The Negative Compound Effect
Why you don't see results despite doing all the right things.
In today’s newsletter we’re going to talk about the negative compound effect.
We all know the benefits of the compound effect.
The formula looks something like this:
small habits + consistency + time = compounding
What this means is that if you consistently stick to tiny habits, the effects of it begin to compound over the long term.
The best example to understand the power of compounding is looking at Warren Buffet.
If you look at his net worth, he made the most amount of money in the past 20 years.
The 100 billion dollars he made at 92 is the result of the investing he did when he was 14 and staying consistent with it.
This doesn’t just happen in finance. It can happen in other areas too.
Let’s say you start to exercise consistently. You’ll notice that your mood will be better. You’re able to focus more. You’ll have a greater sex drive. You’ll sleep like a baby which will help you make better decisions the next day.
In the power of habit, Charles Duhigg calls this the keystone habit. One habit if done consistently, will improve other areas of your life.
There are a ton of books that sell millions of copies about this exact concept. But no one talks about how compounding can work against you.
Just like how good meaningless habits can compound over time, the same happens with negative habits.
An example is scrolling through social media.
You tell yourself “just 5 minutes” and next thing you know an hour has already passed.
If this happens every day for a year, you waste 365 hours.
And this is what most people miss.
You can do all the right things but nothing will change if you cancel it out with negative habits.
Let’s say you’re trying to lose weight. In order to do that you aim to eat 2,000 calories per day. That’s 14,000 calories per week.
You meal prep and workout each day.
Friday rolls around and you get invited for food and drinks.
You think to yourself: “I’ve been pretty consistent this week, I deserve this!”
So you let yourself have 3 beers (~450 calories) and a burger and fries (~1000 to 1500 calories).
All of sudden you added an additional 1000 calories to your day, undoing all the hard work you did earlier in the week.
It gets even worse when you repeat this Saturday night as well.
Next thing you know you’re actually gaining weight.
But Warren Buffet understands this concept very well.
During the internet bubble of 2001, he was ridiculed for not investing into internet startups.
Warren didn’t let greed push him to invest in an industry he didn’t understand. He stuck with his old boring businesses.
When the bubble crashed, people lost a lot of money. But not Warren. He was able to keep reinvesting his profits and keep compounding.
He would’ve undone years of compounding had he invested in internet businesses.
The purpose of all this is to tell you to focus on removing the harmful habits rather than trying to adopt new ones.
Once you start doing that you automatically create space for more positive things in your life.
The thing is that removing negative habits is much harder than adopting positive ones, which is why no one talks about it.
Removing negative habits might involve:
Finding a different friend group
Having to face uncomfortable emotions you’ve been masking
When you try to eliminate negative habits things might get worse before it gets better. You might experience some sort of withdrawal before your mind and body recovers.
So here is the process of pruning out negative habits.
How To Eliminate Negative Compounding
The first step to change is by building awareness. So start by pulling out your journal and answer these two questions:
What habits are preventing me from reaching my goals?
What can I do to eliminate these habits?
The way to change is by shifting both your external and internal environment.
Change your external environment by increasing friction. This can look something like:
Putting the game console back into the box after playing
Installing a website blocker on your computer
Removing sugar from your house
That’s one piece of the puzzle. The other piece is your internal environment.
You’re still going to face uncomfortable emotions and cravings despite doing everything to change your external environment.
The best way to shift your internal environment is by keeping your mind occupied on something else.
You doing something stimulating. Find a new hobby that you want to learn more about. This can be:
Reading new books
Going for a walk or run
Finding some creative work
Keeping your mind and body engaged on something else reduces the chances of you giving into cravings.
That’s all for this week.
Would love to hear if you found this helpful.
I’ll see you next Saturday.
Cheers,
Ashvin