I need therapy. Unfortunately, it’s not in my budget. So instead of sitting comfortably in a recliner pouring out my heart to a straight faced psychiatrist, I’m sitting on an exercise ball in an unfinished basement vigorously typing out my thoughts to you, the reader. Please be nice.
My wife and I are looking to sell my baby (Hyundai Santa Fe) and purchase a car outright with cash so that we remove all debt except for our mortgage (Dave Ramsey would be so proud of me). Though last week, I realized just how much my car affects my self esteem. I pulled into a parking stall at our local grocery store and noticed the older, worn car parked next to my white beauty. Suddenly, thoughts of driving an older mini-van with more miles, fewer features, and some strange color flashed before my horror filled eyes. Making those monthly payments no longer seemed so bad.
Reason #2 that I’m pathetic: My ties
I was once told by a psychic that I had been a female in a prior life (which is a whole other story for another day). Apparently the desire for nice clothing carried over into this life. I have a large collection of ties of various colors and styles. However, I have very strict guidelines for my ties:
- I do not wear prints or solid colors (Regis Philbin).
- I only wear 100% silk.
- I don’t like anything wider than 3.75 inches.
- I only shop for ties at certain stores. And I won’t buy a style that is common.
- Last, I know how to tie my tie using about five different knots, though I use a slight variation of the Prince Albert knot because I want my ties to appear different from other ties.
My wife and I decided some time ago that books and music would replace television in our home. We purchased a nice set of bookshelves from IKEA and put them in our living room which is adjacent to the foyer. We have filled the shelves with books, framed pictures, and a nice clock we received at our wedding. Occasionally when people visit, I honestly hope that they notice the absence of a TV and our bookshelves filled with classics as well as the artwork on the walls.
Why am I telling you all of this?
It’s all about Opportunity Cost or the cost of the next best thing for which you could have used your money.
With each material object above, I have two options: (1) purchase and satiate an emotional need or (2) not purchase and place the money in savings or pay off debt. If you choose Option #1, then you give up all of the future returns from investments or the interest saved by paying down debt. If you choose Option #2, then you receive an emotional spike but fore-go any future emotional satisfaction from investment returns.
The truth is that I find my self-esteem, satisfaction, or whatever you want to call it in part supported by both a solid investment strategy and certain material things. Though, I believe that through self-discipline we can reach a happy medium.
For example, my wife and I almost purchased a sewing machine on Black Friday. But we decided that we would postpone the purchase until we have no debt but our mortgage, which should only be a few months away. This way, we pay off debt (yeah!) and can still make the purchase we desire (double yeah!).
The key is to understand the opportunity cost of your decision and then make a plan that allows you to both accomplish your financial goals and live the life that you desire.
So I just listed my car on Craigslist. This ends my confession.