It wasn't very long ago when I figured out that the home I thought I needed when I bought it – large, on a lot of land, near a country club – was costing me more than $30,000 per year. While I could afford it on paper, it was costing me more than I was comfortable with and was stopping me from using my money in other ways. While I thought the purchase would make me happy, it was causing stress, weight gain and a general sense of discontent.
Our emotions drive a lot of what we do. Hopefully, we rely upon logic most of the time, but there are always those lapses where the wheels fall off the cart. For me, the large house represented what I thought would make me feel fulfilled, but it proved to be the opposite.
Imagine that you're a kid and your parents give you $10 to go out to dinner with your friends. When you arrive at the restaurant you realize that there isn't anything on the menu for less than $15; you panic and feel helpless. When you don't have any other options, you simply admit that you didn't bring enough, get made fun of a little maybe, and if you've surrounded yourself with the right people, someone offers to lend you another $10.
When you become an adult, you get access to a relief valve to the dinner scenario mentioned before called credit (debt). When used well, it can help you expand a business, purchase a home within your means that helps you build equity and provide a roof over your family's head, help you with a large, unexpected purchase that was unreasonable to plan for, and more. When used poorly it can have a negative impact on your life, lead to relationship problems, cause anxiety, increased blood pressure, kidney disease, and depression. It's a legitimate problem!
Think about how emotions impact how you spend money. Are you afraid if you don't buy that polo shirt that you'll never see that deal again? Will buying the new iPhone bring you joy? Can you escape your sadness for a moment with a new laptop? Remember, your emotions are affected by your financial situation and vice-versa. Write down the last five things you purchased over $50 and how they made you feel if that feeling lasted, and what you can learn from your reflection.
Once you have a better understanding of how your financial habits make you feel, you can begin to align your spending with your goals and emotions. Keeping track of your budget is a good start to plan for expenses so that relying on credit becomes less of a problem. There a good budgeting software programs available (including one I offer for free) that can help.
You cannot spend more than you have indefinitely or it will ruin you. The bliss you are seeking, and the feeling you expect will not last. I sold the home in East Amherst, moved to a modest home on the lake in Hamburg, track my spending and saving carefully and cannot remember ever being so happy and secure. Adjusting my lifestyle to my means (and now well below my means) was the best decision I could have made. Do the same for yourself!
Don’t hesitate to reach out with any questions, comments, or concerns.
As always, Buffalo, I’m here for you because everyone deserves a thoughtful plan!