Decisions. Decisions. Decisions. Paying for an education, buying a car, purchasing a home, choosing a spouse, choosing a career, where to invest, how to invest. Where does it all stop?
They are all tough choices with one common denominator. The affect on your financial future.
It’s almost a gamble to trying to predict the outcome of your decisions. Mostly, you hold on to the hope that the decision you make will be a good one. But you realize that a huge swing in the wrong financial direction can cost you years to correct.
Making choices quickly, without counting all the costs, causes the unfortunate circumstances of life to happen. Probably some of which could have been avoided had the decision been thought out clearly. Better choices lead to better results.
The world wants to influence your decision making process. The constant raised hands with “Pick Me! Pick Me! Pick Me!” has become rather persuasive.
There are actual marketing tests done in the hopes of creating just the right advertisement that will hopefully prompt you to buy. Truth is, only you can make the final decision. Your decision affects your life.
Here’s how it can all go wrong:
- Attaining a great education, but using a massive amount of student loans to do so. If you have to use student loans, be wise with the amount you borrow. It’s easy to get the money, but will be hard to write that check every month for payment.
- Purchasing a car and/or home that is too expensive for your income level. Your car payment and house payment should be no more than 15% and 35% respectively, of your income and even less than that if you have other debts that are out of control.
- Using the wrong option to finance your home (ARM, interest only, negative amortization, etc). The best financing option is a 15 or 30 year fixed rate mortgage. You can’t go wrong. Yes, we have “plans” to only own the home for a couple of years and then we’re going to do this or that, so we take advantage of these initial lower priced options. But sometimes life happens in those few years that cause those plans to backfire.
- Choosing a spouse that does not have the same financial values and goals as you do. Financial issues are one of the main causes of divorce. So when choosing a potential mate, it’s very necessary to talk about money BEFORE you say the “I do’s”.
Is there an easy way to make the right choice? I don’t think so, but there are some steps you can follow to help the decision making process more clear. Try this:
- Pray or Meditate before moving forward.
- Wait 24 hours before finalizing a huge decision.
- Use a pencil and paper to weigh the pros and cons and to estimate the total cost of your choice(s).
- Get a good night sleep. Being well rested helps the mind to think clearly.
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The Bottom Line
Don’t feel cornered because someone wants you to make a decision quickly. This is your financial future and you don’t have to play by their rules. Make your own financial rule book. And if it takes you a bit longer to make a decision or two, that’s ok. You’re just being careful. Not fearful. Careful.
“Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.” – William A. Ward
In what ways has “life” affected some of your past financial decisions? In hindsight, would you have made a different choice(s)?
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{ 6 comments… read them below or add one }
This is solid advice. On the car financing, better yet is to pay cash. I have seriously cured by new car fever by changing the way I look at cars. I removed the status symbol association and the desire to have the best. Instead I now look at it for exactly what it is, transportation to get me from point A to point B. That makes it easier for me to buy used and to afford to pay cash.
Waiting 24 hours before making big decisions is something else I practice. Actually, I often wait more than that, and really give big decisions plenty of time. I like for the buying itch to dissipate and see if I still want it. If after a couple days or weeks I still want it, then I move ahead with a purchase.
Hey Eric, I’m with you on the cash, but not sure if I’m over the new car itch. I’ve only had the opportunity to purchase two and feel that I have gotten my value out of both. I had my first car for 15 years and have had the second for 6yrs so far. I would like to however be able to purchase my next car with cash though I have a few more years to go.
I do, however, ponder over big decisions for a while also to be sure it’s the right choice. I’m often accused of being too slow with making a few decisions, but I’d rather be safe than sorry. Thanks for sharing.
I had to admit that I have had my share of mistakes when it comes to financial decisions in my life. However, I have learned from those mistakes. Planning, contemplating and making an analysis are the things I’ve learned when considering future actions. Though life would always be uncertain, it is wise to draw our map.
Reading your comment brings a quote to mind I hear my Mom and Dad use a lot – “Bought sense is better than taught sense.” It’s best to make plans. You are right, they may need to be adjusted along the way, but at least you have something to follow. Thanks Walter!
Great truths!
Student loans is where we are stuck right now! Our loans are massive but we are aggressively working to pay them although it will take some time. We have no regrets that we took the loans since it was our last options but even so.. that monthly check hurts. And by the way you cannot eliminate the student loans by filing bankruptcy.. you will still have to pay!!
As you stated.. Always exhaust other educational funds choices before resulting to student loans.
Student loans are seen as good debt and I do believe that they are. But I know of a few people from my college days that used their loans to buy cars and furnish apartments, not really thinking about the end result of having to pay it back. As you state BK is out of the question. You guys are doing great to pay it off instead of letting it linger around for the next 30yrs. What is the projected payoff date?
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