The Art of the Deal

On October 15, 2010, in finance blog, Index Investing, by Dave

Perhaps more difficult to embrace than financial planning is the art of negotiation.

Growing up, I saw two very different approaches to personal finance.  Both of my parents were good savers, but that is were any similarity between their approach to finance ended. Dad’s investing style:  calm, disciplined, balanced, thoughtful, intuitive, enthusiastic, and confident.  Mom’s investing style: undisciplined, impulsive, emotional, intellectually-detached, and timid.   Over the years I saw another difference:  Dad’s approach was extremely successful and Mom’s was, well, not.

One quick example.  Dad was buying a new SUV.  He found one he wanted and was negotiating on price.  He was making headway getting a $1000 off then another $1000.  The sticker price was a joke.  They started perhaps $4500 apart and whittled the difference to about $2000. The car salesmen was starting to make pained expressions, but I could tell that they were not genuine.  Dad would walk away and the salesman would chase him down like a puppy, only his tail wouldn’t wag.  Then Mom lost it. She got mad and told Dad to quit beating up the poor salesman.  She said, “Our SUV is shot; we’re stuck here and we need a vehicle today.”  OMG, Dad dutifully took the current salesman’s offer.  I was stunned.  In 30 seconds Mom had managed to turn Dad’s hard-earned position of strength 180 degrees.  I had seen my Dad negotiate before and I wanted to see if he would get the full $2000 or just settle for $1500.  On the way out the door, while Mom was out of earshot, Dad said, “You know, Mom just cost us $1500?”  I nodded yes.  I was still in mild shock, but I knew he was correct.  I was attending a 12-round prize fight and Mohammad Ali’s corner had just threw in the towel — in the 3rd round!

To be continued…. So many stories.   Next story:  Making personal finance personal.

P.S. — Cover your eyes, a tiny bit of math.  Let’s say that in 30 seconds $1500 was lost.  That $3000 in a minute, or $180,000 lost in a hour.  Perhaps an odd way of seeing things, but that’s how my mind works.  And there is a kernel of Gestalt truth to it.

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