Wikipedia defines analysis paralysis as ‘the state of over-analysing (over thinking) a situation so that a decision or action is never taken, in effect paralysing the outcome.’
That was such an accurate description of the state I was in! I was reading so much from all sources plus listening to podcasts that I ended up really confused and paralysed as to what I should do or where to start tackling my finances. To say I was overwhelmed was an understatement.
My internal dialogue would go as follows (this example was just on superannuation but I went through the same process for each aspect of my finances!):
How do I know how much I’ll need in retirement? All the experts say I need a million dollars …. quickly, how much do I currently have in superannuation? Where did I file the paperwork? Wait a minute … is that all I have after working more than 20 years? I will never get to a million dollars! How can I retire in the traditional sense, let alone achieve FIRE?
Should I keep both my superannuation accounts? Or combine them into one account? What if one fund ends up performing poorly? The second fund might do better? Wasn’t it good that all my eggs were not in one basket?
If I combine the accounts, should I stay with my industry fund? Or join the industry fund recommended by The Barefoot Investor? What is the difference between any of the funds?
According to The Barefoot Investor, I should also have been salary sacrificing 5.5% of my pay into super once I bought my house. Well, I didn’t do that, did I? I had wanted every cent in my loan account to reduce the amount of interest due. That meant I was way behind, right? I was in my late forties, after all. So was 5.5% enough to play catch up? Could I afford to contribute more? If so, how much more?
The questions were endless … I could not answer question B because I did not know the answer to question A so how could I then proceed to question C? etc etc. I would go to bed thinking I had made a decision only to wake up the next morning asking the same questions again and internally debating the various scenarios.
Wikipedia further states ‘A person might be seeking the optimal or perfect solution upfront, and fear making any decision which could lead to erroneous results, while on the way to a better solution’
Yep, that was me again! I was so afraid of making the wrong decisions and absolutely terrified of the consequences of those wrong decisions. I was looking for a perfect solution. I felt that time was not on my side and I could not afford to make any mistakes.
All the indecision was driving me insane. I was usually a decisive person but delving into the world of personal finance was way out of my comfort zone and fear of the unknown was paralysing me.
I don’t know how or why but one day, I just decided to take baby steps & start somewhere … after all, a journey of a thousand miles begins with a single step.
2 Replies to “Analysis paralysis”
Baby steps are the best way to start! Unfortunately if we let analysis paralysis win, we lose the benefit of ‘time in the market.’ Look at all the people speculating on the covid situation, sitting and holding on in ‘the certainty’ that the market would tank again after March, who have now missed nearly 5 months of growth… The important thing is to have a plan and to start on the road, rather than wait to start until things are perfect and end up not doing it at all.
The problem with being a late starter was being petrified of making the wrong move and not having enough time to correct my mistake. As it is, I already have a shorter timeline. And yes, the plan takes time to develop and making baby steps was all I was capable of