In Search of a Financial Theory of Everything

First things first (and I try to be organized that way): I think my first “official” post for GRS should be a sort of statement of purpose, an outline of what I'll be trying to accomplish here, as a kind of introduction of things to come.

It makes sense as part of the job interview process that I should answer such classic questions as: “What can you bring to our organization?” Or, “Where do you see yourself five years from now?” I really believe that GRS readers got me this job, and I feel I owe you those explanations, even after having been hired. Please don't be afraid, I'm not going to ramble about myself until your phone suddenly wakes you up a half-hour later. I'm actually trying to write something useful.

Let's start by making something clear: I'm not here to dance for the money. I'm here on a mission! Almost like the Blues Brothers. The way I see it, I'm getting paid to research and to learn about something that interests me. And as I discover and learn new things, I will do my best to share these things with you.

However, it has to be said, I learn a lot from you, and everyone here could school me on a huge number of subjects. In fact, I have learned more from you than from reading a bunch of books. So, how can I avoid becoming an echo chamber that simply regurgitates your ideas?

I have a plan for that, and I'm asking for your help. But first, a little background information so you understand where I'm coming from.

The Cause
I've been broke for most of my adult existence, and I've only started to dig myself out of the hole in the past two or three years by applying some basic principles that are easy to follow. Let me emphasize this: simple and easy to follow, such as “spend less than you earn” and “debt is a deadly plague.” Yes, that simple. When you're in an emergency, simplicity works.

Before I discovered simplicity, I used to have a lot of clever ideas. And my cleverness got me into trouble. One of the ways I was clever was that I always pushed things back so I could enjoy them today but pay for them tomorrow. The future would always be brighter and I would always be able to pay.

I remember calling the credit card company whenever I got a raise at work: “hey, I got a $10,000 raise on my yearly salary today, so I'd like to increase my limit,” “sure sir, let me look into that.” Ayayay…

Trouble ensued, of course, in spite of my cleverness. The way I see it, I didn't get in trouble because I wanted to be broke. It's like that truism that no child ever says: “when I grow up I want to be a drug addict.”

In my case, I can tell you that I was full of good intentions, that I wanted to prosper, and that fortunately I'm not an addict, but I was extremely ignorant about money. I really knew nothing about it and I didn't know how to control it. And money, powerful force that it is, took control of my life instead, and nearly destroyed me. Just like, you know—fire.

When I say I was ignorant about money I don't mean that I didn't get the math. I love math. Math is simple and beautiful, clear, elegant, and value-free. Money on the other hand is complicated, laden with conflicting values, charged with emotions, and it smells. I always got math. I just didn't get money.

Today, in spite of my dark past, I feel in pretty good control of my finances. I've read books, I've paid attention to money, and I've been following GRS for the past couple of years. In that time I've learned a few useful things, simple and basic things that work and require no great cleverness.

For example, I've learned that money is not intrinsically “bad,” that it's not base or vulgar to pay attention to it, that the world owes me only what the market is willing to pay for my services, and that I need to spend less than I make every day instead of gambling that my ever-prosperous tomorrow will pay for today's bills.

Today I have a little emergency fund. I'm repairing what's broken and I'm paying the taxman. And I've started to focus on making more money: small steps right now, like charging more for my services, and taking a side gig (this one at GRS, for starters). I'll get better as I go. So now I'm getting rich slowly, I suppose. Very, very slowly! I own practically nothing today, but compared to what it feels to be in the hole, as I was before, there's a world of difference.

And how did I do this? With your help, of course, and the help of others. By reading and thinking and writing about personal finance every day, I've acquired basic knowledge that dispelled old damaging illusions and has allowed me to get my house in order. Now I think I'm ready for the next step.

The State of our Knowledge
The problem, as I see it, is that we have all kinds of ad-hoc financial advice out there, but we have no theory to test things against, and no real basic principles, so the advice we get is often contradictory. I used to drive my wife crazy trying to follow one financial guru after another.

Of course the experts will disagree among them, but sometimes writers contradict themselves, often through no fault of their own because they are working with useful pieces of information that happen to contradict each other.

As you know I'm a loyal GRS reader, so I remember this post from J.D. last New Year's Day. I really loved it, and I added the link to my GTD with the note: “adopt financial blueprint for the year”. However, as much as I vouch for it, I still can find contradictory information in it. It's not J.D's fault, it's just the nature of the subject.

If you look there, step 2 is tracking every penny you spend, and the article suggests many ways to do that. So far, most of us agree this is a good thing. Step 3 then recommends that you adopt a budget, and suggests Elizabeth Warren's Balanced Money Formula. Here's the thing though: Warren is adamantly against tracking every penny. She considers it impractical, a nuisance, and a waste of time that discourages people. So, what is it? To track or not to track, that is the question!

The way I'm trying to describe things, again, I am convinced this isn't anybody's fault: J.D. prospered by tracking his pennies, so he stands behind that. And Elizabeth Warren is great as well, so why not recommend her. But the two systems don't connect. And for now, until we have a theory that explains all things PF, that's acceptable — as long as can we manage to prosper in spite of the disconnect.

The Uncertainty Principle
The world of personal finance is rife with contradictions because it's not based on hard data, and there are very few overarching principles that most of us can agree upon.

I have no problem with a situational approach if it works, but the thing is, in other areas of life we have things figured out a little better — or at least we're pretending more intently, like when we calculate the mechanical energy of an object in motion given its mass and speed, or when lawyers discuss whether a law is constitutional or not.

In personal finance we don't seem to have a lot of foundational concepts, the way Newtonian mechanics has its three laws, or chemistry has the periodic table of elements. Finance is a subject intricate enough; add the personal element and it can soon become a free-for-all, even outright quackery (et tu, Suze…).

The problem is that knowledge is a tough business. Even in the hard sciences, which by comparison deal with very simple phenomena, we have to make do with incomplete explanations: Newtonian laws don't apply to very high speeds, nor to very small distances, so we had to come up with other theories to deal with those things.

And now the problem is, those two other theories (relativity and quantum mechanics) don't connect with each other, and physics, in spite of all its recent discoveries, still doesn't have a Theory of Everything to explain the physical world (it also has a bunch of other big, unsolved questions).

I Know One Thing — That I Know Nothing
Human life is much more complex than the stuff of physics, and is infinitely more contradictory. For example, we lack anything even remotely close to a “moral science” that could predict (every time, with statistical certainty, and deducted from its basic principles) what is the right decision in each situation. Some people have tried to come up with such solutions, but this usually involves either infinite hairsplitting or outright brainwashing (“What did you say you put in this Kool-Aid, exactly?”).

However, in spite of the limits of our understanding, we desperately need rational, sensible, actionable knowledge in order to make the right decisions. And the more fragmented, chaotic, uncertain and contradictory our information, the harder it is to learn anything from it, and the easier it is for people to engage in irrational, self-destructive behavior.

J.D. wrote at the end of last year that financial literacy solves nothing, because our problems are behavioral. He further went ahead and introduced the notion of behavioral finance, and made a critique of consumerism. I agree with him from that perspective, but I've also come to realize that understanding money requires more than understanding the math, and that there's more to it than mere behavior.

Financial literacy, if we are to define it as the basic understanding of money, requires an understanding of the philosophical, psychological, social, and even spiritual aspects of money in our lives—in addition to the math. To steal an expression from the late Steve Jobs: Personal finance is a liberal art.

My GRS Quest
Obviously there can't be a Theory of Everything in personal finance, so it should be clear by now that the title was meant humorously. Even if we could all agree on something as basic as “spend less than you earn,” someone would come up with a case where some outlier just happened to spend more than they earned and somehow got rich anyway and lived the dream and died before blowing through their piles of money and/or debt—and our axiom would be instantly demolished. And because of this, we cannot expect to approach personal finance the way we approach hard science.

Still, for all the diversity of information and contradiction out there, I want my project to be one of connecting the dots, of seeking basic principles and distilling ideas, and of finding ways to relate them coherently, so that others can learn and understand and put ideas to practice without getting confused in the process.

I also want to avoid, if possible, the fundamentalism of oversimplification. Sometimes oversimplification can get us out of trouble, and this can give it a place in our lives, especially in times of emergency. E.g.: “When you hear this alarm, exit the building.” No ifs, ands, or buts.

Reading Dave Ramsey a couple of years ago was very good for me in a financial crisis. It provided me with an easy way to approach things and to avoid rationalizations. However, while it was good in an emergency, it become too rigid a model when the emergency had passed. It was the fundamentalist approach to financial recovery, if you will.

And life is, after all, a complex affair; we need mental models that can deal with such complexity, and deal with it realistically — because complexity should not be an excuse for the rationalization of self-destructive behaviors.

I suppose what I'm after these days is not an easily marketable “recipe for success,” or a reproducible program of some kind, but rather I'm after some sort of “philosophy of prosperity,” if I dare call it that. Of course it would be mad ambition if I considered this to be a final, achievable goal; but the way I see it, this is just as a direction of travel, a point in the compass.

Anyway, I might have managed to connect a few dots and distill one useful idea for you today, after all. The idea is simply that approaching personal finance as a liberal art might help us get a better grasp of this stubbornly irreducible subject. And that's what I intend to do here at GRS.

So this is what I bring to the organization, my dear readers: a love of complexity and a thirst for coherence. And as I begin my work here, I ask you to kindly assist me in my travels (or troubles!) and continue sharing with me the things you know, and challenging me, as you always have.

Oh, and to the question “Where do you see yourself five years from now?” my answer is: sitting on a huge pile of money, of course! (Fingers crossed, my friends, fingers crossed…)

More about...Uncategorized

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
106 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
SB @ One Cent at a Time
SB @ One Cent at a Time
7 years ago

Great to see you bagging the job. just an honest feedback, you wasted too many words to prove a simple point. Anyway, we all have very high hope from you. Keep Wow’ing us!

I also refer to JD’s new year post at times, also GRS about page has a few simple fundamentals, if you want.

Oh BTW, asking for credit limit increase actually is good for your credit utilization and hence, the score. Only, using the card to the limit or near to it is bad.

El Nerdo
El Nerdo
7 years ago

Thanks, my problem is both JD’s New Year and various fundamentals posts are contradictory, incomplete, etc., for reasons explained in my tome above, which is why I want to work on pulling things together.

And yes, I used the upper limits to *buy more things*. Fact is, the nice watch didn’t “advance my career”. Ha ha ha.

SB @ One Cent at a Time
SB @ One Cent at a Time
7 years ago
Reply to  El Nerdo

Are you sure, it didn’t? 🙂

Stephen
Stephen
7 years ago
Reply to  El Nerdo

The biggest reason things are so contradictory are that everyones goals are in different places. Even your own goals move over time. JD has explained the concept of how rich means different things to different people at different times, which in itself explains how both articles can be correct while they are written, but not so when viewed together at a later date. What works now might not work later, same as what works for you might not work for me. Leads to the axiom of do what works.

AMW
AMW
7 years ago

Congratulations on the new gig! While it may seem obvious to some, pointing out that personal finance is not black and white or one size fits all is an excellent place to start!
Wishing you success and prosperity!

bg
bg
7 years ago

Math is simple and beautiful, clear, elegant, and value-free. Money on the other hand is complicated, laden with conflicting values, charged with emotions, and it smells. I always got math. I just didn’t get money.

Oh, this resonates…

philosophy of prosperity

And this is what really made me perk up 🙂 Prosperity is a great concept which goes far wider than money matters, and I’m curious how you will connect your dots towards this.

Looking forward to your next entries!

Elizabeth
Elizabeth
7 years ago
Reply to  bg

I love that line too 🙂

Lou
Lou
7 years ago

Huh?

Just kidding, I like your work. But some feedback. Simplicity is king, in concepts, in money, objects, priorities etc.

Really enjoyed hearing more about your background and looking forward to your next post.

Justin @ The Family Finances
Justin @ The Family Finances
7 years ago

If this is any indication of what future posts are going to be like, then the GRS community is in for a treat. This was a great way to start things out!

I’m an accountant by profession… very number oriented, very logical, very rules-oriented. But personal finance is so much more involved than that, because you’re adding in the human element. What works for some people doesn’t work as well for others, though I agree there are some basic principles that most everyone agrees on.

I’m looking forward to reading more!

Babs
Babs
7 years ago

A treat indeed! A kind of Socratic dialogue.

El Nerdo
El Nerdo
7 years ago

I’m glad you guys liked it, and it’s feels good to be understood, though in the future I’ll try to balance the pursuit of “big ideas” with the concision required of the blog format (but no worries, I won’t do “PF-lite”).

Jacq
Jacq
7 years ago
Reply to  El Nerdo

How about “personal finance for smart people” a la Pavlina? Cuz 2 many wrds r hrd.

Anyhoo – would like to see a post on your thoughts on the following:

http://www.psychologytoday.com/blog/the-science-willpower/201111/3-brain-hacks-avoid-impulse-purchases-youll-later-regret

TinaPete
TinaPete
7 years ago
Reply to  Jacq

“smell a fish”, I love it!

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago

Congrats on the new assignment and on turning the corner!

As for the formula: as I’ve come to know it, personal finance consists of four pillars, each only two words:

1. Earn more
2. Spend less
3. Kill debt
4. Invest more

To that I add the fifth dimension:

5. Know when

(as in: know when to buy or not to buy)

Did I miss anything? 🙂

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago
Reply to  El Nerdo

Well said! There is no single formula for anything in life, because it comes down to what you said: values. Jamie Dimon and Donald Trump have several hundred million to their names, but their values are different from most of us. And those values determine our choices. Because in the end, that’s what it all comes down to: choices. Make good choices, even if they are a little tough in the short term. Oh, and about that house purchase: easy credit shouldn’t be the reason to buy. Just ask the 25% of all homeowners who owe more than their houses… Read more »

PB
PB
7 years ago

Or J. P. Getty’s simple formula:

“Rise early, work late, strike oil.”

Jacq
Jacq
7 years ago

You missed my favorite:

Buy low.
Sell high.

Larissa
Larissa
7 years ago

I think #5 is perfect on it’s own. Know When. When to spend, when to save, when invest, when to earn, when to splurge, etc. I think you have found then philosophy of prosperity with just those two words.

Mrs PoP
Mrs PoP
7 years ago

I love the comparison to physics and searching for a GUT (grand unified theory) of personal finance.   I tend to look at personal finance as a huge multivariate system where so many of the variables are deeply personal (ethics, values, priorities, etc), that a GUT is unlikely to be found.  I like to think of personal finance as looking for local minima and maxima to optimize a given situation that don’t upset the rest of the equation.  And those optimizations can change from day to day, because sometimes it’s just how you FEEL.  (I could go on about why I… Read more »

Ely
Ely
7 years ago
Reply to  El Nerdo

me too!!

Elizabeth
Elizabeth
7 years ago
Reply to  Mrs PoP

Me too! You’re teasing us 🙂

SB @One Cent at a Time
SB @One Cent at a Time
7 years ago
Reply to  Mrs PoP

Why can’t we just treat it as behavioral science and don’t just look for a common equation. We know scientists haven’t yet proven the fact that E=MC2 is the mother of all equation although the general belief is for that. We can attempt to find a common definition of personal finance, but, will that make us better at it? Lately I have been attending many leadership classes, but, none of the definition is going to make me a good leader. I started doubting if it is at all necessary to get leadership education to be a good leader. But the… Read more »

Sam
Sam
7 years ago

On the tracking every penny. I’m of two minds on this one. I think tracking every penny by hand or app for a particular time period, i.e. a month, is a very useful process. Like tracking what you eat, you will be blown away by seeing how much money is flowing out every day. I think tracking those pennies is an important step when coming to terms with one’s finances. After you’ve got your finances and debts in order, I think tracking continues to be a useful and important tool. Otherwise, how to you know whether you are sticking with… Read more »

Sandi_K
Sandi_K
7 years ago
Reply to  Sam

I agree with Sam in comment #8. It’s useful to track your pennies, when you first start the financial journey, as a way of providing a baseline, and a snapshot of where you’re going off the rails (too much eating out? Or truly not enough income?) The caveat I’d offer is that you’ll also need to look at your ANNUAL expenses, something a one month tracking experiment will not do. We didn’t start making serious traction on our financial goals until we started setting aside a sufficient amount EACH MONTH for expected (yet never really budgeted for) expenses, such as… Read more »

Patti
Patti
7 years ago
Reply to  Sandi_K

I love the new percentages you are using. I’m going to keep them in mind as I look at my plans for 2013. I have adopted the 50-30-20 as well, but its based on my take home pay. With my match at work, 12% of my pre-tax salary goes to retirement, and I don’t count this at all in my 50-30-20 budget. I have about 26% of post tax going to debt right now and 25% going to wants.

El Nerdo
El Nerdo
7 years ago
Reply to  Sam

Briefly (I’m trying):

I benefitted with the initial penny counting, and looking back at old receipts was eye-opening, but the BMF is much more sustainable for my family in the long run. (BTW, the BMF requires you do an initial accounting anyway).

And I agree with tweaking percentages, which I’ve done–the BMF is widely aimed at the middle class, extremes in the financial spectrum or special cases (school, retirement, etc) will require departures from the model (Warren/Tiyagi actually discuss that).

Old Guy
Old Guy
7 years ago
Reply to  El Nerdo

BMF = Buy My Furniture? Bi-weekly Money Finances?
I know PF = Personal Finance; PITA = Pain In The Ass; DH = Dear Hubby; GTD = Getting Things Done; ITA = I Totally Agree; and others since I had to look them up on this blog.

But my point is that unless you’re in your 20’s, a LOT of you talk NONSENSE without a separate browser open so the rest of us can look up and guess what your acronym meant.

KWIM? (Know What I Mean?)

SuperSavingSuz
SuperSavingSuz
7 years ago
Reply to  Old Guy

BMF= Balanced Money Formula. Also known as the 50/30/20 rule. A lot of the writers and commenters use it.

Holly@ClubThrifty
7 years ago

Congratulations!

I look forward to reading your posts. Have a great day!

KSR
KSR
7 years ago

“My name is El Nerdo, and I’m your new staff writer at Get Rich Slowly”–When I read that Nerdo–the first thing that came to mind was…I am El Nerdo, and I am the most interesting man in the world. I don’t drink beer, but when I do… Excellent, excellent intro to you. I can’t wait. As you know, you are my favorite commenter and I actively seek you out for what you have to say. For instance, I now suddenly NEED the wooden garden tub, but no– I won’t be putting my order in today. Lastly…Your words are seriously spun… Read more »

El Nerdo
El Nerdo
7 years ago
Reply to  KSR

Thanks! I did put a lot of work into carefully tracing my reasoning in that article, so I appreciate you noticed and could follow the thread, but I think a majority of readers want clear conclusions instead of long multipart arguments– I’ll try to balance that in the future so as not to cause a reader stampede 😀

Holly
Holly
7 years ago

Congratulations, El Nerdo.

This doesn’t answer your question but might provide inspiration for a post. In his book Checklist Manifesto, Atul Gawande devotes a chapter to the use of checklists in finance and other industries. He talks to a few professional investors about their checklists, but it got me thinking about how I might apply them in personal finance. In what PF situations would a checklist make sense, and what might be on the checklist?

El Nerdo
El Nerdo
7 years ago
Reply to  Holly

I don’t use checklists but I probably should. Thanks for the post idea! I will investigate….

Rosa
Rosa
7 years ago

Yay! I am excited to hear your backstory and follow your ongoing search for a coherent pf theory.

Bryallen @ The Frugal Graduate
Bryallen @ The Frugal Graduate
7 years ago

I really love your writing style, Nerdo! 🙂 I am also fascinated with how the human element of finance twists the numbers out of all logic sometimes. I can relate to the “emergency” principle. When I was getting out of debt, I worked two jobs (with little time to even sleep, let alone spend money!), so when I finally achieved my goal and was able to quit the exhausting second job, I felt myself able to spend more freely. I haven’t gone too crazy, but there’s always the slight spending-demon in the back of my mind telling me to take… Read more »

E.R. Murphy
E.R. Murphy
7 years ago

I guess I’m one of the few that found this overly wordy and I kept skipping whole paragraphs.

Don’t fall in love with the sound of your own voice.

Becka
Becka
7 years ago
Reply to  E.R. Murphy

I actually totally love El Nerdo’s written voice, but I have to agree: this article was much longer and wordier than it needed to be.

DB
DB
7 years ago
Reply to  E.R. Murphy

Congratulations El Nerdo! I’m a big fan and looking forward to more. This post was too wordy but I’m sure you’ll hit your stride.

El Nerdo
El Nerdo
7 years ago
Reply to  E.R. Murphy

Don’t fall in love with the sound of your own voice.

That ship has already sailed– but thanks for the advice! 😛

Tim Murphy
Tim Murphy
7 years ago

Love the mission and frankness of this post. Especially liked the contrast you draw between being good at math and being good with money. Both inherently involve numbers, but just because you’re good at one definitely doesn’t make you good at the other. I know tons of really smart people that don’t know jack about managing money. Your math/money comparison hit the nail on the head.

Looking forward to more of your stuff.

Tim Murphy

Laura
Laura
7 years ago

El Nerdo, I first have to say: – You are wonderfully intelligent – You are refreshingly honest – Your writing is entertaining (although I agree this post was a bit wordy) I am wondering, is a good place to start examining personal philosophies of, attitudes towards, and assumptions about money? Because I think that really colors what people come up with in their approaches to personal finance. Hopefully without opening a can of worms, I would just say that while I largely enjoy what commentators on GRS come up with (I learn a lot from the readers!), I’m also amazed… Read more »

Cycleash
Cycleash
7 years ago
Reply to  Laura

Laura, I value the personal experience that you share but likewise your reply was too long as well. I think you could submit a guest post on your personal experience 😉

Laura
Laura
7 years ago
Reply to  Cycleash

Sorry – was just having trouble wording it so as not to inadvertently offend. I wanted people to consider what I was saying instead of how I was saying it.

Not sure anyone would be interested in a guest post from me. Frankly, I’m still trying to get monthly spending out of the red and into the black – feels more like getting poor quickly. 🙂

El Nerdo
El Nerdo
7 years ago
Reply to  Laura

Laura– thanks for the comments. I actually don’t think your reply was too verbose– I love reading! But my own article could have been shorter. I am actually interested in how different social classes approach money. On the individual level, people tend to be very narrow in their perspectives and ignore that others exist or may be different. But the fact that you’re aware of your own prejudices speaks well of your ability to learn and adapt– so, don’t lose courage, and keep our focus so you can get above water. If I can do it, you can do it.… Read more »

jim
jim
7 years ago
Reply to  El Nerdo

Nerdo and Laura, You two have something. Lets lose the “theory” and get down to real practical, real life experiences. I’m one of 10 kids, raised on one salary, lived frugally – never knew it – thought we were rich (turns out my parents are). I lived well below the poverty level with my spouse and child while in law school. I know how to stretch a dollar into a dime and could teach young ones how to do that. What I’m still trying to figure out is how to save/invest sufficiently for retirement. Nerdo – interview Laura and lets… Read more »

Laura
Laura
7 years ago
Reply to  El Nerdo

Interview – um, sure {gulp}. I’d give it a shot. I suspect the takeaway for most GRS readers, though, would be what kind of mindset leads one into debt and how difficult changing that mindset can be, as opposed to learning anything new about how to become financially independent.

Thanks too for the encouragement. I’m nowhere near as far along in my PF journey as most of the folks here but I’m trying (perhaps in more ways than one).

Laura
Laura
7 years ago
Reply to  Laura

O.K.!

ruthmac
ruthmac
7 years ago

Thank you for addressing the complexity of financial independence.

I have been so frustrated that I am still in the process of a debt-free, savings-rich life while others write, “Whew, I got through it and here’s what I am doing now.” Their process seemed so simple.

I am glad you are an addition to this excellent blog resource.

Sheryl
Sheryl
7 years ago

I’d definitely agree that there isn’t one overarching theory of personal finance, just lots of common sense advice that should help get us there and sometimes contradicts itself.

I don’t think there can be an overarching theory, though. Everyone comes into the personal finance game at a different stage in their life, and with a different financial background. The habits we need to change are not all the same, and the parameters we work with are all so individual.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
7 years ago

Let me emphasize this: simple and easy to follow, such us “spend less than you earn” and “debt is a deadly plague.” Yes, that simple. When you’re in an emergency, simplicity works.” One of the ways I was clever was that I always pushed things back so I could enjoy them today but pay for them tomorrow. The future would always be brighter and I would always be able to pay. Your cover is blown, El Nerdo: you’re obviously Ben Bernanke! I’m so glad you’re coming to your senses! Great post, though perhaps a bit verbose. I like to think… Read more »

Brett
Brett
7 years ago

Great post and goal on your Theory of Everything. I like the pillars comment that was made earlier. Two comments about the quest and relation to theories in other fields: 1. Physics has long had different explanations on what happens at atomic level forces and large masses. My thinking was that this applies to personal finance too. If you’re deep in debt maybe tracking pennies is what you need to do where once you’re debt-free and figuring out saving/money goals you don’t. The principle is still sound, but it operates differently at different scales of debt/assets? 2. I think a… Read more »

Michelle
Michelle
7 years ago
Reply to  Brett

I love the idea of factoring a tolerance for risk in a set of over-arching principles of personal finance!

El Nerdo
El Nerdo
7 years ago
Reply to  Brett

Brett, thanks for the post, you’re spot on with #1, and I had never ever thought of #2 so I’m definitely making a note of it in my idea notebook. Thanks!

Honey Smith
Honey Smith
7 years ago

George Lakoff (the linguist at Berkeley) argues that one of the challenges of metaphors (which we all use, so so much more than we think we do) is that they only have to be coherent (with our life experience). They do not have to be consistent (with each other). As a result, we believe all sorts of contradictory things because they are apt for one situation. An additional challenge is that if we truly believe something to be true then our brains are literally hard-wired to ignore/not see evidence to the contrary because we don’t deal well with cognitive dissonance.

El Nerdo
El Nerdo
7 years ago
Reply to  Honey Smith

I googled that guy’s name and his ideas sound fascinating. Thanks!!

http://theliterarylink.com/metaphors.html <-brain candy

Honey Smith
Honey Smith
7 years ago
Reply to  El Nerdo

Don’t Think of an Elephant is probably his best known book and can be read in an afternoon, though Metaphors We Live By is also very good.

Amy
Amy
7 years ago

El Nerdo: Please be concise. I like that you’re writing for GRS because you actually seem to care about the nuts and bolts of finance. In contrast to the majority of staff writers at late, who are wearing designer jeans and not sure if they should cancel mensa dues while their financial house burns down, raising funds via kickstart for friend’s business OR are having a midlife crises, you might actually be the one lone voice of financial education this sight has to offer anymore. So do what you set out to do. But keep your words brief. The whole… Read more »

Laura
Laura
7 years ago
Reply to  Amy

http://www.mrmoneymustache.com/

Just realized you said DAILY – MMM doesn’t post daily, just fairly often.

Jane
Jane
7 years ago
Reply to  Laura

I’ve started reading Mr. Money Mustache on occasion, but sometimes I find it pretty self-righteous and extreme. This was a particularly egregious example written by his wife:
http://www.mrmoneymustache.com/2012/07/27/youll-never-be-normal-again/

Also, I’m shocked by how overwhelmingly positive the comments always are. I find this boring, unlike here where people feel comfortable to disagree. Is it just an echo chamber or does the author highly moderate the comments?

Maddie
Maddie
7 years ago
Reply to  Jane

Mymoneyblog . com is another good one.

Katie
Katie
7 years ago
Reply to  Jane

Doesn’t he subscribe to the creepy “Extreme Early Retirement” school? (Not that retiring early or extreme frugality are creepy; I just think that particular blogger is.)

Megan
Megan
7 years ago
Reply to  Jane

I was excited for El Nerdo’s post, but I have to say that it fell flat. I thought it was too long and I wound up skipping entire paragraphs.

I realize this is just his first post; he just needs to warm up and get used to it.

kate
kate
7 years ago
Reply to  Amy

i just came across 20somethingfinance.com and it seems ok so far. i haven’t loved the past few posts but the archives seem good so i’m going to give it a chance for awhile.

El Nerdo
El Nerdo
7 years ago
Reply to  Amy

@ everyone in this thread: stick around for my next post. If it’s not concise, I will eat my shoe.

(No, I wont. But have a little faith here. I’m not a complete dolt. Only partial!)

Honey Smith
Honey Smith
7 years ago

Also, Mark Twain said, “The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d rather not.” I think PF is similar in some respects 😉

Ash S
Ash S
7 years ago

Worst. post. ever. Promises not to ramble, rambles on to make a simple point, and the writing style was god awful.

Good bye GRS, this is it, you were in decline for a while, we knew this was coming.

Jane
Jane
7 years ago
Reply to  Ash S

Can you explain how this is god awful writing? I have always found El Nerdo’s writing style engaging with a dose of the profound.

The main criticism is what others have already pointed out – that sometimes he takes 100 words to say what could be said in 10.

But god awful? In no shape or form.

PennySaved
PennySaved
7 years ago

I read FreeMoneyFinance regularly plus MrMoneyMoustache. Also fivecentnickel. Used to read TheSimpleDollar, but have given up on that because the blog is now a re-run of old posts and comments were too supervised. I read the Bogleheads.org forum regularly for investment advice and strategy, also they have postings of general personal finance issues too.

Alison
Alison
7 years ago

Hi!

Could you fill me in on the reference to Suze? I’ve been reading GRS posts for months now, and I’m not aware of what you meant when referencing her.

margot
margot
7 years ago

Good lord, this author likes his words. The editing process should have cut 30-50% of this article. It’s redundant and repetitive and uses way too many words to make a simple point. It’s rare on this blog that I resort to skimming and skipping whole paragraphs, but El Nerdo pushed me there. Otherwise, at least he’s a good writer.

Candice
Candice
7 years ago

Love it! Looking forward to more.

margot
margot
7 years ago
Reply to  El Nerdo

You can use significantly fewer words without compromising any of your goals listed above. Go through your post, really scrutinize each sentence, and figure out if it’s truly making a new point or if you’re repeating something you already said. You’ll find that half the post is redundant of something already said. You spend paragraphs ramping up to making a point instead of just making the point itself. And you repeat things over and over without really getting to the kernel of an idea.

El Nerdo
El Nerdo
7 years ago
Reply to  margot

http://en.wikipedia.org/wiki/Convergent_and_divergent_production

I can’t rewire my brain but I’ll talk to my editor about cutting things. Thanks!

Kristen
Kristen
7 years ago
Reply to  El Nerdo

I rather enjoyed the thorough, thoughtful, and perhaps verbose (but enjoyably so) post myself.

HighOrderGultcomplex
HighOrderGultcomplex
7 years ago

Needed pictures of kittens.

Erica
Erica
7 years ago

Hi El Nerdo.

I had a really hard time getting through this post and absorbing your points, which is too bad because you have a lot of good things to say! I majored in journalism before turning to the dark side (public relations), and I had to learn how to ditch the flowery prose of academic writing and get to the point more quickly. Long articles are fine if they make points clearly and are organized well for the reader. I’d recommend buying a basic journalistic writing book like Journalistic Writing by Robert Knight. Best of luck!

El Nerdo
El Nerdo
7 years ago
Reply to  Erica

I’ve bookmarked the book on Amazon & will download after I’m done posting replies (frugally checked with library first, but they don’t have it– blagh!) Anyway– thanks! Really!

Brian
Brian
7 years ago

With all due respect, if this is any indication of what is to come for GRS, I won’t be paying much attention. I read about the first half, and then realized how much time I had just wasted. I truly appreciate your entertaining style and attempts at humor, but after all that writing time and obvious effort you put in, ya gotta SAY SOMETHIN’ of value because that’s what GRS readers are here for. Make it concise, make it clear, get to the point in as few words as possible using impeccable grammar, only resort to esoteric vocabulary when necessary,… Read more »

El Nerdo
El Nerdo
7 years ago
Reply to  Brian

Thanks, I appreciate the feedback, really. Thumbs up & all.

Ms. Kitty
Ms. Kitty
7 years ago

I think the problem here is that personal finance is the murky brackish water between the well-understood river of finance and the deep, mysterious ocean of human psychology. Counting pennies motivates some people (I imagine this includes many of GRS regular readers) but would make someone like my mother angry and more likely to spend money to make herself feel better. I try to think of my own issues with dieting. Although I am able by simply following the HAES approach to maintain my weight and keep my bloodwork healthy, I’d like to get smaller. But losing weight for me… Read more »

El Nerdo
El Nerdo
7 years ago
Reply to  Ms. Kitty

Haa haa– I love the idea in your last paragraph! It’s probably true! (and hilarious) If so, we should probably try to formulate a “care-free” or “joyful” PF system as a response.

I’ll say though, the BMF does not count pennies, if you haven’t tried it… just stick to the percentages and you’re gold. I really love that system. Check it out… https://www.getrichslowly.org/the-balanced-money-formula/

Josetann
Josetann
7 years ago

I don’t think there can be a true unified theory of personal finance. You can have a general theory that works the majority of the time, but there’s always exceptions. No debt ever…except for education and your house. You know…I personally don’t like strict rules that have a “but” or “except” in them, sounds like a cop-out. If we assume debt for education is good, then we’ll go overboard when maybe we could have gotten just as good an education for much less (scholarships, grants, going to a community college for two years then transferring to a four-year, etc. etc.).… Read more »

Anne
Anne
7 years ago

Two points:

1. El Nerdo, your writing really resonates with me. I’m looking forward to your future posts!

2. All the people who have submitted comments ad nauseum about the post being too long could more appropriately have “liked” the first comment that expressed that sentiment rather than posting your own redundant (and often verbose and whiny) comment. You flatter yourselves in thinking we all want to read your unoriginal comment….ironic, isn’t it?

Tyler Karaszewski
Tyler Karaszewski
7 years ago

I wish we had *more* posts that were longer and more in-depth. If you’re not willing to invest more than two minutes reading something, how much do you really expect to get out of it?

JR Readding
JR Readding
7 years ago

This article is filled with overly verbose platitudes, best suitable for lunch conversation. Enough of the emo-newbies already.

J.D., please stop the me too, coming out financial stories. Give us content with useful advice.

rachel
rachel
7 years ago

Great post! It might be a bit long (for some readers), but sometimes complex ideas just need some room to unfold and be explored. (Then again, I am an PhD student in English, so I do enjoy a good long read!) In evolving a Financial Theory of Everything, it might be useful to distinguish between general principles (which generally apply across the board) and strategies (the variety of choices individuals make to achieve the general principles). To give you a bit more context, my take on this is coming from the field of Rhetoric and Composition–where all too often students… Read more »

Colin
Colin
7 years ago

How about this for a grand unifying theory: Spend less than you make. My father taught it to me when I was growing up and it has guided me well ever since.

phoenix1920
phoenix1920
7 years ago

I’m so glad you got the job! Congrats! I often went thru the comments looking for your well-thought POV, and here you are, as a staff writer now! As you are asking for input, I’ll provide mine. First, I love how you look for coherence, but in following that goal, I’d give a warning about research paralysis. Sometimes, we don’t need more knowledge to reach our goals. Too easily with that route, we will fall into research paralysis–a condition that actually stalls any progress toward a goal. Generally in that state, we’re not focused on taking enough action because our… Read more »

phoenix1920
phoenix1920
7 years ago
Reply to  El Nerdo

LOL–yes–I had plenty of possibilities. But it drove my must-find-right-answer self up the wall. Too often, people induce fear in presenting their POV by suggesting that if you don’t do one approach, you’ll mess up your child (or in the case of finance, you’ll incur too much debt and fail). It’s funny to me to look back on that self now, but you’re right–there’s definitely positive points in findings LOTS of different answers. Feel free to use that too in terms of the glass being both. Most importantly, I REALLY admire how positive you respond to all the comments and… Read more »

Eileen
Eileen
7 years ago

Thank you for this entry. I am a big fan of theories of everything, and I agree that this is needed for PF. I have found a useful one for eating, “Eat more plants than animals,” which helps me to avoid getting bogged down in too many fads or ‘new revolutionary findings’ too often. I would like to politely offer this feedback: This article was way too long. Longer than most GRS entries, and I felt you were repeating yourself by the end. I look forward to all your posts, especially as you approach having a unified theory of personal… Read more »

Eileen
Eileen
7 years ago
Reply to  El Nerdo

Thank YOU! I am a long-time GRS reader, even wrote a song inspired by JD, and credit him with all kinds of personal changes I have made in the last 3 years. That said, I am happy to have you on board and look forward to having a happy “El Nerdo” reflex for your by-line, the way I do for Brokamp!

Alexandria
Alexandria
7 years ago

El Nerdo – I find your posts fascinating. I am an accountant and a philosopher so it kind of speaks to me I guess. Usually kind of an odd mix, I guess. The wordiness doesn’t bother me in the least – I prefer it. Look forward to more.

Samantha
Samantha
7 years ago

I enjoyed this post better than any I’ve read this year. Makes me feel better about sticking around the community.

Beautifully written and well-thought out. Elegant. Really resonated with me – we also found Ramsey at a time of crisis, and now are looking toward the future and trying to develop our personal “Whys”. I’ve also been eager for more “meaty” posts, so I didn’t find it too long, either.

I’m looking forward to your future posts – you just became my favorite GRS contributor. (Sorry, Robert!)

Kate
Kate
7 years ago

Sure, the post was a bit long, and I think that El Nerdo is very gracious in receiving the criticism as he has. But El Nerdo, please don’t feel the need to respond to every comment. I feel a bit strange reading through the comments and seeing you respond to nearly every one. I appreciate that you want to acknowledge the feedback, but it’s a bit overwhelming to see your name all over the page. I like it when the writer does pop along and make a comment or two. But that should be kept minimal, and I don’t want… Read more »

Charla
Charla
7 years ago

Glad you have a job, but I hope future posts will be shorter, less wordy, less philosophical and more practical. I gave up listening to long philosophical discussions in college many years ago because they rarely resulted in a practical solution to a problem. Please tell me how to exist in retirement with finances and investments disappearing and costs of living rising faster than at any other time in my life.

shares