No Regrets: There’s More to Life Than Money
When it comes to money, sometimes it’s hard not to imagine What if . . .
What if I’d taken that unionized job with a pension? What if I’d bought Apple stock in 1980? What if I’d bought a house downtown 20 years ago? What if I won the lottery? These types of what-ifs are harmless fantasies, the kind of daydreams we all have, and there’s nothing wrong with that. The problem comes when what if really means I can’t believe I did (or didn’t do) that—when we believe that a financial choice we made years ago has negatively impacted our finances ever since.
I had a chance to buy Apple stock in 1980 but I went for safe instead. I’m such an idiot. The vendor of that house signed back for $1,000 more and I walked away. I’m such an idiot. Financial regret. Shoulda, woulda, coulda. Didn’t. And you can’t stop beating yourself up for a decision that made perfect sense at the time.
This kind of regret can destroy your confidence in the financial future, making it impossible to trust your financial decisions, to go with your gut anymore. It eats away at your happiness and appreciation of your circumstances, reminding you how little you have compared to what you could have had, how bad you are with money. This regret can keep you up at night and makes you second-guess every financial move you make into the future.
Below is an email from a client who had deep financial regret over a house purchase he didn’t make, a purchase that would have put him on the same financial footing as his friends who were cashing in big. Have a read.
Meet Daniel
Daniel Age: 50 Relationship status: married Kids: 0 Annual gross household income: $105,000 Assets: $500,000 in retirement accounts; condo valued at $450,000 Liabilities: $0 |
Dear Shannon,
When I met with you last time, you did a great job convincing me that I’m doing well [which he was]. However, with each passing day I feel like my wife and I made a mistake buying the condo when we got married.
Real estate is in the news every single day. I just read an article about how the average price of a single detached home in the city is appreciating by $100,000 every year. That’s a 15 to 20 percent increase every year. The average price of those homes is now $1.2 million, and in the suburbs the prices are closing in on $1 million.
A friend who is only a few years older than me told me his house is now worth $2 million. He bought it for $500,000 20 years ago. To be honest, I don’t know if he said $2 million or $1.2 million because I almost fainted from disbelief and envy when he said it. I had no idea his house was worth so much.
Conversely, last time I checked the value of our condo, it was worth around $467,000. That means it’s appreciating by around 3 to 5 percent a year [which is still great]. Nowhere near the 15 to 20 percent of a single-family home.
I know we’re in good shape financially, but those kinds of prices and rates of appreciation can make a rational person like me become very irrational. I feel like we’re missing out on so much money because we made the wrong choice. I’ve even thought about moving to a different city or even a different province just to escape the hype.
Any advice?
All best,
Daniel
You can see the themes of missing out, of comparison with others, and overall financial frustration. Trust me, Daniel was in good shape financially. Great, actually. But financial regret has taken hold and plagued him constantly, stealing his peace of mind and perpetuating the feelings of being broke, inadequate and ultimately disappointed in his financial future.
I went through something similar myself a while back. After I’d been working on Bay Street for some time during my early career, my then boyfriend (now husband) and I had managed to save $25,000. At 25 years old, that was a ton of money for us.
During the stock market crash of 2008–09, interest rates plummeted and chat around the office, the dinner table and everywhere I went confirmed what I had been thinking: we had a down payment; we should buy something. Debt was cheap. Being an overachieving Capricorn and hell-bent for leather towards financial security, I headed straight to the Internet and started researching places for sale.
Armed with a mortgage pre-approval, we started going to open houses. We found a townhouse listed at $343,000. We had just enough to put down 5 percent, including closing costs. All we had to do was pull the trigger and put in an offer. We were 25 years old and about to jump into a deal that looked great on paper.
It was a ridiculous night. We stress-ate pizza, called my parents a hundred times, discussed, agonized and discussed again. I cried twice. But here’s the thing: while we had been approved for the mortgage, we couldn’t really afford that townhouse. Not really. When I looked at what we’d have left over to spend each month after paying condo fees, mortgage, utilities and property tax, it wasn’t much. We would have been house-poor for sure. No trips, no extras, no life.
We just weren’t sure. Something felt off.
Ever since graduation we had been on a hardcore debt-reduction and saving plan (that’s what happens when you date a financial planner), leaving us with very little cash in our pockets every month, a very low Hard Limit. Our student debt had just been paid off, so we had savings and finally some financial breathing room. We had talked about taking a trip for so long, eating meatballs and fantasizing about going to Europe once we’d paid off our loans.
Buying that townhouse would mean the austerity would continue. No fun and definitely no trips for a long time. Was that what we really wanted? The answer, after more discussions and even more pizza, was no. We passed on the townhouse and went to Europe instead, using $6,000 of what could have been our down payment. We also bought a bed frame. And eight months later I quit my Bay Street job. Eep!
The day Daniel’s email arrived, I checked to see what townhouses were selling for in the complex we had been considering. Interestingly, a unit similar to the one we would have paid $343,000 for seven years earlier had just sold for $609,000. According to the online mortgage calculator, our mortgage would have been approximately $250,000 by now, which means we would have been sitting on a nest egg worth $359,000 ($609,000 – $250,000) of tax-free equity. Damn. That would have been nice. Woulda, coulda, shoulda. Didn’t.
Financial regret could be hounding me to this day. What if we’d bought that townhouse? morphing into I can’t believe we didn’t buy that townhouse, giving me plenty to beat myself up over. But you see, I quit my Bay Street job that year to launch the Barter Babes project—a one-year project in which I traded unbiased financial planning advice with more than 300 women in exchange for goods or services. No money changed hands. Smartest/stupidest thing I ever did.
While I dislike the term stupid, if you’d looked at the finances, you’d have wondered what I was thinking. To support my project, $15,000 of our down-payment savings went towards subsidizing rent and a cellphone for a year, plus $35 a week for my Spending Money (which, by the way, was not enough). To add to the fun, my husband was laid off the same year and we ended up taking on credit card debt. We had our share of lemons that year and were definitely not winning at life. To be completely honest, it was brutal. I had to take money out of my retirement savings to survive.
But here’s another thing: the Barter Babes project allowed me to do things differently, to work with ordinary people, not just the high-net-worth clients I’d been dealing with in my Bay Street job. I saw the impact that solid, unbiased, affordable financial advice had on the lives and well-being of the 310 women I bartered with. That smart/stupid project changed my life—I was hooked. When it ended, I couldn’t go back to Bay Street. I was a totally different person. My Life Checklist had morphed. So I struck out on my own, launching the New School of Finance, my fee-only practice that keeps financial advice affordable. Six years later we have offices, an amazing team and a client waiting list.
As an added bonus, my husband and I have travelled abroad and now I’m writing this book. None of this would have happened if we had bought that townhouse. I would never have quit my job. I would never have started the Barter Babes project, which propelled me into my career and future business. I would never have travelled to Europe or South America. I would never have started the New School of Finance and you wouldn’t be reading this book. Everything would be different, and not in a good way for me.
Whenever I have those moments when I think I can’t believe we didn’t buy the townhouse, I remember that we made the best decision for our life and our journey at the time. Not someone else’s journey. Ours.
When I wrote back to Daniel, I gave him the same advice I give myself. Here’s what I said:
Hi Daniel,
Thank you so much for sending this email. I understand what you’re feeling and ask you to consider the following:
1. Fifteen years ago, you couldn’t have predicted this extreme rise in house prices. You bought a home that was perfect for you and your wife and the life you wanted at the time. Your mortgage is fully paid, which is fabulous. But more importantly, you have been happy in that home. Would you be able to say that if you’d been carrying crushing debt all that time? Maybe not.
2. Never compare yourself to anyone else, because you have no idea what their financial situation is. The friend in the $1.2 million (or $2 million)house could be swimming in debt. Things might look great on the outside, but they could be living in a pressure cooker on the inside. So stop thinking about them and focus on you. You have what you need in order to do the things you want, and that’s more than enough to be happy.
3. There’s no denying that luck plays a part in all our lives. Sometimes people get lucky in real estate and stock markets, and sometimes people win the lottery. None of that means they’re better with money than you are. Luck played a role, and resenting luck is like resenting rain when you’ve planned a picnic. You can’t control the weather, but you can spread your blanket on the rug indoors and hold that picnic anyway. Think of all the bugs you won’t be swatting while you fill your plate!
Cheers,
Shannon
Daniel thanked me for the response and said it was good advice. When I heard from him again close to a year later, he admitted that at first it had been hard to let go of his resentment and frustration. But focusing on his own life and examining what really mattered to him and his family had helped him see past the fear and stop comparing his situation to anyone else’s. They’re still in the condo, and I’m sure that financial regret rears its ugly head from time to time, but at least now he knows how to get perspective and appreciate what he does have and what he has done right.
Daniel wasn’t the first client I’ve seen with financial regrets, and I know he won’t be the last. Loads of people come in with crippling regret over real estate deals they didn’t make and stocks they sold too soon or held on to too long. I’ve even had clients who lost more than $1 million in a Ponzi scheme. Imagine how hard you could beat yourself up over that one.
No matter how big the issue seems, the solution to financial regret of all kinds remains the same.
Step 1: Remember why you made that decision in the first place
The future is a mystery. All we know for certain is what is directly in front of us. If you could go back in time, armed only with what you knew then, you’d probably make exactly the same decision all over again, because it was the right one at the time. Try to recall why you made the decision, and you’ll realize you’re not bad with money or an idiot. Given the information you had, the choice made sense then.
I didn’t buy the townhouse because I didn’t want to be house poor and miserable. Daniel bought the condo because it made sense at the time and was affordable for him. As for the couple taken in by the Ponzi scheme, they had researched the company, asked all the right questions and trusted that their investments were safe. What more could they have done? The answer is nothing, and they had to stop blaming themselves. All of us made the right decision based on the information we had at the time. Period. Full stop.
Step 2: Recognize that luck has a lot to do with it
Unless you’re psychic, you can’t see into the future. Neither could the people who managed to make the “right” financial decisions. Most of the time they just got lucky.
I cannot stand it when people try to disguise their financial luck as financial savvy. We chose a variable-rate mortgage because we knew interest rates would stay low. Did you? Did you actually know? Do you work for the federal bank? Did you have insider information? Probably not. You simply made a decision based on information at the time and got lucky when it played out in your favour.
It’s the same with the investment and housing markets. Sure there are trends, and I’m not saying it’s all dumb luck, but no one can know for sure what’s going to happen. All we can do is research, make informed decisions, place our bets and hope that our strategy plays out over the long haul.
Comparing yourself to someone who has had more financial luck than you is like going to a casino with a friend who wins $1,000 while you lose $100. You can’t help but wish you had played the same games they played. But there was no way you could have known how their games were going to turn out. And in truth, they were using just as much guesswork as you were.
Remember as well that life isn’t fair. Bad things sometimes happen to good people, and vice versa. That doesn’t make it easier to swallow, but it happens. And there’s no point dwelling on things you couldn’t have known in advance and cannot control.
Step 3: Recall the Beyoncé Factor
Unless you know the intimate numerical details of other peoples’ lives, stop comparing yourself to them. The person who invested in medical marijuana early on may have made 20 percent on their stocks, but maybe they haven’t told you about their 45 percent loss on a rogue junk bond. You likely don’t know the whole picture.
Step 4: Shift your perspective: It’s not all about the money
Think how different your life would be if you had made a different decision. What’s great about your life now that wouldn’t exist if you had gone the other way? You made the choice for a reason. It was one that probably reflects what’s important to you, outside and apart from money.
For me, not buying the townhouse allowed me the financial flexibility to quit my job and strike out on my own. For the couple who lost money in the Ponzi scheme, it forced them to reassess what was important to them and realize that their marriage was strong and money didn’t define them. For the people who missed out on the Apple stock, maybe they made that decision because they couldn’t afford to buy in at the time. That wasn’t a bad call at the time; it was smart.
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We cannot go back in time. But we can keep moving forward. And that is where your financial future lies, full of hope.