Finances are 80% Emotion and 20% Logic


“Finances are 80% emotion and 20% logic.”  I heard that from a financial adviser the other day.  I gave her a call to ask her advice about paying off debt versus keeping the money in our emergency fund.  Truth be told, sometimes I second guess myself.  Imagine that.

This quote resonated with me all day.  I don’t think I’ve ever heard a quote about personal finance that’s been more dead on.  Really, does paying off debt make sense if it saves you money in interest but you can’t sleep at night because you’ve depleted your emergency fund?  What about on the flip side, is it worth hoarding all your money in your emergency fund if you have enough in there to sustain you for 8 months or so but you’ve got the debt monkey on your back worrying you at all times?

To me, peace of mind is priceless.  Knowing I have an 8 month emergency fund is the most awesome feeling.  Knowing that I’m being the most proactive I can in managing my future by making wise decisions makes me feel like a genius sometimes.

When it all comes down to it, we’ve got to do what we’re most comfortable with, whether it makes mathematical sense or not.   What are some things you’ve done that didn’t make the most sense mathematically but made sense for you emotionally?

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