Sometimes It's Better to Bend the "Rules" of Personal Finance

A few years ago, the engine on my faithful, 10-year-old car—which was paid off in full—suddenly died, with no hope of resurrection. At least not a resurrection which made fiscal sense, according to the mechanic.

Less than a year before, I had officially pulled my family out of poverty. It was a goal we all had worked hard towards, and we didn’t want to go back. 

The problem? We had a little bit of savings, but not enough to purchase a reliable vehicle. Without a car, I was going to have a real hard time getting to work every day. No work meant no money, which meant slipping back into poverty while we tried to save up for a new car.

We did the rational thing: we bought a used vehicle and took out a loan we would have no problem affording as long as I continued going to work.

The thing is, some personal finance gurus will tell you taking on debt is never the right answer. If I believed in this blanket rule to its fullest extent, taking out that auto loan would have been a huge mistake.

But it wasn’t. My life didn’t fit under a blanket, and the less-than-$200-per-month car payment cost me a whole lot less than losing my job. At one point or another, we all face situations where strict rules cannot dictate the best financial decision for our individual lives.

Leaving an Abusive Relationship

Transport and poverty aren’t the only circumstances that can lead to a seemingly bad financial decision transforming your finances for the better. A couple years ago, Michelle Bobrow of The Holistic Wallet found herself in an abusive relationship. Not only was she living in hell, but her support network was across the country.

To get out, she needed to borrow money. Fortunately, she was able to get access to credit, and went into $5,000 worth of debt. 

While no one enjoys handing a portion of their paycheck over to someone else with interest, Bobrow does view the decision to take on debt as a positive one. Borrowing money allowed her to escape abuse, and regain ownership of her own life back on the East Coast.

Moving to a Better School District

Because of how decentralized our schooling system is here in the States, there can be vast discrepancies in quality of education from one locality to the next. Often, this leads to young parents relocating to provide their children with better educational opportunities. Because areas with better schools are more desirable, they tend to be more expensive.

It’s easy to judge these parents—to tell them they should just use the money they’d put towards real estate in a more affluent housing market into private school tuition. If you run the numbers against your lifestyle and that’s the decision you make, great.

But there are other advantages to moving to the new school district. First of all, while we all know we can’t count on real estate valuations to go up in perpetuity, homes are still considered an investment by many. The value of your property has the potential to go up, garnering profit further down the line. The money you pay towards private school tuition is just gone.

Then, there are things like the safety of the neighborhood you’re living in, your transportation situation, etc. Each of these variables will affect your final decision; just because purchasing a home may be a larger debt obligation up front doesn’t mean it’s not the right decision for any given family’s situation.

Don’t Judge Others—Or Yourself

It can be extremely tempting to judge our neighbors and peers by their financial decisions. It can be very easy to draw a black and white picture of smart versus poor money decisions.

Remember that the kaleidoscope of human experience is varied and that while one standard financial rule may help others, it may not apply to you.

Learn the rules of personal finance, but always weigh them against the conundrums you face in your own reality. Sometimes, the best money decisions may go against conventional wisdom.