Recently, I’ve been coping with quite a bit of stress in my life. As a result, I’m not thinking as clearly as I usually do. Due to that, I’ve made some dumb financial decisions. Luckily, I implement a regular review system of my personal finances which allows me to correct for those mistakes relatively quickly.
Stress Closes Our Window of Tolerance
There’s a neuroscience model called the Window of Tolerance. Basically, we generally operate within a certain window, handling stressors with relative ease. Sometimes, though, things simply get too stressful. As a result, we begin to exit the window of tolerance. This leads to a variety of different symptoms such as brain fog, indecision, impulsivity, etc. These things can affect our ability to make sound financial decisions.
Due to recent stressors, I fell outside my window of tolerance, and these symptoms happened to me. It’s not a disorder or a disease or anything like that; it’s just a way of thinking about how we handle stress. At a less intense level, you’ve probably heard of decision fatigue. We make so many decisions throughout each day that we can get exhausted by decision making. As a result, we tend to make better, clearer decisions in the morning than we do late in the day. This is another example of how even regular daily stressors can impact our financial choices.
Example of a Stress-Based Mistake
I realized one of my stress-based money mistakes when I looked at my statement for a particular credit card this month. Here are the things that you should know about this credit card:
- I had a $900 balance on the card, which I’d set to autopay across three months at $300 each.
- Then I received a promotional deal for the card. It said that if I spent $250 on health-related services by a specific time, then I would receive $25 automatically as a statement credit.
- The interest rate on all new purchases, including those health-related services, is a whopping 26.99%.
I already had plans to go to the dentist. Moreover, I knew that I needed to put that payment on a credit card. So, it seemed like a no-brainer. I charged the $400 dentist bill to the card. Since I had to pay anyway, why not get $25 back right?
Why This Decision Was a Mistake
Unfortunately, a family emergency took me out of work for a couple of weeks. As a result, I didn’t have the money to cover the $300 scheduled repayment. Obviously, I also didn’t have the money to pay the $400 dentist bill out of pocket. In fact, I knew in advance that I wouldn’t be able to repay that until at least four months out, after the $900 balance on the card was already paid off (if I’d even stuck to that schedule.)
So, I charged $400 to a card that has 26.99% interest in order to get $25 back. Can you see why this is a mistake? I’m paying more in interest before I can pay this debt off than I am getting back in return with this statement credit. I have other credit cards with very low interest rates. In fact, some of them also have cash back rewards. If I had been thinking clearly, I would have ignored the offer to use this card and instead carefully chosen the right credit card for the job. Unfortunately, due to stressors, I wasn’t thinking clearly.
I can’t do much about this now, other than try to earn extra income to pay this off more quickly. However, because I do regular monthly reviews of my finances, I was able to recognize the mistake. This helps me to remember to look more carefully at all offers in the future, especially if I know that I’m in a stressful time.
What’s one of your recent money mistakes and what did you learn from it?
Read More:
- 5 Monthly Habits That Are a Key Part of My Money Routine
- How My Quarterly Reviews Consistently Improve My Life
- This Is How I’m Saving Money in February
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way.
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