Hard Choices

People always seem to amaze me once in a while.  In my other job, as a school board trustee, we had a difficult decision last night regarding a school closure and I was surprised that the board actually voted unanimously in favour of a hard choice.  It wasn’t an easy choice, but it was the right one.  This got me thinking about people and their spending habits.  Do people overspend just because it’s the easy choice and they are avoiding a hard choice?

If you really think about it, if you are making good money and you have access to credit, it isn’t a big deal if you overspend in one month.  Then perhaps you have a few odd events in another month and you get some more debt. So slowly over time you get used to spending more than you make and then before you know it your up to $30,000 in debt and wondering where the hell it came from.  Getting into debt is an easy choice.  Staying out of it or even paying it off is a hard choice.

I won’t lie and say that saving up for what you want before you buy it is easy.  The reality is it is hard to wait when you are so used to getting things NOW regardless of price thanks to credit.  Saving is the harder road but the payoffs can be bigger as well.   That is the point of hard choices, they are not easy ones, but doing what is right in the long run can produce amazing results.  In my case it is reducing my mortgage at a huge rate and allowing me to dream doing what ever I want all day long in just over a decade.

So how do you make a right choice even when it is hard?  To me there is no set formula on decisions.  Some times I look at the math involved and use that to decide.  Other times the decision is mainly emotional and I have to feel my way to a solution.  Regardless of how you come to a choice you need to decide how much do you want your dream.  If it is important enough you will find a way to make it happen even with all the hard choices to get there.

So what hard choices have you faced lately and you did the right thing? In my case, I’m proud I decided to pay off the mortgage in the next few years.  It would have been easier to just spend more, but my wife and I choose a bigger hill to climb and we are looking forward to the view from the top.

10 thoughts on “Hard Choices”

  1. My wife and view ourselves as saving up for the biggest purchase of our lives: our financial freedom. As nice as it sounds it was not an easy choice to make. Looking around us, at friends and family with big houses (and mortgages) and new cars, we know we could be living it up with all of them. With a household income of 140k and expenses of around 36k (includes our mortgage which will be gone in 2012) we have chosen to bank and invest this sizable surplus.

    While most would say this choice isn’t a terrible one to have to make, it really wasn’t a slam dunk. For us, we realized we couldn’t really live life to its fullest while we are working, no matter how big our house was or how expensive our cars were. We will stay in our condo, continue to drive a ten year old truck, invest and save prudently. When we stop working in our 40’s, I’m sure the lightbulb will turn on for many people we know that wonder why we live the lifestyle we do.

  2. When my husband and I ended up in $30,000 worth of debt it was not so much about making easy or hard choices, it was just simply not making informed choices.

    We had no clue to how much we didn’t know about personal finance.

    When his income went up 5 years ago we just assumed I could be a stay at home mom and still buy the things we wanted, so we had a baby.

    We never sat down to see how much money we would have to Live on after all the bills were paid.

    We went and bought a $20,000 van and ended up with a $28,000 loan without checking what that would do to our cash flow.

    For the next 5 years we were blissfully ignorant to how much money we were overspending every month.

    We sent away $600/m to pay our loans and credit cards and 5 years later our debt was still $30,000.

    Learning to live within our means for us meant that first we had to learn what our means even were.

    Now that we know I think it can be said that we are making choices when we decided to Buy or Not Buy.

    But before there was no thinking, no awareness just action.

  3. IIRC, learning to live within my means was a fairly easy choice to make once I knew what I wanted the money for (retirement) and a simple formula to follow. To learn to maximize my income and feel internally that I was worth what the marketplace was willing to pay was harder.

    Today I made the slightly difficult choice to possibly pick up another 2 month contract job because my investments aren’t doing as well as I hoped so far this first quarter of 2010. But I promised myself that I wouldn’t dip into my principal savings in retirement and I have to stick to that or I’ll never make it long term. Those 2 months can pay for another year off, and I’d rather spend a little more in the upcoming years than go completely bare bones or have to worry.

  4. I had to make a hard choice at the end of February regarding last minute a RRSP purchase. I thought I had enough invested for my liking and did some final check calculations and found out that I needed to fork out some more cash to try and offset some taxes.

    The problem was that I had already used up my monthly income to make a final payment on my vehicle. As a result, I ended up doing something I never do. I decided to borrow on my line of credit for a three week period. The rate on my PLC is only 4.25% and its only a temporary measure, it’s just that I hate doing it because it goes against my approach to things. Regardless, I would rather do that than end up having to pay more in taxes. So, to answer your question, I think I made the right decision, only because it’s a temporary measure for lack of good calculations.

    Nice thread.

  5. Hard choices . . .lately the choices have not seemed really hard. My husband and I have lived well beneath our means for years and have made a habit of no longer buying new items. So we don’t have that expectation anymore. That said, we’ve just finally gotten our savings to the point where we’d like to purchase a home. There will definitely be some hard choices to make there, I assume . . .

  6. @ Randalynn,

    Interesting reply on the debt part. I can get the idea of not paying any attention, but I still think that happens because it is an easier choice than doing to work to find out what you are spending.

    @jacqjolie,

    Two months!!! Ugh, that has to be a hard choice to do. Way to go to stick to your plan.

    @ The Rat,

    That isn’t too bad of a problem. A minor loan that is under a month almost doesn’t count for how little interest it will cost you.

    @Simple in France,

    Buying a home is always hard. In France, I suspect even more so since the term ‘historical’ takes on a whole new meaning over there.

    Tim

  7. Tim
    I think the key point here is ignorance though. We were totally unaware that what we had a problem.

    Its like having two people who develop cancer. If one person finds a lump and knows thats a bad sign but doesn’t see the doctor, they are making a choice.

    If another person finds a lump but doesn’t know anything about cancer then they are unlikely to recognise the significance of that symptom.

    It took us a long time to learn enough about finances to recognise that we were not managing our money, we were simply paying our bills. In that time we moved 3 times for my husband’s work, had 2 children, bought a van and our first home and still did not know how to properly set up a budget or that we should track our spending.

    I really wish that Personal Finances were taught in school. I remember taking an economics class, and all we did was play stocks with pretend money. I think a much more rigorous education in mortgages, personal loans, making budgets and determining cash flow is needed.

  8. My hard choice was to start watching the budget more closely and trying to stay on top of things. I’ve had a budget for years and figured I was doing pretty good with it, but I wasn’t really following up with it to see how well it was working.

    It was ignorance, but like you said I took the easy route out to remain ignorant. I knew I /should/ have been paying closer attention, but I chose to believe everything was fine so that I didn’t need to spend the time required. I had other things I’d rather do.

    Even now that I’m watching the budget I’m finding it difficult to stick to it and even track some of the numbers. Although I do have a system forming from the effort.

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