Is Perfect The Enemy of Good? Are We Shooting Too High?

Are We Shooting Too High?

When counseling my patients on health, I like to say that perfect is the enemy of good.  Often shooting too high with our goals can have disastrous consequences.

I see it all the time with exercise.  My patients start a grueling work-out routine to improve their cardiovascular health.  They spend two hours in the gym everyday.  For a week or two.  But, inevitably, the cost of (perceived) fitness is too high.  The path to success too grueling.  And they quit.

Starvation diets are another example.  How many times have we watched friends and family go on starvation diets?  Sure the pounds peel off and they look great, the first month.  As time passes, of course, these diets are too rigorous.  Often, a half a year down the road, the poor dieter weighs even more than when he set out on his journey.

Personal Finance Is Much The Same

There are many roads to China.

Likewise, there are many paths to financial independence.  The most notable form a three-sided triangle: earning, spending, investing.  Shooting for perfection in all three can lead either to way too much wealth, or, more likely, loads of anxiety.

It doesn’t take a genius to be financially independent.  Retiring early is an option for almost anyone dedicated enough to change their lives.  In fact, it has been argued that one must be moderately savvy in only two sides of the triangle.  Or, at the extremes, an expert at one.

I have found myself able to earn, spend, and invest adequately to reach my dream of financial independence.  But there are certainly many areas I could improve on if I was so inclined.

Perfect, however, is the enemy of good.

Earn

I have made no secret that I have maximized my income with my main hustle and various side hustles.  I have not been, however, the most savvy with my real estate properties.  I live in a high cost of living area and I couldn’t find, for the life of me, properties that held to the 1% rule.  I probably paid too much.  I probably should have looked to more economically depressed areas or focused on out-of-state markets.  My cap rate is in the 5-6% range.  I cash flow, but it is nowhere near perfect.  Do I make more than I would if I had invested in an index fund?  I certainly work more for it.

I’ve never been able to capitalize my blog.  Before this, I wrote a medically oriented blog for years and had a fair-sized following.  My attempts to support an active audience, however, waxed and waned.  I even wrote and self published two books with content from the blogs, but neither had the inclination nor time to market them.  I still have a few hundred copies sitting in my basement waiting to be sold.

Invest

I tip my hat to those who are able to eschew index investing and own individual stocks, and beat the market.  I will never beat the market.  In fact, even if I am a little below, I will be okay with that.  The lazy asset allocation strategy is perfect for me.

I have almost no money in my Roth IRA’s.  I funded 1-2 years of Roth IRAs in my young adulthood and then my income became too high.  Although I have become more familiar with the Backdoor Roth principle, having multiple traditional IRA’s has zapped my energy.  I have failed to take advantage of this opportunity.

Spend

I have a little secret.  We spend a healthy amount in my household.  We eat out.  Our kids go to expensive summer camps and private schools.  We sometimes spend out of ease and not necessity.  We don’t track our expenses and don’t even have a formal budget.  We own lots of coats and shoes.

And even more embarrassingly, we don’t travel hack.  We generally pay full price for flights.  There are no comped nights at hotels or rental cars for free.

Of all the ways to get to financial independence, this is the one that has hindered us the most.

But I say this while knowing that we also save fifty percent of our post-tax income.

In Summary

Perfect is the enemy of good.

It’s OK  to choose where you decide to make your finances count.  The point is to be aware of what your weaknesses are, and minimize them when possible.

Shooting too high can make your life miserable.  Over working will leave you little time for fun.  Absolute frugality can sap your enjoyment of all the bounty you have earned for yourself.

And passing up every investment opportunity because is doesn’t fit a pre specified formula will likely keep your money sitting uselessly on the side lines.