It's time I pass on this very valuable piece of money advice. Take it seriously, as it'll set you up to make great financial decisions almost every time.
There is one thing that you can do to make sure your financial decisions are as sound as possible. Sounds nice, right? I mean, it can be daunting to make financial decisions as is, so finding a way to ensure you're making the best possible ones sounds like something you should spend some time on.
I Pass the Secret Money Advice Off to You
Here's the secret money advice: take the urgency out of your decision-making process.
When you're pressed into making a decision — from sleazy Timeshare sales tactics, to waiting until 11:00 p.m. on the night your health insurance open enrollment closes to figure out what plan is right for you + your family — you are putting yourself under a lot of pressure.
Sometimes pressure works in your favor. Sometimes it doesn't.
I don't know about you, but I don't like pressure when it comes to decisions with my money. I like to look at all angles, run a few excel scenarios, chit-chat about it with my husband, and generally wrap my head around the situation.
I'll bet you don't like pressure when it comes to deciding how to manage your money, either.
I'll give you a scenario in our life where we:
- did not take the urgency out, and had to deal with the repercussions from a poor decision, and
- took the urgency out the second time, and how that turned out waaaayyy better
Our Big Financial Decision the Wrong Way (ouch), and then the Right Way
I love beater cars. You know, the kind you get at 160,000+ miles, pay a few thousand in cash for, and drive into the ground.
In fact, not only have I never owned a new vehicle (and I'm 32, driving since I was 17), but I also have never owned a car payment!
Just like any vehicle, they don't last forever. And in 2011 — after six glorious years with my piece of wonderness (aka my 1997 Chevy Cavalier) — it died on me. Rather, the cost of repairs no longer made sense with the $1500 I had paid for the vehicle.
At the time Paul and I were both commuting to different jobs with a sizable distance between each other, and did not even consider another option except to buy another beater car quickly.
So we rushed into purchasing a beater Nissan truck for $3,500. I wasn't crazy about the idea. In fact, my gut told me “no”. But I was overruled by both urgency and my husband, who wanted to get the situation resolved.
And guess what? That truck sucked. It was very rickety on our very bumpy road home each day. It slid in rainy weather. And then…it, too, died (head gasket blew, leaving us a potential bill of $3,500 for a new engine) within two years of the purchase. Not a good decision at all!
Note to truck: thank you for that $3,500 lesson you taught us.
After the truck died, we took the urgency out of the situation. Instead of purchasing the first used car we could find with the Monday morning commute hot on our heels, we rearranged our work schedules and carpooled together. This bought us several months to really search for our next beater car, which we found (and I'm still driving to this day): a 2003 Chevy Cavalier, 160,000 for $2,500 (my first automatic locks + windows).
How to take the Urgency Out of Your Financial Decisions
Perhaps you won't be able to carpool with your spouse if you find yourself in a similar situation, or maybe that scenario doesn't apply to you at all. There are still several things you can do to take urgency out of your financial decision-making equation the next bind you find yourself in.
Take this smart money advice to get money smart:
- Fill Up Your Emergency Fund: I can't stress this enough, as it takes the urgency out of so many financial decisions. If you have proper funds to take care of something, then you don't have to go with the cheapest option (surprise: cheapest is not always best). It also leaves you feeling more confident, and less at the whims of, say, a pawn shop owner or payday loan lender. Since you now know that building an emergency fund isn't as annoying as you originally thought, then get to it! It's just one of the best smart money management techniques.
- Don't Wait Until Last Minute: If you know a big financial decision needs to be made, like which healthcare plan to enroll in, what home to buy before XX deadline, etc., then please don't wait until the last minute. Late night cramming sessions — while they might have worked in college — likely won't work well here.
- Make Temporary Arrangements to Buy You Time: In our situation, we spoke to Paul's boss and changed his schedule temporarily to accommodate us. Other ways to buy time could be short-term service plans to get you through while you're making your decision, asking a family member to temporarily do something for you while you find a replacement option, etc.
Hey, if you made a financial decision under the gun, it's likely not all bad. And some situations — no matter what — will still be urgent. Even with our sucky truck decision, we were able to donate the car to Purple Heart, gaining a $1250 tax deduction that year. But if you can take some deep breaths during your next financial decisions and try to eliminate the urgency (or at least dull its impact on you), then you're going to make solid decisions that will work for you beyond just a band-aiding of the situation.