Short-Term Thinking Destroys Long-Term Results

Short-Term Thinking Destroys Long-Term Results Posted: 13 Nov 2008 10:04 AM CST For this post, I'll share a story and then explain a BIG lesson for everyone. Last year, we rented a lovely home on Lake Norman for 3 weeks. I wrote about how I paid for this home, which is rather expensive, in one of our monthly Income for Life newsletters. In fact, the strategy to pay for this was part of my $4,000,000 Wealth Building Plan. This plan and all previous Income for Life Newsletters can be found in the member's only website! We enjoyed the home some much that we reserved the home for 3 weeks in 2009. Because we reserved so far in advance and we were repeat customers, the owner didn't require us to pay a deposit at the time. We signed the rental contract and planned to send the deposit in December of 2008. The owner received a request from another vacationer to rent the home during one of our weeks. Because we hadn't sent the deposit, the owner had decided to cancel our agreement and rent to the new vacationer. This isn't the end of the world, because there are many other homes available for rent. We would have simply found another home. However, we would have never gone back to this owner and their home again. The bad choice in this particular situation is canceling a 3 week rental with us to get a 1 week rental from someone else. The bad choice is magnified when you consider that we were repeat customers who took very good care of the home and paid as agreed previously. Even worse, we probably would have continued to rent this same home each summer going forward. This one choice would have cost this owner 3 weeks of rent each and every year. Why do so many people make short-term choices without thinking about long-term consequences? If you stop and think about things for a minute, you'll see that limited short-term thinking is the main reason so many people are struggling financially right now. Here are a few examples to show you what I mean: Do I buy the $3,000 flat screen TV on my credit card now, or save up and pay cash? Short-term thinking is on instant gratification. What happens when the credit card bill comes in every month? Do I lease a new car because the monthly payment is lower, when I could buy the car and actually own it someday without having a monthly payment? Short-term thinking is going for the lower monthly car payment, instead of owning the same car long-term. Do I postpone saving for my retirement now because times are tough economically, or go make some extra income so I can continue to save? A significant number of people have decided to stop saving for retirement now. See the retirement test at this link for the details. Do I stop investing in real estate today because the market is flat, or do I think long-term and buy as many properties at discounted prices to maximize my long-term wealth? If everyone would think long-term before making any financial decisions, they would be much better off. Try your best to make best long-term decisions, not the best short-term decisions. The best short-term decisions usually have the worst long-term outcomes. Rob Minton P.S. Everything ended up working out just fine with the summer rental. The owner decided to stick with us! We are very excited! We now have the opportunity to be long-term tenants for them!