The Value Of Facing Down Your Financial Fears

The 4-Hour WorkweekRecently, I was reading The 4-Hour Workweek and I tried out a mental exercise from the book. Basically, the objective is to make a list of your absolute worst-case scenario with respect to your job and then compare it to the dreams you’re giving up in order to stave off any chance of that worst-case scenario. The idea is to make it clear that giving up the dream simply isn’t worth it because, when you really analyze it, that worst-case scenario isn’t really that bad at all.

It occurred to me that it’s quite easy to apply the same basic exercise to personal finance. Give this exercise a try:

First, imagine the worst possible personal finance scenario in your mind. Would it be losing your job? How about having your house burn to the ground? What scenario really makes your stomach flip over when it comes to money?

Once you have the scenario in mind, figure out exactly what you would do if that happened. Would you sell your home? Would you sell your car? Move to another part of the country? What would happen to your life after you did those things?

Now let’s do the opposite. What do you want to do that you cannot because of your financial requirements? Would you like to move somewhere else? Would you like to try out another career? Imagine your life in detail if you could actually follow this dream. What would it be like? This dream should put you at peace.

Ask yourself this: would the sacrifices you would have to make in the aftermath of the disaster allow you to follow your dreams? If they would, then what is keeping you from following your dream?

For me, my dream is actually moving to the Pacific Northwest (Washington, northeast of Seattle/Tacoma), getting a little house in the middle of nowhere, and becoming a writer. For a very long time, this seemed like an impossible dream because I thought I would have to give up so much to actually make it happen. I would have to leave the financial security of my current job, move away from everything I’ve ever known, and so on.

But you know what? When I sat down and started looking at what I would have to give up if I lost my job and had to start working minimum wage, I realized that the possibility of living my dream would actually be worth the material things I’d have to give up in order to live that life. Making that realization was a powerful step, and it made me start living my life in a way that puts my dreams within reach.

In fact, the only thing that keeps me from living that dream right now is the fact that I actually do love many, many non-financial factors of my life as it is right now, so it’s a matter of choosing the best life for me. I’ve already made the choice to start living my life so that losing my job (or other financial disasters) wouldn’t really impact things too much. I’ll still have the things that are most important to me: my wife, my child, my thoughts, walks in the park on sunny afternoons, and so on. Compared to things like that, working a job that stresses me out just to afford a new car or a monstrous house doesn’t really sound like much of a life, does it?

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  1. Christine says:

    Hey, I really like your blog and have been reading it for a while.

    I’m a freshman in college right now, and whenever I visit home for a break my sister and I have a “Sister Day” together. A lot of times we will go out for lunch, watch a movie, and perhaps wonder around in a mall.

    The other day on AIM I was talking to my sister about prom (She’s a freshman in HS but went with an older friend) and how she ows our parents $100 for it. I asked her about the money she had in her bank account, and she reminded me that she isn’t spending that. I suggested that she put the money into something that gets returns better than 1.7% a year.

    So, we decided that our next sister day will have a financial theme. We’ll still go out to lunch (the parents pay) but instead of shopping at the mall we’ll work on making her money work for her; I rather like the idea of getting a CD, or investing in a mutual fund.

    But is this possible? I’m 18 so I can do what I like with my money, but I don’t know what sort of things a 14 year old can do, legally. Would it be necissary to bring parents to sign things?

  2. Trent Hamm Trent says:

    Christine: I would simply have your sister put her money in a high-interest savings account. Spend the time researching these accounts, such as the ones available from ING Direct and HSBC Direct, among others. That’s probably the best place for her to put her money for now.

  3. Lisa says:

    I struggle with “facing down my financial fears.” In 8 years I could retire (55) and pay less than $100 per month for health insurance plus recieve a small pension. In addition, I have savings and retirement accounts. Not alot but enough if I didn’t have to worry about health insurance that I could follow my dream of traveling year round. It would be frugal traveling with some luxury thrown in every now and then. However, my savings/retirement/pension is not enough to self insure or buy an individual policy and still travel. So, I am going to compromise and work 10 mos a year (teaching) and travel summers and weekends until I am 55. I enjoy what I do, so it isn’t a problem right now. However, I reassess several times a year to make sure I do not follow a path that no longer fulfills me out of habit. There are so many possible paths to follow in life. I will admit though that if there was a national health insurance I would quit and just travel. So, that tell me fear is a major part in my decision.

  4. jake says:

    How do you go for a dream job that involves a lot of “IF”. In other word major luck.

    I want to pursue a dream job but when I broke it down I would need a lot of luck in order for certain things to happen. This matter of luck makes the situation more risky sometimes to the point where there is a 10% chance of success.

    I am having a hard time reducing the risk and making luck less of an issue.

  5. John Wesley says:

    @Jake,

    You get luckier the harder you work. The is so much uncertainty in the world, if you worry about it too much you’ll never do anything. It’s better just to work hard and hope for the best. Worst case scenario your dream fails and you have to get a job like everyone else.

  6. reulte says:

    Lisa – take a teaching job in another country. Perhaps teaching English as a 2nd language or simply teaching at American schools overseas.

    I don’t teach but left a very good job for a job that’s merely OK, but involved travel. Currently I’m living in North Africa, tomorrow I’m traveling to Malta for a few days for pleasure. I’ve lived in Argentina, Japan, Germany, Italy and visited Poland, the UK, Colombia.

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