The Things we believe in

Guest column by Gary Foreman

Aren’t you fascinated by the human mind. That we can think is truly amazing. The ability to evaluate the world around us and make decisions based on that input is a very important part of who we are.

Also curious is that sometimes we also have an ability to believe whatever we want despite the facts. Let’s take a look at some of the financial things that we might believe.

Bad things don’t happen to good people. We’d all like to believe it. Our car won’t break down. Others get sick, but not me. Therefore I don’t need an emergency fund or insurance. I can postpone the savings or insurance until I have more money. But, the truth is sobering. Every car will break down at some point. And almost all of us will spend some time in the hospital during our lives. Everyone needs a plan for handling the unexpected.

Because I did it before and didn’t get hurt, I can do it again. Just because you got away with a bad decision before doesn’t mean that you’ll continue to get by with it. Don’t automatically assume that you’ll be as fortunate next time.

Everybody’s doing it and so can I. It’s very rare that everyone is doing something dangerous. Usually it’s only a few people. And rarely do we know enough about their finances to know whether they’re really getting away with it. Even if they look prosperous, they may be getting calls from bill collectors and worry themselves to sleep each night.

Even if everyone’s doing it, it doesn’t mean that it’s smart for you. Several years ago, a lot of people were using variable mortgages to buy homes that they really couldn’t afford. Now we know that it wasn’t a good choice. Therefore, think through any move and how it might affect your personal finances.

I’m smart, so I’ll avoid problems. We’d all like to believe that we’re smarter than average. And, that our smarts make us less vulnerable to financial problems than the average guy. Sadly, our guard is down when we’re so sure of ourselves and we’re probably more likely to have problems. 

Decisions don’t have consequences. Many of us fail to see the connections between the problems that we’re having today and the decisions we made yesterday. We chose a new car instead of leaving the money in savings. Months later, the refrigerator breaks down and we don’t have the money to repair it. It’s the decision we made to take the money out of savings that caused the suffering today. To understand what went wrong, we often have to go beyond the first step. Sometimes the problem goes back a few steps.

Take a look at some of the things that you believe about your finances. You might just find that some of them simply aren’t true.
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Gary Foreman is the editor of  The Dollar Stretcher.com website and newsletter. Would you like to be in control of your finances? Begin each day with Financial Independence, a free enewsletter designed to put you in charge of your finances!

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