What to do when you’re completely unsure
Personal finance is full of confusing concepts and puzzling equations, and there is no lack of professionals with conflicting advice about what you ought to be doing and how you ought to go about doing it. With all that information swirling around in your head, mixed with a general uncertainty about what the future holds, it’s easy to find yourself completely unsure of what to do.
I spent a long time doing nothing before the frustration of inaction finally overtook the discomfort of not knowing what to do. Though I made some mistakes, things finally started coming together once I committed to taking action with my finances and career. That’s why I can say that although times have never been more uncertain for me than they are right now, I’ve also never been more confident in my ability to work things out.
Whether it’s an investment, a career choice, or another big life decision, here are some rules I’ve developed to help me figure out what to do when I have absolutely no idea what to do:
Pick one thing and commit
If you’re uncertain which direction to head, it’s probably because you have too many choices. Should I increase my 401k savings? Start a Roth IRA? Do I need a financial planner? What if I need a will someday? Usually, it doesn’t matter which one you pick; it just matters that you do. Don’t waste time searching for the best option; choose a good option and commit to it. Set everything else aside and focus on that.
Ask yourself why it’s important
It’s easy to end up working on stuff that’s important to some talking head, but not to you. But it can be difficult to focus and make good decisions when you’re working on something you don’t care about it. If it’s not important to you, drop it immediately and work on something else. You’ll give a lot more (and better) effort to goals you care about, so find a way to make it personal.
Accept that you’ll never have all the answers
The most successful people you know didn’t get there because they found a way to answer every question; they made it because they learned to accept that they had to make decisions based on imperfect information. I’m almost certain that you can never be 100% certain about anything. Set a deadline for a decision and act on the best information you have on that date.
Take baby steps
One surefire way to freeze in terror is to convince yourself that you have to figure out everything all at once. When it comes to money, the journey is just as important as the destination. Take baby steps in the direction that feels right, and soon enough, you’ll find yourself sprinting towards your goals. If you want to start saving for retirement, pick an account and open it. Once that’s done, then you can figure out how to start getting more and more money into it.
Stop planning and start adjusting
Set a course of action, but don’t be inflexible. If you force yourself to stick to it even if things go wrong, you’ll be in more trouble than when you started. Instead, develop a rough plan and make adjustments as needed. Remember that it’s only a guide, not a rule. If things go wrong, it’s your job to steer in a different direction. If things don’t look the way you think they should, change course and try again.
Ask for help
This is important. Sometimes I get this idea that other people are too busy being awesome to have any time to help me, but in my experience, that hasn’t been the case. Don’t hesitate to send that email or make that call. You might be surprised by the results. I changed careers in February after being laid off from a job I hated, and I wouldn’t be nearly as far along as I am in my new writing gig if I hadn’t mustered the courage to ask for a little help and advice from some very busy people.
Throw away Plan B
Once you find something important to pursue, throw away your contingency plan. That doesn’t mean you stop making course corrections; it means that you should take your goal so seriously that failure is not an option. Plan B is always easier than Plan A which means that, more often than not, Plan B will become Plan A when Plan A gets too hard. Some things are too important for a Plan B.
I don’t always take this advice myself. Making a big decision is hard. Even if you make the right choice, you might not realize it for a very long time. At 25, it’s still tough to say if I picked the best mutual funds for my 401(k) or if I got my IRA allocations right.
Heck, who knows if I even picked the right career? Sometimes I worry.
That’s not so important, though. I know that I can change course if things go wrong. The game isn’t over just because I made one decision. And in the long run, it won’t be as critical as I think it is right now. What is important is that I keep tipping the scale toward action because the alternative is just more sitting and more head-scratching.
I’m 25 and already starting to lose my hair. The last thing I need is more head-scratching.
What tips do you have for deciding what to do when you have no idea what to do?
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There are 26 comments to "What to do when you’re completely unsure".
It’s true. Life is full of uncertainties, but we need to wade through them and get to the truths: we need to save, we need to invest, and we must continually course correct along the way. Money is dynamic and the plan may be adjusted every year or so, but as long as we all stick to the plan that we set for ourselves, everything should work out just fine.
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When stuck between two choices, my girlfriend has a magic quarter. Heads for one thing, tails for the other. If you don’t get the side you want, 2 out of 3 is okay. So is 5 out of 7…
It’s a great way of showing you what it is that you really want.
The paradox of choice is great reading– recommend it for everyone. (Here’s our accolade: http://nicoleandmaggie.wordpress.com/2010/07/21/satisficing-as-a-life-philosophy/ )
Like Tom’s girlfriend, I often flip a coin. Heck, if you have role-playing dice, you can roll a dice for all sorts of numbers of decisions.
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Nicely said, Tyler, and so true. We can paralyze ourselves with indecion and fretting over making the right choice. An excellent book to help you get out of that mindset is Excuses Begone!! by Dr. Wayne Dwyer. There is a book review on my website.
When I really get stuck, I also have a special coin. It literally says on it, “Executive decision maker.” Flip it and it will make your decision for you 🙂
One interesting thing to observe about successful people is their ability to quickly make decisions when incomplete information is available to them. I think there are a few reasons for this:
1) Instinct – Experience lets them subconsciously pick out patterns in decision branches, so even if they’re not aware, they can avoid disaster.
2) Minimize risk – Successful people are able to position themselves so that even if they make a bad decision, the negative impact is minimal, and / or they can backtrack quickly.
3) Ignore fear – Everybody’s afraid. Successful people either ignore it or thrive on it. They realize, what’s the worst could happen? I lose everything? I’ll just build it up again.
By the way, my “magic coin” is a half dollar. 🙂
Do something easy! There’s always low-hanging fruit – an employer-match on a 401k, a debt you can pay, a nice low-fee index fund.
Doing something now makes it easier to do something else, later – it’s not hard to make the jump from emergency fund, to emergency fund in a CD ladder, to a fat retirement account and a full-fledged portfolio.
When I’m stuck I do one of three things. I list pros and cons of a decision, I list consequences for not doing anything, or I flip a coin. The pros and cons is good between two choices of reasonable action, e.g. do I want to invest in CDs or a mutual fund over the next ten years. The list of consequenses/worst case lets me see what happens if I do absolutely nothing or if things go down the hole, e.g. what if I don’t get a will, does it really matter? And the coin flip is the last straw. The coin flip result is irrelevant. I pay attention to that second it’s in the air and what I want the outcome to be. Even though I know I’m kind of kidding myself, there is still that split second of knowing what I want, which translates in letting me sleep at night.
My other tactic is start small and add for any long term goal. For example, college fund for the kids. Folks freak out worrying about paying $100K plus and how will they save that. Do they use a 529, invest in the market, etc. I say start with $20-50 a paycheck in saving account and add to it in $10/20 as you get raises and take your time deciding where to invest it later. The fact that you start saving is often more important than delaying because you are worrying about where you are saving it and picking the best investment. The $500-1200 you might save that first year is more than the likely difference in interest between any of your choices.
First you need to know what you hope to achieve by making the decision, then it becomes easier to see which choices will help you reach that goal.
If the best course of action doesn’t become apparent within a reasonable amount of time and research, I make a list of pros and cons for each choice. Then I rate them by how effectively each will help me reach my goal and eliminate (or put on hold) the least effective ones making the best choice more apparent.
This simple process of elimination works every time for me and keeps me moving and making progress toward my goals.
One other thought…
Sometimes two choices are better than one.
For example, when deciding between paying off credit card debt or saving more, the earlier savings compounded earned more than what I would save in interest expense. I discovered this in a spreadsheet and decided to split my efforts between the two.
By the time I got my credit card debt paid off, I also had a nice 12 month emergency fund stashed in a high-yield checking account earning 4.75%
Both goals were equally important to me and it pained me to pick one over the other, so I chose to fund both at the same time.
Thanks for adding to the discussion, everyone. There’s some more great tips in here.
I absolutely love the coin flip idea. It doesn’t even have to be the decision maker — it’ll quickly help you see which direction really want to go.
I’m going to start using that. Now to find a nice shiny half-dollar.
A bad decision is only bad if you label it so. Refrain from labeling things! I can’t tell you how many times I’ve gone down one path, feeling at times I was making a terrible choice, only to be proven wrong. All the “speedbumps” were exactly what I needed to get where I wanted to be.
I’m confident and feel good about all my decisions. Why? Because it’s the decision that I made. It’s not bad, it’s not good, it’s just the decision that I made. Learn to stop that judgmental, pre-conditioned thought loop. It’s silly anyways. Cheers!
@Tyler: Stopping by a bank might be your best bet. Or, if you know any coin magicians, they usually have a roll of them. Otherwise, if you’re in NYC, let me know and I’ll give you one. 🙂
Similar to your “ask for help” – find someone you trust or has been successful with “X” task and find out how they did it. Their specific advice may not work with every situation, but the general principles probably apply.
More than one employer has told me that I am one of the few people that are not afraid to make a decision. I guess I was born that way.
I make a decision, then live with the consequences of that decision until I can mitigate it. But, I make a decision. I learn from my mistakes.
I look at my mistake and ask myself these questions:
1. What did I do wrong? What exactly was the mistake in the process?
2. What should I have done differently?
3. How can I mitigate what has already happened?
And, most important of all of them:
4. What can I learn from this to keep from doing it again? Was there any good at all, from this decision? How can I keep the good part of the decision and not repeat the bad part of the decision?
I also go into a decision, especially large ones, without FEAR. Once the decision is made, then I go with it. I know I will fail sometimes and I am okay with that hit to my self esteem. Heck, crap happens!
And, I have this belief that if I make decisions, with a good and not selfish heart, without the intention to hurt anyone, then Life/God/Karma will pay me back ten fold.
It has worked so far in the past 47 years I’ve been on this planet.
I read a quote awhile back that I really like, it said something to this effect: “If I had to live life over again, I would have made the same mistakes, but much sooner!”
Amen to that one.
I’ve recently realized that I have too many choices, too many things I want to do. So I started focusing on one thing at a time – first I knew I wanted to pay off my debt, so I paid off one from savings. Now, I’m paying off one loan at a time by putting all of my extra money toward it. I’ll have paid off over $20,000 by the end of this year, including my car and a large chunk of student loans.
Next year, I will continue paying off my student loans but I also plan to apply to MBA programs. I’m hoping to be able to pay for it with scholarships and cash.
There is no right answer. No right career, no right investment. Pick something and go with it; if it doesn’t work out, try something else.
I’d suggest checking out ‘intentional living’. You’re gettting close with your rules.
A recent post on Dumb Little Man addressed the relative utility of reading about [insert subject here] versus taking action. There really isn’t much utility in the first instance.
In the U.S. I think we are at a point where many spend their days reading about (or viewing) and discussing how things ought to be, and what they (or others) ought to do. I believe if we devoted 10% of our time to taking action, 90% of our perceived problems would disappear.
If there is any action on the Top Ten Personal Finance To-Do’s that a person has not done – in my case, it’s making a will – it’s time to schedule a To-Do Day and get that stuff DONE.
It’s far better, in almost all circumstances, to take SOME action than to endlessly discuss WHICH action should be taken.
Nice post Tyler 🙂
I’ve been living life by some of these rules over the past few months; just taking an option and going with it, no matter what the consequences, and it’s been an amazing, continuing journey!
http://rob-nightingale.co.uk/
Always look forward to your posts. Thank you!
This post was awesome and right on time. I’m trying to figure out where exactly I want to go as far as my entire life goes. Personally, financially, educationally, career wise, etc. I have a rough plan of where I want to be, I’m just trying to take action, just like you said. Bookmarking this possibly forever, lol
Great stuff here.
What I do in this situation is to do as much reaerch as I can, talk to a few people I trust, THINK about it for a little while, and then go with my best instincts.
Nobody is an expert at everything, so sometimes, I think we just have to rely on our gut.
And if it turns out I made a mistake, I make the best of it, learn from my mistake, and make sure it doesn’t happen twice…
I am currently lost and don’t know what to do. Pick one thing and commit is one of the most important tip for me.
I have no problem making a decision. I just have a problem following through lol.
Another option is to find someone trained in “motivational interviewing”. The name is misleading; it’s not used to increase someone’s motivation, but to help a person come to a decision, move to a point of action. Pretty interesting stuff.
I’m surprised nobody has quoted Yogi Berra yet:
““When you come to the fork in the road, take it””
Once you understand that debt is slavery, you will do whatever it takes to escape & never go back. All those nice things you covet so you can ‘feel better’ cost you time. Money is time. Add interest, and it’s a lot more time at work. Time you can’t have back-ever.