I was discussing with someone about misinterpreting data on the weekend and remembered one of my favorite phrases for this type of activity:
If you hear hoof beats, don’t automatically think Zebras
I believe I first heard this one CSI, but I do like the sentiment. I view it as a corollary of Occam’s Razor, but I like the idea of simplicity. Complex ideas and theories always worry me, given I am a simple thinker.
The simple answers in many areas are the right answers (especially in the area of personal finance).
Whose hoof beats are these?
Some of the areas where I have had people hear Zebras when they should have thought horses:
- I am in debt because of the credit crunch. No, you are in debt because you spent more than you made, and you had to borrow to deal with this spending. For some it is borrowing money to buy a house, others borrowed money for a car but the majority, is borrowing money to pay for debts they didn’t need to incur. That ain’t no Zebra!
- It’s too complicated to stop using Credit Cards. This is a rationalization from folks who really are saying, “I like using credit cards and don’t want to give up my current lifestyle“. You can stop using your credit card tomorrow, put them in the freezer in 2 lbs. of hamburger, and they are gone. That wasn’t a buffalo, just a horse.
- A budget is too complicated to figure out. No, that is the statement, “I don’t want to use a budget because I will have to give up my current lifestyle” (again), a budget can be very simple and living to it can be simple, don’t make it a complicated thing, or you will fail. That wasn’t a gazelle, just a horse.
- I can’t save money given my current salary. How many times have all of us said this every time we get a raise? I have made that rationalization myself, you can save it just might be hard to do, that’s all. Wasn’t a wildebeest either, just a horse again.
Don’t make financial planning, personal finance or budgeting more complicated, keep it simple and listen for horses, not Zebras.