Decision making: emotions, risk and regret | Macro

Decision making: emotions, risk and regret

decision_making_emotions_risk_regret

By Debra Ward, Managing Director, Macro

About four months ago my family and I decided to review our housing arrangements.  Having just completed an extensive renovation on our property we found that we now had enough equity to look at property in an area we desired that is closer to the kids schools, to the high street and Bushey park (we have a perpetually hungry and somewhat lazy chocolate lab who needs constant walking).  The commuter links were also brilliant with direct lines into Twickenham, Kingston, Richmond, and London.  

I became acutely aware benefits of living in this area over the holiday season when I spent most of my time driving, chauffeuring or visiting there.  I thought about how lovely it would be to live there instead of getting in a car every day just to get there.  

Additionally, our son (turned amateur real estate broker- age 14!) has been pushing us to move for over a year.  We have been adamant however that we would make the right decision, for the right reasons and not simply because he was tired of his 15 minute bike ride to and from school every day. 

The house we fell in love with was of course just within grasp of the very tips of our fingers if we strained and outstretched our hand until painful… and far enough removed to make it scary.  It’s our “forever and ever” house.  The one our kids will return to with their partners and children.  The house with “great bones but wilting flesh” that we would spend our many evening, bottles of wine and most probably our lives turning into a perfect reflection of our family life.  

We knew that our offer was a good price and slightly under the value of the house and that the area is well regarded and demand is ever increasing.  We tried reassuring ourselves that we would always make money on such a house all the while with silent prayers and fingers crossed. 

OR 

Do we have the loan to value (LTV) reassessed  and use our savings either in a holiday property that we could let out and eventually have an income from (Spanish property is a bargain) or invest in a property here in the UK where return on investment outstrips most other investments without even blinking an eye. 

The first option was a long-term one.  A decision of the heart. A vision of the future that would be proceeded by scrimping, sacrificing, weekend and late night working and at times fretting about finances. 

The second option was a rational decision, one of financial security, risk mitigation and quite frankly an easier life today and tomorrow. 

A colleague of mine said to me, “But you are allowed to make emotional decisions about your house… after all it’s your home”.  But are you?  As parents can we simply dismiss the possibility of increasing interest rates, potential unforeseen taxes, and negative equity all the while dashing a child’s hopes of ever meeting Mickey Mouse? 

For us it came down to this (as most important decisions in my life do)… which one will I regret not doing?  Those who know me well can guess what we decided… 

So here’s the question… which would you chose?  

"Thinking before acting is wisdom, but acting before thinking is regret."

OR

"In the end, we only regret the chances we didn't take."

Follow Debra and Macro on Twitter