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The Path to Mediocrity: Doing What Works For You and Other Self-Limiting Philosophies

General advice for an imaginary average person

Personal finance advice comes in many forms, running the gamut from Dave Ramsey’s philosophies on getting out of debt to Suze Orman’s no-nonsense anti-stupidity spending advice. Opinions vary wildly as you stroll down the promenade from the broker, a salesperson, to the financial planner paid by the hour rather than commission. Mass media, by definition, must appeal to the masses, so unless you’re working individually with a professional, the advice you hear is geared towards the “average” individual.

I don’t know any average individuals. This concept is a fictional statistical human being, an amalgamation of a sample population, with no defining characteristics. Mass advice cannot cater to the most diligent or intelligent of the crowd, because invariably less apt individuals overestimate their abilities, attempt techniques designed for the more able, and fail. Thus, advice is often “dumbed down” or simplified to meet the lower qualifications of a larger group.

Take, for example, the case of the best way to pay off credit card debt. I call it the “Debt Avalanche” but it certainly wasn’t my invention. While there are exceptions, this method of debt repayment calls for credit card debt always being paid off by focusing on the debt with the highest interest rate first. But people don’t always want to take this approach. They may receive more “satisfaction” by paying off the debt with the lowest balance first, which they believe will motivate them to continue paying off debt. Money, after all, is emotional more than it is mathematical.

Unfortunately, it’s this mindset which helps many people fall into debt in the first place (or repeatedly), and it is not correct. The best way of reaching a specific financial goal will always be the mathematical way. If not, your true goal is not purely financial. For example, is your true goal to get out of debt quickly and efficiently or is it to feel good about your debt situation? You will feel better in the end knowing you took less time and spent less money to get out of debt. If not, then perhaps you haven’t learned much from the experience and will find yourself succumbing to the “emotions” of money again and perhaps falling back into debt.

There are legitimate places for emotions when dealing with money, but debt reduction is not one.

Self-limiting philosophies and beliefs

You may hear that “doing what works for you” is the best way to approach a financial situation, but it’s often not a good idea. Doing what works the best mathematically is the ultimate approach. Other approaches may help you reach your goal, but not in the best way possible. “Doing what works for you” is an admission that you feel you have no need to improve yourself. This philosophy tells the world that you’ve learned everything you need to learn and are satisfied with your choice, even though you know it may not be the best. Or worse, if you have not learned all you need to know about your situation, you may not even realize that what you’re doing is in fact “not working.”

“Doing what works for you” is one of a number of self-limiting philosophies, excuses that people will use to convince themselves that they don’t need to strive for excellence. Here are some others:

“Luck and chance affect me more than my effort and skills.” Do you attribute a missed career opportunity to bad luck or not enough hard work? When you received a good grade on a college exam, was it due to the ease of the test or your preparedness? Those who attain their goals are more likely to be those who believe their own decisions and actions affect outcomes, good or bad. Those whose philosophy of outcomes is built around an internal locus of control have been shown to reach their goals more often.

The locus of control is one way psychology pays a significant role in your goals, financial or otherwise.

“Anything is better than nothing.” When it comes to saving, reducing debt, and investing and planning for the future, I agree. You have to start somewhere, but it is only a start. But if you believe that your financial condition in the future is important, the minimum is not enough. Don’t stop at “anything,” even if it is better than “nothing.” This is like saying it’s fine to feed your children one meal a day because one meal is better than no meals. Everyone is busy, but if the minimum is all you have time for, don’t expect results.

“At least I’m better than average.” The New York Times recently cited the Federal Reserve Board with an “average household credit card debt” figure of $8,565. Owe less than that and you’re in good shape, right? It’s unclear how that figure is determined. It may in fact be the average credit card debt of only households that have credit card debt. Include debt-free households in the calculation and the figure will drop. A number this high lulls many people into a false sense of security with the belief that with their balance of $6,000 in credit card debt, they’re “doing better” than most of the country.

This “security” leads to inaction and, in this case, to the glee of credit card providers, merchants, and manufacturers around the world.

Getting over it

The result of a lifetime with these beliefs is guaranteed mediocrity. While removing self-limiting philosophies doesn’t guarantee excellence and the ability to reach every goal, keeping these philosophies guarantees that you will not do your best. I do not know any man or woman with children who is satisfied with being anything but the best father or mother he or she could possibly be, so why are so many people satisfied with being an average personal financial officer?

There is usually a perfect mathematical solution to financial goals, like the Debt Avalanche mentioned above. Although Dave Ramsey says that most people have more success with a different, more expensive and time-consuming technique, that doesn’t mean you shouldn’t strive for the better solution. Just because perfection is not always attainable doesn’t mean that it’s worthwhile to stop striving for that approach and settle for lackluster results, especially if the better approach is not more difficult than the alternatives.

If you’ve found something that “works for you,” don’t assume that there isn’t something else that works better for you. Follow the best examples, not examples set by the fictional average individual. If your financial security is important to you, don’t settle for mediocrity. You won’t always reach your highest goals or always be excellent, but you’ll never be excellent if you limit yourself.

Updated August 22, 2008 and originally published August 20, 2008.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 18 comments… read them below or add one }

avatar 1 Anonymous

Thank you for this frank assessment of much financial advice. It is akin to children in school being given good grades regardless of performance so that their self confidence is not affected. Another reason many people should not “do what works for them” is that a great majority of them are delusional! A 2007 study found that 70% of the American workforce is confident they will have enough money to retire but 49% of those people have not saved a dime. What works for them clearly is not working.

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avatar 2 Anonymous

Hi Flexo,

I think I agree with your assessment that if you strive to be the best personal financial officer, you need to seriously work hard at following the best, mathematical practices at all times. This is pretty much indisputable in my opinion.

However, although you may not achieve TOP financial success, I feel that taking a slower, more “average” approach works better whose life priorities revolve around trying to be the “best they can be” at different things. The financial advice I’ve followed in the past few years have allowed me to save money, plan for my retirement, pay all my bills, get out of credit card debt and still have some money for fun during the week. I’m lucky in that I’m relatively young (31) and am building good habits that will last me through the rest of my life.

I know it’s probably irresponsible of me to not make my personal finance my top priority in life but, like many other “average people” out there, I am more committed to other aspects of my life that take huge amounts of effort as well. And those things are deal-breakers regarding how happy I am in this life: money or no.

Mostly, I guess, that not everyone can strive to excel here and not everyone wants to. The approach of “self-limiting philosophies” works for those of us who put their self-discipline into other areas and their efforts and expertise into other pursuits. Perhaps you’ll be a millionaire well before me (in fact I can guarantee it unless we get a windfall at work here, heh) and enjoy the heck out of getting there, but that’s not the path for me. I know that following those strategies has gotten me to a very nice point in a relatively quick time and I just see my situation getting better (even with the occasional financial emergency).

Regardless, thanks for reading this and I still think your advice is great! Just thought I’d give some perspective from a different side.

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avatar 3 Anonymous

I’m not sure I entirely agree with your premise in all situations. For example, I use a rewards credit card which pays me 2% back, but its requirements are extremely simple – I get 2% back no matter what I buy with it, and I go to their website to claim my cash back reward on a monthly basis. Should I get a card that has the potential for higher rewards in certain spending categories, but requires more of my time to manage properly; or use multiple cards to achieve the highest result mathematically possible? The simple approach “works for me”.
I could mention some other winning financial strategies that might maximize my income or minimize expenses, but that I’ve decided aren’t really worth the effort or stress. They won’t “work for me.”
Just so you don’t think I”m a total sluggard, I have no debt other than my primary mortgage, which I am paying off early, and my wife and I put 24% of our money in savings and investments. Our plan is to retire in 12 years.

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avatar 4 Anonymous

Comment #1… you read those percentages wrong. It says that 49% of people who have not saved are confident they will have comfortable retirement. It does not say that 49% of people who are confident that they will have a comfortable retirement have not saved at all. There is a big difference in how you have interpreted the percentages and what it really says.

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avatar 5 Anonymous

Nice analysis, not only of the financial effects, but the global social effects of what might be termed sloppy standards. Giving advice, and then backtracking with “do what works for you” has become pretty commonplace, mostly because it helps the adviser to avoid controversy or disagreement.

“Works for you” sounds nice in theory but any study of the “fundamental attribution error” that humans fall prey to makes it fairly obvious why objective standards are so valuable in self-evaluation.

This was an original post, I enjoyed it.

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avatar 6 Anonymous

Excellent, excellent post. I couldn’t agree more.

Regarding comment #3: I see Jon’s point. I also think it doesn’t entirely contradict the post. Jon’s example is, I think, a bit different from the author’s. The author’s example refers to paying off debt in a situation in which the relevant figures are all available: the question simply is “Do you want to pay less interest or more?” People who choose “more” either don’t understand what they’re doing or are willing to pay more interest in exchange for a psychological reward.

In Jon’s example, by contrast, you mention a situation in which the alternatives could very quickly get complicated. From a purely financial standpoint, you COULD say the rational thing to do would be to collect 3 or 4 or 9 credit cards, each of which offers a higher dividend in one category or another. But to do so would involve a bit of research, constantly monitoring the accounts to make sure the dividend didn’t change, constantly monitoring other cards to make sure a better one wasn’t available, and keeping up with the bills to ensure that they’re all paid on time. (Personally, I’ve never made a late payment and I’ve always been a bit bewildered by people who have trouble in this regard. But even I would imagine that regularly using a lot of cards increases one’s chances of accidentally missing a payment occasionally).

So the example Jon gives introduces a degree of complexity that would, at best, take time away from living one’s life, and at the worst would also entail financial cost. This kind of complexity and mental clutter would, itself, need to be assigned an arithmetic value of some sort– and the time spent entails an opportunity cost. Even if Jon’s decision to choose simplicity over complexity is saving him nothing but a lot of hassle, i.e., even if he’s “losing out” in cash terms, this is not irrational (as paying off the low interest debt IS).

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avatar 7 Anonymous

Yep– Andy (#4) is reading that survey correctly, and that’s even worse than Carol made it sound!

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avatar 8 Anonymous

Very good comment! Money has an emotional aspect, too, but in the end it is really just a means of measuring economic value which is supposed to be rational. As humans we don’t have much choice about making decisions with our gut or based on prejudices. Life is just too complicated not to rely on “known mediocracy”. It is difficult for the average person to break out of our confines set up by our biases and prejudices which unfortunately often influence our financial decisions negatively. So let’s hope that your “Anything is better than nothing” is a good start for many people.

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avatar 9 Anonymous

Just like most of the comments I totally agree. Lots of lowest common denominator strategies out there. But even with that, there are so many who fail.

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avatar 10 Anonymous

Thanks, Mike.

I’ve seen some discussions on PF sites about another area where following the straight numbers isn’t always the best thing. For example, chasing the highest interest rate in an online savings account. Unless you’re dealing with very large amounts of money, it’s not always worth the effort to change banks for a half a percent. If I ever got to the point where I had a couple of million $ invested, I’d probably spend more time figuring out where to put it to get the best rate of return (all other factors being equal).

Another subject that came up recently is the idea of buying presidential coins from the US Mint on a rewards credit card, then depositing the coins in savings until it’s time to pay the credit card, as well as more convoluted variants on the idea. I looked at it, ran the numbers, and decided not to mess around with it.

My main focus these days is on simplifying my financial life, automating things as much as possible, so I can work on more creative things. Chasing the numbers too closely doesn’t help me do that.

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avatar 11 Anonymous

Flex, I have to disagree with this sentence…

The best way of reaching a specific financial goal will always be the mathematical way.

(I’m not sure that ‘disagree’ is the right word for me to use, so let’s say ‘take issue with’)

I have a buddy, who decided to get out of debt.
He lined up his debts, highest rate to lowest rate, and started paying them off. A few months in, he was still working on the exact same debt (the big one, w/ the highest rate)… and he got discouraged. So, he slacked, for just three months, and paid only minimum payments. Eventually, he got his act together,started kicking butt, and paid off his debt.

Another buddy of mine, he decided to get out of debt..
But he lined his debts, lowest balance to highest balance. After only two months, he was done paying his first (low balance) account. He was so psyched, and energized, that he turned around and started to ATTACK the second debt on the list. He paid off his final debt months ahead of his original schedule…

Now, if you look at these scenarios, the first dude had the math right, but the second dude was REALLY motivated, b/c he saw some progress. Granted, if both had maintained the SAME intensity, the first dude would have paid less overall interest. But, losing just THREE MONTHS worth of motivation derailed the first dudes plan, and in the end, he paid MORE interest than the second, more intense dude.

Math is cool, and all, but this stuff is still VERY psychological and VERY emotional…

Rock ON,

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avatar 12 Luke Landes

Hey NCN, thanks for your comment. What you illustrated, a common example, is a motivational problem which can be overcome with some suggestions I wrote about here.

Just because your first buddy couldn’t motivate himself properly doesn’t mean that the option that worked for your second buddy should be recommended over the more mathematically superior option. (Sorry to all Dave Ramsey fans.) The goal is to use the BEST method, and the best is the one that *provides the possibility* of getting out of debt faster and cheaper. If you can’t make that goal and want to adjust your plan, that’s fine, but striving for a lesser option that is so similar but more expensive and slower — and pretending that it is the best you can do — is like an Olympic diver aiming for only the silver medal.

I’m sorry your first buddy got discouraged, but you can’t use some people’s discouragement as an excuse to strive for a lesser goal. And like I said, motivation issues can be handled separately.

Like I said in the post, there is a right time for taking emotions and other non-financial aspects into account when dealing with money, but *getting out of debt is not that time.* Getting out of debt is so important that you should strive to do it *right,* and if you’re not motivated to pay your extra funds to the card with the highest interest rate rather than the lowest balance, that’s another issue that you’ll have to deal with.

Put it another way, let’s say you’re teaching an Advanced Placement History class in high school. It’s a very hard class. Most students who took the class the year before only received a “C” as a final letter grade. They tried for an “A,” but even with hard work they ended up with a “C.” Maybe they lacked the motivation, but whatever reason, they didn’t achieve their goal.

According to your suggestion, you would advise students entering your course to strive for a “C.” In fact, you would only assign them the projects that would ensure the *maximum* they could receive in the class is a “C” (like how your second buddy could only achieve a sub-par result even by following his (Dave Ramsey’s) plan to the letter).

I want to teach my students to be “A” students, not “C” students. Let’s stop lowering the bar to cater to the most unmotivated individuals. Let’s stop lowering our goals. Let’s stop rationalizing by saying, “Well, at least a ‘C’ is passing.” That’s what this post was about.

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avatar 13 Anonymous

I’m still scratching my head at how easy you make it sound to magically sever all emotion and psychology from the process. I could pick a fight about it, but… there are other parts of my life I can devote that time to getting an “A” in. :)

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avatar 14 Luke Landes

Julie: Separation of the emotional and the rational does not mean that you eliminate emotions from the decision making process. You *can* keep the psychology involved by just changing a few details. I’m not a heartless person, I’m quite emotional myself like every other human, perhaps even moreso. Emotions are necessary… it’s just a question of redefining some of the psychology involved, in the case of getting out of debt, to find satisfaction in a mathematical solution.

“Emotional spending” is often what leads some people to finding themselves in debt, and the best way to solve that problem for the long term is separating emotions when making spending decisions, and a more rational view of money will help with that. Otherwise, one could find themselves back in debt soon after they “succeed” at eliminating debt.

But this post isn’t really about getting out of debt, although I used that as an example. It’s about setting goals in a world where we’re encouraged to strive for mediocrity in all things. The “money is emotional” excuse can often be a crutch that prevents people from reaching their full potential — a self-limiting philosophy.

As far as picking what you want to get your “A” in — you’re completely right. Focus your energy on the goals that are important to you, but when you have the option for expending the same amount of energy to get an “A” as you would to get a “C,” go for the “A.”

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avatar 15 Anonymous

Your “A” and “C” argument holds no real water…

I’m talking about behavioral change – and the psychological / emotional impact of getting rid of an entire debt account…
As someone who has written about and interacted with (literally) thousands of people who are getting out of debt, the impact of clearing away an entire account cannot be overstated.

I realize that my ‘less-sophisticated’ method doesn’t meet the high standards of the personal finance-elites… and that’s cool w/ me. I’m not writing about theory, I’m writing about fact. If you remove the emotional / psychological component, then you’re just writing a how-to.

In theory, if we were to follow the absolutely mathematically correct course w/ all of our decisions, then we’d all be debt free, prosperous, soon-to-be multimillionaires… (we’d all be healthy, educated, and in shape, as well)… Unfortunately (or fortunately, depending on your point of view)… we are NOT robots… we have souls, and we have emotions… and, these emotions play an important role in what we do or do not do…

I dig the intent of the post… but as a former C student, I’ll stick w/ us average joes…


Rock on,

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avatar 16 Luke Landes

NCN: Thanks again for your comment. I think it’s great that you’ve interacted with thousands who have agreed that there is an impact to clearing away an entire account. I also completely agree that the method you suggest works. There’s clear evidence of that. But I wonder how many (assuming all thousand-plus who you’ve spoken to adhered to that particular method of paying off debt, but I’m sure many found their own path), when first starting on their journey, had it explained to them that there is an option, while mostly similar to the method you profess, that will get them out of debt quicker and cheaper if followed as closely as they might follow the other path. Of those, I wonder how many could have used a suggestion of redefining milestones to help get the same “quick win” that Dave Ramsey finds so important. I also wonder how many blindly followed the suggestion of a guru without determining whether they could do better simply by modifying their strategy.

It’s a fallacy that “we’d all be millionaires” if we followed a mathematical course of action at all times. Everyone has their own goals, interests, and values; some align with making gobs of money, but most do not. Many life decisions are *not* about money, even though there are financial impacts (getting married, having kids, moving to another country, etc.) Additionally, the opportunities to become millionaires are not available to everyone. So I’d have to say that argument doesn’t really apply (but I hear it often).

One method isn’t “less sophisticated” and one isn’t “elite.” They’re basically the same strategies with one slight difference that many people wouldn’t even notice, unless told that they might need a “quick win” for extra motivation.

I don’t expect anyone to be robots. I’ve said already that emotions are an important part of the decision making process. Emotions are everywhere… from the feeling you get when you first decide that it’s finally time to pay off debt to the feeling you get when it’s all paid off and everything in between. Emotions will get you from one step to the next. But anyone who *relies* on emotions at the expense of logic for making decisions about money must admit that their goal is not “to get out of debt” but “to feel good about their debt situation.”

The “A” maximum grade vs. “C” maximum grade is an appropriate analogy because the Dave Ramsey method of paying off debt falls short. It cannot match the other method for speed and total interest cost in most cases. YES, his method has been proven to work, but that doesn’t mean other methods don’t work better for people who can handle the motivation (and it’s not much harder, you still get “quick wins,” I’ve written about this at length).

I get that you want to stick with average joes. Some people are happy with being average. I can understand. Striving for excellence opens up more opportunity for failure and makes some people more vulnerable. Playing it safe is one way to live through life, and it’s a choice anyone is free to make, as long as it is with the knowledge that they’re sacrificing some element of quality. In terms of debt repayment, the Dave Ramsey method isn’t really safer than the Avalanche method. They are so similar, especially for someone who is intrinsically motivated to get out of debt. It just doesn’t make sense to pay more money and waste more time in debt.

In the end, it’s can be a small difference in time and money or it can be a large difference, but it’s usually small. So you can look at it as either a big deal, no deal, or more of a measure of mindset. People who are able to make financial decisions based on more logic than emotion will succeed more frequently… and this is a skill that can be learned. Sometimes people just need to be shown that they’re wasting time and money. Many who follow the Debt Snowball method do *not* know this (even though Dave Ramsey mentions it). I’ve spoken to people, too. :-)

This is all just one small piece of the point of this article, the “doing what works for you” piece. Dave Ramsey’s method works. He’s got a multi-million dollar business based on it. That’s great! But there are other options that can *work better* with hardly any more effort, if any at all.

Just to be clear, a financial decision would be called for when asking, “What’s the best way to get out of debt?” On the other hand, “Should I have kids?” or, “Should I marry this girl?” do not call for purely financial decisions (though finances are a small part). Emotions and psychology are BIG, but when it comes to financial decisions, the best are made when emotions are checked at the door.

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avatar 17 Anonymous

I’m the kind of person that would pay off the debt with the highest interest. Also, I am not in debt and I will not be in debt (other than a mortgage) because I budget and only spend what I can afford. I have a hunch that other people that would use your ‘A’ method of getting out of debt are the types of people that would not have a problem with emotional spending. The people that do need help controlling their emotional spending are more likely to succeed using the the Dave Ramsey approach.

Take away irrational spending, track your money using simple arithmetic, and you won’t need either approach for getting out of debt.

By the way, for some reason everytime you guys ‘reply’, the message is sent to my e-mail. I was not the originator of this discussion nor have I ever responded till now. So could you just drop this discussion, I am tired of seeing it in my inbox. How about you all just agree to disagree?

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avatar 18 Anonymous

You are right. And this is the first time I have read this in light of personal financial management.

Didn’t someone say that all progress is made by unreasonable people.

We just have to keep questioning and work on getting better in one way or the other.

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