Couples find they must compromise on where their precious pennies end up. Yet, a mistake that many can make (my wife and I have made it twice!), isn’t even something they have done.
You and I are ASSumers!
Determining where every dollar should be spent remains the pain in the neck for every couple. “How much should we save?” “How much should we spend on a Purse?…(there’s no “We” when you’re a guy)” “How much towards Paying down Debt?” Those questions don’t always lead to Problems (the jury’s out on the purse), but there is something that is more unknown and much more dangerous.
Assuming a Future Influx of Income.
Key word there, yep, Assume.
It’s so easy to do it:
You think you will get more from a special event e.g. wedding, birthday etc.
Tax refund will probably be $_____, so I’ll buy these expensive Christmas presents…for me! Bwhaha!
I’ve been so close to getting a job, which means higher pay, I can afford this expensive cruise.
He told me that he was going to pay me the $300 back for _____, so let’s hit the town on me!
Financial Effects of Being an ASSumer
Assumptions can only lead to bad things in the finance world. Do you pick your investments based off of your own assumptions? Yes…but when your account value drops, you can only blame yourself (no matter how much you want to say the market is a scam). My wife and I, while in search for a place to rent to start our married life with our pup Cooper, we were sure that increased income, a promotion, a new job etc. were in our sights. We deserved it, we said, it’s bound to happen.
So, what did we do?
“Well, after we get that increase in income, we can afford this place. We can get a more expensive place, it’ll work out.”
Down Economy? No problem at all! As it turned out, those income assumptions didn’t come, and we got stuck living in a place that we could afford, but meant we had to cut back on many other things for which we could have used added money.Less in savings, less in flexible income, less to pay down debt.
Control what’s in your reach, do not worry about outside conditions you can’t control. Don’t make financial decisions based on unknown conditions! Trust your decisions that YOU can make based on present circumstances and not hypotheticals. If you get some extra income, great! Have a party. But don’t take on debt contingent on a future extra influx that may or may not come.
Notice, I’m not talking about your income that comes steadily, such as a salary. Yes, hypothetically, you could get fired in 5 minutes and that income stream is cut off. I’m talking about “assumed extra” income on which you justify purchases. It’s a trap that leaves you smacking your head later, it’s not worth it!
If you want the other story (because we didn’t learn from the first one), send me an e-mail at email@example.com.
Joe Cassandra is the Founder of the 7Minute Entrepreneur, where he shows how to attack your life with the mindset of an entrepreneur in personal finance, careers, starting your own business, and much more. Follow him here on Twitter.
Category: Family & Home