I imagine my life would be much different if I always looked at the long term when making a decision. For some reason, I never do…I need to figure out how to make that a habit.

Rent may go up, but the factors outside of the rent-vs-buy dichotomy do add up.

Every day we face choices where we can have the fast fix or we can go for the slow burn. It’s tougher for people to visualize what will happen five years from now versus experiencing what will happen five minutes from now. My wife and I are teaching our children about tough decisions currently when it comes to where our money goes- as we will be cutting down on our cable access and eating at home more to place money in areas we believe are most important (emergency fund, paying down debt).

Excellent post Trent, keep up the great work and making people think.

I also liked Damester’s idea (#11) “Ask them just to think about how they’ll feel very soon. Because when you make bad choices daily (food intake, spending habits, activity choices), you DO generally have a negative correlation much sooner in real life. Your clothes don’t fit, you can’t afford to pay bills or do things you want, you feel miserable after spending time with people you don’t want to, you beat yourself up for wasting time better spent on earning income, etc.”

Great post that definitely has me thinking. Thank you.

Be careful about that strategy. If your new landlord is foreclosed, it can be quite inconvenient to you.

And the equivalency thing is hard, because a lot of times you just can’t buy the house you want in the are you want/need. I know a number of people who would really *like* a smaller house but the area they wanted was all new construction, which tends to be gigantic. I would like a newer house, but it’s just not possible in our neighborhood (or, it is possible but it’s not really comparable because we would have to buy an older house just to knock it down, and and count all of that in the cost of the new house.)

It’s not like most products, where you are pretty much choosing the product – a huge part of housing cost is just location.

Unfortunately, that’s our “default setting”; it’s what we’ll always chose to unless we conciously resist. And that’s not easy either, so we don’t do that without strong resolve.

Your idea to ask how we’ll feel about a certain action in five years is a good step, and we probably all could do with figuring out what mental steps we need to make better choices. On the surface it SHOULD be easy, but what we’re really doing is trying to override our internal programing.

The landlord’s mortgage may be less than yours because the landlord bought in the past when prices were lower, or because the landlord gets a lower interest rate than you do or financed with cash.

Or the market may be pushing the landlord to charge less than the mortgage.

Or the rental market in your area may be aimed at a low-income demographic while the homes for sale market is aimed at higher-income people and the houses are all bigger/fancier than you need.

It’s really a local, individual problem and not an issue where one is always better than the other.

Balance is also important, because we do live in the now and have to be aware of the “right now” but also must be concerned with the future.

The reason so many people can’t think ahead is because their mental and physical energies are still needed for the literal “daily grind.”

many people, Trent, are still living a hand to mouth existence these days, even when they want to plan ahead. And the stress and strains of daily life have a lot to do with the “desire” for comfort food. Plus, if you don’t eat healthy, you can’t understand its’ benefits. Forced to eat lots of carbs? It changes your brain chemistry and affects cravings for unhealthy foods. It’s all tied in.

At best, for these folks, it’s truly stretching the dollars available to them now and trying to upgrade skills and get a better job. Although these days, when people are going back to school in their 40s and 50s to learn new skills in the hope of finding some kind of job…it’s still a struggle.

I think people need more “in the moment” awareness to focus on the positive aspects of a healthy choice (whether it’s NOT spending money to save it or not eating unhealthy food). Many people get over their infatuation with eating unhealthy food, or too much food, by reminding themselves of how they generally feel afterwards or how they feel when they weigh themselves or when their clothes don’t fit. Things they do every day.

If you have to dwell on the negative aspects–not having money to pay bills–to keep you from making an unhealthy for you choice, then do it.

Awareness, mindfulness in the moment always help.
Really think about what you want, and why. Too much of our lives is habit and acting without thinking. The brain is desensitized as it were.

Asking people to think five years ahead…nah, most people can’t and won’t. it’s too unreal to most.

Ask them just to think about how they’ll feel very soon. Because when you make bad choices daily (food intake, spending habits, activity choices), you DO generally have a negative correlation much sooner in real life. Your clothes don’t fit, you can’t afford to pay bills or do things you want, you feel miserable after spending time with people you don’t want to, you beat yourself up for wasting time better spent on earning income, etc.

Of course, some people have no real sense that what they do is harmful or don’t care. But that’s another story.

#8 Craig. As you continue to focus on long term gain, your mind will change about “short term fun.” I have been really focused on long term for about 5 years now and am starting to realize that I do not really value many things that my peers value even though I can now easily afford them.

Trent: To me, this article is another one where you are integrating finance and health. I like it. Gold cannot buy health.

For example: My newest car and my Roth IRA. I really can’t afford to pay towards both. I want to pay off the car, but I want to invest in my IRA.

My compromise? Telling myself that it’ll be OK if I don’t contribute the $1,000 I wanted to this year to my IRA. If I can make it to $500 or $750, that’s more than most other 21 year olds out there, and it’ll still be money I’m glad I saved. On the other hand, I can throw a lot of money at the car, pay off my loan and build my credit, plus have an awesome project for my husband and me to work on.

Guess I ought to note that I’m okay with lower Roth IRA contributions because of my 401(k) contributions that I started this year. 4%, matched by my company dollar-for-dollar with immediate vesting. Means I ought to be pretty close to on track with the $1k retirement contributions, just not in the same account.

@Craig (#8) — I wholly agree, it’s WAY more difficult to know what you should be doing but to never have enough dollars to do it all! I only hope that I can make some really good choices when I start to make more money than I am now.