The Proof of Brain word of the week is Outrageous. I felt I should sneak in an entry before the time frame runs out and weekend elapses. What better way to elaborate on the word than to highlight something we generally care about - Our finances.
Let's start off with a definition and a story.
Outrageous
shockingly bad or excessive.
We have seen many 'rags to riches' stories in the past, constituting famous, wealthy people whose investment/spending choices left them broke. None can said to be more popular than the case of Mike Tyson who filed filed for bankruptcy in 2007. Over the course of his career, Tyson earned at least $400m by rough estimates, yet still ended up broke, unable to pay child support, and millions in debt.
He himself admitted to his lavish spending habits in his autobiography which are well known (including Tigers at a point, Tigers!) or can be easily researched for information, so I won't be dwelling on them.
What we can make of it though is that it takes a special kind of behavior to blow away $400million, especially considering prior humble beginnings. Such actions tend to become addictive or compulsive, without much thought put into them before proceeding. While many of us may never make as much money in our entire lives, we are still in danger of falling prey to little self sabotaging behaviors which prevent wealth generation and promote the accumulation of debt, thereby increasing poverty.
The way compulsive habits may creep in may not signal danger ahead at the early stages. Of course things like Alcohol and Drug addictions which are prime example just don't start off being compulsive behaviors, or do immediate damage to our financial stability, and even beyond. They may give the semblance of providing temporary feelings of euphoria, relief or excitement, often acting as quick relievers.
Detecting such behaviors often come at a later stage when significant dents have been made to our finances, and habits holding a firmer grip over us. For the proactive, it is possible to spot a red flag if it is addictive, destructive or offers instant short term relief.
The key to avoiding compulsive behavior is to ground ourselves on a strong ethic that embraces thinking, planning and delayed gratification. Failing to think through a decision that can have financial implications will end up having such implications. One way to do this is to always consider the medium to long term in our dealings, and let them guide our actions instead.