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Trust Your Instincts

May 2, 2010

Thirty minutes after I came home from work last Friday there was a knock on my door.  My neighbor was there wondering if the two dogs running around in the front of our lawn were our dogs.  I told him they were not, but I let the dogs in to our back yard while my wife, Kerri, went around the neighborhood to try to find the dogs’ home. 

The dogs had collars and it was clear they were domesticated, but none of the neighbors claimed the dogs or knew who they were.  We called Animal Control, but had missed them for the day and we were not sure if we would hear back from them before Monday.  Kerri  suggested we let the dogs out, saying, “Dogs know their way home.” 

Part of our decision to let the dogs out was based on our own experience the very first day we brought our own dog, Buddy, home.  He came home from the kennel we rescued him from on a Saturday morning, and when we came home from a basketball game later that evening, we discovered he jumped the fence and was gone.  We drove around the entire town looking for him to no avail.  We thought he was gone forever.  I put a bowl of dog food right outside our back door.  Right before going to bed, Kerri took one last look outside and saw Buddy at the back door eating the food. 

That was five years ago.  Since then, Buddy has not so much as wandered down the block — partly because we ensured our fences have been reliable, but I think he also learned that day where his next meal is coming from.

What does this all have to do with personal finance?  I believe we can learn a lot from dogs.  Like our four-legged friends, most people have instincts that will lead them home.  You most likely know you should spend less than you earn, and a lot of debt is not a good thing.  However, there are times we let our emotions or a great salesperson get the best of us, and we make money mistakes. 

In order to achieve financial greatness, you must learn to follow your instincts more and ignore or work with forces that go against them.  Below are a few simple tips to this end:

No. 1:  If it sounds too good to be true, it probably is.  There are times when we hear of a new investment strategy or debt cure (usually on late night television) that sounds too good to be true.  As one looks more into these opportunities, it is easy to find many people who thought they would work and all they have to show for it is regret and a few thousand dollars less in their bank account.

No. 2:  If you have your doubts regarding a purchase or financial decision, talk to someone about it.  Many people can give a good sales pitch and make it sound like you would be crazy to not go for it.  However, use logic; not your emotions.  If your gut says something does not seem right, talk to someone who does not have a self-interest in the situation.  That person can reflect your own thoughts back to you, which will allow you to make a better decision.

No. 3:  Take your time.  Many sales techniques try to apply pressure and get you to act right now.  You have your doubts about whether or not you really need that Snuggie, but if you call within the next five minutes, they will throw in another Snuggie and a reading light.  This technique wants you to buy on your emotion, as opposed to taking the time to listen to your instinct about what you really need.  If you have a trouble with impulsive shopping, freeze your credit card in an ice cube.  If you want to buy something you see, you will have to wait until your card unfreezes to purchase it.  This time will allow your instincts to help decide if it is really something you need.

You know most of the principles in personal finance.  The problem is your emotion or a great sales pitch sometimes gets the best of you.  Take your time to trust your instinct and you too will eventually get back to the safety and security you need with your money.

Become a great wonder!  Master your finances today.

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