I often tell my clients that financial decisions are not always black and white – that it’s not always about the bottom line number.
There is often a gray area that comes into play and there is no formula for it on an Excel spreadsheet.
It’s called HUMAN EMOTION.
Last week, I “broke down” and made a purchase that wasn’t technically a need, but wasn’t necessarily a want either. I can definitely make the argument that it was needed for my mental well-being. Actually, I HAVE made this argument with myself, and won.
Do I have you wondering what the heck it was that I actually bought?
A fancy new car? Louis Vuitton bag? A year’s supply of Botox treatments?
Nope, nothing that fun.
I bought new bedroom carpet. Woohoo. Exciting stuff.
Here’s the catch – the carpet I have now is LESS THAN A YEAR OLD.
I won’t bore you with the dirty details (and they are, quite literally, dirty). Although, it’s a very good story and I get lots of jaw-drop reactions from it, especially among women. I’ve become a master story teller with this one.
I’ll give you three words to shed some light on the matter:
Coffee (a whole mug, covering a very wide swath)
Bleach (yes, I said BLEACH)
I tried; I really did. I waited three months before breaking down. I laid down a throw rug to cover the damage, but it was a constant reminder of what was lurking beneath.
So that’s where the human emotion part of the financial equation came into play. Clearly, with the rug having just gone in last year, I didn’t WANT to replace it. But it wasn’t really a NEED either. It still served its purpose of covering the plywood floor underneath.
So, the decision came down to this:
Which was going to tip the scale more? The EMOTIONAL SIDE of looking at the damaged carpet every day or the FINANCIAL SIDE of not wanting to pay for carpet less than a year after having paid for it the first time?
You already know the winner.
This is not to say we can ALWAYS let the emotional side rule. Human emotion is actually the piece of the equation that can get a lot of folks into trouble and a part that I help my clients manage in a healthy way.
But with a well thought out decision, taking BOTH financial and emotional factors into account, it very often can be the right move.
“We didn’t realize we were making memories. We just thought we were having fun.” -Winnie the Pooh