As I resume writing about money, I’ve re-discovered just how opinionated people can be about personal finance. For some reason, many folks believe that there’s a “right” way to pay off debt, invest for the future, and spend what you’ve earned. A corollary to this is the belief that anything that’s not the “right” way is, therefor, the wrong way.
I don’t agree.
I’ve long held that there’s no one right way to do any of this stuff. There’s no right way to pay off debt. There’s no right way to invest. There’s no right way to spend.
Sure, some methods offer quicker results or better returns, but that doesn’t mean that they’re right. It’s great to push for optimal solutions, which is why we talk about paying off high-interest debt first and choosing index funds over other types of investments. But optimal and right are not the same thing. And “best” is something else entirely. (Sometimes the optimal method is the best method; other times it’s not.)
If there’s one lesson I’ve learned during a decade of writing about personal finance, it’s this: Do what works for you.
We are not robots. We are human beings, which means we’re complex emotional and psychological creatures. We don’t make decisions based on optimal mathematical outcomes. We make decisions based on what we believe will make us happy. (What will actually make us happy is often different from what we believe will make us happy, but that’s another story.)
We each have different wants and needs. We have different desires and preferences. What’s right for me probably won’t be right for you. Let’s look at some real-life examples of the issue I’m trying to describe. [Read more…]