Personal Finance column: My fridge, my emotions, my finances
I had been away at conferences for over a week and my husband, Mark, joined me for the final few days in Denver. A large puddle of water in front of the fridge welcomed us as we went to unpack bags full of groceries. Opening the door, I unscrewed my coconut milk and it smelled a bit off. The food in the freezer was cold, but completely unthawed. Great! We also had company coming for dinner in a couple of hours. No place to keep things chilled. Even worse — no ice for cocktails.
I immediately started to panic. I called my neighbors — did they have room for the freezer food? Going through the fridge, nose on high alert, was anything salvageable? I looked at the dinner menu and discerned how to make it happen. We could have called our guests and cancelled, or gone out to dinner — but I wanted to cook, and we needed to eat this food.
We divided up the cold, but unfrozen food amongst the neighbors, and I frantically told my husband to go buy a cooler and dry ice. “Just get a good, big one,” I exclaimed as I started unpacking bags and prepping our evening meal. He came home with a large, heavy duty one that pretty much cost as much as a new refrigerator. I forgot to have him get a bag of ice (for cocktails), so back out he went. Is it starting to sound like a crazy evening to you?
Our dinner and evening with friends turned out to be lovely. When all was said and done and we had some time to step back, I began to think about how my emotions hijacked my financial decision-making process. Was running out and buying a big, expensive cooler the best way to deal with our situation?
The repair person couldn’t come look at it for a week, maybe longer to fix it (if it is repairable). We needed to come up with a creative solution.
I posted our first-world problem on FaceBook, and a boating buddy offered to lend us his large cooler. We could also use our non-working freezer for fresh groceries, replacing ice regularly. We came up with a plan, and because of gracious neighbors and space available in their freezer, we rotated containers of ice.
Our impulsive purchase wouldn’t have a huge impact on our life, but it wasn’t a good fit. We actually took the very large and expensive cooler back, exchanging it for a smaller one that better suited our weekend day trips, or summer grocery store runs. However, there are bigger financial decisions that get made under emotional duress. It would be better to not let the limbic brain (emotional) get the better of us — especially when the consequences are irreversible or have long-term impact.
Three steps to making better financial decisions.
Ponder: Acknowledge that this is how are brains are hard wired — to reflex instead of reflect. Understanding that anxiety clouds our thoughts and judgment when we are stressed and how it hijacks our rational thinking is a first step. When it comes to money, fear and greed are easily triggered emotions. Listening to the pundits talking about the stock market? “OMG — the sky is falling! I need to get out!” Thinking about when to take Social Security? “The government is going broke, and I better get mine now.” “I haven’t saved enough for my golden years, I better get in on this new investment to make up ground.” These are all emotionally charged decisions that have big long-term implications.
Pause: Catch yourself entering into an emotionally charged situation with financial implications. Hard to do. When you are faced with financial decisions, from an unanticipated purchase to a major life event, take five and think twice. It may be a few minutes or an hour. Take a couple of deep breaths or a walk to clear your head before heading to store, or hitting the purchase button. Halt — are you hungry, angry, lonely or tired? These will impact your financial decisions. It may be a “time out” which can last six months or a year after a divorce or death or job shift. I can’t think of any financial decisions that need to be made when you are emotionally charged.
Process and plan: You can be proactive in many areas of your financial life. The larger the financial decision, the more your emotions will want to take over. There is more at stake. It is imperative that you tap in to the pre-frontal cortex — the rational — foresight, hindsight and ultimately insight area of your brain. Take time to chart your course, lay out your options, educate yourself about implications and balance out the emotional and rational parts of your brain. Are you ready to engage an advocate, an educator, a guide as you balance out the emotional and rational financial decisions that you will encounter in your fall season of life?
Good financial decisions will be aligned with what is important to you and leave you feeling at peace, and in unison with those around you. It took my fridge to remind me of how easily we can get off track with our emotions. It has also made me grateful for good neighbors, friends and working appliances.
Danielle Howard is a CFP® and CKA® with Wealth By Design LLC in Basalt. Check out her retirement podcasts and blogs at daniellehoward4u.com.
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