I read something which I learnt many years ago and is still struggling to always apply it today. I think everyone should read this article by the Co-Founder and Managing Director Mark Reijman of comparehero.com.my which was published in thestar.com.my. It reminds us again on something which has continued to pull more people into more trouble they should have avoided; superiority bias. How many times have we bought something pretty expensive and we convinced ourselves that we could afford it, as long as we are disciplined enough to pay for it over the next few months. Well, what about those who bought something which needed years to pay back? Yes, most of the time and that includes me occasionally too.
What’s the major reason we bought those stuffs? Is it because we love them? Not entirely true because IF there was no way we could ever afford them, whether we love or not, we still could not afford to buy them. However, when we may or may not afford them, we tend believe we could instead. Yes, this is why majority of us believe we are above average when compared to everyone else. How possible is that? I recently overspent form overseas vacation because I thought I should just enjoy myself and the excess could be covered by my performance bonus. Guess what, this year I got a lower bonus payout and thus, I suffered on both ends; spent more and got less. Sigh…
Coming back to property, that first home. How many of us would ask our banker friends who told us we could afford a loan of up to RM500,000 and then we asked what’s the maximum we could ever stretch it to? How many of us would start with a renovation budget of RM100,000 and in the end stretched it a little many times and in the end, it became RM200,000 or more? How many of us would bust our electrical goods and furniture budget simply because instead of the 7-feet sofa, it became 9-feet and instead of a 40 inch LED TV, it became a 50 inch LED TV instead? Haha.
That more expensive home can be a future upgrade. A cheaper one allows us to do more in the areas of investment. That renovation that we are about to slog every month to pay for it for the next few years would cease to look amazing after a while. Yes, I know because I have moved homes quite a bit within the past 10 years. Do note that the 50 inch LED TV we paid for just 2 years ago would have dropped in price by half today. Plus, the current one would have even more features too. Yes, sad but true and all these stemming from the fact that we thought we could and thus we should. As for whether we should continue to ‘overestimate’ ourselves, it’s a personal choice. Nope, I do not wish to even start debating about smartphones. Happy believing and acting based on what we believe in.
written on 31 Oct 2016
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