Life is not perfect and in all honesty, it was never meant to be. We certainly control what we can control in hopes of influencing our destiny but sometimes we get hit by events that can have positive or negative effects. Whether these situations have long-lasting effects or not, depends entirely on us but more specifically on our behaviors and the way we proceed when handling them. However, I truly believe the most important thing we can do is to take the time to learn so that we can at least fail forward.

Making mistakes and failing in personal finance is the real deal. I’ve written about my mistakes and I’m also glad to see fellow bloggers doing the same. For some reason, there is a perception that members of the FI community are exceptional creatures and that our net worth is the result of flawless decision-making. This could not be farther from the truth. I wonder if we need to produce more content highlighting our failures, minimize posts on net worth updates (I don’t do it but respect others that do) or a combination of the two.

Please understand that personal finance is all about education, making informed decisions,  and taking calculated risks. The more you try, the more you expose yourself to making mistakes. If you think you’re not making mistakes then I wonder if you’re trying hard enough?. Don’t get me wrong my intent is not for you to fail but, if you do, to reflect on what your perception of and response to failure is. This is especially important when thinking about what it is you intend to achieve long-term.

Defining Failures

I recently finished reading Failing Forward: Turning Mistakes into Stepping Stones for Success and I have to say it was a phenomenal read!. I particularly liked John C. Maxwell’s approach by first stating what a failure IS NOT:

• Avoidable
• An event
• Objective
• The enemy
• Irreversible
• A stigma
• Final

If you let these bullets marinate for a few minutes, it is my hope you’ll start thinking about the way you view, perceive, handle and ultimately respond to a failure. After all, there are no mistakes only lessons. However, remember that just like in school, a lesson is repeated until it is learned. If you don’t learn the easy lessons how in the world would you expect to learn the harder ones. Finally, you’ll know if you’ve learned once your actions start to change.

If you are doing the same thing over and over again, and yet you expect a different outcome, then I must take a pause and remind you THAT is the exact the definition of insanity.

I also like the way John C. Maxwell connects the dots between errors, mistakes, and failures.

Errors become mistakes when we perceive them and respond to them incorrectly, mistakes become failures when we continually respond to them incorrectly. Failure is simply a price we pay to achieve success.

Demystifying Failures

Just like success is a process, I think the same could be said about failures. I know this post has a negative connotation to it and I bet is probably de-motivating you as we speak; however, that is not really the intent. This year has been a difficult one, especially at work. Even though I continue to be thankful for what I’ve been able to accomplish, I’m trying to turn these experiences around so that I can create positive outcomes. I guess you could say I’m just trying to fail forward. At the end of the day, failures are not about us. I may have failed AT A LOT of stuff this year but that doesn’t make me a failure.

If you’re wondering what those failures are, I think I could summarize them as follows:

• • Lack of self-awareness: I speak a lot about emotional intelligence but I think I’m gonna have to remind myself everything I preach. Sometimes I let my analytical and factual side dominate causing me to shut down and stop listening. To receive feedback in the words of “being too defensive or not listening” has been painful but a great reminder that one must watch out for behaviors that lead to messages conveyed not only by your words but also your body. I hate to say this but perception is reality, regardless of whether it is founded upon facts or not. Ugh!!

• • A desire to achieve perfection: this is an interesting one because who the hell knows what perfection even is?. When thinking about delivering solutions to specific problems, the process should be centered around KPIs (key performance indicators) tied to a definition of ready or perhaps a definition of done. Taking it one step further, your definition of done could be completely different than mine. My team has developed outstanding solutions yet we have failed to deliver because we lacked processes to bring these ideas across the finish line. This has led to burnout and frustration and even departure of talent that will be greatly missed.

• • Delivering great solutions no one uses: This one is tied to the previous one and is a direct result of not listening to what your customer is really asking you for. We have been looking too much inward instead of outward and, as a result, have completely missed on addressing the pain points. Even when working as a team, this one was on me because as a technical product owner it is my role to make sure the team is working on things that matter and to bring our customers along the way.

• • Lack of processes: Obviously without a process, scopes could creep, people could burn out and timing for delivery is nothing more than a joke. If you keep following the same steps that have given you the evidence to support a shift in direction, then change, otherwise, you’re a fool. Yep, I’ve been a fool but no need to beat myself to death over it.

• A toll on work-life balance: I don’t see my wife and kids as customers but to some extent they kind of are. They deserve my time and full attention and when I fail to deliver the outcome is completely unacceptable. My work does not define who I am and nor should it come home with me. I’ve tried being more present but I would be lying If I said I got it all under control.

Today, I feel I’m at a better place. Learning about how to make decisions, improve processes and better serve your customers has come handy. I’ve also engaged in crucial conversations with the wife as well as folks I’ve rubbed the wrong way. I’ve apologized for my actions and said the 3 magic words … “I was wrong”. The environment at work continues to be a challenging one but I feel I’m more prepared to navigate the scene while coming up with actions and strategies that are likely to lead to better results.

Welcoming Failures

You can blow up, cover up, back up and give up but that is just going to defer the pain. It all starts with responsibility and accountability. When was the last time you admitted a mistake and said: “I/we was/were wrong”? When I think about meetings and interactions I have at my job, I can’t remember someone saying those 3 words. Why are we so afraid to hold ourselves accountable? is it society that expects perfection when perfection is the enemy of done? or is it that we try to fool ourselves thinking that “yeah everybody knows, so no need to be explicit about the fact I/we were wrong”.

I’m a big believer in focusing on solutions instead of spinning my wheels on the problems; however, if you consider yourself an achiever then grow a pair, take responsibility, accept something did not happen as expected, vary your approach, set realistic expectations and take action. Above all, don’t make the mistake of taking things personally and letting that discourage you from doing what is right. Maxwell states it very well in his book “A life spent in making mistakes is not only more honorable but more useful than a life spent doing nothing”.

Think about Mistakes as an acronym:

M: messages that give us feedback about life
I: interruptions that should cause us to reflect and think
S: signposts that direct us to the right path
T: tests that push us toward greater maturity
A: awakenings that keep us in the game mentally
K: keys that we can use to unlock the next door of opportunity
E: explorations that let us journey where we’ve never been before
S: statements about our development and progress

Taking Risks

If the word “risk” terrifies you then I’m sorry to disappoint you but it is the only way to fail forward. Whether you realize it or not, you will always have to assume a certain amount of risk. I know risk can be scary but it should not be evaluated based on the fear it generates or the probability of success, instead, it should be based on the value of THAT you intend to create. The difference between someone who’s failed backward compared to someone who’s failed forward lies in knowing there’s merit in trying something great and failing than trying nothing great and succeeding.

Since I shared an acronym for the word mistakes, I guess I have to do the same for “risks”:

R: rethinking the status quo
I: inspiration to do things differently
S: socializing your strategy to avoid assumptions
K: knowledge and understanding that failure is still a possible outcome
S: satisfaction in knowing you’re trying to be different than the average.

Failing Forward in Personal Finance

I got news for you. When it comes to personal finance there is simply no room for the word perfection. As a result, expect to make plenty of mistakes. If you’re like me try to learn from others, be open-minded and make adjustments that are in line with your personal situation. Since we are talking about making mistakes allow me to share a few:

• While attending grad school and not knowing any better, I decided to lease a car instead of buying used.
• Once my lease expired I had the brilliant idea of buying a new car instead of buying used.
• I did not pay attention to funds (and their expense ratios) in my 401(k) for at least ~6 years.
• Missed on maximizing the annual contribution to my 401(k) in some years.
• Having too much cash sitting on a money market account for ~6 years making probably 0.01% at the highest.
• Carrying debt on credit cards even though I had money to pay them. Justification? I did not want to touch my savings … crazy.
• Started being serious about investing late in the game at the age of 35.
• We love our home but I feel is too big of a house. Yes, we got a good rate but we could be further ahead. FOMO?
• We were in Denver in 2012 and instead of renting we should have bought a place and turned it into a rental. We had the money so today it hurts seeing prices and how properties have appreciated.
• Perhaps the last bullet but probably the most important one …. not being present for my family.

Now, there are two ways to deal with these type of situations: you either fail backward or forward. But what is the difference between the two? let’s look at a few examples:

What About Retrospective Analyses?

A retrospective analysis or retrospective study is a research method that is used when the outcome of an event is already known. If we think about failures, you may want to know what went wrong before you start all over again. I would recommend completing a root cause failure analysis (RCFA) to identify, adjust or remove those steps that led to an unexpected outcome. I’m not going to claim that by doing an RCFA you will remove all risk and chances of failing, but at least, you will avoid making similar mistakes as before. Whatever you do please do not follow this approach:

Final Thoughts

• • Shit happens and will continue to happen.

• • Change your mindset and response to failure and consider them a critical part toward achieving success.

• • Welcome failures and no matter what happens TO you, the important thing is what happens IN you. Remain positive and cultivate optimism.

• • Failing sucks but to achieve success you have to embrace adversity.

• • Make failure your best friend. I really like this quote from John C. Maxwell … “your attitude toward failure will determine your altitude after failure”.

• • I’ve made mistakes and will continue to make more but you know what, I gotta keep trying. There’s no other choice.

• • Please, please, take the time to learn from others’ mistakes. It could save you a lot of money and hey it’s free advice!.

• • Doing a retrospective analysis is something you should do otherwise, you will never know what went wrong.

• Consider failing forward and good luck.

Until next time … JJ