It’s a mixture of a wide range of factors, many of which are arguably outside of our control like genetics, luck, and in some cases the environment.
But there are some things that fall within our circle of influence – one of which is how we choose to react to our situation.
Our reaction to the cold, hard facts of our circumstances happens in 4 distinct stages, which are summarized by what I call the “B.E.A.R. Cycle”:
Before we get into the 4 stages, just a quick note on what I mean about the “facts of our circumstances”. These facts could literally be proven in the court of law. And the important thing about them is that they are neutral until we give them a meaning. Some examples of facts one might have are:
- I have $50.43 in my bank account.
- I have 2 kids and my wife divorced me.
- I weigh 247 pounds.
In contrast, the following are things some people might consider as fact, but really they’re not:
- I don’t have the discipline to manage my money
- I’m not attractive to anyone
- I don’t have the time to work out
These are subjective… the beliefs and opinions we have about the true facts of the circumstances.
Here’s how the B.E.A.R. Cycle flows:
Our beliefs elicit a certain set of emotions that influence the actions we take. The result of our actions then loop back around to reinforce our original beliefs.
The diagram below represents this cycle.
Let’s go over a quick example of how I used this tool on my financial circumstances a few years ago.
I was personally over $160,000 in debt and the minimum payments going towards my student loans, car loan, and mortgage were making a shamefully small amount of impact to the principal balances. To make things worse, I was unaware of all the benefits of early investment so instead of putting my salary to work, all I could seem to manage to do was buy more toys and gadgets to reward myself for working so hard for my money.
Ok, let’s distill that down to the facts.
- Over $160,000 of debt to car, motorcycle, student, and mortgage loans.
- Salary of $x per month.
- $0 going towards investments.
- $x of expenses per month.
- I wanted to be debt free.
Notice that the facts don’t include any of “feeling” words and phrases like “shamefully” and “to make things worse.”
Here’s how I used the B.E.A.R. Cycle to improve my situation.
- B stands for the Beliefs that I chose to think about in regards to my situation.
- There are people that have had way more debt than me and they’ve been able to turn it around. And I’ve got a pretty good head on my shoulders so I can figure it out too.
- I can learn about the basics of smart money management from teachers. They have books, seminars, and all sorts of programs I can invest in.
- I make enough money to turn this around quickly if I really focus on it.
- E stands for the Emotions those beliefs elicited.
- I felt optimistic and excited that what I wanted was not only possible but inevitable if I started taking the right steps.
- A stands for the Actions influenced by those emotions.
- I read the best books on money. My favorite ones include: I Will Teach You To Be Rich, The Millionaire Next Door, Smart Couples Finish Rich, and Rich Dad Poor Dad.
- I used what I learned in those books to understand where all my money was going. After figuring out how to live on a budget I set, I began throwing all of the excess cash at my debts.
- I also read about minimalist lifestyles and began to cut my spending. My then girlfriend, now wife also helped me sell thousands of dollars worth of stuff that I no longer needed (and “didn’t need in the first place”, she used to say haha).
- R stands for the Results those actions produced.
- $0 student loan debt (both of ours).
- $0 car debt.
- $0 motorcycle debt.
- $0 credit card debt (again, goes for both of us).
- $67,000 mortgage debt that’s quickly declining (decreased by $40,000 in just the last 6 months).
- $xx,xxx savings that can cover 12 months of expenses, $7,000 vacation fun money, and fund a 3-month sabbatical my wife and I are planning to take within the next 6-12 months to Asia.
- Yearly maxed out Roth IRAs, my 401(k), and her 403(b).
- Still have money left over each month to put towards the mortgage or other investment options — all without tapping into our savings.
Those results then looped back around and around to reinforce my original beliefs — that I could learn about how to manage money and be disciplined enough to dig myself out of my debt hole.
The sequence of my beliefs, emotions, and actions led to a happy ending but you should know that the B.E.A.R. Cycle doesn’t always end up with favorable results. If I would have had the beliefs of someone who is victim of their circumstances, I would have had unhelpful emotions that would have led to inaction or worse yet — a snowball that could have ruined me financially.
Before I move on, I want to thank my wife who has been equally committed to our goals. She was on board from the start and we’re both very proud of what we’ve been able to accomplish together—all without sacrificing the things that matter most to us.
When we follow the B.E.A.R. cycle and choose beliefs that are helpful instead of ones that limit our potential, then the best results become possible.
Instead of allowing this 4-stage process to run on autopilot, analyze whether or not your beliefs are serving you. Choose the beliefs that lead to the emotions, actions, and the results you’re after.
One last note:
At some point, we all have a tough time finding a productive belief to assign to the facts of our circumstance.
For example, what if you’re driving down the road and someone hits you and you end up breaking your leg. In those situations, try using an interrupter.
Examples: What does this opportunity make possible? Why is this a good time for a challenge like this? What strengths do I have right now that can help in this? How can I have fun doing this? What can I learn from this?
Well, that’s all for now.
The next time you find yourself in a particularly tough circumstance, remember the B.E.A.R. Cycle. Used properly, this is what can set the people who thrive apart from the rest.
Thanks for reading,
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