April 22, 2008, 6:00 am

The Financial Chaos Theory

by: The Financial Blogger    Category: Miscellaneous,Personal Finance
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As you probably know already, I just love to make up theories about finance. I developed The Frugal Reflex and the”I deserve it” factor. Today, I am coming up with another weird creature that came out of my mind which I called the Financial Chaos Theory. In fact, I apply this homemade version of the Chaos Theory to my whole life. If find it quite simple to put in place and quite efficient.

The main premise of the Financial Chaos Theory is that you must have money problems. When you have bill coming from all over the place or if you have ten thousand projects to finance at the same time but not the wallet to go with it; you are in a financial chaos.

As you have too many things to follow-up on, you are not really aware of what is going on with your money. In fact, the Financial Chaos Theory doesn’t only apply when you have too many debts, but really at any point in time where you feel that you are losing control of your finance. It could be related to bad or good events. If you win 1M$ tomorrow morning for example, you might not know where to start to spend it! This is also a money problem!

While people see the chaos as the worst thing that can ever happen to an individual, I see it as the perfect opportunity to make good changes. As your money is out of control, this gives you the perfect excuse to establish a clear financial strategy in order to get back on the right track.

You simply have to pick up one problem at a time and solve it. By putting all your energy on a single issue, you will become more efficient and creative. This will allow you to clear this problem out of your way for good. As the rest of your finance is a total bordello, it doesn’t matter if you take care of them or not; the result will be the same. However, once you have solved a few issues, you will get a clearer picture of your financial situation and you will be able to setup a real plan.

The fuel behind this theory is motivation. When everything goes wrong, your level of motivation along with the urgency of taking action should reach its peak. Once you have reach this peak, you select one problem and you hit it with a baseball bat. Your money problems should get solved one after the other.

In one line, the Financial Chaos Theory explains why the perfect moment to clear up your finance is when you are at the bottom of the barrel. However, I do not suggest that you purposely mess up your finance in order to design a proper plan. It is more to encourage the one who feels left alone and lost in the abyss of financial debts. For those, I would tell you that you are in the best position to get better!

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[…] I was writing The Financial Chaos Theory yesterday, I didn’t think it was really clear enough. This is why I decided to find example of […]

[…] The Financial Blogger comes up with another new theory.  This one he calls "The Financial Chaos Theory". […]