Improve Your Life By Improving Your Decision Making
Posted on February 8, 2008
We are where we are today because of the choices we’ve made in the past. In my book Weekend Millionaire Mindset (McGraw-Hill 2005) I chronicled a number of major decisions I made in my life that led me to where I am today. My decision to run away from home and what I thought was an abusive stepfather at the tender age of 15 was one. The decision to find my natural father whom I had never met was another. And there were many more. The decision to leave a secure factory job to sell encyclopedias door-to-door! Deciding to start my own business rather than going to work for a regular paycheck! All of these decisions substantially affected the person I am today.
Not only have our past decisions brought us to where we are today, but the ones we make from this point forward will determine our futures. Decisions are the building blocks of our past and our future, which is why learning how to make good decisions is critically important in determining who we will become later in life. Reckless decisions like driving intoxicated, using drugs and shoplifting have landed many people in jail and even though they try to reform, the damage done to their reputation is practically irreparable. Thoughtless spending and running up debts can damage your credit and put you in a financial hole that may take years to crawl out of.
Few people understand how to make good decisions. If they feel good that day and the money is flowing, they tend to do it. If they don’t feel good or if money is tight, they don’t do it. That’s no way to build a life. Sound decisions are often tough decisions. The first thought you should have when faced with a decision is, “Do I have enough information to make an �informed’ decision?” If the answer is no, you should stop right there and consider the risk you will be taking if you go ahead without trying to obtain additional information. Decisions nearly always involve either problems or opportunities and the responses to these can be categorized in to one of four groups.
First, is it a “do I or don’t I” decision? Do I buy this house or don’t I? Do I accept this job or don’t I? Do I mow the lawn today or don’t I? Do I play golf this afternoon or don’t I? When faced with a “do I or don’t I” decision, your first thought should be, “What if I do nothing?” Will the opportunity or problem still be there tomorrow or next week?
Second, there is no apparent solution. You understand the problem or opportunity, but you don’t know what to do about it. In situations like this a good dose of creative thinking needs to come into play. You should seek solutions that are not transparent and that require you to think outside of the box.
Third, is it a dichotomy? Are there both right and wrong answers, but you don’t know which one to pick? Let’s say you’ve been sued and you don’t know whether to settle the case or defend yourself in court. This type decision is best made using a rating system. Rate each option on a scale of one to 10 and go with the one that seems best. If you’ve been sued for $1,000, but it will cost you $3,000 in attorney fees to defend yourself, you may be better off financially to settle the matter even if you know you are right.
Fourth, is there more than acceptable solution? You have several choices available, but you don’t know which one to pick. For example, you need to get from one place to another and you can get there by plane, car, bus, train or some other method. These type decisions involve measuring the value of your time against the cost of your decision. An expensive airline ticket might get you there quicker, but if you have the time, a leisurely drive along country back roads might give you a scenic experience at a fraction of the cost.
Here’s a tip! Prepare yourself to make decisions by considering certain points. If it doesn’t require a complex decision, don’t make it one. Set up policies you will use to make certain types of decisions. As a real estate investor, I have two policies that determine whether or not I buy a property. One, can I control the investment�no partners. Two, can I structure the deal so that it will at least break even after all expenses. These policies let me quickly evaluate deals that are brought to me and make fast decisions.
Don’t think your problem is unique. There are virtually no unique problems unless you are a rocket scientist or microbiologist. Virtually ever problem we’ll ever face has been solved by thousands of people before us. When you think you have a unique problem, seek the help of an expert. What makes them experts is that they help people solve problems similar to yours every month.
Finally, is it a money problem or a people problem? Upon careful evaluation, you’ll find that every problem or opportunity you face can be separated into either money issues or people issues or some combination of the two. Learning to analyze the situation and determine which type problem you are facing will enable you to make better decisions.
Remember, you are who you are because of the decisions you’ve made up to this point in life. The only way to truly improve your life is to improve your decision making.
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