You know, it wasn’t long ago that I stumbled upon the current concept of financial independence and early retirement (FIRE). I, like most of you, became familiar with FIRE through great bloggers like Mr. Money Mustache (MMM), JLCollins, and others.
I came across these blogs serendipitously when I was contemplating what would have been the largest (non-real estate) purchase I’ve ever made: a car. I mean it’s a really nice car. But my internal-warning system, my inner-voice (INVO), was putting up warning signs everywhere, at that moment I didn’t care.
That’s right. I wanted a Tesla Model S.
Fell in love with this car. I mean, look at it. The whole concept of Tesla is sexy.
Tesla pulled on all the right emotional and intellectual strings. With compelling money-separating arguments like saving gas, saving the environment, free supercharging network, driving faster than a Ferrari, auto-pilot… You name it, I was drinking it.
Anyway, I was willing to depart with some of my hard earned money for it. Boy, my creative juices were flowing. I created a spreadsheet and devised scenarios to make it work. I could pay cash… oh wait, since interest rates were low, I could easily borrow the money, right? One rationalization after another.
I called it a freedom swap… money for car—swapping the freedom money can afford you over time for the perceived freedom and status of having a Tesla. What’s the use of having money if all you do is hoard it, gotta have some fun with it… right?
I was thinking irrationally, and in hindsight my INVO was on point, but I still did everything I could consciously to try to justify the purchase. I convinced myself enough to test drive it. Tesla even let me take the car home for an overnight test drive. What an amazing car. I was in auto-pilot love.
I built my custom Model S online, placed the order, and put down a refundable reservation price of $2500 with a credit card. Called the bank and got pre-approved. Super excited, marked the estimated date on my calendar, called an electrician, and started planning the first super-charger road trip. Woo-Hoo!!
Cons? What Cons?
By my loose estimates, the Tesla would have probably set my FIRE plans back by nearly two year. In my irrational state, it all sounded doable… but, that’s a long time. Anything can happen in two years especially during the accumulation phase–loss of income, etc.
My mind was conflicted and my excitement started to quickly fade. A day or so later I came down with a bad case of buyer’s remorse. I think having the opportunity to drive the car home also helped to tame my excitement a bit.
So, instead of looking for every excuse to justify the purchase, I started to search Google for the opposite. Looking for arguments against buying a Tesla. (So glad I did)
My search first led me to the financial independence Reddit forum. Then, I found a link to MMM’s blog: “Money Has Made Me Weak: MMM Family Spending Rises to $256,000” including how he bought two Teslas.
Honestly, in the beginning, I didn’t catch on to the now obvious joking tone of that blog. For a second, his blog convinced me to keep my order. So convinced in fact that I almost stopped reading the rest of the blog. It wasn’t until I read the blog replies that I discovered the joke was on me. An April fool’s blog post and I was almost the fool.
That was the first blog I read of Mr Money Mustache. I was hooked. I spent some time exploring the rest of MMM’s blog site, jumped over to JLCollins and Mad Fientist, eventually.
Binge read as many posts as possible over the next few days. The concept of living below your means, having a high savings rate, passive investing, 4% rule, retiring-early not-old… some were familiar concepts, but for some reason, at that moment, it all just clicked for me. It made complete sense and I had a renewed fire in my step.
I guess I never really thought it was possible to retire early; I always thought that was something you do when you get old. How was it possible that average folks can retire before they reached 30, 40, even 50?
I couldn’t believe people were actually doing this and graciously sharing their experiences. Never the less, it peaked my interest enough to continue to learn more.
My focus and priorities shifted almost immediately. I reevaluated my position, suppressed my materialistic desires, and saved myself before I super-inflated my lifestyle.
Look, don’t get me wrong, I still really really like Tesla cars and Tesla’s mission to disrupt the automotive industry (and others) and change the world. That’s exciting!
Needless to say, I cancelled my Tesla reservation on the very last day to get a full refund.
I still want a Tesla, but I want financial independence even more.
The bottom line:
Avoid making emotionally driven financial decisions.
Be honest with yourself when evaluating the pros/cons of your decision. Can’t find enough cons or pros? Search the web to find others who might be going through the same thing.
Beware of confirmation bias—which is “the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.” That’s exactly what I was doing before I caught myself doing it.
If all the signs are pointing in one direction (pro or con) only, step away from the decision-making process for as long as possible.
Get back to it after a nights rest, for example, especially if you’re making a decision that will impact your finances in a really really big way.
It’s really you against the world when it comes to your money. The world will use compelling money-separating arguments, every trick in the book designed to separate you from your money.
Some arguments are subtle, some are not. A lot of research, money, and time goes into trying to get people to buy things, often impulsively.
It’s up to you to be aware of your emotional state, take a breather, take some time, take a step back, and make thoughtful decisions only after considering all your options.
Don’t avoid the naysayers, consider all the arguments. Keep your long term goals in perspective.
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