A Better Way To Prevent Financial Mistakes: Convince Others Why Before You Buy

Since starting Financial Samurai in 2009, I’ve been making better financial decisions. The reason is because before each big decision, I always spend at least a couple hours analyzing each situation through a post. The dilemmas I have are very similar to the dilemmas many of you have, will have, or have experienced. As a result, after each publication there’s plenty of great feedback from the community.

Before 2009, I had several financial blowups. One mistake was buying a Lake Tahoe vacation property for $710,000 in 2007 and watching its value sink to below $400,000 within three years as the financial crisis unfolded. I thought I was getting a good deal because the sellers had purchased the property for $785,000 just the year before. But the tidal wave of foreclosures was just too strong.

If Financial Samurai had existed back then, I’d like to think I would have held off on my purchase or bargained much harder because at the time, I foolishly thought my income would continue to go higher seven years after the dotcom meltdown. We're once again seven years into a real estate and stock market recovery. Please be very careful!

Examples Of Solving Big Decisions With Writing

Writing is thinking. Let me share some examples of how writing posts helped me make better decisions.

Big decision #1: At age 34, I wondered whether I should leave a 13 year banking career and make no money as a writer for an unknown period of time. It sounded like a crazy thing to do so I wrote: The Dark Side Of Early Retirement. The post made me face all the pitfalls of leaving the rat race so soon. Everyone who is planning on pulling the plug early should read this post.

Because of the post, I was able to formulate a severance negotiation strategy a full year before actually leaving. Because I knew with 80% certainty I was leaving, I was able to take it much easier my last year of work while still getting paid. Because I no longer cared as much about rankings and revenue, much of the work pressure dissipated. Instead, I took six weeks of vacation for the last three years and and spent lots of time writing during my free time.

When it was time to sign the severance documents, I had already run every possible scenario. Thus, it was with great anticipation rather than immense consternation that I signed the documents to move on to the next chapter of my life.

Big decision #2: After leaving Corporate America, I still felt a little vulnerable. I was used to a significant monthly paycheck and now I earned zilch. To feel rich again, I was thinking of selling my primary residence and renting a two bedroom, one bathroom apartment for half the cost of owning my home. If I sold my house, I would have netted roughly $500,000 after taxes and fees. Not great since I had owned the home for seven years by then and put $325,000 down.

Back then, selling was super tempting, so I wrote: Should I Sell My House Now That Facebook IPOed? We had gone through the worst of the financial crisis, and I felt lucky to still have all my wherewithals. Time to sell everything before we return to the abyss!

After writing the post, I decided it was not the time to sell because it appeared we were just at the beginning of a real estate recovery. I received a couple low ball offers which I declined after listing my house for 29 days. In my gut I felt that if I sold, I'd regret that decision 10 years later. Since 2012, SF real estate prices are supposedly 50%+ higher. Because of leverage and four additional years of principal payments, my equity has grown from $500,000 to ~$1,500,000. That is some serious money made with much less disruption thanks to thinking things through with a post!

San Francisco Home Prices After Facebook IPO
Writing a post prevented me from selling at the bottom.

San Francisco median home price

Big decision #3: Roughly $420,000 in CD money was coming due in early 2014 and I wasn’t sure how to reinvest the money because I usually invest only $5,000 – $20,000 at a time. I loved the CD because it was earning a a risk-free 4.1% a year. If I could earn a guaranteed 4% a year for the rest of my life, I would invest my entire net worth in such an asset.

The two most obvious asset classes to consider were stocks and real estate. As a result, I wrote: Which Is A Better Investment: Stocks Or Real Estate? The post evaluates all the pros and cons of each asset class. In the end, I realized I didn’t feel comfortable investing more than $150,000 into the stock market at the time and also didn’t want to hold so much cash earning nothing. The post reminded me that I don’t like being a minority shareholder with no control over anything. Further, compared to SF real estate, I didn’t like the volatility of the stock market.

As I'd been wanting a smaller house with panoramic ocean views in a new neighborhood, I decided to use $250,000 as a downpayment on a fixer upper, and earmarked another $120,000 to do a gut remodel. The remodeling is done, except for a ~$20,000 deck addition off the master bedroom once my contractor stops ducking my calls. Meanwhile, my previous house is rented to five people. As only three people lived in the house before, this helps ameliorate the SF housing shortage. The move also pushed me ~$50,000 closer to my $200,000/year passive income goal.

Perhaps it's too soon to tell whether I made the right financial move because I'm forecasting a decline in property values over the next couple of years. But I do know that I'm very happy with this house so far and am extracting full value from the earlier house. According to comps in the Golden Gate Heights neighborhood, prices are up about 15% since 2014 while the stock market is flat.

Big decision #4: After successfully supporting myself without a job for three and a half years, I started getting fearful and restless in 2H2015. My economic outlook for 2016 and 2017 wasn't that great, and I thought it would be wise to get a job before job opportunities became scarce. As a result, I wrote, Time To Go Back To Work Full-Time Again?

Of course you know by now I haven't gone back to work, thank goodness, and have just maintained one or two corporate consulting clients to keep me engaged with the real world. I was so close to accepting a really shitty job at this fintech lending company 30 minutes south for low pay just because I wanted security and camaraderie. Then I almost stepped over the ledge by returning to my old industry with a tier 3 bank that just announced they are laying off 20% – 30% of their North America employees! Yes, the pay would have been at least $250,000, but for how long as a last-in employee?

Going through the process of finding full-time work again reminded me of the awkwardness of pretending to want to do something I don't want to do. I'm so happy I didn't go back to work full-time because I would have stayed for at least a year, no matter how bad things got.

Make A Convincing Written Argument

If you can’t convince me, the FS community, a close family member or a friend why you should part with your cash, then sit on your money until you do. The same thing goes for making any big decisions in life. We all have blind spots that need illuminating. The question is whether you will have the patience and honesty to hear what other people have to say.

Writing is a very purposeful action that makes you think much deeper. If you're unwilling to start your own website, then at least type your argument out in private. Upon reflection, it looks like not only has Financial Samurai allowed me to break free from Corporate America, it has also saved me a ton of heartache over the past seven years!

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55 thoughts on “A Better Way To Prevent Financial Mistakes: Convince Others Why Before You Buy”

  1. Hi Sam,
    If I feel that a financial downturn in the stock market is inevitable in June- August, would I be justified to take 90% of my portfolio in 401k out of the market? Right now I’m 50% in stocks, but if I don’t have a crystal ball but very strong gut feelings, would it be insane to take the rest out of the market?

  2. I really liked this post. The down turn of the housing market really took a toll on a lot of us. But investing in the housing market at the bottom of the market was a brilliant idea. The market has to come back to equilibrium and it sure did. I bought a home a little after the bottom of the market and it has gain $100,000 dollars in equity in a short time. I wish I would have bought to and took that risk. Better luck next time. :)

  3. Alright I am going to write out the reason why I am retiring early. I just read The Dark side of Early Retirement. I’ve never read it before. It was posted before I started following FS. What a great read. And it’s true, if you love you job, you would not want to retire.

    So, some of the reasons Sam listed for early retirement:

    1 – Have not found the right job. I don’t love my job. I don’t hate it. But every year it seems like I am working more for less. Of course there is typical work politics, hierarchy, kowtowing to the superior. And if I could advance easily at my work I would have stayed, but it take 120% effort to move up which I cannot not muster in a job that I am not passionate about.

    2 – Want a way out. Not becoming all I can be. Yes. I admit it. I had higher hopes for myself when I was a kid. Curing cancer, invent rocket ships. Maybe this is not a good reason to quit, but I like to think I can do more in another field?

    3 – Time is precious. Honestly, as a single 44 y/o I have more money than I can spend. Maybe not for the rest of my life, but for the foreseeable future. If I have more free time, I rather spend it with family, traveling, and doing something creative.

    Dangers of early retirement:

    1 – Employment gap – won’t apply to me. I will still work part-time, and on my resume I will not have an unemployment gap. I won’t take more than 1 month off at a time. I believe I’ll have to explain that in my future job application.

    2 – Run out of money – Not gonna happen. I already have some passive income. And even working part-time I can cover all my expense. The down side is that I cannot fully fund my IRA.

    3 – Lose touch with family and friends. The opposite will happen. I will travel back to my country to spend time with my aging parents. Perhaps spend more time with friends too since while working full time I am always too tired to socialize on the weekends.

    4 – Difficulty starting a family – This one I am concerned about. The reason I am working full time is to have sufficient fund for a family. By myself I can live on a $60,000 pre-tax income. Yes, part of my want to keep up with my peers who are making $300-$400K a year. More practically I do work that when I have a family, can I provide for them.

    5 – Lose self respect due to lounging around lol. Admitted, maybe a little. If I retire early and not do anything productive with my time, I will feel worse about myself. If I do not follow through with the different personal projects that I have set out to accomplish, I will feel unproductive. If that happens, I should go back to working full time.

    It seems like I have all the reasons why people want to retire early. I am not saying they are great reasons, but it is what it is. On the other end, I have covered most of the risk of retirement. The biggest worry is not making enough money. Another big worry is losing momentum to work. The pluses of being in a rat race is that you get used to waking up at 6-7, commute to work, do you 10 hours days, look forward to the weekend. Once you stop working, you’ll get used to not working, and one day when you have to go back to work, ti will be SOOO painful.

    Mmmmm…. now I have write it all out. Will I still retire at 45???
    I will. I just need to make sure I stay productive during that time. Have fun. Play hard.

  4. Great point to verbalize a plan to convince even the most skeptical people why you should be doing what you’re doing. Writing an essay on it (or via blog entry) will take it to the next level. This reminds me of how I try to construct a convincing argument to my 4 y/o nephew who wants to eat candy before dinner!

  5. Well you are doing great! You earned it in full with all of your hard work.

    If I’m not certain about things, I ask my close friends, my husband for feedback. I also read, read from others who are experts and talk to people.

    I also think of all the worst case scenarios and see if I can deal with the consequences as well as find ways to mitigate it.

    And I also listen to my gut too.

    You are doing well, I agree with the readers above to celebrate your winnings:)

  6. BeSmartRich

    You are right. If you can convince others then you are probably ready. Also sleeping on it for a couple of days would help as well. Discussion with your wife and trusted investment buddies are also good ideas. Thanks for sharing!



  7. Trying to get ahead

    My wife and I are both in our mid 30s and are worth approx. $1.6 million (about half of which is our home and the rest stock) with ZERO debt (no mortgage, no student loans, no car loans, no CC debt, nothing!). We earn approx. $500,000 per year, both doing stress-free jobs that we love. We have about $20,000 coming in every month from salaries net of taxes, insurance, 2 max 401k contributions and buying company stock. The rest of our income is our 2 annual bonuses. Our monthly nut is about $3,500. Now that we are banking approx. $300,000 and no longer have debt to pay down, what do we do with the money? Buy a vacation home, a rental or just pile up the cash? I don’t want the money earning 0% but I also don’t want to put more at risk in the stock market. Half of our net worth is in the stock market already and we purchase $75,000 in stock annually through our 401ks, IRAs and company stock purchase plans. P2P lending freaks us out and we have a hard time trusting it.

    1. Congratulations! You have done well to position yourself for a great future.

      Given your income, I would recommend the purchase of a rental property, assuming you have the time to be a landlord (or the willingness to compensate a property manager. If you are saving approximately 60% of your income annually, it shouldn’t take you long to save up cash and find a steal of a rental property. You have the luxury of being patient if you are a cash buyer.

      I would recommend a CD ladder, given your current situation maxing out your 401ks. This will provide you added stability and security. Read Sam’s post (https://www.financialsamurai.com/the-dvd-method-to-cd-investing/) on CD investing here. That should give you the information you need to get started.

      My last piece of advice: Celebrate a little! You are killing it and are certainly on a path toward early retirement, if that is what you want.

      1. Trying to get ahead

        What kind of rental property? I thought about that seriously a while back but was discouraged by many people. Is a seasonal property easier to deal with? The problem is that most good rentals by me cost around $1 mm or more to buy. I don’t live in an area where people rent SF homes, so it’s more multifamily homes closer to the city. I definitely feel like I’m missing out not owning a rental property but don’t want to buy one if it’s going to kill my life either.

        Regarding the CD ladder,
        I looked into that and the interest rates are around 1%. That hardly seems worth it. Where are you finding better CD returns?

        On a side note, we celebrate life every day. We travel, eat out and spend lots of time with friends. Thanks for this point though. Too many people are extreme and lose sight of the point for saving in the first place.

    2. Hey! Out of curiosity, what are you both doing? Stress free jobs = not entrepreneurs right? Curious what kind of jobs pay what you’re making. ;)

      Thanks :)

    3. Sounds like you are both crushing it. Congratulations. I think cash is a better option than many people think – despite its inability to grow much. Always keep your powder dry for a downturn that may materialize.

      I’d be reluctant to buy rental real estate unless you really want to get into the real estate business. It just complicates your life and it sounds like you are enjoying a relatively stress free one. Why add the burden of a rental just to diversify?

    4. With that kind of money coming in, you could think about doing venture investing locally – maybe see about becoming an accredited investor. That should open up a whole slew of opportunities to lock up your money in ways not available to someone like me.

      But if you haven’t yet, I would open a portfolio of real estate. It provides an inflationary hedge and a way to increase monthly cash flow. As someone else mentioned, in your case, it’s probably worth paying the convenience fees of a property manager.

      But great job on your financial success!

    5. If you are at the mindset of capital preservation instead of leveraging and trying to make it big, I would buy rental property in a good neighborhood and good school district.

      Even during the 2007 crash, the housing price in the best area in the best city dropped at the most 20% for about 2 years, then bounced right back up. It may have dipped 30% but just for 6 month.

      You CAP rate will be low, but it will be relatively stress free.
      An example would be a $1,000,000 property renting for $4000-$5000 a month. It will yield realistically a 3% CAP rate. Beats the S&P dividend by half a point. Hedge again inflation. You’ll get very good tenant, low vacancy, very little hassle. Compare that to a 5 unit in a bad neighborhood where the value may drop quite a bit, 5 broken toilets and kitchen and endless phone calls.

  8. This is so true and one of the best ways to manage your cash flow. Any of my life altering decisions – car or home purchases, starting my new blog (time commitment), and whether or not I should open a 529 for my kid or continue aggressively investing in my retirement – always get talked over not only with the girlfriend, but also my uncle and friend of mine from college who works in M&A. Gives three different perspectives of family vs old money thinking vs new money thinking; coupled with my game theory analysis of any large purchase it gives me a great perspective on which to gauge my decisions.

    Life is short. It doesn’t make sense to carelessly walk through it when we have so many friends and family that have probably already been through exactly what we’re facing.

  9. I’m not too far away in the outer Sunset and also low on camaraderie working for myself. We should meet up some time.

    I think am naturally not a big spender on objects. Big ticket items I think about if I can just rent it once per year for 90% of the benefit at 25% of the cost. I think if I want it in comparison to a trip somewhere or something else I know I want.

  10. Hi Sam,

    Every single financial decision that I’d like us to make, I talk about it with my wife. She will try to analyse it from all angles and see any pitfalls. It’s a very powerful way to make sure you haven’t missed any obvious pitfalls.

    You can convince yourself with nearly any investment / purchase because you can come up with a logical reason why you should. You must also think through the logical reasons why you SHOULDN’T. Only then can you compare your pros and cons and then you can make a rational decision.


  11. PatientWealthBuilder

    great points. My english professor said “writing is thinking” about 100 times. That is all he wanted us to learn from our class and probably it was all that I did learn. However, I did learn it. And that is saying something. Writing it out forces contemplation. It also forces you to really test what you are thinking. Writing a sentence down that is really ridiculous can help you realize that you are not thinking clearly!

  12. Boocoo Money

    I always take the time to think things over before making a big decision. Me and my wife would sit in Walmart for hours just to figure out whether or not to buy a $40 dresser. So making a big decision of this magnitude definitely cause for some thought.

    My mother always says ” I got more time then money”. I live by those words and in retrospect they have served me well.

  13. Thanks for the article, Sam. I’ve been lurking for a few months and learning a lot!

    One thing I do when comparing big financial decisions is write down every pro/con and, on a scale from 1-10, determine how heavily weighed the pro/con is. Then cumulatively add up the pros and subtract the cons to get a relative score for each decision. I’ve found that in doing this, I take the impulse emotion out of decision-making, clearing up my head.

    When the two decisions are too close to compare, time has always changed the circumstances and given me my winner.

  14. The Finance Games

    My boyfriend would always ask my opinion for every purchase over $50, and I thought that was odd, since it was ‘his money’ and my response was ‘did you pay your half of the rent this month? put money into retirement? save? then do what you want’

    As time went on, as I started talking more about paying off my student loan faster, opening an IRA, savings goals, etc – and his silly questions about buying a scuba suit enabled us to have serious conversations about saving. He’s now feeding off my energy and following the financial plans I laid out – opening high yield savings accounts, more retirement savings, aggressively paying down student debt, etc. And it means we’re open to bounce decisions off each other.

    Additionally, my large group of friends have started a slack to keep in touch – with a personalfinance section as well. I’m so psyched that we can talk openly about finances (though we are the instagram/facebook generation) because not only can I vet my decisions but learn from other people’s decisions, and celebrate successes without jealousy. Because even the generation that overshares about EVERYTHING ELSE is still so hesitant to talk about finances!

  15. Sharing your thoughts with others is a good thing: be it a blog, a face 2 face chat, a call to a friend. It helps me to structure my thoughts and to come up with a clear well argument story. Either while preparing the chat or having the chat. And then they ask some questions you never thought about….
    It does not matter if your idea stands or not, it will improve. That matters.

    Not selling my apartment back in é008 and resting it out was the result of speaking to my mother and girlfriend (now wife). I was fearful of having 2 mortgages. they showed me the opportunity to rent a place out. It was a good deal!

  16. This is also part of the reason why I started a blog. Usually when I make big financial decisions I have the reasons in my head but writing it out helps organize my thoughts.

    I’ve written about my decision to rent instead of buy, and why I remain invested in the stock market even through short term declines. Based on my personality, I realize that if I don’t have a rock solid reasoning in place beforehand, I am extremely, extremely susceptible to groupthink, peer pressure, and FOMO.

    A lot of times I think if people write out their thought process for any decision, they’ll make better quality decisions. Not because they’ll necessarily make the *best* decision but because it’ll help them avoid catastrophic mistakes.

  17. Getting To One Million

    This is the main reason I started a blog. I wanted to hold myself accountable to my financial actions by making them public and having people comment and ask questions. It helps me to avoid impulse purchases.

  18. Financial Slacker

    When I was growing up, my father had me make t-charts for every big decision that came along. At the top of the page, write pros on one side and cons on the other. Draw a line down the middle and start filling in each side with whatever comes to mind.

    Many, many years later I still follow this approach.

  19. I like to sleep a few nights on my decision. Talking with my wife is always a good idea. Impulse buys are just dangerous. An impulse buy is an impulse buy, it doesn’t matter what the price tag is. If you buy a pack of gum on impulse, you are just as likely to buy something more expense on impulse.

  20. I’ll typically talk things over with my wife, the most frugal person I know, and one of my buddies who’s much more risk tolerant than I am.

    Between the two of them I get two extreme opinions to moderate my moderation.

    Always good to get different points of view

    1. Getting two extremes is an interesting approach, Jack. I am curious – as a moderate, which person do you tend to agree with the majority of the time? How do you reconcile disagreements with your wife and make a decision if you happen to be far apart in opinion?

  21. Writing helps me so much. I don’t always get a lightbulb answer or a super insightful comment that sways me to make a decision but it does help me process my feelings and thoughts about changes in my life. You’ve done a fantastic job using your blog to provide incredibly unique articles and real life situations while also helping yourself dodge multiple bullets. That’s a super win-win.

  22. Adding a time barrier definitely helps me with decision making on purchases. On most medium to large purchases I like to wait a couple of days after I originally wanted to buy. If I still want it after waiting, its probably the right choice. Using this site for big decisions is a great move. Laying out the case will help you clarify your thought process and decision making. Plus you can use your large network of people for confirmation one way or the other.

  23. Eric Bowlin

    It’s so important to have someone to talk to about your decisions. If you can convince a skeptic, then it probably makes sense.

    On a side note, I agree real estate is the best path toward financial wealth.

  24. I agree that the process of writing is helpful in thinking through the logic of your decisions. You know that hundreds (thousands?) of people are going to read it – and that makes you ‘accountable’ for thinking things through fully. Additionally, people’s comments can be helpful in seeing other POVs and focusing in on key parts of your decision process. I early retired last week (@age 49) and my blog has been an outlet for the journey to reaching financial independence & retiring early. There were a lot of plans made & shared on the blog and I appreciated the “sharing” component with readers.

  25. Apathy Ends

    The internet makes making decisions a lot easier, information and advice is abundant (especially if you know where to look). Whenever we have a financial decision I go into full research mode.

    One decision that keeps coming up is whether or not to put money in a CD, I feel like we should be but the returns haven’t swayed me yet.

    1. It’s tough to get excited about CDs when the rates are so low. I’m currently happy to have money invested in an online savings account that pays almost one percent interest. If a crash does happen I’ll be better positioned to invest.

  26. The Green Swan

    This sounds like a great approach! As a fairly new blogger I just might turn to writing my ideas out and fully analyzing before pulling the trigger. Did you find more help writing it out yourself and thinking through any repercussions or did you find more help in reader comments?

  27. Distilled Dollar

    Your approach reminds me of Charlie Munger’s “iron prescription” when it comes to making decisions. He says, “I’m not entitled to have an opinion on a subject unless I can state the arguments against my position better than the people who support it.” He says he’s only qualified to speak on that subject once he reaches that level of understanding on both sides.

    For myself, any large purchase was basically discussed with my girlfriend. We would talk things through and see if it made sense within our larger goals.

    Now that I started a blog earlier this year, the audience to justify our expenses has expanded.

    The one thing I’m itching to spend money on is buying a condo in Chicago in the summer of 2017 (when our current lease expires). I’ve gone back and forth on this decision a lot and I know I will create at least one post about it to highlight the pro’s and con’s.

    1. FinanceSuperhero

      I am looking forward to that post, Distilled Dollar! What neighborhood(s) will you be looking to buy in?

      1. Distilled Dollar

        As of now (a full year out) I think I’ve found a few opportunities in the Loop itself.

        I’ve been looking at River North, Streeterville, Gold Coast, and Old Town. Most homes seem way overpriced especially after factoring in HOA.

        1. It will be interesting to see the impact of the bad state/city finances on Chicago. Seems likely taxes are headed up there having a negative impact on valuations.

          1. Distilled Dollar

            Couldn’t agree more Mike. The worst part is the uncertainty. HOW much will taxes go up and when?

            I saw an article last week that Cook County (where Chicago is located) has the highest level of exiting millionaires than any county in the country. Not surprising for me.

  28. I live close to DC and the prices of the houses here are really high. I thought of buying a house, but I don’t want to sink all my paycheck into paying for mortgage. I am the only one working in the family right now as my wife is taking care of the baby.

    I have a couple of friends who I have been talking to in regards to the benefits and risks of buying a house near DC. A lot of them call it an investment but I always go the opposite direction. Plus, I don’t know if I am going to stay here for the long-term. They would tell me that I’m just wasting money by renting but I just cannot see the light that buying a house in DC is a good option or investment for me and my family.

    1. I’m in the same boat, but I’m in the Bay Area (work in Fremont, live in San Jose). We just moved here in December from Tennessee and decided to rent a house for the first year and then make a judgement call on what to do after that. I have very mixed opinions so far on what to do. I believe that we’re in a real estate bubble and that if I buy this year I’ll be getting in at the top of the foreseeable market. Our present net worth is around $300k, and if we were to buy a million dollar home and it lost 30% of it’s value over the next few years we’ll basically be wiped out. At the same time, my rent is $3,900 a month (!) and I don’t know how much longer I can stomach it. We can afford it however, and we still save around 1/3 of our gross income. I just know that we could be building equity instead of paying for someone else’s mortgage and it’s already bothering me more than I thought it would a few months in.

      1. How much was equivalent rent back in Tennessee? Hopefully you guys got large pay raises to come here if you can afford the $3,900/rent?

        I truly believe the RE market here is normalizing. Take your time. Start getting more picky. Look at stalefish listings. Buying a $1.1M median net worth home w/ a $300K NW is a VERY aggressive ratio. I might have to write a post about this!

        1. JourneyToFIRE

          Please do write a blog post. Actually this post made me think about writing my first blog post about same dilemma (Buying vs Renting). I live in Fremont, CA (work from home) and renting right now. I think we are in RE bubble, but price increase has been relentless and it has made me nervous. I am also getting influenced by everyone else buying..:) My gut says buying at this price point is not good idea, but I am having second thoughts.

          1. Same situation here. Live in Manhattan. Incomes and wealth do no match up with RE prices. However, the NYC housing market is very stable in terms of very qualified buyers, so a different beast. I say do not feel bad paying rent unless it is financially a terrible deal. Buy when there is blood in the streets!

        2. Our base annual income went from about $168,000 annual to $230,000 annual when we moved, so even with the additional income taxes (TN has none!) we can afford the additional housing expense. We bought our previous house in TN for $220,000 in 2012, and sold it for $276,000 this year when we moved. My net worth calculation methodology is very conservative, so some might calculate that we actually have $400,000. When you say that buying a 1.1M house with our net worth is a risk, I agree! I’ve been crunching numbers, and if everything works out right in September 2019 (when our daughter will start Kindergarten) we will have a net worth of around $500,000 and be ready to buy a home. We will also be nearly debt-free (we will still have a mortgage on a rental property back in TN). That’s 3+ more years of paying out the nose in rent, but hopefully the market comes down a bit and we can save a few dollars.

  29. Expat Warrior

    It is so easy to rush into a decision when a situation is filled with a lot of uncertainty. Sometimes, it is better to take a step back and think things through in order to come out with a better decision. I would compare this strategy to the “I’ll sleep on it” strategy because it also allows for things to sink in while allowing for a thorough analysis.

    1. Do more than sleep, as that is passive. Write out as eloquent an essay as possible convincing someone why. If you can’t, then don’t go forward.

      Purposeful thinking makes things clearer.

      1. A lazy way is to just talk it through with someone. They don’t have to ask impressive questions just present the pros and cons to them and in my experience I get much more clarity. If it’s still unclear flip a coin and see if you like the answer.

  30. Dr.J @ MedSchool Financial

    Giving yourself time is always a good approach to big decisions, I think sleeping on it and making a choice after you have rested leads to more objective decision making.

    Self-awareness is helpful in these situations because emotions and impulse decisions generally are the ones that are more likely to result in wishing you had just waited, thus if you have the gift of time to give it an extra day.

    1. I agree, Dr. J. Self-awareness is possibly the best defense against impulse decisions. Sometimes, great opportunities require a quick decision. If I am at all unsure about an opportunity, I prefer to hold off and let it pass. The value of a good sounding board cannot be overstated.

      A wise friend has created what she calls her Thirty Day List. If she is contemplating a purchase over $100, she adds the item to her list and waits thirty days. If she still feels the item is a need after that time, she pulls the trigger. Circling back to self-awareness, I don’t think I could wait this long, but I can appreciate the power of self-discipline.

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