5 Expensive Decisions That Can Haunt You for Life
March 9, 2012
Some of your decisions about money are forgotten weeks or even days after you’ve made them. Other decisions will stick with you for far longer and will impact your finances for years to come.
Here’s a list of 5 things you should give some serious thought to before taking the plunge. As you read through them you’ll notice that they’re really “life decisions” but each has a big financial impact that you should keep in mind. Not that the money aspect will stop you from doing any of them, but it might change the timing or direction of your decision.
When I say haunt, I don’t necessarily mean the “disturb or distress” definition, more the “remain persistently; loiter; linger” meaning. However, if you don’t think them through, some of them could become your own personal money-sucking ghosts.
1) Having kids. We just had our third. The event of having a baby is expensive, but nowhere near as the cummulative cost of paying to raise them from screaming infant to (hopefully) responsible and self-sufficient adult. In my opinion it’s totally worth the money to have a family but you don’t really know what you’re in for until it’s “too late”. Kids are amazing but a lot of work and expensive.
2) Buying a home. Taking out a loan to buy a home will probably be the largest amount of money you’ll borrow at once in your life. Committing to payments for the next 30-40 years will certainly change your life, particularly if the amount you borrow pushes the limit of what you can afford. Of course, now that interest rates are so low, it’s more realistic to take out a 15 year loan. Your payments will be higher but the total amount of interest you’ll pay will be significantly lower. Regardless if it’s a 15 or 30 year mortgage, the amount you’re borrowing can make it a life altering decision.
3) Paying for a college degree with student loans. There are actually two decisions rolled into this one, choosing a degree and going into debt to pay for it. You may be working in the field that you earn your degree in for a long time, whether you end up liking it or not. So choose carefully (research, job shadowing, internships). Every job sucks at least a little, just find out where the soft spots are and if your personality and plan for the future can handle them.
Going into debt to earn a degree only complicates things. After you’ve invested years of your life and many thousands of dollars into a degree, it’s hard to walk away and do something different if you end up hating it. Even if you like your job, you might spend 10 years paying back your student loans.
4) Getting married. It’s true there are financial benefits to getting married, such as consolidating expenses like rent or a mortgage. However, you’re also giving up the control of your finances that you’re used to.
If the person you marry has much different spending habits than you, it could feel like a very “expensive” decision. If your spouse spends money on something you think is unneccessary or a total waste of money then it seems REALLY expensive. How the #@!!% could a curling iron cost over $100? Or, why on earth do you need to spend $499 on this new iGadget?
Talk seriously about money before you get married. Don’t assume that things will automatically change after you tie the knot, the reality is both of you will probably have to make some changes so be prepared to deal with it.
5) Getting divorced. Lawyers are not cheap, so the costs of getting divorced probably won’t be cheap. You can also lose money splitting up your shared propery. My co-worker bought his house from a couple who was getting divorced and splitting the equity in the house. Problem was, they were selling in an awful real estate market and lost $40K in equity. Good for my friend but bad for the unhappy couple.
If you have kids, having two sets of parents adds another dimension to the cost of raising them. Even if you don’t have kids, all the cost consolidation you benefited from in marriage goes right out the window.
Extra Credit Decision – Breaking the Law
So far, everything I’ve talked about are big life decisions but there’s another type of decision that can haunt you for years – deciding to break the law. Things like tax evasion or drinking & driving could end up with you owing a lot of money and/or spending time in jail.
Like I said, we make tons of decisions everyday that don’t have long-term consequences, but there are some that deserve careful consideration. No pressure : )
All posts by Ben Edwards