11 The 20-80 Rule and the way to joy on a budget

I first heard of the 20-80 rule from Robert Callaham, retired Chief of Research of the US Forest Service, in 1993, in a management development program he gave along with Colonel Pathak from Innovative Consultants Combine, Pune. The second context in which this principle was quoted and illustrated in great detail, was on Robert Monaghan’s site on medium format photography "medfmt.8k.com”, where he demonstrates how just 20% of your equipment satisfies 80% of your needs. Photo enthusiasts being often “equipment junkies”, they continue buying stuff long after they have covered their normal requirements, making it a needlessly costly hobby. We have even coined terms to describe this affliction, such as “Nikon Acquisition Syndrome (NAS)” or its sibling, “Canon Acquisition Syndrome (CAS)”, brought on by endlessly poring over glossy brochures and analyzing different models. No doubt this is the case with other hobbies and professions too, since men do like their tools and toys in all cultures!

I wonder whether you have noticed how house procurement invariably leaves you in a situation of bankruptcy. Very recently, there was an item in the newspapers that the child actress of an internationally acclaimed film shifted from her little place in a slum to a one-and-a-half room flat that cost… hold your breath… 40 crores or 400 million rupees (used to be roughly 50 rupees to a dollar); it just so happens that this is all they could scrape together from all her film earnings and the donations into a trust for her (I live in a house which cost me and my wife some 15 lakhs to build… it has five, admittedly small, bedrooms). The most important thing in her life now is that she is going to a mainstream school and learning English.

But she (or her family) is not alone in sinking everything into one major investment; every one of us puts their entire life’s savings into a house, plus a hefty sum over and above that, leaving them broke and indebted for life. If you have 25 lakhs (a lakh is a hundred thousand), you will beg or steal another 5 lakhs to build or buy a house beyond your capacity; if you have 10 lakhs, you will contract to spend 15 lakhs. Prince or commoner, we are all broke and in debt, because as you build your house on a budget of 20 lakhs, there will be enough temptations to push you into the 25 lakh bracket. Or higher… “you only build once”! The fact, however, is that much of the additional expenses are to please someone else’s idea of who you should be. At the end of it, not only are you broke and anxious, you also cannot enjoy it… either you have no spare cash, or you have to rent it out to meet the payments, or you’re ready for a nursing home, or it’s just too big for you as the children leave. You say that it is an investment; but not only can you not easily convert bits of it into cash as you need (and where will you live if you’ve sold it), but actually the physical structure is more or less a liability that detracts from the value of the land it stands on; any appreciation is going to be in the land value, not the building.

The building contractor will always tell you to make your budget, and be prepared to add at least 20% to it. You would have been better off spending 20% less than the budget by cutting out frills, reducing your debt, and spending the cash on a world cruise.  Also, the budget grows to pull out all the money you have, which is why the first question you will be asked is “how much do you have to spend”, rather than how many rooms or bathrooms you want; which is why you should always quote a figure considerably lower than what you have in mind (he’ll get there, never fear!). Once again, 80% of your needs are probably being satisfied by just 20% of the expenditure… the rest is icing (in house building, that’s called doing up the “elevation”).

Very recently, I realized that whole books have been written about this specific subject*. The burden of the story is that most of our stuff can be dealt with by a small fraction of the resources we can commandeer, so we should go through life with a sense of abundance, not one of poverty. What does it matter that you don’t have the wealth that the As and the Bs command, if the end of it is the ugliest mansion in the whole world, be it ever so tall or however close to the edge of the ocean? Your cottage is more comfortable and prettier by far, and leaves you enough resources to enjoy it and pay the bills!

10 Dealing with difficult people…the smart way!

I can hear murmurs that all this is very well, but how can anyone remain continuously benevolent and forgiving in this world… surely one has to keep harsh measures for bad persons, and not be uniformly benign. I have many things to say on this, but here let me share what I have learnt and developed after a lifetime of dealing with… DIFFICULT PEOPLE!

There are basically three ways of dealing with difficult people: aggression, assertion and avoidance. The instinctive reaction to people who get our goat is to retaliate, lash out, give as good as we get, pay them in their own coin, show them who’s not a pushover. The problem here is that we are not clear about our objectives… the end is not in view. People are not easy to change in their convictions, and the more aggressive we get, the more defensive and self-vindicating they are going to become (and the more vindictive, too, sometimes). One thing we can be assured about is that the closer we get involved with them, the more we are going to get sucked into their idiocy. We have to really be clear how much of our time and energy we want to put into trying to change someone else. We may try convincing them to a certain extent, but then we will have to back off, as further engagement can often prove costly for our own health and survival.

In most engagements in the world of living beings, there is a choice between flight and fight: “he who fights and runs away, lives to fight another day”.  Animals often have ritualized jousts, which provide a winner without risking serious injury or disablement to either party. This is the story behind the cat’s nine lives.

In human affairs, too, avoidance is after a point the optimal policy. Difficult, vindictive, and misguided people are all round us, and the best we can do for ourselves is to leave them to live their own lives, to stew in their own juice, while we carry on with ours. We are not responsible for their lives! But we always leave a window open if they want to come around… we never, as far as human foibles will allow, slam the door in their face. The best result is achieved when we follow a consistent, perhaps one-sided, long-term policy of being ever prepared to forget and start afresh… this is also evolutionarily the most beneficial, as the chance of positive associations is always available, whereas if we shut off permanently, we lose the gains that might have been garnered from such collaborations.

This doesn’t apply just to bosses, but even to those ‘under’ you… never under-estimate the damage that can be done by the lowest of your ‘sub-ordinates’, or those who are now abjectly dependent on you, such as powerless children and those on the receiving end of your petty powers. So try to establish collaborative, supportive relationships in all directions.  Your aim would be to not give the world any vulnerable points for their hooks to catch hold of you and yank you around: whether it is your bosses, or your juniors, or your clients, or your family. The mantra will be ...avoid, avoid, avoid. Combined with the 20-80 rule (later!) and the rule of fives, this will help you increase your overall effectiveness, or at least reduce the factors conspiring to bring you down.

09 Building up your life’s credit balance

I like to think that each of us starts out with a certain credit balance, bestowed on us by dint of membership in the human race. As we grow and travel through life, we are constantly interacting with our fellow humans, other living things, the forces of nature, and negotiating with the Fates and the Furies… playing our percentages, juggling our few chances, giving and taking.

Each one of these interactions has the potential of adding to this balance… or of drawing it down. When we are very small, the human race looks on us with a bemused tolerance and affection, finding us charming and lovable, even when we gurgle or worse down their shirt fronts. We can safely keep taking at this stage in our lives, without drawing down much of the bank balance. As we grow, however, the community becomes less tolerant, more critical. If we persist in being childish, we will soon find our credit dwindling. At sixteen, the plainest Jill or Joe looks winsome and handsome, with all the promise of a lifetime ahead. Anyone can find admiration and romantic attachments at this age, a quirk of adaptation to propagate the species. Gradually, however, we find that this potential contracts, options grow ever smaller and fewer, and soon we have to start putting back into the bank by serving others, kowtowing to the community, conforming to the rules, and serving in our slots in society.

Children are one-sided consumers and demanders, but even they have to start replenishing the balance one day, if at least by making themselves less dependent on their families and more self-sufficient, and finally independent.

As we pass through our working and family life, we have a choice at every moment. Every meeting, every interaction, every discussion, can be the source of increasing and replenishing your balance of credit, or if you convert them into adversarial confrontations, arguments, or contests, you may well be drawing down the balance at every step. This is brought home in today’s web world by instant feedbacks that establish and grow your reputation in the community, no matter that you don’t actually come face to face. The question is, how do you replenish the balance, increase the credit,  and reduce the downdraft? How do you arrive at the later stages of your life with a huge credit balance to last you through your sunset years, when your capacity to add to it may be much less?

The answer is that you’ve got to put in, during the years of maximum productivity and influence. In many ways, this is no different from building up your pension fund! The more you let go, give away, or let go during the years of maximum activity, the less you will have to worry about at the later stages. The less you stand around for immediate recompense, the more the stock is going to grow, and the richer you are going to be in your years of need.