Letting Go Financially
Last week we looked at the value of exhibiting patience when making important financial decisions. You need to be prudent with your spending and debt choices, and you should give yourself enough time to get the best results from your efforts in saving, investing and creating wealth.
While it's advisable to stay on course with your financial goals and allow time to work in your favour, there are instances when you actually need to move quickly to get rid of unhealthy money habits or reverse unwise decisions you may have made.
When you commit to a specific financial route, you may not be certain if you should hold on because you made the right choice, or if your results indicate that you should change direction. Let's look at some situations in which it's time to cut loose and 'wheel and come again,' as we say in Jamaica.
Liquidate your assets
On many occasions, I have seen persons find themselves in a financial bind because they acquired a possession, such as a car or home, with borrowed funds. Suddenly, they realise that they are no longer able to pay for basic expenses, and they have to resort to more debt to make ends meet.
Although you might be gaining an asset that can benefit you personally, you have to be careful not to overextend yourself financially if you choose to borrow to purchase it. Ensure first that your budget can cover the loan repayments and other associated costs, as well as your regular bills.
If your budget is already out of kilter because you borrowed unwisely, you may have to make the tough decision to let go of the possession in order to pay off the debt. Another option is to work on earning extra income in your spare time so that you can afford the loan repayments.
Divest your investment
When making an investment, it's important for you to be very clear about what you hope to gain from the venture before you commit your funds. Do you want your investment to earn a steady income for you, should it grow in value over time, or do you want to buy and sell it for quick profit?
One way to determine when to let go of an investment is when it no longer meets your investing objectives. For example, if you bought stocks to receive dividend income and the company changed its policy to stop issuing dividends, you may decide to sell your holdings and look for other options.
All investments come with some level of risk, and fluctuating values and lower-than-expected returns are not necessarily reasons to sell an asset. However, with the help of your financial advisor, you should establish some parameters that will guide you when it's time to divest a losing investment.
Close your business
If you're in business, you need to be relentless in finding solutions to the myriad challenges that will come your way, but sometimes you may be better off winding down your operations. One reason to let go is when your business idea was ill-advised and lacked proper due diligence in the first place.
Even great business concepts can be critically malnourished if there is insufficient capital to last through the difficult early years. If your venture simply cannot generate the level of sales that will allow it to pay its bills and create wealth for you, then you may need to look at other income options.
Many wealthy tycoons will reveal that they experienced multiple business failures before hitting on the right formula. Letting go of a terminally ill enterprise does not indicate that you lack fortitude; instead it may release you to discover the business venture that will succeed for you.
Release your goals
Perseverance is a must if you want to attain your long-term financial objectives, as you need to keep forging ahead until you realise your goals. Quitting is not an option, except when you recognise that the route you're currently traversing is no longer taking you where you want to go.
Let's say that you always dreamed of becoming a doctor, but midway through internship you admit that your heart is not in the medical field. Should you ignore your feelings and continue in a profession you don't like? Letting go could allow you to seek career counselling and find the right vocation for you.
There's no shame in letting go of a financial idea or endeavour that just isn't working for you any more.
Just be honest in assessing what you really want to achieve at this point in your life, and create a new plan of action that will take you along the pathway to accomplishing your dreams.
Cherryl is a money coach, business mentor and founder of Financially S.M.A.R.T. Services. Her upcoming book, "The 3 Ms of Money" will reveal all the secrets she learned about financial success. Read more on money and business matters at financiallysmartadvice.com and entrepreneursinjamaica.com. Email comments to firstname.lastname@example.org.