We’ve all been there. You’re minding your own business, going about your day-to-day routine when suddenly you get hit with some unexpected bad news. Your car needs a new transmission. Your roof is leaking. You need to get a root canal.
Whatever the case may be, these unplanned expenses can really put a damper on your financial situation.
In times like these, it’s important to take a step back and assess your options. One option you may be considering is getting a financial haircut. But what exactly is a financial haircut? And more importantly, is it the right choice for you? Let’s take a closer look.
What is a Financial Haircut?
A financial haircut is essentially when you take a hit to your finances in order to meet an important goal. For example, let’s say you want to buy a house but you’re just barely scraping by financially as it is. In this case, you may decide to get a financial haircut by downsizing your current living situation in order to free up some extra cash to put towards your down payment.
Another example might be if you’re trying to pay off debt. In this case, you may decide to get a financial haircut by selling some of your possessions or taking on a side hustle in order to make some extra money to put towards your debt payoff goal.
As you can see, there are all sorts of different situations where getting a financial haircut might make sense. The important thing is that you weigh all of your options before making any decisions.
Is a Financial Haircut Right for You?
There’s no easy answer when it comes to whether or not a financial haircut is right for you. It all depends on your unique circumstances and what your goals are. With that said, there are some general things you should keep in mind if you’re thinking about getting a financial haircut.
First and foremost, ask yourself if the extra cash you’re hoping to free up by getting a financial haircut is worth sacrificing whatever it is you’ll be giving up in order to get it. For example, if you’re thinking about downsizing your home in order to come up with extra cash for a down payment on another property, ask yourself if the trade-off is worth it. Are you willing to deal with the hassle of moving and potentially downsizing your lifestyle in order to save up for something better? Only you can answer that question.
Next, think about whether or not the benefit of getting a financial haircut will last long enough to justify the sacrifice. For example, let’s say you take on a second job in order to pay off debt faster but then find yourself in an even bigger hole six months later because now you’re working two jobs and can’t keep up with the bills. In this case, the temporary benefit of getting a financial haircut wasn’t worth the long-term sacrifices that came along with it.
Finally, make sure that whatever decision you make is one that aligns with your overall goals and values . If getting a financial haircut means sacrificing your health or wellbeing in order to save money, then it’s probably not worth it in the long run . The same goes for anything else that might be important to you .
Make sure that whatever decision you make regarding your finances is one that won’t have any negative repercussions down the road.