I love building things around the house. Home improvement projects can become addictive. Once I start on one project, I start thinking about the next one while working on the current one. Last spring, this was just the case. After paying off all of my credit card debt since being divorced, I decided that it was time to stop being tight with money and make some home improvements for my enjoyment with the future in mind. I wandered into Home Depot one cold, dreary, February Sunday and noticed a sign near the entrance boasting “up to 20% off counter tops”, and so it begins.
As I get older, I have learned to understand my impulses. When I was in my 20’s, I would just do what I wanted, without thinking much about how I was going to get there unless it was a really big purchase, like a car or house. Nowadays, I tend to tell myself: STOP! I ask myself questions like:
- Do I have the cash to cover this want?
- How will I feel about spending $x,xxx six months after the purchase?
- Would it feel better to have that money in my savings account?
- Are there more important goals in my life and is this congruent with my goals?
- What are my true motivations for wanting to make this purchase?
These are some of the questions that keep me out of financial trouble more often than not. Being able to identify these behavioral patterns in myself has allowed me to get ahead, which I measure by looking at my increasing net worth and my quality of life (not to mention increased sanity!). I have the same tendencies, but I react to them differently.
I admit that I am a spender, but the feeling of security gained from having a big pile of cash in the bank is a big reason why I don’t just buy what I want, when I want. I can remember being 23 years old and always broke. On payday, I paid all of my bills, which left me with almost no cash, but I did have available credit on my cards and was able to eat and buy gas on that. Then something would go wrong and my life would become stressful. This stress radiated into my career and my personal relationships. I didn’t realize it then, but I felt out of control. The lack of control was causing chaos not only in my financial life, but in all other areas. I couldn’t sleep well when I was wondering how I would fix my car and get to work to keep up this rat race.
Fast-forward about three years and I was advancing my career and financially. I was ready to purchase a house with my significant other. It was 2007. Home prices were decreasing. This seemed like the best time to buy since we had been in such a hot market. The joke was on us! Within a year of closing on the brand new house, prices dropped over $100K on our block from what we had purchased it for. I was, and still am, a firm believer that individuals should do what is ethical, even if the popular thing to do is not. Many of those people kept their jobs and income and dumped their underwater homes rather that weather the economic storm.
We stuck with it, paid our mortgage, and things are pretty good today. It worked out and I’m moving on and up. The moral of the story is to stick to your big plan. Don’t let fads or impulses throw you off track. If you do, get back on track! Everyone will have obstacles with money, health, careers, and more. You can plan for these obstacles and make incremental choices every day to move you closer to, or further from, those goals.