So, you looked up one day, you're older now, maybe you're making more money than you used to, maybe you have a better car than you used to. You wonder whether what you are doing in your life is really what matters, or what you should be doing.
See, here is the thing humans by their very nature develop habits. Sometimes those habits are great. They eat healthy, go to the doctor when they need to, and clip coupons before going to the grocery store. Those are just examples of habits you may have started when you were younger that you carried over as you grew up. The question is, are the habits that you have developed over time serving you well?
I once knew a man who owned a franchise of a popular ice cream store. Every year, that man trades in his old Cadillac or last year's Cadillac and gets a brand-new Cadillac. He was about 55 when I met him. I asked him one day in my youth, "You must have a lot of money," and he looked at me and said, "No, not really." Why do you ask? I said you always have a new Cadillac every year, every spring you buy a new car. I assume you have a lot of money because of the depreciation. He looked stunned. Then he said, " What do you mean? In the conversation, I was probably only 19 years old, and I told the man that one of the hallmarks of owning brand-new vehicles is that in the first year or two, they lose a high percentage of their value due to depreciation. I said to them, or at least I have always been told, that if it's 20% then, then a $5000 car would lose $1000 in the first year or two in its perceived retail sale or trade-in value. So my logic was that if you traded in your car every year, as he did, you were willing to give up that depreciation each year.
You see, he paid cash. Every year, he would say to the dealer, "I want a new Cadillac. What will you give me for my old Cadillac?" He never thought about what he paid for the original Cadillac to begin with. Old habits die hard. This scenario would be even worse if you financed your car. Here's what I mean: take the example I used above. If the car was $ 5,000 and it lost 20% of its trade-in value in the first one or two years, the dealer would only give you $ 4,000 for the trade-in. So you go to buy a new car, and you have to pay the dealer back the depreciation every time you buy a new car. If you financed your vehicle, the lender will be responsible for the loan, so you are paying for depreciation and your new car. Really, the only difference I told the man was that in your case, the depreciation comes right out of your checkbook. To him, the deal was personal; he liked how he was treated, and he dealt with familiar people, so it made sense.
Old habits die hard.
Now I tell the story about this man because he was a well-respected businessman who ran a top-notch operation, and I really liked him a lot, and I was just making conversation, but I've always been good with math. He told me he had been doing this for more than 20 years because it had been easy in the first couple of years. He said he negotiated with the dealer by showing up with the Cadillac, taking whatever they offered, and getting the new car.
We came up with a whole new plan. Can you do that with your life?
Are you buying name-brand goods because you always have?
Do you go to buy a car without thinking about all of the things that go into that transaction beforehand?
Do you think about the total cost of ownership, for example? Questions like: What does it cost to insure this car? What does a new set of tires for the car cost? How expensive will it be to maintain? Typically, how well does this car hold its value?
When you negotiate, how do you begin? Do you just ask the seller what their lowest price is? And then do you think that's actually the lowest price and you pay it? When buying consumer goods, do you do the same thing with them that you do with restaurants? If there are low-, medium-, and high-priced options, do you usually buy the medium-priced option? Do you ever wonder why that is?
There are literally thousands of habits that may be ingrained in you, and the only reason they are used is that it's always been done that way.
I had a man tell me one time, "If you always do what you always did, then you'll always get what you always got." I don't necessarily get along with that man anymore, but I still remember it and think it was good advice.
Thankx, everybody,
bigmike
