Crossing a High-Speed Intersection
Imagine you are standing at the corner of a high-speed, two-way intersection. Would you check traffic in only one direction before deciding to walk across? Of course not.
But financially speaking, that's how millions of people approach their financial decisions every day. How so? Because they focus on what they will get with their purchases without considering what they might be giving up.
Sure, you might get lucky the first few times you "cross the street," but eventually you're going to get blind-sided by the negative financial consequences you failed to see coming.
What Am I Giving Up?
If you are considering a purchase that is large enough to require taking out a loan, please consider the following "hidden" costs of going ahead with the purchase.
- How many hours will I need to allocate to work to pay off this purchase?
- How much passive investment income could I earn if I invest the money instead of using it to make this purchase?
- Can I afford to set aside the funds needed to license, maintain, repair, fuel, insure, store, and replace this purchase so I won't get blindsided by these costs in the future?
Life is a lot more predictable than we care to admit. If you fail to accurately answer the above questions before going ahead with the purchase, you will likely be creating "unexpected" financial emergencies for yourself in the future.