2023: Undermining Your Worth & Capacity
2022 was a definitive moment in my life because I overcame so many financial obstacles at the expense of my emergency funds. Normally, emergency funds are for emergencies but trust me, so many people wished their emergency funds were never used for emergencies and if it eventually does, then one is back to ground zero, looking for another means to raise another emergency fund.
Due to this, I Initially experienced a lot of regrets, because I went on some crazy spending spree, not on things that weren't good enough, but on things that I wasn't financially capable enough of doing.
One thing about doing things we aren't financially capable of doing is that it exposes us, and gives a wrong impression of how much we originally have. However, sometimes, we consciously or subconsciously do it.
Everyone in life has at one point in time overestimated or underestimated how much they own and one of the reasons why this happens is because we do not know our entire worth: its financial capacities, the cost of the life we want to live of are scared of living or check if the means we have are capable of earning passively enough to keep us going or not. It might not be too consequential to underestimate how much we own, but it might be when we do otherwise.
For example, when people retire from their jobs, they begin to buy all sorts of property with the intent that it'll yield a lot of money in a short period. But the truth is that these people are doing this out of fear. Some calculative people spend their pension with the intent of spending wisely, howbeit they do this out of fear of poverty and lack only because their Income has stopped flowing.
When a person loses their source of income, whether they were sacked or retired, provided they didn't choose to retire by themselves, it'll still feel unreal. It creates a feeling that they're now broke, meanwhile, with the gratuity they might get, they might never be poor again, but then, the feeling of not working creates a sense of lack.
meanwhile, they're just underestimating their finances, this underestimation comes because they're scared of the cost of reality.
People also overestimate their finances especially when they earn a salary increase, however, there are uncontrollable factors that create a change in the way we spend, and some of them are things we wouldn't even imagine.
This was how my 2022 was, I undertook projects I thought I was financially capable of handling without considering that there might be financial unforeseen circumstances. Of course, I was hit badly by expenses I never expected, and my unexpectedness was what became my undoing and this was how I ended up in debt, having to pay back loans I didn't budget for.
So in order not to overestimate worth, people create a certain figure, before they can undertake some financial ventures and sincerely I think this is very good. In Nigeria for example, one's not expected to have $50 in their account and they're wearing clothes for $49. In fact, doing so will create an external impression, that such a person has more, there will be assumptions of that person has over $200 in their bank accounts, since they can afford clothes for $49.
But these are just schemes of mental accounting. We usually create an assumption of how much we need to have in cash or asset to be able to spend some particular amount of money. This is because of how much we understand about owning more than we spend. It should be an endless cycle, that we aim to better every time
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People mostly overestimate how much they've got until they buy too much stuff on credit. When things pile up, it only gets worse from there. I blame the education system on this one because nobody teaches you how to spend or invest responsibly. You have to do it on your own or be lucky enough to have someone in your life that already has that knowledge.
Educational systems can mostly not teach this and this is because it's not a rubber stamped subject or topic really. Most of the times, people are left with learning on their own.
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It was good to read all this, and yes in this times we buy to lot things what we not need 👌
Just for the sake or the pleasure of only owning them.
Hmmm, this is a good done bro, we as a human sometimes go far ahead of things and forgetting that everything has its own time and need plan. We should not because of the current situation make some decisions that we won't be able to run till end..
That's exactly the point.
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Yeah. God's helping us
Try having to physically fight debt collectors at your door then spending months in court proving that they attempted to enter your property illegally through force.
I was accused of assault for defending myself and property, when the debt collector tried to break my wrist. The police naturally took the debt agents side, no questions asked. I was just lucky that my neighbour filmed the whole thing through a crack in their apartment door.
You might have wondered why i went from having 14k HP a few years ago to virtually nothing powered up. Despite the illegal actions of the debt agency i had to pay them the full amount rather than in instalments, and this forced my to sell nearly all my stake at around $0.30/hive average to pay them off.
I've never come closer to becoming homeless than at that point in my life. Luckily, I managed to get it sorted and am now back on my feet.
But put it this way, there is zero chance of me taking early retirement from crypto or hive earnings like i planned at one point.
Sometimes life just takes a big crap on ur head. But i guess it could have been worse.
I think we're not very good at planning/calculating especially when it comes to financial matters. Past results don't usually guarantee future results because unforeseen circumstances will always happen. To be on the safer side, I always prefer underestimating things and keeping it 'tight' effectively reducing the impact of unforeseen circumstances.
Just like me too, I always try to underestimate things as well and this is because, one can plan within a specific range. As you've said. Past results don't gurrantee futuristic outcomes.
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As long as you spent it on something useful for your development , then such spending is worth it...
Spending might not be worth it, when it's done hastily.
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No one is perfect in planning.
Unforseen Expenses is also inevitable.
It becomes important not to overestimate so we can remain on the track Incase of whatever comes in between.
Overestimating one's worth can be dangerous, although it brings confidence and all that, but I think it's better not to do it because of the repercussions
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First of all it's usually easy for people who have retired and living well outside the country because the government provides for them no matter what happens but here you have to fend for yourself you have to look after yourself and once you lose your job or become retired the reality of not having money anymore dawns on you. Leaving you at a chance to looking for the next possible escape to survive financial crisis,
This is absolutely true. Retirees in Nigeria find it very difficult because the system is quite harsh and difficult on them, hence, this is the main reasons why they make those mistakes initially. But it's easier in other systems outside there. Nevertheless, no matter who it is, making mistakes can be inevitable
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Well it s really going to be a repeated occurance unless there's more pressure on how to save for old age as it is the same pressure on how to make money during the youthful days
How you always manage to pass knowledge with keyboard without stress is extremely interesting. Your post are so inspiring and captivating.
You are experienced
ThIs is another great piece
Believe me it's stressful, at the moment I'm out sick, but I love writing normally, and I've written this previously and chose to share now. However, thank you, I'm glad you enjoyed reading.
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It's never good to use your emergency fund and I had to a few times. It was unavoidable due to something happening and it generally took a few months to fill back up or I liquidated some assets to refill that up. It hurts building up my income sources and it's a harsh reality that having those spare funds is very useful.
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No one hopes to spend their emergency funds. I hope I didn't. But sometimes we just wish it was there without us touching or bothering to even touch it. I can relate to your experience. I'm glad it didn't really take you under.
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I think underestimating one's actual worth could have some positive results especially if it was done consciously. The bigger danger for me is overestimating one's financial standing. This one leads to more financial woes faster than anything.
So sorry. In our economy, instability is always at the peak. Just take an example of the cash crunch. Many people are regretting how they spent cash not too long ago because they couldn't see the future we are in today
Basically, we need to have a balanced assessment of our financial capabilities. That is usually difficult, but we keep on trying!
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Im not going to say Im the cheapest guy on earth but boy I dont spend a tenth of what I use to do for example of cloth 10 years ago, I value more other things like food, services, where i sleep, more about feeling well than looking good, this and not over spending more than I own and keep investing and diversifying put me on the cero debt state I just enter two days ago, Im 35 and I really dont think I could have done it 10 years ago, time is a very expensive resource it teach so many lessons, thx for sharing ✌️