When you’re “into” personal finance – whether a blogger or a regular person who likes to stay updated on the latest financial news – you hear a lot about the shoulds and shouldn’ts of money.
You should create an emergency fund. You shouldn’t go into debt. You should pay off your student loans. You shouldn’t take out a car loan. You shouldn’t go to Starbucks. You should be saving for retirement. You should invest, but you shouldn’t invest in X. And, of course, you should like doing all this stuff.
I’m kind of sensitive to shoulds and shouldn’ts; I always have been. When I’m told that I should or shouldn’t do something, I really internalize it and take it very, very seriously (I’m starting to realize that this quality has done me more harm than good in my life, but that’s a post for another day!). So I tend to get a little ruffled when I meet someone who didn’t follow a should or shouldn’t and ended up better off for it. And it seems like, recently, I’ve been meeting a lot of those people. Specifically, I’ve been meeting a lot of people who’ve completely disregarded financial shoulds and shouldn’ts and things worked out just fine.
Take my coworker, for example. He’s in his early 50’s and somehow we got to talking about paying for college. He told me – completely nonchalantly – that he used the equity in his home to pay for his childrens’ college educations. That’s right, this guy used is house as an ATM for twelve years (he has 3 kids) to write the checks to pay for his kids’ tuition bills. Now, this financial shouldn’t – borrowing agains the equity in your home – should have ended up especially painful for this guy because of the dive that home values took in 2007. But it didn’t. He moved last year to a new, smaller home with his wife, sold his old house for a tidy profit, paid off the equity loan, and still had enough left over to put almost 40% down on the new house.
Another example: a friend of mine who’s a few years older than me recently confessed that when she and her husband bought their first home, they were totally, desperately house-poor. They bought way more house than they could afford at the time and were so strapped for cash that they considered unplugging the refrigerator during the day to save money on electricity. But, over the next couple of years, both she and her husband started making more money and the house that was totally unaffordable became the house that fit their new income just fine.
I know that these examples should boggle my mind in a wow-did-they-get-lucky-because-that-shit-almost-never-happens kind of way, but mostly, I just find these examples depressing. I’m trying my hardest to make all the right financial decisions – I’m making sacrifices, following all the shoulds – and I just don’t feel like it’s paying off. I’m not really getting anywhere and I’m definitely not getting any of the stuff that I want. And I know I’m not alone; yeah, there are tons of people out there who make shitty financial decisions that work out ok, but there are also tons of people in the opposite situation. They make all the “right” decisions and somehow end up getting screwed over. Is all my planning and obsessing for naught?
Maybe it’s time for a radical reboot of my financial plan. I’m just not sure what to believe anymore.
