RPF0217-Costs_vs_Benefits
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00:00:29.000 | - Welcome to the Radical Personal Finance Podcast.
00:00:32.000 | My name is Joshua Sheets and I'm your host.
00:00:34.000 | Quick coaching call version of the show today.
00:00:37.000 | I'll be back soon with the regular format of the show.
00:00:40.000 | I want to talk with you about making decisions
00:00:43.000 | and clarifying costs.
00:00:46.000 | This is just a simple thing that I've noticed,
00:00:48.000 | very straightforward.
00:00:50.000 | But I've recognized that many people
00:00:52.000 | don't have a framework for making decisions,
00:00:55.000 | or at least they don't specifically
00:00:57.000 | isolate, they don't have a specific process
00:01:00.000 | that they could clearly say,
00:01:02.000 | here's my process, my framework for making decisions.
00:01:05.000 | So I want to give you a tool that is going to sound
00:01:07.000 | incredibly basic to some, but incredibly useful
00:01:09.000 | to others of you.
00:01:11.000 | I receive a lot of questions here on the show,
00:01:13.000 | Joshua, should I do this, what would be the option here,
00:01:15.000 | what would be the, you know, should I make this
00:01:18.000 | financial decision, should I do this thing here?
00:01:20.000 | And I often look at the questions and I think,
00:01:22.000 | but this is so simple.
00:01:24.000 | But obviously it's not simple to the person
00:01:27.000 | asking the question.
00:01:29.000 | Otherwise, well, unless they're just interested
00:01:31.000 | in my viewpoint, which is probable to some of them,
00:01:34.000 | but it's not simple to them because they haven't
00:01:36.000 | put it down.
00:01:38.000 | And sometimes I respond back with an email
00:01:40.000 | and say, well, what about this information,
00:01:42.000 | this information?
00:01:44.000 | But it's very simple about just simply weigh
00:01:46.000 | the pros and cons and make a list of all of the reasons
00:01:48.000 | to make a change and all the reasons to not make a change
00:01:50.000 | and clarify the costs and clarify the benefits.
00:01:53.000 | But the key is write it down.
00:01:56.000 | And that's the point that I want to make to you.
00:02:01.000 | Our natural way of making decisions is to think
00:02:04.000 | something through and think through the pros
00:02:06.000 | and the cons, the costs and the benefits.
00:02:09.000 | And then if the benefits outweigh the costs,
00:02:12.000 | we make the decision.
00:02:13.000 | If the pros outweigh the cons, we make the decision,
00:02:16.000 | whichever direction it is.
00:02:18.000 | But what I've recognized is very few of us
00:02:21.000 | are disciplined enough to consistently clarify
00:02:26.000 | the key bits of info for each decision
00:02:30.000 | that we have to make.
00:02:32.000 | Rather, we let it all swim around in our brain.
00:02:36.000 | And brains are a very bad place for processing
00:02:39.000 | some types of information.
00:02:41.000 | They're great at some things and they're bad at other things.
00:02:43.000 | And one of those things is trying to think your way
00:02:45.000 | through a decision.
00:02:47.000 | It's a lot easier if you get it out on paper
00:02:49.000 | and it's black and white.
00:02:51.000 | The best way to do this that I use often --
00:02:53.000 | excuse me, not the best way, the simplest way
00:02:55.000 | that's a good way --
00:02:57.000 | comes from a sales closing technique.
00:03:01.000 | There's a whole business --
00:03:03.000 | if you pay any attention to sales training,
00:03:06.000 | there's an aspect of sales that involves
00:03:09.000 | closing techniques.
00:03:11.000 | And professional selling has changed
00:03:14.000 | from the way that it used to be done.
00:03:16.000 | But it used to be that a professional salesperson
00:03:18.000 | would spend a little bit of time finding out
00:03:20.000 | what you needed, more amount of time
00:03:22.000 | presenting to you the solution,
00:03:24.000 | and then a whole lot of time tying you down
00:03:26.000 | with some fancy closing language.
00:03:28.000 | The best example would be alternative choice.
00:03:31.000 | "Dear Mr. Jones, you're looking at this furniture.
00:03:34.000 | Well, would you like it in blue or red?"
00:03:37.000 | That's a closing technique,
00:03:39.000 | just presenting an alternative choice.
00:03:41.000 | And most people are savvy enough now
00:03:44.000 | to spell that out.
00:03:46.000 | And most of us are not manipulated by,
00:03:49.000 | "Well, I don't know how to say whether I would like it
00:03:51.000 | in something other than blue and red,
00:03:53.000 | or I wouldn't like it at all."
00:03:54.000 | Most of us are familiar with that.
00:03:56.000 | So, a pro tip for you,
00:03:58.000 | alternative choice is still powerful,
00:04:00.000 | but you've got to do it a little bit more elegantly.
00:04:02.000 | So if you're a salesperson,
00:04:04.000 | still use an alternative choice,
00:04:06.000 | but be a little smoother about it,
00:04:08.000 | and don't do it too soon,
00:04:10.000 | and position things a little bit more elegantly,
00:04:12.000 | rather than just, "Well, would you like it blue or red?
00:04:14.000 | Is Tuesday better, or is Thursday better for you?"
00:04:17.000 | Be a little bit smoother.
00:04:19.000 | But that is a closing technique.
00:04:22.000 | And one of the more famous closing techniques
00:04:24.000 | that you probably should be aware of
00:04:26.000 | is commonly called the Ben Franklin Close.
00:04:29.000 | And every sales seminar that I ever listen to,
00:04:32.000 | or every sales training,
00:04:34.000 | they always cover the Ben Franklin Close.
00:04:36.000 | And it's pretty tired because of that fact
00:04:39.000 | that most people have used it.
00:04:41.000 | But here is how the sales close was taught to salespeople.
00:04:45.000 | You would do a sales presentation.
00:04:47.000 | You'd finish up the sales presentation.
00:04:49.000 | You're sitting, whatever you're selling,
00:04:51.000 | you're sitting in front of a couple,
00:04:52.000 | and they're on the fence,
00:04:53.000 | and they can't make up their mind,
00:04:54.000 | and they haven't committed to the buying decision.
00:04:59.000 | And so you say, "You know, Benjamin Franklin
00:05:02.000 | was one of the wisest and most respected men in history.
00:05:06.000 | Wouldn't you agree, Mr. and Mrs. Jones?"
00:05:09.000 | Got to get in the agreement.
00:05:12.000 | Whenever he was faced with a tough decision,
00:05:14.000 | much like you are today,
00:05:16.000 | he would take out a plain piece of paper.
00:05:19.000 | He would draw a line down the middle
00:05:21.000 | and put a plus sign on one half
00:05:23.000 | and a minus sign on the other.
00:05:25.000 | And he discovered that by listing
00:05:27.000 | all the positive elements on the plus side of the paper
00:05:30.000 | and the negative things on the minus side,
00:05:33.000 | well, the answer would become obvious.
00:05:35.000 | That makes a lot of sense, wouldn't you agree?
00:05:38.000 | With your permission,
00:05:39.000 | I'm going to borrow Ben Franklin's method
00:05:41.000 | for just a moment.
00:05:42.000 | And since you're having a tough time making a decision,
00:05:45.000 | let's list the benefits,
00:05:47.000 | some of the reasons that you should make this purchased,
00:05:50.000 | and then we'll list the negatives.
00:05:52.000 | Fair enough?
00:05:53.000 | And then you write down all the positive qualities
00:05:56.000 | and benefits of the product or service,
00:05:58.000 | or if you're a little bit more advanced,
00:06:01.000 | you have the prospect write them down for you
00:06:03.000 | or list them off for you,
00:06:04.000 | and you pay attention to what's the most interesting.
00:06:07.000 | And then you write down the negative prospect
00:06:09.000 | and the negative options,
00:06:10.000 | and of course, as the salesperson,
00:06:12.000 | you never list any negatives.
00:06:13.000 | You let the prospect list the negatives.
00:06:15.000 | And what happens is that almost always
00:06:17.000 | the negative list will be shorter than the positive.
00:06:19.000 | So that's the sales closing technique.
00:06:21.000 | And it's very effective,
00:06:23.000 | but the key is to use it professionally,
00:06:26.000 | and I won't go too deep into that.
00:06:28.000 | But it's good to know.
00:06:29.000 | I love, by the way,
00:06:31.000 | in case you think I'm making fun of salespeople,
00:06:34.000 | I love being sold to.
00:06:35.000 | It's one of my favorite things in the world,
00:06:37.000 | and I often will buy things
00:06:38.000 | just because a salesperson is a great salesperson.
00:06:40.000 | I'm talking about smaller ticket items.
00:06:42.000 | But I love, love, love to be sold to professionally.
00:06:45.000 | But the key is professionally,
00:06:48.000 | and jumping into a closing technique
00:06:50.000 | without all of the earlier steps,
00:06:54.000 | finding the need, clearly identifying it,
00:06:58.000 | proposing the solution,
00:06:59.000 | finding out, making sure it's appropriate,
00:07:01.000 | all that other stuff.
00:07:02.000 | I hate that.
00:07:04.000 | And most of you do too.
00:07:07.000 | So even though this is something
00:07:10.000 | that generally gets made fun of today,
00:07:13.000 | makes you think of a not-so-fun selling situation
00:07:17.000 | where a salesperson is being unprofessional
00:07:20.000 | and pushing you too far,
00:07:21.000 | still a useful technique.
00:07:23.000 | That's called the Ben Franklin Close.
00:07:25.000 | Now, my encouragement to you
00:07:26.000 | is just to always use this yourself.
00:07:30.000 | Anytime you have a decision to make,
00:07:32.000 | take out a little notebook.
00:07:34.000 | I like the type of notebook,
00:07:36.000 | the Moleskine notebook type.
00:07:38.000 | I get some--
00:07:39.000 | By the way, a couple times,
00:07:41.000 | if you like the Moleskine type of notebook,
00:07:43.000 | I've found some good deals on a brand called Ecosystem,
00:07:46.000 | and they're really nice notebooks.
00:07:47.000 | So I like that type of notebook.
00:07:48.000 | Open it up where you got a page on the left
00:07:50.000 | and a page on the right.
00:07:51.000 | Put a plus or a minus,
00:07:52.000 | or put the two opposing.
00:07:53.000 | If I move, if I don't move,
00:07:55.000 | advantages to this job, advantages to that job.
00:07:58.000 | Write it down, and then just fill out the page
00:08:00.000 | with everything that you can think of.
00:08:04.000 | And when you do that,
00:08:05.000 | the answer is going to probably emerge.
00:08:11.000 | Tip to make this work well,
00:08:14.000 | put everything on the page.
00:08:16.000 | Specifically, list all of the costs.
00:08:22.000 | Where I see this a lot of times
00:08:23.000 | would be something like buying cars.
00:08:26.000 | Many times when people are trying
00:08:28.000 | to make a car buying decision,
00:08:30.000 | I faced this recently.
00:08:31.000 | I was making a car buying decision.
00:08:33.000 | You get excited about the acquisition.
00:08:36.000 | It's fun to buy stuff.
00:08:37.000 | It's exciting, at least for me.
00:08:40.000 | I like to buy stuff.
00:08:42.000 | And so you get all excited
00:08:43.000 | and wrapped up in the purchase,
00:08:46.000 | and then you don't want to write down all of the costs.
00:08:48.000 | You don't want to actually do the research
00:08:50.000 | and say, "Well, if I buy this car,
00:08:51.000 | "how much is the car insurance going to be?"
00:08:53.000 | "Ah, it's $48 a month."
00:08:57.000 | Or, "Yeah, here's what the depreciation actually is."
00:09:01.000 | Or, "You know what?
00:09:02.000 | "If I buy this car,
00:09:03.000 | "I'm actually going to need to get it washed,
00:09:05.000 | "and so let me go ahead and add this."
00:09:10.000 | If you'll use this technique,
00:09:13.000 | pluses and minuses,
00:09:14.000 | one on one page, the other on the other,
00:09:17.000 | and you'll be honest and complete,
00:09:20.000 | you'll make better decisions,
00:09:22.000 | and you'll be able to coach yourself
00:09:23.000 | into better decisions.
00:09:26.000 | Write a clear question at the top of the page,
00:09:29.000 | one page for pros, one page for cons,
00:09:31.000 | however it's structured within the form of a question,
00:09:34.000 | and fill up the page.
00:09:36.000 | Sleep on it for a night,
00:09:37.000 | come back the next day,
00:09:39.000 | look at it, assess,
00:09:40.000 | talk it over with somebody who's close to you,
00:09:42.000 | your dad, your mom, your husband, your wife,
00:09:44.000 | your boss, your employee, your friend.
00:09:49.000 | Very simple, but very few people do it.
00:09:53.000 | Be one of those who does it.
00:09:55.000 | Be back with you soon.
00:09:56.000 | Thank you all for listening.
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