek out critical reviews and analyses. By evaluating both positive and negative viewpoints, you can make a more informed decision and reduce the risk of overlooking potential downsides[1].

 Putting Mental Models into Practice: Tips and Tricks

 1. Create a Mental Models Toolbox

Assemble a personal collection of mental models that resonate with you. This could be a digital document, a notebook, or even a series of flashcards. Regularly review and update your toolbox to keep these models fresh in your mind[1].

 2. Start Small and Build Momentum

Begin by applying mental models to everyday decisions. For instance, use the Pareto Principle to prioritize your daily tasks or the Eisenhower Matrix to manage your time. With practice, these models will become second nature[1].

 3. Reflect, Refine, Repeat

After applying a mental model, take a moment to reflect on its effectiveness. Did it help simplify the decision-making process? What could you improve next time? Iterative reflection will help you fine-tune your use of mental models and amplify their impact[1].

 4. Learn from the Best

Study how successful individuals and organizations use mental models. Books like “Poor Charlie’s Almanack” by Charlie Munger and “Thinking, Fast and Slow” by Daniel Kahneman offer valuable insights into the practical application of mental models[1][2].

 5. Never Stop Exploring

Keep exploring new mental models and expanding your cognitive toolkit. The more models you have at your disposal, the better equipped you’ll be to handle a wide range of situations[1][2].

 The Bottom Line

Mental models are indispensable allies in our quest to conserve brainpower and navigate the complexities of daily life. By integrating these cognitive tools into our routines, we can make more informed decisions, solve problems more efficiently, and ultimately free up mental space for what truly matters. Whether you’re prioritizing tasks, managing time, or challenging your assumptions, mental models can help you streamline your thinking and unleash your full potential[1][2]. So, start building your mental models toolbox today and watch as your cognitive load lightens and your decision-making sharpens.

Remember, the goal isn’t to eliminate all cognitive effort but to use it more strategically. By leveraging mental models, you can focus your brainpower where it counts, leading to a more productive, balanced, and fulfilling life[1][2].

Citations:
[1] https://fronterabrands.com/mental-model-examples-and-their-explanations/
[2] https://nesslabs.com/mental-models
[3] https://commoncog.com/putting-mental-models-to-practice-part-5-skill-extraction/
[4] https://durmonski.com/self-improvement/how-to-use-mental-models/
[5] https://jamesclear.com/mental-models
[6] https://blog.hubspot.com/marketing/mental-models
[7] https://fs.blog/mental-models/
[8] https://jamesclear.com/feynman-mental-models
[9] http://cogsci.uwaterloo.ca/Articles/Thagard.brains-models.2010.pdf
[10] https://betterhumans.pub/4-lesser-known-mental-models-that-save-me-30-hours-every-week-efc60f88ec7a?gi=e3c8dbd3d48c
[11] https://www.julian.com/blog/mental-model-examples
[12] https://www.youtube.com/watch?v=hkL7S9cQLQM
[13] https://www.coleschafer.com/blog/ernest-hemingway-writing-style
[14] https://www.okayokapi.com/blog-post/why-your-writing-style-isnt-wrong-or-bad
[15] https://www.turnerstories.com/blog/2019/3/10/how-to-find-your-writing-style
[16] https://carnivas.com/writing-style-culture-7740ad03d7a6?gi=e15f15841156
[17] https://www.reddit.com/r/coolguides/comments/1bgdmp9/a_cool_guide_cheatsheet_to_mental_models_with/
[18] https://writersblockpartyblog.com/2018/04/05/finding-your-writing-style/
[19] https://www.slideshare.net/slideshow/reflection-sample-essay-reflection-essay-samples-template-business/266204999
[20] https://www.slideshare.net/slideshow/example-of-critique-paper-introduction-how-to-write/265714891

 

* AI tools were used as a research assistant for this content.

Don’t Underestimate the Value of Progress

I love self experimentation. I like trying to find ways to grow my skills, learn new things and optimize my life. I find learning new things not just rewarding, but enriching-that is learning seems to make my life significantly richer and brighter with each new skill and insight. That said, I am a recovering type A personality, and like most type A personalities I’ve lived a life heavily focused on goal setting and goal achievement.

I suppose goal setting has always been a big part of my life. I was, after all, a high stress and high anxiety child. I can remember doing extensive goal setting exercises in middle and high school, and of course, I remember the stress of pushing myself to get decent grades and to stay focused on the learning at hand. As I transitioned into an adult, and an entrepreneur, goal setting became a huge part of my life. I came of age in the days of Stephen Covey, when carrying a paper planner and doing daily goal setting was a part of the corporate mantra. Later, I joined Amway, where goal setting and so-called “dream building” were a part of the business culture. I’ll save my Amway stories for another day, but suffice it to say, I was fully indoctrinated in goal setting by the time I opened the beginning of a string of businesses.

Fast forward 30 years and you get to today. Now, I’m a serial entrepreneur, a part-time ex-pat and a recovering type A personality, with the emphasis on recovering. I still do goal setting regularly and I have a variety of daily practices which I follow closely. But, unlike the days of my entrepreneurial youth, I tend not to focus on the end goal as a destination, but as a general direction in which to focus my efforts. This probably seems like a subtle change to many of you, but to me it is life-changing. You see, I’ve learned to stop tying my self-worth to achievement of a very large goal at the end of a usually complex and difficult struggle. Instead, I now endeavor, and judge myself, against the yardstick of improvement. Generally speaking, I ask myself “Did I make 1% improvement toward my goals today?”.

I originally learned about the 1% better approach from James Altucher . He mentions it in many of his books and it is a frequent topic on his podcast. Basically, he asks himself a set of questions every day, such as “Did I make myself 1% better today?” And he does that across a set of categories which he has defined. I adapted this technique, unaware of its historic tradition, to my life several years ago and have seen great benefit from it over the long run.

It turns out, that the 1% approach to improvement has a pretty significant historic tradition. That tradition, called Kaizen, dates back quite further than James. I’ve included a link, for those of you interested in learning about the history of this approach. No matter how it came into my life, or the history behind it, I am just thrilled with the difference it has made.

So, why am I telling you all this? It’s because I want to share with you a very simple but powerful insight that I gained from this approach. That insight, is to value progress. For so many years, I only could see the value of reaching the end goal, and I realize now, that I was blind to the joys of the progress along the way. Be better than I was, and learn from my mistakes. Learn to appreciate each step of the journey. Learn to appreciate progress.

Let me give you a couple of examples of how powerful this concept has turned out to be in my life recently. One of the goals I’ve been pursuing this year is to raise my number of Kiva loans to 100. Today, my number of loans sits at 73. I still have a ways to go before the end of the year to hit my goal, but I have a plan to make that happen. Now, I could be down on myself because it is the middle of November and I’m still quite a few loans away from hitting my goal. However, in the last 30 days, thanks to help from some of my friends who donated gift cards to my Kiva account, I’ve made several loans and thus helped several families around the world. Every day that I make a loan, I improve the lives of distant entrepreneurs and their families, as well as those in their community in many cases. Thus, even without hitting my goal of 100 loans at this moment, I have managed to help people and improve people’s lives with the progress I’ve made. I’ve gotten notes and updates from a few of them, describing their progress and thanking me for my help. I celebrate those notes and my being fortunate enough to help others. I’m not stressed about hitting my goal, because I am grateful for the progress that I’ve made thus far and the help I’ve been able to give to those who need it.

Another example of appreciating progress came in the last few months in the area of exercise. At the beginning of the year, I set a goal for 2018 to restore my mobility and flexibility to prevent injuries. I had a concrete, measurable achievement that I used as a test of whether or not I had hit this goal. For personal reasons, I’ll leave that test out of this discussion. But, suffice it to say, that I have a metric that I’m trying to hit. To accomplish that metric, I also defined a set of activities and a frequency that I would perform those actions as a sub goal toward achieving my overall goal of passing the test. Now, here we are in the middle of November and I am very close to hitting my goal in passing the test. In fact, barring a physical illness or injury, I should be able to pass the test in early December. But, here’s the amazing thing, as I have been working on the larger goal in accomplishing the subgoal on a week to week basis, the improvement has been amazing. Each week, I get more and more mobility and that leads to significantly improved comfort, balance, patience and an overall sense of just feeling “better”. I’ve also gained additional physical capabilities along the way. This has translated into increased comfort and mastery while practicing various physical activities that I enjoy. Once again, even though I haven’t hit my overall goal yet, the journey has been rewarded at its own pace along the way. Nearly every day, I take a little time and appreciate that progress. I remind myself in gratitude of those changes in the progress that they represent. Just that simple reframing and recognition of each step and its return has made a huge difference in my happiness and contentment.

I know. I know. By now, a lot of my type A personality friends have either stopped reading, or saying to themselves that this seems like such a small and trite thing that it couldn’t possibly be useful. “I’d rather stay focused on the larger goal.”, they are probably saying to themselves. That’s okay. I don’t feel that I lost track of my larger goals. I don’t feel lost, wayward or listless. I also don’t feel as much anxiety and trepidation as I used to. In fact, I feel like I get more done now than I used to. I feel like I hit my goals more readily and with more satisfaction than ever before in my adult life. What works for me, might not work for you. I’m certainly not writing this to tell you that my way is the right way. Instead, if you are one of my type A personality friends, I just want you to be aware that there are other ways to think about the problem. That’s it, that’s the sole agenda I have.

Maybe someday, I’ll dig a little deeper into my time at Amway or I’ll tell a few more stories about all of the lessons I learned there. But for now, I hope this writing helped you and I look forward to hearing from many of you that have questions or that want to share their own stories about valuing progress. You know how to find me, I am @LBHUSTON on most of the socials. As always, thanks for reading and I look forward to hearing from you.

Sometimes The Best Answer is Better Questions…

Let’s face it – we live in a world of answers. Nearly all of us has a little box in our pocket that we can ask anything and get back some form of answer. Maybe it’s blogger content, scientific study results, news feeds, or a meme about our interest along with cats or tacos – but the ability to get answers is almost ubiquitous. You can ask about anything, as well; from the mating habits of Sudanese moths to the ingredients in a Pina Colada and everything in between.
Even when we aren’t explicitly seeking answers, data is still everywhere. There’s the web, of course, and printed materials. There’s video and audio on billions of subjects that would take thousands of lifetimes to consume. Then there is social media – a never ending barrage of stream of consciousness from around the globe, expressed in short bursts or pictures (often with tacos). All of that data and all of that access to communication is driving down the value of answers each and every day. Why learn and memorize when you can find it in a few seconds?
What’s amazing about that, is that the value of questions is actually rising, even as answers become trivial. Looking at a problem, and being able to derive the questions you need to search for to find the most appropriate answer is a modern day super power. Identifying the right series of questions that allow someone to link answers together and walk down a path of data to enlightenment is a mystifying, awe inspiring super power in these days of the information age.
However, not all questions are created equal, are they? Not all paths lead to compounding knowledge and insight. Many only lead in circles or back to pictures of cats, or tacos, or cats with tacos…
How can you get better at creating the right questions and knowing what questions to ask and in what order to ask them? The answer is, of course, repetition. Practice makes perfect, as the old saying goes. You have to do the work of generating questions (almost like mental pushups) on a daily basis, so that when you need them for real, you have the skill to build the right path to insight. To make that happen, you have to flex those question muscles and work through them against a variety of topics every day. Like pushups, if everyday, you generate a set of 10-20 questions and follow them down a research path, you’ll find that you get better and better at the process, until one day, like pushups again – you can flex without pain, confusion or hesitation.
Give it a shot. Pick a random subject every day and try and ask 10-20 questions that you think are interesting about that subject via Google or your favorite search engine. It’s OK to follow the rabbit holes, and keep pushing forward. You’ll be surprised what you learn, and even more surprised at how much easier generating good questions becomes.
Want better answers? Learn to ask better questions. It leads to a better life.