Several years ago, my wife and I stopped someone in his front yard and asked if he wanted to sell his house. Much to our amazement, he said, “Yes.” He brought us inside and told his wife that he wanted to show us around. She was not nearly as enthusiastic. We ended up negotiating a price and 30 days before we were set to close, they changed the price. Since we had already sold our home, we were in a bind. We ended up reluctantly meeting their new price, even though it didn’t feel right. We closed on the home, but never felt good living there and, three years later, moved out.
I think many personal financial mistakes come from trying to make something work that did not feel right. I see this with clients all the time. So here is a new rule for your financial planning — if you find yourself constantly wondering about whether something is right, it’s wrong. Just make sure you understand what it is you are wondering about.
When we decided to buy the house, we were not hand-wringing over the new price, but over whether we really wanted to move out of the city and into the suburbs. The price was something we could focus on, but it wasn’t the real issue.
Trying too hard to make something work usually means it shouldn’t. A client was trying to buy a vacation property that cost more than she was comfortable paying. The creative stories she told herself to justify the purchase ending up being somewhat comical when I would parrot back her reasoning to her. She basically wanted a property more prestigious than practical. Saying no to that enabled her to buy something within her means and located near people more similar to her bracket.
We all have doubts about important decisions regarding our careers, the person we marry or how we raise our children. Those are issues with high stakes. But most of the other things we wrestle with are not nearly as important. For most of them, we know what is right, but it isn’t always what we want.
I was talking to a friend who bought a car without telling his wife. He said, “I wanted it, so I bought it.” But if he felt that it was the right decision, shouldn’t he have included his partner in it? I suspect he wanted to ask for forgiveness rather than permission. There is a cost to that.
My wife and I were able to fix our own mistake and move happily back to the city, but it helped solidify our belief in not trying to make what’s wrong right.
Spend your life wisely.
Ross Levin is the founding principal of Accredited Investors Inc. in Edina.