Wise minded financial decision making
Emotion and logic are often at odds with one another. Some therapeutic modalities highlight the difference of our logical brain and our emotional brain and work to teach us to operate from a place where they coexist, like the middle of a Venn diagram. When we make decisions purely out of emotion, we might find that the decision was not wise. Similarly, when we make decisions purely from logic, we might miss some of the magic that emotion brings. Emotions guide our values and our goals, and logic is what helps us carry them through. This is what the Bottom Line philosophy aims to accomplish.
This philosophy was reinforced for me this past year. As I’ve shared before, we live in a little house. We have 800 square feet, and within this small footprint lives two dogs, two adults, and soon to be, two children. I love the idea of land, more space, and also making a home our own (i.e. a fixer-upper). This past summer, I looked at a piece of property with two houses on it. It was a dump. There was no plumbing or electricity. The houses were truly uninhabitable. As I was looking at it, I imagined what it could be, and I imagined raising my children there and I suddenly, and irrationally, fell in love with this unlivable piece of property.
We made an offer, and I became even more attached. My sister, an architect, went to see it and drew plans. I called our mortgage lender. In a matter of 24 hours, I had made a lot of decisions out of emotion (and convinced my husband of them, too). A week or two later we got a call from the seller’s agent asking if we would be willing to make our offer better. I was controlled entirely by emotion, so we made our offer better.
Ultimately, our offer was rejected, and we didn’t get the property. Even though it felt like logic, there was very little sound reasoning guiding the decision to purchase this property. For a while, I was devastated. But truthfully, when we looked at the numbers, they weren’t good. The numbers defied a lot of what we value so dearly. Looking back, I think the universe was protecting us so I could gently learn this lesson.
Currently, and this is what we’ve intentionally created, we can live on one income. That property would have required us to have two incomes (or one much larger income). This is what I learned a few years ago about managing money, what I was reminded of because of this experience, and is the key takeaway of this post:
The greater our financial obligations, especially relative to our income, the less freedom we have. Put another way, the lower our financial obligations, the more opportunity and choice we have.
While I could envision this being a wonderful place to live and raise our children, needing to earn a certain income to make this our home wasn’t compelling. It sounded stressful, and still does. It removed the freedom, choice, and peace of mind that we hold so dearly.
We can use logic and Bottom Line tools to balance our emotional desires (and, not to be confused with logic that justifies emotion). Whenever we feel compelled to buy something that causes us to change course, especially when it is based on emotion, remember: Yes, we can make a choice to have that thing and if we make that choice, we may make our financial obligations greater and our freedom smaller.
This is the philosophy behind Bottom Line. You have complete control over your Bottom Line. The choices you make impact what you can do. Some of our core values are having freedom and choice: the ability to take lower paying, less stressful jobs if that is fulfilling; the choice to be able to stay home with kids if that’s we want; the choice and ability to change careers. It can also go the other way. We might choose at some point that we want two jobs or that we’re willing to have two jobs because we decide we value something else more. If we’re intentional in our choices and consider our financial obligations relative to our income, we can design and curate the life we want.
We aim to find the place where we make choices based in both emotion and logic. That place where we know we are making a wise decision that supports our visions, dreams, and goals. Every choice we make is tradeoff for another choice, no matter how big or small. Our goal is to make choices that serve exactly what it is that we want in life and to do so consciously.