What To Do Instead of New Year's Resolutions

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Welcome to another issue of Passionate Income.

Today we’ll be discussing what I believe is one of the absolute best books on the topic of mindset. In particular, the mindset required to succeed in business.

Let’s dive in.

To start the New Year, I wanted to share one of my favorite quotes of all time:

I thought this would be an apt quote to start off January given this is when people set New Year’s Resolutions.

According to surveys, only 8% of people who set New Years Resolutions maintain them throughout the end of December. In fact, 80% give up by February.

I mention this not to be negative, but to shine a light on how few people actually succeed with this strategy. So what should you do instead?

Odds are you’ve heard of Compound Interest.

While it’s normally discussed in the context of investment returns, what people don’t realize is that compound interest applies to your health, relationships, business and most everything else.

Here’s why.

In his book The Slight Edge, author Jeff Olson discusses how our current situation in life is the result of the decisions we’ve made in the past.

More important, he discusses how those decisions ‘compound’ to create a growth trajectory for different areas of our lives (similar to the orange and blue lines in the graphic above).

On the positive side, any number larger than 1 compounded 365 times (once for each day in the year) will result in a number that’s larger than 1.

As an example, 1.001 compounded 365 times = 1.44.

On the negative side, any number that’s smaller than 1 and compounded 365 times will result in a number less than 1.

Example: 0.999 compounded 365 times = 0.69.

So let me ask you?

• Would you like to be 44% more muscular by Christmas of 2024?

• Reduce your body fat by 44%?

• Increase your net worth by 44?

Well, if you can eat just 0.1% healthier every day… Or do 0.1% more exercise… Or sock away just 0.1% more cash…

You too can make the above your reality. How?

According to The Slight Edge, it’s not through brute force, 90-day sprints or “monk mode” that people achieve their goals.

Instead, they achieve them by doing the small things day in and day out (which sets the wheels of compound interest into motion).

As an example, eating a Snickers or donut is not going to have any tangible, visible impact on your weight or health today. But that’s because the negative effects are so tiny they’re almost invisible.

And that invisibility is why bad habits are so destructive.

It’s not that hitting the vape, procrastinating on cold emails, or skipping the gym is going to destroy your life today. Because if we’re being honest, it’s not.

Instead, the real problem is how these behaviors compound to produce negative results over time. Let’s use a financial example to demonstrate.

Imagine you invest $100,000, but lose just 0.01% per day. Not 1%. Not 0.1%. A measly 0.01% negative APR.

Doesn’t sound that bad right?

Turns out, even that microscopic little loss can destroy your investment portfolio. In fact, after 10 years of negative compounding, your $100,000 investment would dwindle to just $69,418.

In short, that 0.01% negative APR compounds into a 30.5% loss over a decade!

Now let’s flip those numbers to show you the positive.

If you invest $100k at 0.01% positive APR per day, and continue doing so for 10 years, you’ll end up with a stunning $3,840,000!

That’s a full 3,840% increase.

What’s interesting is how much more upside there is relative to the downside.

While 0.01% negative compound interest results in a 31% decrease over 10 years, 0.01% positive compound interest results in a stunning 3,840% gain over the same time frame.

Admittedly, this type of content doesn’t perform well on social media.

Mainly because the big-time benefits (wealth gains, weight loss, etc.) come months and even years after you start. But in our instant gratification, hustle culture society, people want results now.

Sadly, the “results now” mentality is precisely why so few people succeed in achieving their goals: Overnight results require overnight solutions.

But as you likely know, most overnight solutions can’t be sustained for weeks and months (let alone years). And because of that, people give up on these behaviors well before they have a chance of reaping the long-term benefits.

Fortunately for most people, following The Slight Edge philosophy is likely easier than what they’re doing now.

Mainly because, with compound interest, any goal-oriented behavior that requires hectic, unsustainable levels of effort or discipline (e.g. bootcamps) is unnecessary.

Instead, for compound interest to work, all we need to do is make slow, steady progress week in and week out.

So if you’ve tried New Year’s Resolutions before, but arrived to December 31st no better off than when you started, I can encourage you to a) pick up a copy of the book, and b) take a more lightweight, sustainable approach to your goals.

Doing so can be counter-intuitive, as there’s no sprinting, frenetic chasing to make up for lost time, or dramatic life overhauls required.

Instead, all you have to do is eliminate your most destructive habits, add a couple healthy / productive ones, and let time take care of the rest.

As Albert Einstein once said:

Hard to argue with one of the brightest minds to ever walk this planet.

💡 Takeaway: While many people think of compound interest in the context of retirement investing, in reality, the quality of our decisions and behaviors compound over time to determine whether we grow, stagnate or fall behind.

Fortunately, even the slightest positive growth can compound to deliver massive results on a years and decades long time-horizon. The hard part is adjusting your behavior to have more positive days than negative ones.

I'll leave you with this quote…

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