I initially wrote this back in 2007. Back then, the world was very different. Strangely, Debt and Debt Reduction are still very much a hot financial topic. There are many straightforward solutions to Debt that I have written about, but here is a more creative perspective. I also like the Count Basie story.
A while back, I read a book called “Creative Whack In the Head” by Roger Van Oech (Amazon Link), and it has an excellent section on solving the Right Problem. The section had a very entertaining story, which I think is topical to Financial Problem Solving as well:
“I’m not returning until you fix it”, bandleader Count Basie told a club owner whose piano was always out of tune. A month later Basie got a call that everything was fine. When he returned, the piano was still out of tune. “You said you fixed it!”, an irate Basie exclaimed. “I did”, came the reply, “I painted it.”
Creative Whack in the Head by Roger Von Oech
Now, the important thing in financial planning is to make sure you are solving the RIGHT problem, not just a perceived problem.
Right problem with the wrong financial solution:
- I can’t afford my credit card payments, so I should get a payday loan?
- No, you should figure out where you are spending your money and curtail it. If you are really in a financial fix, maybe see a Registered Bankruptcy trustee?
- Everyone is making money on Bitcoin, I should get into that
- Do you understand Cryptocurrency? FOMO is a very dangerous motivator. Stick with low cost ETFs with a safe coverage of investments. Buying a Bitcoin ETF is NOT mitigating risk.
- I find investing confusing, so I invest in bank mutual funds
- Good idea, but the solution isn’t the best. Maybe learn a little about Index Funds or safe ETFs and use them? Good on you, just maybe your solution isn’t quite on target.
Borrow the book from the library, it’s a light read, and may cause you to think differently, and sometimes that is what you need for your Debt Reduction thinking.
Another good book about problem-solving is John Cleese’s “Creativity a Short and Cheerful Guide” (Amazon Link).
More on Solving the Right Financial Problem
Debt reduction always feels like trying to fix a car with too few tools. But the real trick is diagnosing the actual problem. You can’t fix overspending by adding more credit, no matter what the lending company tells you. You can’t fix investment confusion by handing your money to the bank rep who is working on Tuesday morning. Don’t get me started on missing out by YOLOing into crypto.
The best long-term approach is boring: track spending, kill high-interest debt, automate savings, and stop chasing financial magic tricks. It’s not sexy, but collections are not chasing either.
If you consistently focus on the right financial problem instead of the loudest one, you’ll make more progress in one year than most folks do in a decade.
My list of debt commentary articles is quite long, so let's stick with the basics.
- Three Solid Ideas For Your HeLOC is a misdirection title. With interest rates going up, home equity lines of credit are becoming heavier anchors on your financial life.
- Pay Day Loans? Absolutely, positively NO! Go talk to a licensed insolvency professional before you do this.
- Surreal Paragraphs Found in Credit Card Bills, if you carry balances on your credit cards, you are in trouble. Look at their estimate for how long it will take to pay off the debt on minimum payments.
- A Mortgage Changes You, which is very accurate. When you get a mortgage, your life changes, and it will be a major element of your financial decision-making process.
- Make More by Reducing Debt with some elementary (maybe naive) arithmetic.
- Straight Talk on Your Money is not just a good book (and podcast). It explains how debt can get out of control quickly.
- Debt-shaming: Debt is Bad, but You Aren't having a poke at the "influencers" who say my commentaries about Debt being BAD is debt shaming.
- My coup de grace There is No Such Thing as good debt. Debt is a tool, like a chainsaw, and must be respected.
