“What should I do – invest or pay off my mortgage?”
“What’s better – paying off debt or building up savings?”
“Who’s sexier – you or Brittany Spears?”
My answer to these questions are always the same: Whichever excites you the most. (Except for the Britney Spears one, she wins all comparisons as I have a soft spot for her ;))
Yes there’s a financially “correct” answer to most of these which of course you have to factor in, but if you’re anything like me* you get a LOT more accomplished when you’re actually excited about what you’re working on vs looking at the numbers only. I can pay off debt like a mother when I’m in the mood, and alternatively I can turn around and save-save-save as well if my priorities and interests change over the months. But it has to motivate me enough to take action!
(That’s another important thing to keep in mind btw – life and priorities change ALL the time and there’s no shame in switching gears to adapt accordingly. Nothing is permanent in life and money!)
Here are two other reasons excitement works:
- Gives you less of a chance of giving up! What are you more likely to do – stop doing something that’s exciting or stop doing something that’s forced?
- No route is a bad one!! Saving money, paying off debt, investing, earning more – they all positively affect your net worth as long as you actually do one of them.
Of course there will be exceptions** and I’m sure some of you will bring them up in the comments, but generally speaking you can’t go wrong by choosing the path you’re most excited about. Even if you’re “losing money” in the process by not being the most efficient.
(Dave Ramsey’s Debt Snowball method is a perfect example of this – paying off the lowest balanced credit cards first to gain momentum vs the higher interest ones which will save you more in the end. But guess how much you pay off if you quit? None! And studies show time and time again that we’re flawed human beings and usually need the emotional push to keep us going.)
Now, in a perfect world? We’re excited AND it’s the financially “better” option! If it motivates you to kill off 18% credit cards instead of throwing money into a savings account earning 18 cents, then it’s a total win-win. You can plow through with all the motivation you’ve mustered while knowing it’s the more financially prudent decision. We should all be so lucky for the stars to align!
So to recap:
- Think about which route most excites you and gets you to stick to it.
- Don’t worry about picking the “wrong” answer because they’re all GREAT!**
- Britney Spears is sexy.
Now to go throw my dollars around like those Simpsons gangsters… Always the right answer!
* It’s okay to be emotional with money if you use it towards your advantage.
** There are some questions that “being excited” is of course a dumb decision-maker. For example, “Should I buy this Ferrari or pay off my $80,000 c/c balance?” or “Should I go to work today, or stay home and watch the complete 3rd season of House of Cards?” We all know which would be more fun, but we’re talking about smart financial debates here and not nonsense ones.