Life is full of decisions and is more complicated than simply saying yes and no. Life is not binary. You could even say there are 50 shades of grey in life.
The Latin meaning of the word decide literally means ‘to cut off’. When you make a decision you cut off or kill all other options. Want to go out with your friends on a Friday night? That’s great – life is short and should be enjoyed. By doing so you are cutting off or killing all other options like having a quiet night in and saving money.
When you decide to pack your lunch you are cutting off the option of spending money on an overpriced lunch.
When you make a decision you are saying yes to one thing and saying no to a million other options. You are literally cutting off all other options. In life, you can do anything but not everything. Whether intentionally or unintentionally your decisions will lead to consequences. In life, sometimes the consequences are good and other times they are bad. Even if you choose not to decide you still have made a choice. What are you going to prioritize in life?
Seeking financial independence takes planning and requires decision making. Some options are viewed as more optimal than others. Completely optimizing your decisions for financial gain will shorten the time require to reaching financial independence. But at what cost?
In some instances its easy to select the optimal decision. Contributing enough to your 401k plan so you earn the employee match is a no-brainer. This is literally FREE money and hard to pass up.
Other times, optimal choices are not as easy. Deciding where to live and how much to pay for housing is challenging.
I recently decided to accept a job offer from a former employer. The new job requires a longer commute both in time and distance traveled. The increased compensation more than makes up for the increased commuting costs and time commitments. By making this decision I killed my cut off the options of my shorter commute.
My car is 20 years old and has over 200k miles. Her reliability has waned in her old age and she is almost embarrassingly old to drive. Given my increased commuting, frequent work travel for meetings, and occasionally driving executives, I decided to get a new (to me) car.
As I have discussed before, buying a new car is a suboptimal decision. I wrote about the $30,000 car that cost my friend over $240,000 and knew the pitfalls associated with car purchases.
I decided to purchase a lightly used car for about $15k. The new car has just under 40k miles and was built in 2015. I could have easily purchased something a few years older or with more miles for half the price. However, this suboptimal financial decision also brings me happiness.
I like my new car and the heated seats. The car also has Bluetooth which is great for listening to podcasts like FIRE Drill Podcast, ChooseFI and Rod Khleif’s Lifetime Cashflow Through Real Estate Investing during my longer commute. I no longer feel embarrassed pulling up to a client’s office in the new car.
The car will last me for 12-15 years with routine maintenance. The extra expense amortized over the life of the car is minimal. In fact, the car may last me even longer than 12-15 years. I imagine my driving will reduce greatly in FIRE. I plan to bike and travel more.
If you are reading this post you are probably a human. If not you are probably a computer or an awesome dog. Either way, we have physical, mental, and emotional needs. We should not program ourselves to optimize every aspect of our life’s for financial gain. In fact, I believe this would cause more harm than good for our happiness.
We all have financial needs as well which should not be neglected. We need to live for today AND plan for tomorrow. Life is a juggling act; its a delicate balance of living in the moment while setting yourself up for a lifetime of success. Brandon at the Mad Fientist did a wonderful job discussing the hierarchy of financial needs and the meaning of life.
Earlier this week, a friend reached out to me. She is buying a 5 bedroom house and plans to house hack. She is also considering renting one of the rooms to a ‘live in AirBnB manager’ who would rent all the other rooms on Airbnb and manage the day to day operations.
She believes the AirBnB model would allow her to pay the house off in 2.5 years. Sounds pretty awesome right? She asked if she should move forward with this or have more traditional roommates on long-term leases.
The optimal decision would be to pay the house off in 2.5 years by using Airbnb. The suboptimal decision would be to rent to long-term tenants on a year-long lease. Or even worse, she could buy the house and live alone and have to pay for everything out of her own pocket.
I don’t believe in telling people what to do or how to live their life. Rather, I prefer teaching by using the Socratic Method. I asked her, a series of questions:
Are you ok with the revolving door of people staying at your house?
How quickly would the house be paid off?
Is this worth the extra hassle and time?
The optimal choice financially may not be the optimal decision for your happiness. Needless to say, there is no right or wrong answer. Being human is more complex than selecting the most optimal path for financial gain.
At the end of the day, it’s about happiness. Money is just a thing we use as a medium of exchange. Focus on happiness as money is ultimately unimportant. One day, when you wake up in 20, 30 or 40 years – are you going to regret not making more money? Or not making small decisions to be happy? Perhaps I’m off base and money provides fulfillment and happiness in your life.
In recent weeks I’ve discovered a new love. But first I would like to tell a brief story of a friend of mine.
You see – my friend was getting crushed at work with constant 80 hour weeks. He was struggling with burnout and a demanding career. He was also going through an unexpected divorce.
Despite all of his hardships, he was able to endure through the adversity. Even more so, he seemed better than ever. I spotted a noticeable change in his demeanor. He had more energy, a positive outlook on life and was pleasant to be around (not that he wasn’t before). His happiness radiated throughout the room (this was new).
I couldn’t resist. I had to ask him what’s his secret. He was literally getting pummeled from every direction in life. Yet, he was thriving, vibrant and happy.
My buddy chuckled and told me it was simple. He picked up meditation. I was very skeptical at first, however, with good reason I decided to give it a try. He recommended the free app ‘Insight Timer’.
Morning mediation after the gym has become a regular staple in my routine. I would highly recommend practicing meditation. It’s great for coping with stress and anxiety. Meditation also improves focus, self-awareness, and happiness.
What suboptimal choices have you made in your life to achieve happiness? In what ways has optimizing benefited you? And at what cost? What ways do you find happiness, cope with stress and find fulfillment in life?