The Importance of Keeping Your Word

In my previous life, I was a software development freelancer. I began taking projects at RentACoder.com in my 4th year of college, and was freelancing on an off for quite a while since then.

My beginnings were more than humble – I remember taking $10 gigs and willing to work a couple of weeks for $70. However, I was quickly accumulating positive ratings from my clients. Towards the end of my freelancing career, I was routinely charging 3-4x the hourly rate of my competition, making freelancing my primary source of income.

How was it possible? On the one hand, I always remembered Dan Kennedy’s advice that you should not be afraid of raising your prices. But on the other, what I think contributed most to my freelancing success was following these two basic rules:

  1. If you say you’ll do something by a certain date, do it.
  2. If you see that you are not making it on time, let the client know ASAP.

These rules look really simple but I have found out that being religious about keeping your word sets you apart from 95% of your competition almost immediately.

One of the reasons is undoubtedly the nature of remote work itself. When you and your client are located in different parts of the world, it’s only natural that the communication is scarcer than if you were working in the same office. When means of tracking your progress are limited, every promise you make gets double scrutiny from the client. Keeping your word thus helps alleviate client anxiety and builds trust.

And you know what? Clients are willing to pay extra for that.

But keeping your word is important not only in freelancing. In fact, when I moved to the business world, I quickly found out that keeping your promises is the very first test you are subjected to in a new business relationship. Break your word – even in a small thing, like calling back by a certain date – and the business partner’s trust diminishes dramatically. This is especially true in early stages of a business relationship.

Of course, this is life and we cannot keep our word 100% of the time. The key here is to let the other person know as early as possible. If you see that a certain chunk of work is taking you longer than expected and you are not going deliver by the agreed upon date, let the client know right away! The longer you delay, the worse off you will be.

One important note here is what exactly to consider a promise. My wife half-jokingly says that it’s not a promise unless you explicitly say: “I promise that…” Well, I don’t agree! Everything you say or even imply about your future actions or expected outcomes is a promise to the other person. So what we are really talking about here is managing the other person’s expectations and making sure they don’t deviate too much from reality.

Keeping my word has served me well and I hope it will for you, too.

How to Save Money

Scrooge McDuck

Saving money is crucial for a few reasons. First, it enables you to buy investments and eventually reach financial independence – that is, the ability to live off your investment income. Second, only by saving can you create a financial cushion to protect yourself from life’s blows such as an unexpected medical bill or an unforeseen repair.

The Wrong Way to Save

Most people get saving wrong. They try to “budget” and then put aside whatever money is left in the end of the month. More often than not, that doesn’t work well.

Why is that happening? You see, there is a powerful law in place, which I call The Law of Matching Expenses:

No matter what your income is, your expenses will always find a way to catch up.

The Law of Matching Expenses means that no matter how hard you try, there will be very little money left to put aside in the end of the month – if any.

The only way to fool the law is to save in the beginning, not the end.

Pay Yourself First

Paying yourself first means that you set aside a percentage of all your income first thing after receiving it. Got a paycheck? Deposit 10% immediately in your savings account. Got a gift from an uncle? There goes 10% to your savings.

Paying yourself first is the opposite to paying other people first, e.g. your landlord, the phone company, the grocery store etc.

Basically, what you want to do is set money aside, and then forget about it as if it never existed.

To start saving, the exact percentage you set aside is not important. I save 10% but you can start with 1% and increase the percentage over time. What’s important is that you do it, and stick to the routine religiously.

Save Half of Your Income Increases

This tip will help you save even more:

Whenever your monthly income increases, direct 50% of the difference to your savings.

Here is how it works. Imagine that you are an employee and your salary is $5,000 per month. You set aside 10%, or $500, from each paycheck, which leaves you with $4,500 for your monthly expenses.

Now, you get a promotion and your salary becomes $6,000. Instead of assigning just 10% of the $1,000 difference to savings, you assign 50%, or $500. You have now doubled the amount you save every month (from $500 to $1,000) and your disposable income still went up from $4,500 to $5,000 monthly.

If you stick to this routine, you will eventually find yourself saving almost half of your income. Imagine how many great investments you will now be able to afford!

Protect the Money from Yourself

This is a bonus tip. As you set the money aside in the beginning of every month, make sure that it’s not easily accessible. As much as we want to believe in our willpower, it is human nature to tap the cash that’s just lying around.

Remember that your savings are untouchable and can only be spent on investments or in case of an emergency. (Actually, a good idea would be to keep emergency and investment money in two different accounts.)

What you want to do is put your savings money in a bank account that has no online banking or debit card attached. That way, you would have to physically go to the bank if you decide to withdraw, which will give you plenty of time to reconsider.

Here’s to your financial freedom, and remember to pay yourself first!

The Power of “I’m Sorry”

We have been friends with Andrew for many years. We met during my first summer in the US and hit it off right there. Andrew is 14 years older than me but we had a lot to talk about – music and technology were the two main things.

It was 2001 and I remember us listening to Grateful Dead and downloading dance tracks for me via Napster.

Around 2010, we went into an online business together. Things started off nicely and we’ve been doing some progress, but after a while, tensions began to grow between us.

Andrew insisted that we should be moving faster and trying different marketing techniques, and I maintained that we should be keeping our focus.

Then, the catastrophe happened.

One day, I ran some ads in Andrew’s Google AdWords account without getting Andrew’s approval. It turned out that the ads were against Google’s policies, and the account was banned.

Andrew was devastated. Not only was AdWords our chief source of traffic, but Google normally bans for lifetime and Andrew was afraid that the ban would put an end to his marketing efforts altogether.

I became defensive and refused to acknowledge my mistake. We sold our business for around $5,000 and split the proceeds.

We never talked afterwards.

This whole thing was very hard for me. You know, Liv, you will only have that many truly meaningful relationships in your life. Friendships take long time to develop. Losing a long-time friend is like cutting a tree that you planted and have enjoyed for years.

And yet, my pride kept me from reaching out to Andrew. It was fear, too: What if he refused to accept my apology?

Now, we have this tradition in our family where we watch Home Alone around Christmas time. Home Alone is a great comedy, but it’s also a profound story of forgiveness.

Remember this scene with Kevin and Old Man Marley? Marley had a quarrel with his son years ago, and now he is cut off from his son’s family and his granddaughter. About the only time he can see her is during her rehearsals with the church choir on Christmas eve.

Old Man Marley

Every time I watched that scene, I remembered my quarrel with Andrew. And yet, I was still finding myself unable to step over my pride.

A few years later, I was preparing for a church confession and was going through an examination of conscience. It’s a very powerful exercise where you take a deep and honest look inside yourself to recall your sins.

One of the questions in the examination had to do with forgiveness. If I were to be 100% honest, I had to mention my inability to reconcile with Andrew to the priest, which I did during the confession.

The priest didn’t explicitly tell me to do anything about the situation. But then and there, I decided that I would reach out to Andrew.

It turned out to be one of the wisest things I had done in my life.

Andrew was really happy to hear from me, and it turned out that he had missed our friendship just as much. We had been able to put the past behind us and we keep in touch regularly just as before.

Was it God who helped me to finally take that step? Was it Home Alone? I don’t know. But I do know, Liv, that very few things in life are worth living in regret. Step over that pride and challenge that fear, and don’t be afraid to say, “I’m sorry.”

Because those meaningful relationships in your life are too precious.