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As a teenager I was fascinated by Douglas R. Hofstadter’s book, Gödel, Escher, Bach: and Eternal Golden Braid. The book explores set theory, computer programming, logic, philosophy, genetics, music, Zen, and art. Between each chapter are fun interludes. They take the form of scripted scenes featuring colorful characters like Achilles, Tortoise, and Crab. In most of these interludes, the characters discuss a concept such as recursion or a fugue while the script itself illustrates that same concept.
The book introduced me to the philosophical tug-of-war between reductionism and holism. Reductionism is the belief that an explanation of a system can be valid only if it focuses on the smallest elements of that system, whereas holism is essentially the opposite: the whole is greater than the sum of its parts, and the only way to explain a system is to look broadly, all but ignoring the components.
Reductionism and getting out of debt
The concept of reductionism can be used to help get out of debt. Debt itself is a mathematical concept. You are in debt because the balance of your assets is less than the amount of your liabilities. Each purchase worsens this condition, and if interest is involved, a $100 purchase could cost multiples of that amount in the long run. If never paid off, the true cost of any purchase approaches an infinite number of dollars.
Emotional spending is often, but not always, the cause of debt. Purchases are made without regard to financial condition, enabled by access to easy credit. Sometimes debt is caused by unexpected expenses without a cash cushion to cover surprises, and occasionally even the best emergency fund can’t save people from finding themselves in debt. Focusing on and eliminating the various root causes of debt, eliminating each, and evaluating your progress at every step are all reductionist approaches to getting out of debt.
The Expense Coffee-Related Drink Factor is a reductionist approach, as well. If you have a daily habit of excess, like drinking a $4 drink from a boutique coffee shop when it would cost $0.20 to make your own, eliminating this expense fits with the reductionist philosophy. A reductionist would also creating a specific plan for paying down debt once excess income is available, whether the plan is the Debt Snowball, Debt Avalanche, or something in between.
The reductionism approach, if followed faithfully and tailored specifically to unique circumstances, will engender success. However, this may be missing an important part of the debt reduction process.
Holism and getting out of debt
One might look at their financial situation with a holistic philosophy. Rather than focusing on the specific causes of debt and a predefined path for eliminating debt, it may be worthwhile to look beyond these details and at the total self. These are some questions that trigger holistic thinking and evaluation:
- What kind of person am I?
- What are the aspects of my self that define who I am?
- What are my most important values?
- Why have I not focused on sound financial management?
- How would others benefit from my financial condition if it were stronger?
- Am I satisfied with the balance of power between myself and those to whom I owe money?
- Why do I feel I am not in control of my financial situation?
While these are all questions that are somewhat separated from the specific actions taken when dealing with money, the answers describe a character. The whole self provides insight that can help someone improve a financial situation and life. Holism and reductionism are by definition mutually exclusive, but that shouldn’t prevent someone from using aspects from both philosophies to increase the probability of financial success.
You could eliminate bad habits, cut up your credit cards, and pay off your debt, but if you haven’t evaluated your identity and your relationship with money, you are treating only symptoms. Likewise, if you redefine your values and begin to re-frame your locus of control without thinking about the consequences of your purchases, you may feel better about yourself but the financial damage will still exist.
Do you lean more towards holism or reductionism? Or are you just a fan of GEB:EGB?
Photo credit: psd
Updated February 27, 2010 and originally published December 9, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.