Posted by Rob Minton
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In an Income for Life Newsletter, I once shared a story of a man who committed suicide because his wife filed for divorce. This man was a multi-millionaire. There were many lessons from this sad story. One of the most important lessons is that we should never make permanent decisions from temporary situations.
In my opinion, divorce is temporary. I should know, my father has been divorced three times.
This rule does not just pertain to marriage. It pertains to everything in life. We all have temporary setbacks. The problem occurs when we make permanent decisions in the midst of temporary problems.
You may have a temporary situation at work that is causing you stress and anxiety. Temporary situations like this have led thousands of people to quit their jobs. They go in search of a new job that sounds better than the old stressful one. However, as is the case with most things in life, they quickly find out that the new job isn’t all what it was cracked up to be. Now they regret leaving their first job. Regret is a painful feeling. Regret usually occurs when we make permanent decisions from temporary situations.
Here is another example: I could evict a tenant from one of my homes and end up with thousands of dollars in repairs (I just did). For many investors, this temporary situation may cause them to make a permanent decision — not to invest in any more homes. They could say: “I’m done investing in real estate.” This is another example of making a permanent decision because of a temporary situation.
Back in 2000, I lost over $50,000 investing in the stock market. I got so fed up with my losses that I swore off the stock market for good. This was a mistake. I now invest into the stock market through my company’s 401k plan. You can probably see that it only took me 7 years to learn the rule I am sharing with you today.
The problem we all face is that temporary “bad” situations distort our thinking. We tend to make incorrect decisions based upon this distorted thinking.
Is there an alternative?
Of course. The alternative is to simply ask yourself, is this situation temporary or permanent? If the situation is temporary, you should avoid making permanent decisions. Temporary decisions for temporary problems are okay. Permanent decisions are not.
When I used to be an accountant, my job required that I travel a great deal. For many clients, I was forced to drive two to three hours a day without pay. I would literally have to leave home at 6:30 a.m. in order to get to a client’s offices by 8 a.m. I did get reimbursed for gasoline and car-related expenses. However, I wasn’t paid for my driving time. This meant that I had to pay three hours of my time just for the opportunity to work for the day.
Unfortunately, these situations are normal in public accounting. They occur each and every year. This simply meant that the situation was permanent. I, therefore, made a permanent decision to leave the accounting world. This decision was correct because it was made based upon a permanent situation.
My decision to exit the stock market for seven years was incorrect because it was based upon a temporary situation. It would have been a thousand times better for me to learn why I lost $50,000. It was my fault. I had all of my money on Internet stocks. I let greed control my thinking. However, at the time, I couldn’t see the problem as temporary. I also couldn’t see that I created the situation and that I was responsible for the loss.
Here is my suggestion for you: Before making any major decision in your life, think about your life goals. How does this situation or the decision you’re contemplating relate to your life’s goals? Keep your eyes on the big picture. Permanent decisions should only be made based upon your life’s major goals.
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