Taking Money Out of the Equation
It’s interesting how much we let money (either the lack of it; or the potential amount of it) influence our decisions. We don’t take money out of the equation when deciding what we really want. Now of course, on a certain level this makes a lot of sense.
For example, if we don’t have $40K a year to go to a private college, we shouldn’t take out student loans to do so. Yet many people do exactly that, reasoning that graduating with a degree from a “good school” is important — even though they’ll start out their adult life $160K in debt. Which I think is handicapping at best, and usually based on not understanding the full impact of borrowing that money.
On another level though, it doesn’t. For example, take the question about whether or not my car would really be ok or not afterward if I were to repair it after its accident. The vast majority of people that I talked to about it skipped right to “well you could get another car for less”. Which of course I know. I could also spend $0 and literally save money each month (because I would no longer be spending money on gas or insurance) by not replacing it at all. Or they focused on the $8K estimate, which is of course a lot of money. Neither of those matter though, if the car would no longer be safe if it were repaired. That’s the first question, and it’s completely unrelated to money. In that case, it would make perfect sense to take money out of the equation.
The money paradox
The point is, there seems to be this paradox when it comes to money. Part of the time, we completely ignore it when we shouldn’t, and part of the time we give it way too much sway over our decisions when there’s no reason to. Sometimes, of course, it’s a mix of both.
Yet I think people in general tend to spend too much time at the extremes. They run up debt because they buy things they can’t afford, or they spend hours of every day in jobs that they hate because they need the money.
A balanced approach
A more balanced approach would be to take money out of the equation so that you can figure out what you really want, and then put it back in while you’re figuring out how to get that.
For example, if it’s your hearts desire to attend that private school, but you don’t have a spare $160K laying around, you could find a way to attend that didn’t involve handicapping yourself with a huge amount of debt.
Or if you hate your job but can’t afford to quit right now, rather than remaining miserable you could take steps to change your life.
Keeping money in the equation IS important, but there’s a time to take it out before putting it back in. Allow yourself to really consider what matters to you, and then how you can get that in a financially sensible way. You’ll end up with a lot more options, and will probably be a lot happier too.