This Is Why You Can’t Get Your Finances Under Control

You remember your logic classes, don’t you?

Logical fallacies are common forms of poor reasoning – literally, misconceptions based on errors of reasoning.  Even if you didn’t take a logic class, you should quickly realize the errors in certain types of arguments.

This particular post is a reaction to a particular form of ad hominem attack.  ‘Ad hominems’ are fallacies which attack the person making an argument, rather than details of the argument.  Poisoning the Well is a preemptive attack on the character of someone about to make an argument.  It’s literally an attack before the arguments even begin.

It’s Not The Message, it’s the Messenger!

For the ultimate example of poisoning the well, check out this Gawker hit piece on Graham Hill’s widely panned piece on living below your means in the New York Times.

Mr. Hill is a member of the last generation of Internet Millionaires, minted during the tech bubble in the late-Clinton era (you know, like this guy).  Often in their late 30s to mid-40s, this crowd, through an arguable combination of good timing and luck, extracted some of the massive wealth which drove the NASDAQ to levels around twice what they are even today.

Mr. Hill’s major sin?  Having the gall to post about living below his means… when his means are above the average!  Author Hamilton Nolan wasted no time poisoning this particular well – even if the passive aggressive article title can be blamed on an editor, Mr. Nolan opens his article in no uncertain terms:

There is something about achieving great financial success that seduces people into believing that they are life coaches. This problem seems particularly endemic to the tech millionaire set.

Right.

Granted, just because you were targeted by a logical fallacy doesn’t mean you are correct.  There are plenty of issues with Mr. Hill’s ideas of what counts as necessities – certainly, the average debtor doesn’t need to amass an extensive DVD collection or travel around Europe for years with a foreign girlfriend or boyfriend before seeing the light.  Those quibbles aside, the article is spot on – and math is truth.  Spending less than your $10,000,000 budget will leave you with a surplus, sure – but so will spending less than your $10,000 (or whatever amount you’re bringing to the table).

Damned If You Do, Damned If You Don’t

99.9999% of the time, you can't credit their perfect genetics... (Wikipedia)

99.9999% of the time, you can’t credit their perfect genetics… (Wikipedia)

It’s almost impossibly hard for people to make it through the screens we put up.  You see, your biases make you dismiss people out of hand for their current success.  However, if they aren’t yet in the ‘promised land’ of fitting the description?  You’re probably biased against listening to them since they aren’t yet experts!

Think about it – if the messenger has achieved something of value that other people want, you dismiss it because of their traits.  If the messenger hasn’t achieved something of value yet (even if they are obviously on the right path), you dismiss them for lacking the traits.  If your mind is that closed, please explain to me the traits of a person who you would listen to – someone who had ‘it’ and lost ‘it’?  Recognize that there is a distinction between ‘will become’ and ‘will never be on this path’.  Your not-yet-experts will be experts in 10 years – and you’ll be dismissing them for their past success!

If your messenger went from 30% body-fat to 16% body-fat, even though they aren’t at 10% yet (I’m assuming a male here) they probably are doing something right.  If your messenger has an increasing net worth at any age, they’ve probably got some wisdom to impart (we listen to Journalists, and isn’t the definition of Journalist, “someone who reports with authority on matters where he or she isn’t an expert”?)  Wouldn’t a junior Pre-Med undergraduate be able to give you good advice about becoming a doctor?

To start your journey to a very achievable goal, shut up, drop the impossible standards, and listen to people who have done it… AND to people who are doing it.

Convenient Excuses for Failure

The excuses you make of this form tend to be applied to similar situations.  Human beings display a ton of time inconsistency, which means we tend to over-discount future results and are biased to rewards in the present.  Stated another way, we overvalue the short term at the expense of the ‘not-so-short’ term.  By dismissing someone making an argument about improving your life over the long term, you avoid tough short term choices.  Let’s give a few examples:

  • Argument: A millionaire gives you advice about how to structure your finances to become a millionaire. 
  • Excuse: Well, she’s a millionaire so there’s no way that applies to me.  
  • Pain Saved: Not reducing short term spending.
  • Result: Next year you’re in the same leaky financial boat – with a year less to do anything about it.
  • Argument: A celebrity explains a workout routine.
  • Excuse: Well, of course he has great abs!  He’s paid to have good abs.  Or: of course she has great calves!  That’s why she gets those roles!
  • Pain Saved: The physical pain of working out.
  • Result: A bigger spare tire and ill-defined calves… and a stronger remote control finger.
  • Argument: A doctor explains how to become a doctor.
  • Excuse: I can’t do it, it’s too hard!  He must have been born with the ability to be a doctor.
  • Pain Saved: Tons of work, seemingly endless hours in the clinic, and (gasp!) college classes on Friday.
  • Result: $100,000 in college debt, an Underwater Basket-weaving degree, no job, and free rent in your parents’ basement.

Newsflash: only 16% of millionaires were born into wealth.  The number of children born with perfect musculature is probably a few in 7 billion (with at least 2 documented).  And the number of people who are born doctors?  Literally zero – none, nada, zilch, and every other form of absolutely nothing.  So your ridiculous excuses about why you can’t achieve the same results are unfair to 84%, 99.999%, and 100% (respectively) of people.

Truth is, you really can have what you want, it’s just prioritization.  Don’t continue to make mistakes – the most rewarding journeys start with a single step.  You might as well start walking.

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Comments

  1. says

    It is quite peculiar about how some folks perceive others. I’ve kinda given up helping everyone I can and only helping those who want help. It’s easier to share personal stories and if readers want to follow, great. If not, all is good too.

    Sam

    • says

      I talked to Cameron about this the other day. He was frustrated that people continually will seek him out for advice. Call, in person, whatever. Then, when he dispenses out well-crafted and heart felt advice, they completely ignore it.

      Maybe that’s why we need to blog? Rejection of our advice is usually quiet and anonymous. The issue is when people take our advice, only some of those people will let you know.

  2. cashRebel says

    I guess id say that my most powerful motivators for financial success are those halfway to financial independence because those folks don’t typically write books. Those blogs are really inspiring to read. Of course it also helps to hear from folks who have completed the journey like you said, because they know the road ahead. Great post!

    • says

      I think that’s a healthy philosophy – you avoid the people who first post they have $100,000 in debt, say. You seek out the people who have stuck with it, have a track record, and are down to, like, $50,000… then you know they’ll probably stick with it.

      It’s hard to define the x and the y, but I think you’ve got something there…

  3. says

    I firmly agree the Gawker article here. Mr. Hill has a lifestyle and a philosophy that’s entirely unapproachable by the average person. If Mr. Hill wanted to pontificate about how to build an internet startup company, I’d be all ears. But I don’t want some phony eco-mimimalist trying to say how great it is to have less stuff while he jet sets around the world with exotic beauties.

    I have less stuff. It’s not a fun liberating experience. It’s a necessary tradeoff (something I don’t think Mr. Hill has had to encounter in at least a decade) to achieving greater financial goals.

    • says

      But Mr. Hill is really just an inflated version of a lot of the stories we hear in the “blogosphere”. Person spends too much, person realizes they spend too much, person stops spending so much, person writes it down to become accountable.

      I, too, think he is quite preachy – I’m perfectly happy with my life the way it is (I just smogged my car – it’s so clean you could probably breathe the muffler air. Not suggested, though.). However, the math he suggests – spend less than you earn in the present – is what personal finance is all about. Just, well, on a larger scale.

      • says

        I cannot find where he mentions personal finance in his NYT article. He doesn’t talk about spending less. Only having less stuff. Spending money on intercontinental flights and carbon offsets is still spending.

        He rambles on and on about how minimalism made him happy. I think he’s full of it. His apartment may be minimal – to the extent that a custom designed apartment can ever be called minimal. But his bank accounts and lifestyle (he brags about flying around the world and bedding exotic women) are anything but minimalist. I had an apartment as small as his in grad school. It came complete with 40 year old appliances, excessively drafty windows, and rug so flat it might as well have been tile. Hardly the magical liberating lifestyle he brags on and on about.

        He also rambles on about how he’s saving the Earth. Good for him. I’d rather not smugly beat people over the head with every environmentally conscious decision I make.

        He’s the kind of preachy, smug, out of touch person who completely rubs me the wrong way.

        • says

          Okay, I see what you mean. I suppose I was reading in a “use what you can afford” into his “reduce consumption”.

          I know the feeling, too. Al Gore, lecturing people about carbon offsets from his mansion. Bono doing the same while flying his HAT first class. Movies complaining about businessmen making millions of dollars.

          However, that’s hypocrisy we don’t like. Mr. Hill, at least it appears to me, actually has traded away a fair amount of possessions. Sure, he’s still not the most sympathetic person – foreign jaunts with foreign girlfriends don’t resonate with me – but I give him credit for taking a step further than Mr. Gore and Bono, at a minimum.

          I’ll still keep my house, which would fit quite a few Hill-sized apartments.

  4. freeby50 says

    I agree that ad hominem attacks don’t refute an argument.

    But I do think that who the messenger is and their circumstances and credibility matters to how a message is received.

    If my 8 year old niece gave you advice on being a millionaire would you accept it? Even if she had a blog and called herself a journalist?

    • says

      What’s your niece’s URL? I’ll take a look! (Ha).

      I think the opposite reductio ad absurdum is equally… uh, absurd. If someone has a net worth of $999,999 should we ignore his or her millionaire advice? What if this person is 29? What if they are not a journalist?

      Certainly, the messenger matters. However, in this particular case – I think that the math is universal. Sure, Mr. Hill has a ton of money. That doesn’t change the fact he has to spend less than he makes (in interest, or enough that his nut doesn’t shrink too quickly) if he wants to be in good shape.

      • freeby50 says

        Well Mr Hills argument is really “live with less” rather than “spend less than you earn”. And he cites his 420 sq ft apartment as evidence of how you can live with less. However his little apartment is setup with all sorts of specialized custom folding space saving features that probably cost him 6 figures to install.

        So his “its easy to live in a small apartment” argument is actually impacted by his high net worth because he is only comfortable in that apartment because he has all sorts of fancy and very expensive fold away furniture items.

        Its easy to have few books if you have a Kindle with 100′s of titles you bought.

        Its easy to live without a kitchen if you eat out all the time.
        I think this is the objection to his argument based on the wealth in this case. His lifestyle is made very much easier due to his wealth.

        He’s not a broke student living in a squalid studio.

        However, yes a alot of his argument is universally true that stuff costs people money and most of us have too much of it.

        p.s. you just *assumed* my niece isn’t a self made millionaire?? ;-)

        • says

          “Its easy to live without a kitchen if you eat out all the time.” – Isn’t it funny that the exact same statement applies to hoarders who have lost their ability to use their own kitchens? The two extremes have an odd symmetry…

          P.S. Your niece should probably write a blog – it wouldn’t be any worse than this silliness I’ve got going here!

  5. says

    Denial and creating excuses is probably the number one reason we fail at anything we would “like” to do. Maybe if we treat it as something that we “have” to do it would be easier not too create the excuses to not do it.

  6. 101 Centavos says

    Horses for courses.
    Not for nothing that Hill is the founder of TreeHugger.com. He’s probably hard-wired to be preachy.

    • says

      I’m very disappointed that that website has a white background.

      Doesn’t he realize that white requires the red, green, and blue pixels to all be on simultaneously, thus requiring more energy use on a monitor than any other color? I’m appalled!

    • says

      How do you feel about him having to experience loads of ‘stuff’ before coming to that conclusion? Would you agree with some of the other commenters?

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