A little over a week ago, I responded to a mailbag question from Mary, who was struggling with the decision about whether to go on an expensive trip (that she could afford) with her ailing sister. She was worried about the long-term financial impact of this big expense and was weighing it against doing something with her sister that they had long talked about before her sister became too ill. You might want to go ahead and read the full question and answer before continuing.
My response to Mary was that she should absolutely go on this trip. The reasoning was simple: The entire purpose of being financially responsible is so that life doesn’t stand in your way when those rare, life-altering moments come along, the kinds of moments that leave you with regret for the rest of your years if you let them pass by. Being frugal and living beneath your income level means that when those things come to pass, you’re prepared. It means putting aside the little things that you’ll forget in an hour or in a day or two so that you can step up during the really big moments.
To say I’ve received a lot of feedback from that mailbag entry is an understatement, and virtually all of it was positive and in agreement with my answer. So, why does it merit another post?
Several people who wrote to me in the aftermath of that question were dealing with their own crossroads in life, moments of various kinds where they were unsure what they should do next. Was it smart to take the financially sensible path? Or was this a “key moment” in life where they needed to take the financially risky path and rely on the financial support they’ve built?
Every single one of those questions revolved around situations that seemed less certain than Mary’s trip to France with her sister. One person wanted to buy a restaurant. Another person wanted to buy a houseboat. Yet another person was torn about moving across the country out of love. Literally none of them seemed to be a clear cut “life moment” like Mary and her sister.
This, of course, left me thinking: How does one know whether or not this is a big enough choice in life that one should take the less financially stable path? Sometimes, the situation is like Mary’s situation, where it’s pretty clear that this is a once-in-a-lifetime moment that needs to happen now or else the opportunity is lost, but many times in life, that’s not the case.
How does one know the difference? How does one make the right choice in those really big moments of opportunity?
First of all, look at the actual likely downside of this choice going badly. If you choose to make the leap and it goes poorly, where does that leave you? It might be tempting to buy a restaurant, but if it doesn’t work out, what will your financial state look like? Will you be able to easily recover? Or does it put you into a bad financial position?
If you quit your job, will you be able to find another one if your endeavor doesn’t work out? Or are you basically exiting your career because it will be tough to find your way back?
Most drawbacks in life are mitigated by making really good choices along the way when things are calm. If you spent your financial life consistently making good decisions and spending less than you earn, then there is much less financial risk in buying that restaurant. If you spent your career constantly building a great reputation and a ton of strong relationships, then there is substantially less risk in making a very unusual career or business choice.
On the other hand, if you’re struggling in a pool of debt, taking a big financial gamble is a huge risk that could easily sink what you have left. If you don’t have a really strong career built up, then taking a big professional gamble has a huge downside.
Here’s the truth: The calm moments of your life are times of preparation for the big moments, so use them that way. The calm moments are when you spend less than you earn and get rid of debts and build a strong financial base. The calm moments are when you build up a strong professional reputation and a great skill set and a huge professional network. In both cases, you do those things so that when the big opportunities come around, you have something to fall back onto if things fall flat and you have the resources to make that choice happen.
Second, ask yourself honestly if this is really a unique opportunity. Great opportunities can grab our attention and convince us that we absolutely have to jump on board with this opportunity, but many opportunities aren’t really all that unique. This is particularly true when it comes to buying something, particularly something that isn’t at an incredibly steep discount.
You may have always dreamed of running a restaurant, but it doesn’t mean that now is the time to make that leap simply because you became aware of a restaurant location for sale. Restaurants go up for sale all of the time and locations can be converted into restaurants as well. You should make this leap when you’re ready, when you have a strong business plan in place and appropriate financial backing. Until then, a restaurant on sale at a discount is just one similar opportunity among thousands and not one you should reroute everything for.
You may have always dreamed of owning a boat, but it doesn’t mean that now is the time simply because you saw a beautiful boat for sale at a decent price. Boats are bought and sold all the time. If you want a boat, plan for it. Save your money and figure out what you can actually spend and deeply understand what you’re looking for so that it’s not a regrettable purchase.
Yes, there may be a special extenuating circumstance or two about this particular situation, but is it really that special or unique? Or is it just attractive to you in this moment when you happen to have the idea floating around in your head?
There will always be another restaurant or another boat, but there will never be another sister.
Third, ask yourself if this specific situation is something you would genuinely regret if you say no. This again comes back to the big purchases or big career decisions or big life decisions and whether they offer anything truly unique or just happen to be both convenient and somewhat compelling.
If you pass on this restaurant, does that mean you’ll never be able to open a restaurant again for the rest of your life? Or does it simply mean you might have to wait for a little while, a calm period in which you can strengthen your business plan or improve your financing?
If you pass on this boat, does that mean you’ll never be able to own a boat in your entire life? Or does it mean that you might have to wait for a while, a calm period in which you can save for that boat and really evaluate what you want and whether it’s truly worth it for you?
If you pass on moving across the country to be with someone you’re in love with at the moment, does that mean that you’ll never be able to fall in love ever again? Does it even mean the end of this relationship?
Mary’s situation was clearly a once-in-a-lifetime situation. It was extremely likely that her sister was not going to live more than another several months, so, yes, the opportunity was not likely to happen again. But what if her sister was going to live for the foreseeable future? Does that mean that if they were excited about a trip to France, they shouldn’t have taken it?
No, it just means that they should have planned for it. The opportunity to travel to France together would come up next summer or the summer after that. They could have saved for it and planned for it and then gone on that trip in a way that produced no worries for their life. The only thing that caused a faster choice was a huge unchangeable deadline.
Finally, consider whether or not there is another approach to the problem. If you’re thinking of buying a restaurant, that means you want to get into the restaurant business. There are a lot of ways to pull that off without just buying the restaurant sitting in front of you. Consider other options for what you’re wanting to do… in fact, writing a business plan might be a much better step at this point than just buying a restaurant.
Ask yourself whether it might make sense for your long-distance romantic interest to move to you, or whether a move might make more sense in several months when you’re sure the relationship will last and you’ve really vetted the other person.
Contemplate other career approaches. Maybe a simple change in employer is a better approach for the short term than simply abandoning a career you’ve invested deeply in.
The point is simple. If you’re at a crossroads, step back and look at all the paths forward rather than locking yourself into one or two of them. You might just find a road less traveled that you didn’t consider before.
Here’s the thing to remember: Financial success gives you more opportunity to take advantage of those key moments in life, but that doesn’t mean you should jump wildly on whatever opportunities cross your path. Take advantage of the calm times in your life to build financial and professional and personal stability so that you can take advantage of those key life moments when they happen, but don’t fly headfirst into everything that comes your way. Step back and take a deep breath and look more deeply at the situation, because throwing everything into something that isn’t really that worthwhile just means you have less opportunity when something truly important comes along.
How will you know when something is truly important? Will you truly regret not taking this opportunity in five or ten years? Is there no other chance to take it, or take anything like it? Is the downside of not taking this opportunity not all that disastrous? And, more than anything, your heart is unquestionably telling you that this is something you need to do, even when your mind is sure? Those are the guideposts to pay attention to.