Analysis paralysis

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.

 

The journey begins …

 

Mt Urgull, San Sebastian

Am I a grown up yet?

At the beginning of 2018, my new year’s resolution was to sort out my finance. Simple, right? But I had no idea what was involved or where to start.

Somehow I always considered finance to be something grown ups do and that I was not grown up enough to deal with it. It was sobering then to think that maybe, just maybe, turning 47 this year would now be considered ‘grown up’.

Um … did someone mention ‘investing’?

I felt I had two pressing issues to deal with; I had finally paid off my mortgage some months ago and thought vaguely that I ought to think about what to do with the extra cash instead of just leaving it in my savings account ie I should … invest … in something.

Retirement … the dreaded word

The second issue was the dreaded word ‘retirement’ – it kept cropping up around me – in conversations with friends, in newspaper articles … and it was driving me crazy. Turning 47 seemed to bring out the anxiety of whether I would have enough to live on in retirement, something that I certainly had not thought about in any depth.

The Pineapple Project

Stumbling upon The Pineapple Project podcast on the ABC hosted by Claire Hooper was fortuitous – Claire Hooper’s delivery was entertaining and funny, not at all boring like I assumed all finance discussions must be.

Episodes included The Psychology of Money, Demolish Your Debt, You Need an Emergency Fund and more. While my circumstances were different, the stories of all the women resonated with me. I felt that I could start to tackle my finances.

The Barefoot Investor

Not long after listening to all the podcasts, I was gifted a book – The Barefoot Investor by Scott Pape. I read it in one afternoon. I loved the simple way he explained personal finance – once again, like The Pineapple Project, finance was explained in language that I understood and was not boring. The steps he outlined seemed achievable.

Why didn’t I know this earlier?? Why did it take so long for me to be interested?

FIRE

It was while doing further research on the internet that I discovered a whole new (to me!) world of blogs and podcasts devoted to FIRE ie Financially Independent Retire Early concept. The stories were so inspiring and unbelievable at the same time. People in their 20s and 30s were achieving financial independence and some have actually retired. They were living their dream lives NOW and not working until their 60s.

This was my ‘light bulb moment’ as they like to call it in the FIRE community – I was panicking about retiring in the traditional sense in my 60s and yet, the idea of FIRE, strangely, really appealed to me.

But let’s face it, I am already in my late 40s …. what are my chances, realistically, of achieving FIRE?

Zero, was my first thought.

But my next thought was ‘what have you got to lose by trying?’ I may be able to retire earlier than 65 or 60 or work part time before fully retiring. It won’t be the classic FIRE achievement but it was still worth giving it a good shot.

 

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