The Truth Is Out There…

Topics that involve both numbers and emotions have a wide spectrum of what we might call “truth”.

And personal finance is no exception.

In fact, finance might be the most mathematical emotional topic – when you consider how money makes us feel, what we sacrifice for it, and the dominant role it plays in nearly every decision we make.

Last week I wrote a post about why you should consider working overtime if you have the opportunity.  The idea for that post was inspired by a discussion I was having with my girlfriend about whether or not you made less money by working overtime (due to more taxes being taken out).  I realized I knew the answer but couldn’t put it in to words, so I came up with an example to make my point.

While I think it’s a good example, is it really truthful?  I made it a point throughout the article to say that readers should run the numbers themselves and form an opinion based on their own situation.  Which I think is really all you can do.

And I know that everybody’s situation is different, but all hope is not lost!

One thing that occurred to me was while writing that post, as well as for nearly every financial decision I’ve made over the last few years, I could find a calculator that would give me the “numbers” part of the truth, leaving only the emotions left.

I’ve made quite a few life changing financial decisions based on these results.  Like buying a house.  I like the idea of owning a home someday but I’m not all that into the idea right now.  Right now we rent in a great area, but if I could afford a house (plus the responsibilities that go along with it) for cheaper than we rent, in the same location, I might be inclined to think differently about it.  But I’ve run the numbers, and it’s cheaper to rent.  That’s part of my truth right there.  Based on our financial situation it’s better to rent.

If I really really wanted to buy a house, I would now understand that it would be more expensive, that I would be paying a premium over the cost of renting to fulfill that desire.  Emotions still matter in my decision, but I’m also faced with real numbers – not what “financial experts” say, not what parents and relatives and friends and coworkers say, and not what society says.  They’re my emotions, my numbers, and so they become my decisions.

Consider some other personal finance “truths” you might look for:

  • Paying off debt vs. investing
  • Contributing to taxable or non-taxable investment accounts
  • What percentage of your income to spend on housing, transportation, etc.
  • How much money you need for retirement

A couple days ago I signed up for a new credit card based on the results of a calculator that, after I input spending averages, gave me an estimate of the cash back I would earn.  There’s literally a calculator out there for anything money related you want to figure out.

You don’t have to be a detective or a financial guru (or even a special agent!) to find the truth.  Just be someone who’s willing to

run the numbers…

see for themselves…

let how THEY feel dictate their decisions…

ask their own questions…and find their own answers.

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One thought on “The Truth Is Out There…

  1. Agreed! Personal finance is personal, after all. It’s difficult/impossible to remove emotion and your personal wants out of the equation entirely. Everybody’s numbers and feelings are different. I think this is why it’s so important not to judge other people who are also striving for FIRE.

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