After November’s mediocre showing, I’ve been reflecting on my actions over the past month. It’s clear that I was overzealous in my first debt payment, and in doing so I had to rely on my credit card to cover other expenses, which only succeeded in putting me in another bad spot.
What I was lacking was the mindfulness of the full picture of my finances and I was failing to create space between impulse and payment. I wasn’t asking myself the right questions or taking the time to make sure the math checks out. I gave in to the excitement and adrenaline rush of paying off a huge amount of debt without considering if it was the ‘right’ choice for that time.
Everyday we’re faced with making decisions. We ask ourselves things like:
Should I do X?
Should I buy Y?
Should I get rid of Z?
But I believe what we should be asking ourselves are things like:
Would I rather do X, or would I rather do Y?
Should I buy Y, or should I use the money for Z?
Should I get rid of Z, or should I do A?
Life is a delicate dance of trade-offs. For every X, there is a Y we could pursue instead. Taking the time to create space for these decisions can save you from emotional, financial mistakes.
Understand your motivation, your goals, and your values
If you don’t know why you’re doing something, then you lack the criteria to evaluate choices that are presented to you. You’ll be restricted to relying on impulse, on what feels right, instead of an objective eye. Keep your goals and values at the center of everything you do and you give yourself criteria to judge choices presented to you.
Shift from living on default to living intentionally
Living on default means living without mindfulness, without intentionality. It means following your impulses as defined by years of habit formation, for better or for worse. When you live on default you live without considering the trade-offs.
Trade-offs aren’t a punishment, they are necessary and unavoidable. With every choice you must consider the opportunity cost of your options and choose the option that best serves what you’re trying to accomplish. Create the space between choice and action to do this and you’ll slowly build new habits, new ways of living, and new ways of looking at ‘stuff’ and money.
Empower yourself with choice
One of the great things about understanding and accepting the reality of trade-offs, is that you get to empower yourself with choice. Wielding choice is a powerful way to live. The ability to confidently say ‘No’ to those things that don’t serve your goals and values, and being picky and intentional about the things you say ‘Yes’ to sets up a way of living that leaves you in total control. As my mother, who is a very smart lady, always says, “No one is obligated to your time, your money or your attention.”
Another exercise I love is the Yes/No Trade-Offs Charts. Download these printable worksheets to begin.
SAY YES: Write down on the left the things you want to say ‘Yes’ to – and directly across from it start thinking and noting the things you’ll need to say ‘No’ to in order to achieve that.
SAY NO: Write down on the left the things you want to say ‘No’ to – and directly across from it start thinking and noting the things you’ll need to say ‘Yes’ to in order to achieve that.
Trade-offs and personal finance
This has a powerful application in personal finance. When you’re trying to achieve money goals, be it debt freedom or a savings goal, it’s going to require discipline and mindfulness, it’s going to challenge you to not live on default.
Understanding trade-offs in your spending (for example, spending a few bucks here and there on take out coffee, but failing to recognize that those dollars add up and can be put toward your debt in their sum) can help you start to take control of your finances. With each opportunity to spend your money, you’re faced with choice. Choose the path that will lead you toward your goals.
In the comments: What trade-offs have you discovered in your life, your spending?