While surfing some of my favorite PF blogs this weekend, I came across a post at The Simple Dollar called Business Card Doodles. One Doodle, in particular, caught my attention.
This doodle sums up almost everything you need to know about Personal Finance at its most basic level. You are in control of your finances and you make the choices that decide how successful you will become.
Justifying the Irrational
One thing the Subprime Crisis has reinforced in my mind is that people can always justify irrational choices. They buy a house they can’t afford and justify that it will go up in value. They buy furniture on credit and they justify that a new house must have new furniture. While they are struggling to make the mortgage, they take out a second to remodel, and justify it as an investment. They buy the latest electronics or new appliances and justify that there are no payments for a year.
Recently, I listened to a teenage girl making minimum wage try to justify a $500 purse, because it was of such high quality. I listened to a broke 24 year-old justify paying $500 to sit at a table in a nightclub. And, I have listened to people justify cars, TVs, cell phones, dirt bikes, vacations and many other things they couldn’t afford.
The Affect of Bad Choices
Nothing is sadder than watching someone lose their home. Almost as sad, is watching people struggle in debt, while they waste their precious income on frivolous things. All of the money spent on late fees and credit card interest would make a great investment into a retirement account. Instead, this money is bestowed upon banks, which are more than happy to profit from our indiscretions.
But, it is nearly impossible to convince people to make better decisions with their money. I don’t have the heart to explain the affect of these bad choices on their finances. Nor, do I feel it is my place to judge people’s purchases or to kill the joy they receive from buying something. So, I smile and act happy for them. Inside, I am biting my tongue and thinking of all the foolish things I bought on credit.
Making Wise Choices
It takes an incredible amount of discipline to say “I really want that new HDTV, but I can’t afford it right now”. It’s very easy to justify that it’s Christmas and the family deserves it or I’m having friends over to watch the Super Bowl and I am embarrassed of my old TV. But, if you put this purchase on a credit card or are late on just one of those zero-interest payments, the TV will cost you much more than it’s worth.
Stop the irrational behavior and the excuses for buying things you can’t afford. Your family deserves to live debt-free, without the stress of money problems. Your friends should be happy to watch your old TV and enjoy your hospitality during the big game. If not, they can host the party and you can watch their new TV. Or, you can find some friends who value your company, instead of your possessions.
The Bottom Line
The bottom line is that our lives are a continuous series of choices. And, nowhere are the choices we make more important than in our finances. Whether you choose to save your money or live your life in debt, the choice is completely up to you.
“While we are free to choose our actions, we are not free to choose the consequences of our actions.”
Stephen Covey – American Author