Whenever you say yes to one thing, you are saying no to something else.
Suppose you are thinking about buying a small lake house. The price seems pretty good, but something is bothering you. You still have some other credit card debt you haven’t paid off yet. The angel on your shoulder says take care of the debt, but the devil whispers that you’ve got to pull the trigger on this kind of thing quickly or someone else may buy it.
How do we know what’s right?
Well, we could agree to meet again in twenty years and then we would both know what the right decision was.
Until then, we are left with the uncertainty of opportunity vs. risk.
Most of the time, we have at least some idea of what we are agreeing to do or to buy (such as the lake house). What you cannot know is what future opportunities you are giving up because you said yes to the opportunity right in front of you.
John Mauldin once wrote, “…the choices we make today are constrained by the choices we made in the past, and the choices we make in the future will be limited by the choices we make today.”
That reality can paralyze you, which is the wrong response. To make no decision (because you are frozen with fear) is still to make a decision…but with no thinking attached.
Once you realize that today’s choices shape tomorrow’s opportunities, you ought to start asking questions like “how much is today’s choice going to limit my choices tomorrow?” and “what other things do I want to do that I might not be able to do if I say yes to today’s opportunity?”
That’s where a holistic financial plan comes in.
Let’s say you wanted to go see your long-lost cousin Bertrang in Onalaska, Wisconsin. Never been to that part of the country, much less heard of Onalaska, right? So how would you get there without a map? And if you were trying to get there to celebrate cousin Bertrang’s birthday, how would you know if you have time to stop and site see along the way?
Without a map and a travel plan, you have no idea how to make decisions along you way.
A holistic financial plan is like a map and a travel itinerary showing you how to reach your desired destination at just the right time.
Before you buy another house – or make any other major financial decisions - get a map.