by When I was about five years of age, something incredible happened to my family. We moved from a public housing project in East New York in Brooklyn, to a brand new, two-family home in Canarsie.
My three siblings were thrilled. We were moving from a small apartment to, by comparison, a mansion. How did this miracle happen? My twin sister and I were clueless. Only much later did we learn the truth.
You see, Marcy Projects, where we first lived, was operated by the New York City Housing Authority, which provided public housing for low- and moderate-income residents. The apartment was rent controlled.
In plain English- rent was cheap. Very cheap. To be given the right to rent, the renter was subject to strict income guidelines. Theoretically, if income increased, you would be asked to leave. Practically speaking, this rarely happened on a voluntary basis. Who wants to give up a low cost apartment, even if your salary increases? Of course there are always ethical and moral considerations.
As the sole breadwinner in the family, my dad’s salary steadily increased. Still, he was thrilled to have his family of six stay put in the Marcy Projects at least a bit longer. But my mom had different plans.
I later found that she tried every persuasion tactic she knew to convince my dad to move. She sweet-talked him. She tried raising her voice in anger. She sweet-talked some more. Nothing seemed to work.
Then my mom took matters into her own hands, making a decision which can only be deemed as bold, if not reckless. She mailed a copy of my dad’s pay stub to the project manager. When my dad received the eviction notice, he threw a fit. But it was too late. He couldn’t undo my mother’s diabolical plot. The damage was already done. Canarsie, here we come.
I learned three lessons from this:
- The best way to make important financial decisions is to do it together. My mom forcefully took the reigns in this matter, but it’s a good thing my dad was a gentle soul.
- Both logic and emotion should be considered when trying to make sound financial decisions. My dad prided himself on making logical decisions. He was “comfortable” living in the projects and saw no reason to rock the boat. My mom on the other hand let her emotions drive her financial decisions. She acted strictly from her instincts. Her choice to expose my dad to potential financial ruin was irrational. I’m quite certain she was not analyzing the family’s cash flow to validate her decision.
- Take time to talk over the risks and the rewards. I can’t say for sure if my dad took the time to help my mom understand the financial consequences of moving. Thinking like a financial advisor, I believe including this step as part of the process ought to produce better money decisions.
My mom suffered from the same dilemma investors do—an inability to control emotions of fear and greed. It’s no surprise that investors usually buy too high when excited, and sell too low when afraid.
Seduced by the smell of a new home, a beautiful garden, and a backyard , my parents purchased our new home and fortunately things worked out. Of course, the new home placed enormous financial pressure on my dad, but to my mother’s credit, we did get a mortgage, and eventually our home was sold at a very handsome profit, which later helped fund their retirement.
Though the ending to this story is a happy one, my mom’s rash decision could have played out very differently; may have even led to financial devastation.
There is a psychology to financial decisions. Trusting your “gut” may work when it comes to love, but not when it comes to making important financial decisions.
As Oscar Wilde said- I can resist everything except temptation.