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Creating Freedom Through Financial Independence


Being Rational and Solving Problems

March 24, 2018

Making decisions is part of being human.

And it’s an important part of life.

Especially, when you’re trying to achieve something unusual, like retire a few decades before your peers.

But good decision-making is a learned skill.  It takes time to improve and fine-tune the art of making a good choice.

One of the biggest obstacles to making a good decision, is our emotions.

Many people ‘go with their gut’.  Or think they’re making a rational choice, when really, it’s their emotions driving it.  Instead, they look for reasons (excuses) that justify their decision.


Making Rational Decisions

The key to making a rational choice is to sit back for a minute.

Simply making a snap judgement and rushing to a decision, is likely to turn out poorly.

But when we stop, (try to) remove the emotion and think about the decision from various angles, we can begin to see what our emotions were blocking.

It sounds simple.  But we’re human, after all.  We have so many built-in emotions, usually to protect us.

Although, in modern life, they often cause us to do silly things, because they alter our ability to be rational.

Now, I do this just as much as everyone else.  But I’m aware of it.  And that helps, because I remember to slow down and think about things from different angles.


How This Affects Financial Independence

The reason it’s important, is due to the vast amount of decisions you’ll have to make on your way to Financial Independence.

And if you’re making those choices with too much emotion, and not enough rationality, then it’s gonna take longer.  A lot longer!

Why?  Because we’re going to make excuses about why we can’t move closer to work, or get a smaller, more efficient car.  We’ll justify why we deserve a new pair of shoes or another overseas holiday.

Our monkey brains will actually search for these excuses.  And this is why a little rational thinking, mixed with some self-discipline, goes a long way.

An area where our ability to be rational often fails, is happiness and life satisfaction.

We often think we know what will make us happier, but it turns out we’re terrible at it!

The truth is, once we’re part of the Western middle-class, there is very little, if any happiness benefit from additional luxury.

Therefore, once we reach middle-class living conditions, there is very little point in spending more money, with the assumption it’ll make us happier.

Obviously, this is handy information when you’re trying to funnel a boatload of cash into investments for early retirement!

Because remember, the real cost of living is far less than it used to be.  This means we can quickly amass a hoard of investments paying us a nice income stream.


Solving Common Problems

When we buy stuff, we’re simply just solving a problem or meeting a desire we have.

Marketing companies know this.  So if the product doesn’t really solve a problem, you can be sure they’re working their arse off to create desires we didn’t already have!

Here are some basic problems we come up against as humans, along with possible solutions…


Problem 1:  Finding a safe and comfortable place to live.

Solution A:  Buying a 4-bedroom house in a beachside suburb close to the city.

Solution B:  Buy or rent a modest size apartment with similar city/beach convenience at a fraction of the cost.


Problem 2:  Getting from one place to another, when walking is not an option.

Solution A:  Buy a 2018 Range Rover Sport on finance, with all the extras.

Solution B:  Question whether car ownership is the only way to solve the problem…

Can you use public transport?  Combine it with Uber?  Ride a bike instead.  Finally, if buying a car is still the most sensible option, then optimise it.  Buy a low-cost efficient car for 5-10k and use it sparingly.


Problem 3:  Avoiding starvation.  Also known as finding food, to ward off regular hunger.

Solution A:  Visit restaurants where food is professionally prepared just for me, while I sit in a chair and wait.  Also I can avoid having to do anything, and won’t need to clean up.

Solution B:  Learn to cook and prepare my own food that I’d bought previously by planning ahead.

This offers far higher convenience (it’s in my house so I don’t need to go anywhere) and likely health benefits.  This also reduces Problem 2 (needing a car).


Problem 4:  Taking a break from everyday life by visiting somewhere new to explore and unwind.  Also known as a holiday.

Solution A:  Purchase first class tickets to Europe, for 2 weeks of hotel-hopping and tourist traps.

Solution B:  Pack up the car and head down (or up) the coast, to a lovely waterfront town, or a forest/mountain type area, to soak up nature in all it’s glory.

Here, you’ll have a true chance to de-stress from city life and melt into the gentle pace of the country, while exploring the area at your leisure.  And without competing with thousands of other tourists for happy snaps.


Subtle Assumptions

While it may seem like silly examples, these are just different ways to solve the same problem.  And each option will give us roughly the same end result – solving our problem and meeting our needs.

Since our needs are still being met, there’s no rational reason to go for the more expensive option.

Now, this is where the subtleties come in.  Many people assume the more expensive option will make them much happier.  Even if we don’t acknowledge it, subconsciously, it’s an assumption most of us have.  And that included me, until recent years.

But would our overall happiness change with the more expensive option?  No.

So it seems to be flawed human thinking that believes more expensive trips, meals, experiences and possessions will make us happier.  That’s simply not true.

Because even a basic life in a rich country like Australia, is unbelievably good, compared to most of the world, now, and throughout history.

If we’re all honest, the vast majority of our household spending is up to us.  It can cost as little or as much as we like.

Life satisfaction is not a numerical game.  Spending three times as much, doesn’t make us three times happier.



It’s been found that once we have the foundations of a good life, we’re about as happy as we can be.

A comfortable and safe place to live.  Some work or hobbies we find engaging and challenge us.  Taking care of our health and being a good person.  And having strong relationships with friends/family to share the good times with.

Funnily enough, most of the stuff that actually satisfies a human, doesn’t cost all that much.

So why not mesh this idea with the dream of living a wealthy and free life?

We can all make better financial choices, by recognising which things make us truly happy.  And also seeing, the expensive options are just another way to solve the same problem, in a more costly manner.

The result is, we can save and invest a ridiculous amount of money, while living a good life.  This allows us to purchase our freedom, in less than a decade.

Finally, let’s start thinking more rationally, when solving problems or meeting our desires.  And always aim to get the same result, in a far more effective and efficient way.


Note:  The ‘irrational’ spending can come later (if you like), after building Financial Independence and the happy foundations of a good life.


9 Replies to “Being Rational and Solving Problems”

  1. Sorry, Dave, at risk of sounding trite, first class tickets to Europe does give me far more pleasure and happiness than driving down the coast in the Australian summer for hours in my ancient Toyota with faulty air conditioning and annoyed passengers. Sometimes the more expensive options do give more happiness. However, overall, I do agree with the sentiments in your post.

    1. Thanks Jon. I see what you’re saying. But pleasure and happiness are quite different things. Focusing on pleasure is usually a short-term high. It can leave us permanently broke, morbidly obese or a drug/sex addict.

      I’m talking more in terms of overall life satisfaction, and meeting the need of ‘having a break/taking a holiday’.

      You could always rent a nice new car (which we recently did)…or get some better passengers 😉

  2. Rationality is incredibly hard for most of us – which is why so many people struggle with the best way to live a good, happy life!

    Fully agree with the foundations of a happy life in your conclusion, and is similar to what I try to focus on day to day, but also agree with Jon that there can be times where spending money on something specific makes you happier. The hard part is understanding what ‘happiness’ really is, and what things actually do make you happy – you’re right that we’re not too good at knowing this though! Being bombarded every minute of every day with advertising sure doesn’t help…

    1. I think you nailed it – we’re being told (marketed to) what makes us happy, because it’s good business, and sadly, we believe what we see. So when we see rich people on tv having a great time on a yacht or in a sports car – we think how happy they look in that moment and put two and two together.

      Agree with you, there are things that cost money that add to happiness of course. But the trick is, learning about happiness (a never-ending task in itself) and realising how people who live in other parts of the world can live a perfectly happy life with much less than we have, because they place more importance on those foundations than we do.

      It’s definitely harder than it seems. But when I look around it just seems people are placing a lot of importance on things that are not destined to make their life any happier over the long term. An example is material things or experiences they chase, while complaining about their never-ending workload in a job they don’t like, which completely dominates most of their waking hours for most of their life. That doesn’t make sense to me. They place more importance on the money from the job so they can buy/experience things in the short-term, while trading their life for it over the long term. The result is, misery at work and only ‘happy’ when on holiday.

      It’s not as simple as that of course, but hopefully you get what I mean 🙂

      1. I actually think that’s the worst part – when a job you don’t like consumes most of your life, because you want the money to spend on things you think makes you happy. I’ve certainly kept leaning towards doing work I enjoy and feel good about for the most part. Holidays are wonderful, I don’t think it’s possible to be close to happy when you don’t like your work!

  3. This is the reason it can help to have family, friends, or an online community to talk to. Just taking the time to run a decision by someone not involved can sometimes talk that monkey brain down. Not always – our friend has just purchased a $1.2 million property because he didn’t get on with his neighbours. That’s $300,000 more than his current place, and according to him they’ll have to live on less than Mr. ETT and I do until the kids go to school. This is the man who says to Mr. ETT “I don’t know how you can live like that.” Sometimes, our brains suck.

    1. Thanks for the story Mrs ETT! It’s a good point you make about talking to others. That can definitely help. Sometimes, when we share our thoughts out loud, they don’t sound so rational after all!

      Haha there’s more than a few things wrong with that thought process, yet somehow to him, that’s the best way of solving that problem…

  4. haaaaa !
    i really like the post and relate to it.
    i would push further and say that, as humans, we re deeply unsatisfied creatures and still think that our happiness is outside
    (i m fighting with the above daily myself!)

    1. Glad you like it grogounet.

      Good point. I remember reading somewhere that we’ve evolved to become a regularly dissatisfied creature. And this actually has helped us all along, because we always look to improve our lives of our never-ending dissatisfaction. We make things more efficient, create new technology, grow more wealth etc, because we’re never really settled and always look to optimise and make things better. It was written in a much clearer way than that, but I think you get the picture.

      It’s an ongoing battle for all of us it seems 🙂

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