Bulletproof Ways to Minimize Unexpected Consequences

by David@MoneyNing.com · 5 comments

Imagine with me for a second that you took the advice to freeze your credit cards. You read the article, poured water into a container, dropped the plastic cards into it and then shoved the end product in the freezer. All is good. Months go by, your spending declines, your bank account balance rises and your mood changes. In fact, you are feeling so good and the increased productivity translates into a promotion. You are ecstatic. You decide that you can afford to splurge a little and buy yourself a new netbook. You go to the freezer, thaw your cards and something strange occurs. The plastic on the front of your credit card starts peeling off and so does the magnetic stripe at the back. You might be thinking that it’s someone telling you that the netbook is really an unnecessary purchase, but more appropriately, it’s the lack of foreseeing the whole scope of your actions. Our society calls this “the unexpected consequences”.

We make decisions all the time and every choice come with a whole set of consequences. In fact, our future is based on the decisions we make at this very moment. Whether consciously or not, you decided to keep reading, and again and again and again as you continue to scan these words. Sometimes, like reading an article, the consequences are small. Other times, like freezing your spending, the scope is much bigger and therefore the outcome is harder to predict. In these cases, how do you minimize the possible unforeseen accidents you may ask? Here’s a few ways that will help.

Tip Your Toes First – In business, we learn to minimize risk by not changing the companies we deal with too often and starting out small even if we have to switch vendors. On an individual level, we need to do the same. Every time we try something new, don’t go all out. Be patient and learn the ins and outs on a small scale.

Example #1: When you start out investing, don’t pour a huge amount of money into the stock broker right from the get go. Start with a small amount and learn how the market works before you commit more of your capital.

Example #2: Many of us have a problem of spending a bunch of money up front to try something new. We are excited and we buy into the advertisements. That’s why we buy that treadmill that we never use. Same with the 12-month membership up front that we don’t go to anymore. Yes, it is cheaper to prepay but don’t give in to temptations until you prove to yourself that whatever you are purchasing is actually useful.

Do Trial Runs – Fire fighters always practice their job over and over even when they aren’t out and about saving people. They say practice makes perfect but it’s also a great way to find out about potential problems that can arise. Learn from them.

Example #1: Any of you have backup of your computer data? How many of you have actually tried to restore what you backed up or are you confident that everything will work out just fine so there’s no need? I helped a friend reconstruct his files after his computer got stolen because he couldn’t figure out which program he used to create those backup files.  Do a test run.  It wouldn’t hurt.

Example #2: Back to the credit card story.  If we just try to test out the strategy with an expired card or try thawing it before we need to buy something important, we would have a better solution (my friend, which this happened to, is going to put the credit card in a plastic bag first before she freezes it in the future).

Have Alternatives – My friend ended up buying a netbook by paying for it in cash. One of my junior high teachers always talked about the importance of having a plan B, and it not only applies to school presentations but everything in general. Do you have one?

Example #1: Diversifying our income sources is really about having alternatives. Did any of you take action when I wrote about passive income?

Example #2: Do you have a way to get to work if your car breaks down? Would you starve if you are locked in your house for whatever reason? Sometimes, having alternatives is just a matter of simple planning and thinking of the possibilities.

Don’t Worry Too Much

Our decisions are important, but it’s okay to make mistakes and deal with accidents from time to time. Actually, it’s what makes life fun (in fact, my friend’s incident became a fun topic to talk about and the idea spawned into this post). Just learn from your mistakes and try to not repeat the same ones. This way, you have time to make new ones. Unforeseen events are what keeps things interesting, because life would be boring without them.

What are some of the unforeseen consequences that you’ve encountered recently?

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  • Best Savings Account Girl says:

    Nice post,

    Can’t really think of anything that was unforeseen. But I am going to be opening an online trading account and I’ll take up your advice and start off with $500 – see where that goes for me.

  • Thicken My Wallet says:

    Good post. A good follow up post would be what to do now that the unexpected has occured.

  • Ken says:

    I call this Plan B thinking. You always need to account for the unexpected – especially regarding finances. Good post.

  • Car Insurance Guy says:

    Best piece of advice I’ve read all day, and I visit a lot of finance forums. When you’re starting something new, the dip your toes mentality is best.

    If you’re investing for the first time, try a virtual account.

  • DDFD @ DivorcedDadFrugalDad says:

    Nice post. We should all do “What if , , , ” thinking. What are the possible outcomes or next steps?

    Much like chess– you need to consider the possible next five moves . . .

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