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Apply Occam’s razor to your finances

I have always gotten along well with math.  I guess being an engineer by trade and writing a financial blog lends itself to at least tolerating math.  Math is one of those things that I profess to know little about, but actually am quite good at.  Philosophy on the other hand I profess to be an expert on, but know very little.  So just for fun, lets mix the two together.  As my son likes to say “Ready, set, gooooo…”

A decade or so ago I had a class in college on philosophy.  I attended half of the classes.  Of those I attended I slept through half.  Of the half of those that I was awake for, I thought that half was boring.  Of the half I did not think was boring, I thought half was BS.  Of the little bit that was left I learned two things:

1) Philosophy professors have no grasp of real life

2) There were actually some pretty smart guys in history that came up with some pretty smart things.

Revolutionary, right?  Well one of those things that I thought was smart was a little logical exercise called Occam’s Razor.  To put it in simple terms it is the principle that everything usually boils down to the most basic fundamental things.  One other way to state it that will be relevant to my eventual point is: do not complicate things unnecessarily.

You might now be asking yourself: “what on earth does this have to do with personal finance, my career, or any of those other things Jesse likes to ramble on about?”

The answer is: everything.  Using a completely unscientific poll of my contemporaries, I’ve found that the vast majority of people reading personal finance sites, listening to personal finance podcasts, watching personal finance TV shows, and making people rich by buying personal finance books are most concerned with getting out of debt and saving money.  Does this sound familiar to you?  I know it does to me; its how I discovered I enjoy staying up late working on blog posts while listening to my eclectic music collection and drinking diet pop.  We are now going to apply this concept to getting out of debt:

1) Am I spending less than I earn?
If yes, continue until debt is gone.  If no, go to question 2.

2) Do I have a budget?
If yes, go to question 3.  If no, create a budget and come back after a month.  Ok ok, come back tomorrow, but come back to this article in a month.

3) Am I following my budget?
If yes, go to question 4.  If no, follow your budget and then come back.

4) Are there things I can cut out of my spending?
If yes, go back and remake your budget, removing that which can be removed.  If no, go to question 5.

5) Can I increase my income?
If yes, do so and then come back to these steps.  If no, go to 6.

6) Something big needs to change.

If you got to question six, then there is nothing further to boil down, you need to make some sort of life altering sweeping change.  It really is that simple.  If you need help with any of those steps along the way, search my site and there will be answers.

You do not need to buy 10 personal finance books, listen to David Ramsey 24/7, or meditate for clarity.  I just saved you doing all of that.  Now, instead, you can go get out of debt, make more money, and send me an email about how you are killing it and you’d love to treat me to a scotch tasting on your new yacht.

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