CHAPTER I - SELF-HELP - NATIONAL AND INDIVIDUAL
"The worth of a State, in the long run, is the worth of the
individuals composing it."
- J. S. Mill.
"We put too much faith in systems, and look too little to men."
-B. Disraeli.
"Heaven helps those who help themselves" is a well-tried maxim,
embodying in a small compass the results of vast human experience.
The spirit of self-help is the root of all genuine growth in the
individual; and, exhibited in the lives of many, it constitutes the
true source of national vigour and strength. Help from without is
often enfeebling in its effects, but help from within invariably
invigorates. Whatever is done FOR men or classes, to a certain
extent takes away the stimulus and necessity of doing for
themselves; and where men are subjected to over-guidance and over-
government, the inevitable tendency is to render them comparatively
helpless.
Even the best institutions can give a man no active help. Perhaps
the most they can do is, to leave him free to develop himself and
improve his individual condition. But in all times men have been
prone to believe that their happiness and well-being were to be
secured by means of institutions rather than by their own conduct.
Hence the value of legislation as an agent in human advancement has
usually been much over-estimated. To constitute the millionth part
of a Legislature, by voting for one or two men once in three or
five years, however conscientiously this duty may be performed, can
exercise but little active influence upon any man's life and
character. Moreover, it is every day becoming more clearly
understood, that the function of Government is negative and
restrictive, rather than positive and active; being resolvable
principally into protection - protection of life, liberty, and
property. Laws, wisely administered, will secure men in the
enjoyment of the fruits of their labour, whether of mind or body,
at a comparatively small personal sacrifice; but no laws, however
stringent, can make the idle industrious, the thriftless provident,
or the drunken sober. Such reforms can only be effected by means
of individual action, economy, and self-denial; by better habits,
rather than by greater rights.
The Government of a nation itself is usually found to be but the
reflex of the individuals composing it. The Government that is
ahead of the people will inevitably be dragged down to their level,
as the Government that is behind them will in the long run be
dragged up. In the order of nature, the collective character of a
nation will as surely find its befitting results in its law and
government, as water finds its own level. The noble people will be
nobly ruled, and the ignorant and corrupt ignobly. Indeed all
experience serves to prove that the worth and strength of a State
depend far less upon the form of its institutions than upon the
character of its men. For the nation is only an aggregate of
individual conditions, and civilization itself is but a question of
the personal improvement of the men, women, and children of whom
society is composed.
National progress is the sum of individual industry, energy, and
uprightness, as national decay is of individual idleness,
selfishness, and vice. What we are accustomed to decry as great
social evils, will, for the most part, be found to be but the
outgrowth of man's own perverted life; and though we may endeavour
to cut them down and extirpate them by means of Law, they will only
spring up again with fresh luxuriance in some other form, unless
the conditions of personal life and character are radically
improved. If this view be correct, then it follows that the
highest patriotism and philanthropy consist, not so much in
altering laws and modifying institutions, as in helping and
stimulating men to elevate and improve themselves by their own free
and independent individual action.
It may be of comparatively little consequence how a man is governed
from without, whilst everything depends upon how he governs himself
from within. The greatest slave is not he who is ruled by a
despot, great though that evil be, but he who is the thrall of his
own moral ignorance, selfishness, and vice. Nations who are thus
enslaved at heart cannot be freed by any mere changes of masters or
of institutions; and so long as the fatal delusion prevails, that
liberty solely depends upon and consists in government, so long
will such changes, no matter at what cost they may be effected,
have as little practical and lasting result as the shifting of the
figures in a phantasmagoria. The solid foundations of liberty must
rest upon individual character; which is also the only sure
guarantee for social security and national progress.
Excerpt from "Self Help; With Illustrations of Conduct and Perseverance"
by Samuel Smiles
Scanned and proofed by David Price
Wednesday
Can You Be Financial Independent Before 40?
When I first pose this “financial independent” question to my advisor 7 years ago, he gave me a rather cynical look. I guess he must be thinking “Gee, this girl is out of her mind. With the salary she’s drawing, there’s no way she can be financially independent by 40!”
It was inevitable. At that time, I was just a lowly paid analyst. Given the conventional way financial advisors derive their calculations, it was technically impossible for me to achieve something like that within such a short time. In fact after that first meeting, he went back and did some analysis for me. And the final conclusion?
The earliest age I could “officially” retire was 55. And that was provided I had at least $1.5 million worth of cash & investments – with a 1% withdrawal rate – by then. That stash of money would help pay off a pseudo $500,000 mortgage and generate $1,200 a month for my post retirement expenses. $1,200 isn’t a lot but for a 55 year old retiree who spent her most productive years slogging on a 9to5, with grown up kids, a paid up mortgage and few hobbies that would help.
But to accumulate $1.5 million, I would have to stay dutifully employed for at least 3 more decades for the compounding to work.
Yes, 30 years!
I don’t deny it. I was disappointed when he said that. Though I liked what I was doing in the corporate world then, I found it depressing that I would have to wait so long before I could have the time of the world to do what I truly valued.
And that is what being “financial independent” means to me. It isn’t about having loads of money in the bank while I get around in a posh car or live in a large mansion. It isn’t even about traveling around the world on a lavish fashion. But rather, a modest down-to-earth approach towards living life. When I can have the freedom of time & resources for things, people and activities that really matters to me. While my daily needs and wants are being taken care of. And certainly, I’m not expecting to do all this only in my 50s. I want to do it in my best years.
My Ongoing Journey Towards Financial Independence
It was with this goal in mind – an awakening I got after reading Rich Dad Poor Dad – that I started actively researching on ways to “get out of the rat race”. As I explored and experimented with different ideas, I made several lifestyle choices along the way. And one of the most significant decision was taking the plunge to become a full time online entrepreneur.
Looking back, it has almost been 3 years since I’ve decided to quit my job. While I’m not exactly living in a lap of luxury, my online endeavour is fully supporting my lifestyle now. Which is relatively simple and low cost since I’m single, debt free, living with my parents and pretty frugal to begin with. The fact that I’m now working from home helps a lot too. Daily commuting & apparel expenses can really add up, you know
I’m fortunate too that my online income is kind of residual in nature. I don’t trade time for money and much of my effort these days is spent on my websites (10%), family (50%) and volunteering for a cause I strongly believe in (40%). I love it that I’m no longer accountable to anyone for my time. And that – in my opinion – is where I think the “real” freedom is.
But having freedom for freedom’s sake is meaningless unless you’ve got the resources to support what you want to do. And of course your day to day needs. For example, what’s the point of having 8 hours of free time a day when you can’t even afford a proper meal? Or leisure activities that you’ve always wanted to pick up? Such as salsa lessons?
I admit this is one area I got real lucky. I’ve always been a very thrifty person and my lifestyle is kind of minimalistic in nature. Most of my hobbies are either inexpensive or entirely free. I’m that kind of person who’ll rather wait months for a new release at the public library than buying it immediately from the bookstore. And even when I travel, I usually do that on a shoestring. I know, I know. Thriftiness stems from scarcity but I admit this is one “virtue” that put me in a good stead. I don’t have to live miserably just to be financially independent. Scrimping and saving seems to be in my blood. Ha ha.
But much as I’ll like to think I’ve achieved financial freedom, I know I’m still a distance away. After all, there are way too many possibilities which may disrupt this equilibrium. What if I decide to move out? The rent or mortgage payments will add on my monthly expenses, isn’t it? What if a nice guy comes along and I decide to get married and have 2 kids?
Even though my emergency fund can tackle any unexpected one-time expenses, these possible recurring lifestyle related costs can have longer term repercussions. Being the ever prudent girl, the challenge for me right now is to really diversify and beef up my income sources so that I’m “ready” for such changes as they unfold. But one thing’s for sure though. I don’t think I’ll be waiting till 50 to make that happen.
No, don’t get me wrong. I’m not implying that retiring at a later age is inappropriate. Nor am I encouraging you to quit your job and do the same thing like I did. My decision was purely personal. And while it may not be the most foolproof plan around, I know it’s something I call my own. So far the journey has been very fulfilling! What about you? Any goal to achieve financial independence this year?
What You Can Consider In Your Own Financial Independent Plan
While everyone’s circumstance is different, there are things to consider and perhaps even adopt, if they’re relevant to you. Some of these may require a major paradigm shift, but the actual execution can be picked up over time.
(1) Set up an Emergency Fund
“Cliché!” you might say. But this really works. In case you’re unaware, an emergency fund is an amount you can readily access to tide over unexpected events in your life. This should be separated from your spending account and used for only covering emergencies. You know things like getting laid off, paying for an unplanned hospital bill etc.
I can’t stress enough the importance of an emergency fund. Before I first decided to quit my job back then, I had at least 10 months worth of daily expenses all stashed away. It gave me a lot of reassurance as I worked on launching my websites. I had to dip into it a couple of times over the initial months but since then, the shortfall has been replenished. So, how much should this amount be?
Well, it depends. Popular personal finance expert Dave Ramsey recommends that if you’re debt ridden, keep a buffer of about $1,000 and use the rest for the debts. Once they’re cleared, build up your emergency fund to about 3-6 months worth of required expenses. I think that’s a good way to get started. But for me, 10 months is still a figure I’m more comfortable with so I’ll probably stick to it.
(2) Keep Yourself Covered Medically
Since the demise of my sister, my attitude towards insurance – particularly health insurance – changed drastically. I witness for myself how chronic illnesses can literally cripple a family’s finances overnight. I also learned how one can easily mitigate that risk with a relatively low cost health insurance plan. Believe me, if you’re living in a country which doesn’t have some sort of universal health care, this can be a life saver.
Consult a few insurance agents if you must to obtain several quotations for your comparison. You can even get insurance quotes online. A general rule of thumb? Get a plan that suit your needs and not necessary something that is cheaper. For example, I switched into a comprehensive private health plan when I knew I was no longer covered under my ex-company’s employee insurance scheme. It cost twice as much as the most common option. But at least I know I can sleep better at night.
(3) Reduce Your Debts
Do you know how debts can delay your journey towards financial independence? It basically eats into the amount of disposable income you have for investing in cash flow generating assets such as stocks, real estate or in my case, online web properties. These assets are responsible for creating the residual income required to fund your lifestyle. And since debt payments and interest usually represent a significant portion of one’s monthly expenses, by tackling it head on, you’re applying the 80-20 Pareto rule.
A rather effective method for debt reduction is Dave Ramsey’s debt snowball approach. While traditional methods of debt elimination recommend tackling the highest interest rate debts first, the debt snowball suggests you attack the lowest balance debts first. In this way, you gradually build up a psychological victory of eliminating debts in a quick consecutive manner.
I can see why this method works so well. It encourages the human mind by letting in a few quick wins and by the time one gets into the bigger balances, the whole debt elimination process would have been reinforced. Sure, that doesn’t mean it’s easier. But it somehow becomes so much more habitual.
(4) Lower Your Cost Of Living without Feeling Miserable
In Your Money or Your Life, financial independence is defined as “having an income sufficient for your basic needs and comforts from sources other than paid employment”. By simply lowering your essential costs of living, you stand a better chance of reaching financial independence earlier. Think about it. Which is easier? Earning a residual income to cover a monthly expense of $2,000 or $5,000? And trust me; you’ll be surprised how little you actually need.
For example, my expenses were cut by 30% after I quit my job. I don’t need to commute to an office anymore since I’m working from home. I can’t remember the last time I bought a new set of “office wear”. You know those formal power suits? And I’m eating out less too thanks to my mum who cooks at home.
But do you know where the bulk of my savings was? Entertainment. Previously, I would chill out over drinks with my colleagues after work. I still do nowadays with my friends. But it’s so much less frequent. I guess when you’re bogged down with deadlines and tight schedules; you’ll need more booze to soothe the nerves. Ha!
So how do you get started on this? First, write down all your monthly expenses on a piece of paper. Run through each one of them and as you do so, ask yourself these questions:
• Can this be cut back?
• If yes, will doing so make your life miserable?
• If not, how should you go about it? And how should you track it?
Remember, every dollar saved is a step closer to being financial independent!
(5) Increase Your Residual Income Sources
While being frugal and cutting back on your expenditure helps, it’s just one side of the equation. Some say it’s just a small part of it. You must have sources that will generate income for funding your needs and wants. And it’s pretty crucial that this income is “residual” in nature. Here’s why.
Residual income refers to recurring revenue you receive long after the initial work is done. It’s very much different from earned income in that you aren’t getting paid for your time, like you would in a job. And when your residual income exceeds your monthly expenses, you’re literally freed to do whatever your want! Because you don’t need a job to pay for your expenses anymore! Examples of such income include:
• Rental from real estate
• Dividends payouts from your stock portfolio
• Advertising revenue, affiliate commissions, product sales from your websites
• Recurring commissions from network marketing or insurance related products
• Royalties from copyrighted works such as the books you authored, music you composed, inventions you created etc.
Now, I’ll be lying to you if I said such income doesn’t require any effort. In fact, the initial work can be very laborious. During a dinner yesterday for example, a friend revealed how she was renting out her property for a net positive cash flow of $600 a month. Not too bad considering she’s still holding a full time job. But do you know how long she took to earn that income? Almost a year sourcing for a suitable property, renovating, furnishing it and getting all the paperwork done!
Come on, all that work for just $600 a month? Doesn’t sound like a good deal, isn’t it? But if you consider how much work she’s putting to maintain it, it’s probably not that bad after all. Yes, there IS effort required to maintain such revenue streams but depending on the type of investment you’re looking at, it can be pretty low.
In my friend’s case, the house’s in a pretty good condition so there were few tenant complaints about it. She also engaged someone to help her with the management so it was pretty much hassling free. Lucky girl.
Or is it? From my own experience, it definitely takes more than just luck to being financial independent.
By Ellesse Chow
It was inevitable. At that time, I was just a lowly paid analyst. Given the conventional way financial advisors derive their calculations, it was technically impossible for me to achieve something like that within such a short time. In fact after that first meeting, he went back and did some analysis for me. And the final conclusion?
The earliest age I could “officially” retire was 55. And that was provided I had at least $1.5 million worth of cash & investments – with a 1% withdrawal rate – by then. That stash of money would help pay off a pseudo $500,000 mortgage and generate $1,200 a month for my post retirement expenses. $1,200 isn’t a lot but for a 55 year old retiree who spent her most productive years slogging on a 9to5, with grown up kids, a paid up mortgage and few hobbies that would help.
But to accumulate $1.5 million, I would have to stay dutifully employed for at least 3 more decades for the compounding to work.
Yes, 30 years!
I don’t deny it. I was disappointed when he said that. Though I liked what I was doing in the corporate world then, I found it depressing that I would have to wait so long before I could have the time of the world to do what I truly valued.
And that is what being “financial independent” means to me. It isn’t about having loads of money in the bank while I get around in a posh car or live in a large mansion. It isn’t even about traveling around the world on a lavish fashion. But rather, a modest down-to-earth approach towards living life. When I can have the freedom of time & resources for things, people and activities that really matters to me. While my daily needs and wants are being taken care of. And certainly, I’m not expecting to do all this only in my 50s. I want to do it in my best years.
My Ongoing Journey Towards Financial Independence
It was with this goal in mind – an awakening I got after reading Rich Dad Poor Dad – that I started actively researching on ways to “get out of the rat race”. As I explored and experimented with different ideas, I made several lifestyle choices along the way. And one of the most significant decision was taking the plunge to become a full time online entrepreneur.
Looking back, it has almost been 3 years since I’ve decided to quit my job. While I’m not exactly living in a lap of luxury, my online endeavour is fully supporting my lifestyle now. Which is relatively simple and low cost since I’m single, debt free, living with my parents and pretty frugal to begin with. The fact that I’m now working from home helps a lot too. Daily commuting & apparel expenses can really add up, you know
I’m fortunate too that my online income is kind of residual in nature. I don’t trade time for money and much of my effort these days is spent on my websites (10%), family (50%) and volunteering for a cause I strongly believe in (40%). I love it that I’m no longer accountable to anyone for my time. And that – in my opinion – is where I think the “real” freedom is.
But having freedom for freedom’s sake is meaningless unless you’ve got the resources to support what you want to do. And of course your day to day needs. For example, what’s the point of having 8 hours of free time a day when you can’t even afford a proper meal? Or leisure activities that you’ve always wanted to pick up? Such as salsa lessons?
I admit this is one area I got real lucky. I’ve always been a very thrifty person and my lifestyle is kind of minimalistic in nature. Most of my hobbies are either inexpensive or entirely free. I’m that kind of person who’ll rather wait months for a new release at the public library than buying it immediately from the bookstore. And even when I travel, I usually do that on a shoestring. I know, I know. Thriftiness stems from scarcity but I admit this is one “virtue” that put me in a good stead. I don’t have to live miserably just to be financially independent. Scrimping and saving seems to be in my blood. Ha ha.
But much as I’ll like to think I’ve achieved financial freedom, I know I’m still a distance away. After all, there are way too many possibilities which may disrupt this equilibrium. What if I decide to move out? The rent or mortgage payments will add on my monthly expenses, isn’t it? What if a nice guy comes along and I decide to get married and have 2 kids?
Even though my emergency fund can tackle any unexpected one-time expenses, these possible recurring lifestyle related costs can have longer term repercussions. Being the ever prudent girl, the challenge for me right now is to really diversify and beef up my income sources so that I’m “ready” for such changes as they unfold. But one thing’s for sure though. I don’t think I’ll be waiting till 50 to make that happen.
No, don’t get me wrong. I’m not implying that retiring at a later age is inappropriate. Nor am I encouraging you to quit your job and do the same thing like I did. My decision was purely personal. And while it may not be the most foolproof plan around, I know it’s something I call my own. So far the journey has been very fulfilling! What about you? Any goal to achieve financial independence this year?
What You Can Consider In Your Own Financial Independent Plan
While everyone’s circumstance is different, there are things to consider and perhaps even adopt, if they’re relevant to you. Some of these may require a major paradigm shift, but the actual execution can be picked up over time.
(1) Set up an Emergency Fund
“Cliché!” you might say. But this really works. In case you’re unaware, an emergency fund is an amount you can readily access to tide over unexpected events in your life. This should be separated from your spending account and used for only covering emergencies. You know things like getting laid off, paying for an unplanned hospital bill etc.
I can’t stress enough the importance of an emergency fund. Before I first decided to quit my job back then, I had at least 10 months worth of daily expenses all stashed away. It gave me a lot of reassurance as I worked on launching my websites. I had to dip into it a couple of times over the initial months but since then, the shortfall has been replenished. So, how much should this amount be?
Well, it depends. Popular personal finance expert Dave Ramsey recommends that if you’re debt ridden, keep a buffer of about $1,000 and use the rest for the debts. Once they’re cleared, build up your emergency fund to about 3-6 months worth of required expenses. I think that’s a good way to get started. But for me, 10 months is still a figure I’m more comfortable with so I’ll probably stick to it.
(2) Keep Yourself Covered Medically
Since the demise of my sister, my attitude towards insurance – particularly health insurance – changed drastically. I witness for myself how chronic illnesses can literally cripple a family’s finances overnight. I also learned how one can easily mitigate that risk with a relatively low cost health insurance plan. Believe me, if you’re living in a country which doesn’t have some sort of universal health care, this can be a life saver.
Consult a few insurance agents if you must to obtain several quotations for your comparison. You can even get insurance quotes online. A general rule of thumb? Get a plan that suit your needs and not necessary something that is cheaper. For example, I switched into a comprehensive private health plan when I knew I was no longer covered under my ex-company’s employee insurance scheme. It cost twice as much as the most common option. But at least I know I can sleep better at night.
(3) Reduce Your Debts
Do you know how debts can delay your journey towards financial independence? It basically eats into the amount of disposable income you have for investing in cash flow generating assets such as stocks, real estate or in my case, online web properties. These assets are responsible for creating the residual income required to fund your lifestyle. And since debt payments and interest usually represent a significant portion of one’s monthly expenses, by tackling it head on, you’re applying the 80-20 Pareto rule.
A rather effective method for debt reduction is Dave Ramsey’s debt snowball approach. While traditional methods of debt elimination recommend tackling the highest interest rate debts first, the debt snowball suggests you attack the lowest balance debts first. In this way, you gradually build up a psychological victory of eliminating debts in a quick consecutive manner.
I can see why this method works so well. It encourages the human mind by letting in a few quick wins and by the time one gets into the bigger balances, the whole debt elimination process would have been reinforced. Sure, that doesn’t mean it’s easier. But it somehow becomes so much more habitual.
(4) Lower Your Cost Of Living without Feeling Miserable
In Your Money or Your Life, financial independence is defined as “having an income sufficient for your basic needs and comforts from sources other than paid employment”. By simply lowering your essential costs of living, you stand a better chance of reaching financial independence earlier. Think about it. Which is easier? Earning a residual income to cover a monthly expense of $2,000 or $5,000? And trust me; you’ll be surprised how little you actually need.
For example, my expenses were cut by 30% after I quit my job. I don’t need to commute to an office anymore since I’m working from home. I can’t remember the last time I bought a new set of “office wear”. You know those formal power suits? And I’m eating out less too thanks to my mum who cooks at home.
But do you know where the bulk of my savings was? Entertainment. Previously, I would chill out over drinks with my colleagues after work. I still do nowadays with my friends. But it’s so much less frequent. I guess when you’re bogged down with deadlines and tight schedules; you’ll need more booze to soothe the nerves. Ha!
So how do you get started on this? First, write down all your monthly expenses on a piece of paper. Run through each one of them and as you do so, ask yourself these questions:
• Can this be cut back?
• If yes, will doing so make your life miserable?
• If not, how should you go about it? And how should you track it?
Remember, every dollar saved is a step closer to being financial independent!
(5) Increase Your Residual Income Sources
While being frugal and cutting back on your expenditure helps, it’s just one side of the equation. Some say it’s just a small part of it. You must have sources that will generate income for funding your needs and wants. And it’s pretty crucial that this income is “residual” in nature. Here’s why.
Residual income refers to recurring revenue you receive long after the initial work is done. It’s very much different from earned income in that you aren’t getting paid for your time, like you would in a job. And when your residual income exceeds your monthly expenses, you’re literally freed to do whatever your want! Because you don’t need a job to pay for your expenses anymore! Examples of such income include:
• Rental from real estate
• Dividends payouts from your stock portfolio
• Advertising revenue, affiliate commissions, product sales from your websites
• Recurring commissions from network marketing or insurance related products
• Royalties from copyrighted works such as the books you authored, music you composed, inventions you created etc.
Now, I’ll be lying to you if I said such income doesn’t require any effort. In fact, the initial work can be very laborious. During a dinner yesterday for example, a friend revealed how she was renting out her property for a net positive cash flow of $600 a month. Not too bad considering she’s still holding a full time job. But do you know how long she took to earn that income? Almost a year sourcing for a suitable property, renovating, furnishing it and getting all the paperwork done!
Come on, all that work for just $600 a month? Doesn’t sound like a good deal, isn’t it? But if you consider how much work she’s putting to maintain it, it’s probably not that bad after all. Yes, there IS effort required to maintain such revenue streams but depending on the type of investment you’re looking at, it can be pretty low.
In my friend’s case, the house’s in a pretty good condition so there were few tenant complaints about it. She also engaged someone to help her with the management so it was pretty much hassling free. Lucky girl.
Or is it? From my own experience, it definitely takes more than just luck to being financial independent.
By Ellesse Chow
Saturday
Before They Were Titans, Moguls and Newsmakers, These People Were ... Rejected
Few events arouse more teenage angst than the springtime arrival of college rejection letters. With next fall's college freshman class expected to approach a record 2.9 million students in the United States, hundreds of thousands of applicants will soon be receiving the dreaded letters.
Teenagers who face rejection will be joining good company, including Nobel laureates, billionaire philanthropists, university presidents, constitutional scholars, best-selling authors and other leaders of business, media and the arts who once received college or graduate-school rejection letters of their own.
Both Warren Buffett and "Today" show host Meredith Vieira say that while being rejected by the school of their dreams was devastating, it launched them on a path to meeting life-changing mentors. Harold Varmus, winner of the Nobel Prize in medicine, says getting rejected twice by Harvard Medical School, where a dean advised him to enlist in the military, was soon forgotten as he plunged into his studies at Columbia University's med school. For other college rejects, from Sun Microsystems co-founder Scott McNealy and entrepreneur Ted Turner to broadcast journalist Tom Brokaw, the turndowns were minor footnotes, just ones they still remember and will talk about.
Rejections aren't uncommon. Harvard accepts only a little more than 7% of the 29,000 undergraduate applications it receives each year, and Stanford's acceptance rate is about the same.
"The truth is, everything that has happened in my life ... that I thought was a crushing event at the time, has turned out for the better," Mr. Buffett says. With the exception of health problems, he says, setbacks teach "lessons that carry you along. You learn that a temporary defeat is not a permanent one. In the end, it can be an opportunity."
Mr. Buffett regards his rejection at age 19 by Harvard Business School as a pivotal episode in his life. Looking back, he says Harvard wouldn't have been a good fit. But at the time, he "had this feeling of dread" after being rejected in an admissions interview in Chicago, and a fear of disappointing his father.
As it turned out, his father responded with "only this unconditional love...an unconditional belief in me," Mr. Buffett says. Exploring other options, he realized that two investing experts he admired, Benjamin Graham and David Dodd, were teaching at Columbia's graduate business school. He dashed off a late application, where by a stroke of luck it was fielded and accepted by Mr. Dodd. From these mentors, Mr. Buffett says he learned core principles that guided his investing. The Harvard rejection also benefited his alma mater; the family gave more than $12 million to Columbia in 2008 through the Susan Thompson Buffett Foundation, based on tax filings.
The lesson of negatives becoming positives has proved true repeatedly, Mr. Buffett says. He was terrified of public speaking -- so much so that when he was young he sometimes threw up before giving an address. So he enrolled in a Dale Carnegie public speaking course and says the skills he learned there enabled him to woo his future wife, Susan Thompson, a "champion debater," he says. "I even proposed to my wife during the course," he says. "If I had been only a mediocre speaker I might not have taken it."
Columbia University President Lee Bollinger was rejected as a teenager when he applied to Harvard. He says the experience cemented his belief that it was up to him alone to define his talents and potential. His family had moved to a small, isolated town in rural Oregon, where educational opportunities were sparse. As a kid, he did menial jobs around the newspaper office, like sweeping the floor.
Mr. Bollinger recalls thinking at the time, "I need to work extra hard and teach myself a lot of things that I need to know," to measure up to other students who were "going to prep schools, and having assignments that I'm not." When the rejection letter arrived, he accepted a scholarship to University of Oregon and later graduated from Columbia Law School. His advice: Don't let rejections control your life. To "allow other people's assessment of you to determine your own self-assessment is a very big mistake," says Mr. Bollinger, a First Amendment author and scholar. "The question really is, who at the end of the day is going to make the determination about what your talents are, and what your interests are? That has to be you."
Others who received Harvard rejections include "Today" show host Meredith Vieira, who was turned down in 1971 as a high-school senior. At the time, she was crushed. "In fact, I was so devastated that when I went to Tufts [University] my freshman year, every Saturday I'd hitchhike to Harvard," she says in an email. But Ms. Vieira went on to meet a mentor at Tufts who sparked her interest in journalism by offering her an internship. Had she not been rejected, she doubts that she would have entered the field, she says.
And broadcast journalist Tom Brokaw, also rejected as a teenager by Harvard, says it was one of a series of setbacks that eventually led him to settle down, stop partying and commit to finishing college and working in broadcast journalism. "The initial stumble was critical in getting me launched," he says.
Dr. Varmus, the Nobel laureate and president of Memorial Sloan-Kettering Cancer Center in New York, was daunted by the first of his two turndowns by Harvard's med school. He enrolled instead in grad studies in literature at Harvard, but was uninspired by thoughts of a career in that field.
After a year, he applied again to Harvard's med school and was rejected, by a dean who chastised him in an interview for being "inconstant and immature" and advised him to enlist in the military. Officials at Columbia's medical school, however, seemed to value his "competence in two cultures," science and literature, he says.
If rejected by the school you love, Dr. Varmus advises in an email, immerse yourself in life at a college that welcomes you. "The differences between colleges that seem so important before you get there will seem a lot less important once you arrive at one that offered you a place."
Similarly, John Schlifske, president of insurance company Northwestern Mutual, was discouraged as a teenager when he received a rejection letter from Yale University. An aspiring college football player, "I wanted to go to Yale so badly," he says. He recalls coming home from school the day the letter arrived. "Mom was all excited and gave it to me," he says. His heart fell when he saw "the classic thin envelope," he says. "It was crushing."
Yet he believes he had a deeper, richer experience at Carleton College in Minnesota. He says he received a "phenomenal" education and became a starter on the football team rather than a bench-warmer as he might have been at Yale. "Being wanted is a good thing," he says.
He had a chance to pass on that wisdom to his son Dan, who was rejected in 2006 by one of his top choices, Duke University. Drawing on his own experience, the elder Mr. Schlifske told his son, "Just because somebody says no, doesn't mean there's not another school out there you're going to enjoy, and where you are going to get a good education." Dan ended up at his other top choice, Washington University in St. Louis, where he is currently a senior. Mr. Schlifske says, "he loves it."
Rejected once, and then again, by business schools at Stanford and Harvard, Scott McNealy practiced the perseverance that would characterize his career. A brash economics graduate of Harvard, he was annoyed that "they wouldn't take a chance on me right out of college," he says. He kept trying, taking a job as a plant foreman for a manufacturer and working his way up in sales. "By my third year out of school, it was clear I was going to be a successful executive. I blew the doors off my numbers," he says. Granted admission to Stanford's business school, he met Sun Microsystems co-founder Vinod Khosla and went on to head Sun for 22 years.
Paul Purcell, who heads one of the few investment-advisory companies to emerge unscathed from the recession, Robert W. Baird & Co., says he interpreted his rejection years ago by Stanford University as evidence that he had to work harder. "I took it as a signal that, 'Look, the world is really competitive, and I'll just try harder next time,'" he says. He graduated from the University of Notre Dame and got an MBA from the University of Chicago, and in 2009, as chairman, president and chief executive of Baird, won the University of Chicago Booth School of Business distinguished corporate alumnus award. Baird has remained profitable through the recession and expanded client assets to $75 billion.
Time puts rejection letters in perspective, says Ted Turner. He received dual rejections as a teenager, by Princeton and Harvard, he says in an interview. The future America's Cup winner attended Brown University, where he became captain of the sailing team. He left college after his father cut off financial support, and joined his father's billboard company, which he built into the media empire that spawned CNN. Brown has since awarded him a bachelor's degree.
Tragedies later had a greater impact on his life, he says, including the loss of his father to suicide and his teenage sister to illness. "A rejection letter doesn't even come close to losing loved ones in your family. That is the hard stuff to survive," Mr. Turner says. "I want to be sure to make this point: I did everything I did without a college degree," he says. While it is better to have one, "you can be successful without it."
by Sue Shellenbarger, Wall Street Journal
Tuesday, March 30, 2010
Teenagers who face rejection will be joining good company, including Nobel laureates, billionaire philanthropists, university presidents, constitutional scholars, best-selling authors and other leaders of business, media and the arts who once received college or graduate-school rejection letters of their own.
Both Warren Buffett and "Today" show host Meredith Vieira say that while being rejected by the school of their dreams was devastating, it launched them on a path to meeting life-changing mentors. Harold Varmus, winner of the Nobel Prize in medicine, says getting rejected twice by Harvard Medical School, where a dean advised him to enlist in the military, was soon forgotten as he plunged into his studies at Columbia University's med school. For other college rejects, from Sun Microsystems co-founder Scott McNealy and entrepreneur Ted Turner to broadcast journalist Tom Brokaw, the turndowns were minor footnotes, just ones they still remember and will talk about.
Rejections aren't uncommon. Harvard accepts only a little more than 7% of the 29,000 undergraduate applications it receives each year, and Stanford's acceptance rate is about the same.
"The truth is, everything that has happened in my life ... that I thought was a crushing event at the time, has turned out for the better," Mr. Buffett says. With the exception of health problems, he says, setbacks teach "lessons that carry you along. You learn that a temporary defeat is not a permanent one. In the end, it can be an opportunity."
Mr. Buffett regards his rejection at age 19 by Harvard Business School as a pivotal episode in his life. Looking back, he says Harvard wouldn't have been a good fit. But at the time, he "had this feeling of dread" after being rejected in an admissions interview in Chicago, and a fear of disappointing his father.
As it turned out, his father responded with "only this unconditional love...an unconditional belief in me," Mr. Buffett says. Exploring other options, he realized that two investing experts he admired, Benjamin Graham and David Dodd, were teaching at Columbia's graduate business school. He dashed off a late application, where by a stroke of luck it was fielded and accepted by Mr. Dodd. From these mentors, Mr. Buffett says he learned core principles that guided his investing. The Harvard rejection also benefited his alma mater; the family gave more than $12 million to Columbia in 2008 through the Susan Thompson Buffett Foundation, based on tax filings.
The lesson of negatives becoming positives has proved true repeatedly, Mr. Buffett says. He was terrified of public speaking -- so much so that when he was young he sometimes threw up before giving an address. So he enrolled in a Dale Carnegie public speaking course and says the skills he learned there enabled him to woo his future wife, Susan Thompson, a "champion debater," he says. "I even proposed to my wife during the course," he says. "If I had been only a mediocre speaker I might not have taken it."
Columbia University President Lee Bollinger was rejected as a teenager when he applied to Harvard. He says the experience cemented his belief that it was up to him alone to define his talents and potential. His family had moved to a small, isolated town in rural Oregon, where educational opportunities were sparse. As a kid, he did menial jobs around the newspaper office, like sweeping the floor.
Mr. Bollinger recalls thinking at the time, "I need to work extra hard and teach myself a lot of things that I need to know," to measure up to other students who were "going to prep schools, and having assignments that I'm not." When the rejection letter arrived, he accepted a scholarship to University of Oregon and later graduated from Columbia Law School. His advice: Don't let rejections control your life. To "allow other people's assessment of you to determine your own self-assessment is a very big mistake," says Mr. Bollinger, a First Amendment author and scholar. "The question really is, who at the end of the day is going to make the determination about what your talents are, and what your interests are? That has to be you."
Others who received Harvard rejections include "Today" show host Meredith Vieira, who was turned down in 1971 as a high-school senior. At the time, she was crushed. "In fact, I was so devastated that when I went to Tufts [University] my freshman year, every Saturday I'd hitchhike to Harvard," she says in an email. But Ms. Vieira went on to meet a mentor at Tufts who sparked her interest in journalism by offering her an internship. Had she not been rejected, she doubts that she would have entered the field, she says.
And broadcast journalist Tom Brokaw, also rejected as a teenager by Harvard, says it was one of a series of setbacks that eventually led him to settle down, stop partying and commit to finishing college and working in broadcast journalism. "The initial stumble was critical in getting me launched," he says.
Dr. Varmus, the Nobel laureate and president of Memorial Sloan-Kettering Cancer Center in New York, was daunted by the first of his two turndowns by Harvard's med school. He enrolled instead in grad studies in literature at Harvard, but was uninspired by thoughts of a career in that field.
After a year, he applied again to Harvard's med school and was rejected, by a dean who chastised him in an interview for being "inconstant and immature" and advised him to enlist in the military. Officials at Columbia's medical school, however, seemed to value his "competence in two cultures," science and literature, he says.
If rejected by the school you love, Dr. Varmus advises in an email, immerse yourself in life at a college that welcomes you. "The differences between colleges that seem so important before you get there will seem a lot less important once you arrive at one that offered you a place."
Similarly, John Schlifske, president of insurance company Northwestern Mutual, was discouraged as a teenager when he received a rejection letter from Yale University. An aspiring college football player, "I wanted to go to Yale so badly," he says. He recalls coming home from school the day the letter arrived. "Mom was all excited and gave it to me," he says. His heart fell when he saw "the classic thin envelope," he says. "It was crushing."
Yet he believes he had a deeper, richer experience at Carleton College in Minnesota. He says he received a "phenomenal" education and became a starter on the football team rather than a bench-warmer as he might have been at Yale. "Being wanted is a good thing," he says.
He had a chance to pass on that wisdom to his son Dan, who was rejected in 2006 by one of his top choices, Duke University. Drawing on his own experience, the elder Mr. Schlifske told his son, "Just because somebody says no, doesn't mean there's not another school out there you're going to enjoy, and where you are going to get a good education." Dan ended up at his other top choice, Washington University in St. Louis, where he is currently a senior. Mr. Schlifske says, "he loves it."
Rejected once, and then again, by business schools at Stanford and Harvard, Scott McNealy practiced the perseverance that would characterize his career. A brash economics graduate of Harvard, he was annoyed that "they wouldn't take a chance on me right out of college," he says. He kept trying, taking a job as a plant foreman for a manufacturer and working his way up in sales. "By my third year out of school, it was clear I was going to be a successful executive. I blew the doors off my numbers," he says. Granted admission to Stanford's business school, he met Sun Microsystems co-founder Vinod Khosla and went on to head Sun for 22 years.
Paul Purcell, who heads one of the few investment-advisory companies to emerge unscathed from the recession, Robert W. Baird & Co., says he interpreted his rejection years ago by Stanford University as evidence that he had to work harder. "I took it as a signal that, 'Look, the world is really competitive, and I'll just try harder next time,'" he says. He graduated from the University of Notre Dame and got an MBA from the University of Chicago, and in 2009, as chairman, president and chief executive of Baird, won the University of Chicago Booth School of Business distinguished corporate alumnus award. Baird has remained profitable through the recession and expanded client assets to $75 billion.
Time puts rejection letters in perspective, says Ted Turner. He received dual rejections as a teenager, by Princeton and Harvard, he says in an interview. The future America's Cup winner attended Brown University, where he became captain of the sailing team. He left college after his father cut off financial support, and joined his father's billboard company, which he built into the media empire that spawned CNN. Brown has since awarded him a bachelor's degree.
Tragedies later had a greater impact on his life, he says, including the loss of his father to suicide and his teenage sister to illness. "A rejection letter doesn't even come close to losing loved ones in your family. That is the hard stuff to survive," Mr. Turner says. "I want to be sure to make this point: I did everything I did without a college degree," he says. While it is better to have one, "you can be successful without it."
by Sue Shellenbarger, Wall Street Journal
Tuesday, March 30, 2010
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