The world of personal finance is an odd one to outside observers.
I know it’s tough, but picture yourself as someone who doesn’t give two craps about the world of money. You’ve been transformed from someone who actually loses sleep if you don’t save 30% of your income to someone who regularly makes it rain with $20s at the club.
We all hate the new you, by the way. You better change back immediately.
Whew, that was a rough six seconds, huh?
Nobody wants to be that friend who doesn’t care about money. What will he do about retirement? What will he do when he loses his job? What will he do if his car breaks down? OMG YOU GUYS HE’LL NEVER EXPERIENCE THE SEXUAL THRILL OF GETTING DIVIDEND CHEQUES.
That poor bastard.
How can anyone live a life where they don’t have a safety net? Don’t these people know that something will inevitably go wrong? Don’t they know that you have a one in four chance of being disabled in your life? How do they live knowing they’re only two weeks of non-work away from a disaster?
We all know the answer to this, of course. They’re aware these risks exist. They either choose to downplay them or ignore them completely. If they really get into financial straits, they’ll just throw up their hands and default on debts. Easy come, easy go.
A different way of looking at things
From our perspective, this way of life seems pretty normal. We think a lot about money because we like it. We like having it, we like saving it, and we even like spending it–responsibly, of course. We like the freedom of making money outside of our day jobs and collecting dividends. And ultimately, I’d say most of us lust for the freedom financial independence provides.
To get to that ultimate goal, the average personal finance blogger does some stuff no sane person would ever do. In fact, I’d probably come out and argue pretty strongly that most of the activities we do aren’t healthy at all.
Be honest. How many of the following things have you done or currently do?
- Check your bank/investment balance more than once a day?
- Intentionally missed out on fun activities because they would take away from your savings goals?
- Ate bad food for the sole purpose of saving money?
- Became emotional because of mild swings in the stock market?
- Got mad because of the lack of savings habits from your parents/friends/other finance bloggers
- Read hours and hours of money saving tips that are just the same old tips recycled for the 9th time?
There’s more, but you get the picture.
Let me put this next part in bold because it’s important.
People with a healthy relationship with money don’t check balances several times a day or get emotional because of normal swings in the market. These are the behaviors of people with a deeply unhealthy relationship with their cash.
Think about your average debt blogger. They go from an orgy in spending to complete celibacy, vowing to not only never spend a nickel on non-essentials again, but to do so while channeling 100% of their disposable income back towards paying off that debt. Sacrifices will be made, and they’re more than happy to make them and finally get their lives back in order.
In short, this person swings from one type of obsession to another. But they’re not doing anything about the root causes of what causes the obsession in the first place. They’re just moving along from shiny object to shiny object, but this time writing a blog about the process.
Is it any wonder these people don’t have a great success rate?
Debt bloggers aren’t the only ones who suffer from this. When Sean Cooper paid off his mortgage in three years, people mocked him for working 80+ hours a week and eating Kraft Dinner while the rest of his peers went out and had fun. Cooper had the last laugh, proclaiming it was all worth it when he finally paid off his house.
What Cooper and the rest of the people who support his decision missed were the very legitimate arguments against his strategy. Investing in the market would likely have given him higher returns over time. Renting out the top floor of his house ensured he had an investment that was cash flow positive.
But most importantly, they all missed the all-important fact that people with psychological issues surrounding money are the ones that “need” a mortgage gone in a short amount of time. Normal people don’t need that boost. Normal people recognize a mortgage is a debt that takes a while to pay off, and plan their lives accordingly.
In several interviews Cooper mentioned his mother’s financial troubles as a source of inspiration. Isn’t it possible that he overcompensated for these issues?
Another example? Don’t mind if I do
There are essentially two types of finance blogs. One is directed towards the reader, while the other becomes a sort of diary for the person writing. In the latter, we’re treated to thousands of words every week, outlining everything from the personal finance blogger’s budget to their plans to buy property three to five years from now.
How much of a down payment do I need?
What size of house should I buy?
Should I buy now in case I get priced out of the market forever?
How can I pick the best Realtor?
And so on.
You’ll notice a key letter is bolded in all of those questions. These blogs are unabashedly all about the proprietor and their future plans; their hopes and dreams; and their financial journey.
When we look at these types of sites as a sort of personal diary, they don’t seem so bad. After all, diaries have existed as long as paper has been around.
When we look at these blogs from another perspective, a different story starts to emerge. What kind of person spends many hours a week thinking about financial goals that won’t happen for years? Who feels the need to explain the tiniest minutiae of their financial lives to an awaiting audience? And perhaps most importantly, why do any of us care?
And ultimately, somebody with a healthy relationship with money doesn’t spend hours and hours preparing for a financial decision that’s years away.
We’re all guilty of this
I’m hardly one to talk. There are more than 1,100 posts in my archives, some of which aren’t entirely dick jokes and scantily clad ladies. And although I’ve made an active effort to avoid talking about my own personal life most of the time, plenty of these articles have been posted over the years.
And when going over my list above, I’ve been guilty of just about all of those money-related sins. When my stocks go down, it sucks. I try to get over it pretty quickly, but it still affects me.
We collectively spend thousands and thousands of hours obsessing with our finances. Our friends and acquaintances don’t, yet they still seem to do okay. Sure, they might have to scramble a few times in their lives, but a full 99.8% of the time they survive just fine.
I’m not suggesting we all turn into these people. What I am suggesting is that once we get all the heavy lifting started and on a path to financial independence, perhaps it’s fine to take our minds away from the subject of money sometimes. In other words, stop sweating the details so much. It’s the first step for all of us to improve our own relationship with money, which, in this world, isn’t healthy.