317 Week 5 Discussion

Narrator: In today's episode called, “What's your problem?”, Nicole and Roger will discuss the importance of establishing purpose and scope as essential steps in framing a decision. They will also talk about sunk cost, a common trap that can undermine your decisions. Roger: Welcome to it's your choice. I'm here with my cohost, Nicole. Nicole.

Nicole: Yes.

Roger: It's time to start the show. The heck are you doing? Nicole: Oh, hi everyone. Sorry I'm so distracted. It's just that I think I want to redecorate my room and it's all I've been thinking about lately. Roger: Oh, okay. You're obviously in need of some help. Nicole: No offense Roger, but you're like the last person I would go to for interior design advice. Roger: I'm not going to make color choices for you, Nicole, but I can help you frame your decision.

Nicole: That would be a big help.

Roger: So why are you thinking of redecorating?

Nicole: I just hate my room.

Roger: What's wrong with it?

Nicole: I don't know everything.

Roger: If you don't know what's wrong with it, how will you know what the change?

Nicole: I don’t know?

Roger: Well, as today's framing guru, I'm going to help you get to your purpose. So let's go back to why you hate your room. What's wrong with it? Nicole: Just something about it. It seems dark and dingy and has a tired feel to it and there really isn't a good place to sit and do work.

Roger : Ah, I think we're getting somewhere.

Nicole: Now that we're talking about it. I think my reason for wanting to redecorate is to make my room a nicer place to hang out and a better place to study. Roger: That sounds a little better. And now that we've got a purpose, let's talk about scope. Nicole: I always think of Goldie locks when I'm trying to scope out a decision.

Roger: Say what?

Nicole: When we determine scope, we're defining our decisions so that it's not too big, not too small, but just right for the problem we're trying to solve. Roger: ah ha. I like to keep it simple. What's in and what's out.

Nicole: That would work.

Roger: So what's your answer?

Nicole: That's what I've been trying to figure out.

Roger: Why don't I keep asking questions? Maybe that'll help you clarify things, Goldielocks. So have you thought about just moving to a more cheerful and brighter apartment? Nicole: Yeah, but I signed a lease for the year. I really liked the location and the rent is reasonable. Basically the apartment itself really works for me. Roger: Okay. It sounds like a major change, like moving isn't within your scope, so just let me ask you another question. Why is it so bad for studying? Nicole: I mean the lighting could be better, but that's only a small part of the problem. Roger: So it sounds like this is a bigger decision than just adding some more lights were already making some progress. You'll remember this one from last year. It's called the scope timeline. It helps you figure out when certain decisions need to be made so you can bring focus to your thinking.

Nicole: Oh yeah. The three questions. What's already been decided? What needs to be decided now and what should be decided in the future? Roger: Yeah, so how does your timeline look for this one? Nicole: Let's see. I've already signed a lease for this apartment, so moving is out and I'm only gonna be here for the rest of the year so it doesn't make sense to make huge renovations. Roger: And how much money are you willing to spend? Nicole: I've already decided I'm not going to spend more than $200 on whatever change I make. Roger: So those decisions are done in the past. What decisions do you have to make now? Nicole: I need to think about what things I could easily change that will fix up my room without being too expensive. Like buying some posters or getting some cheerful pillows.

Roger: Well that gives you some focus.

Nicole: and it also helps me recognize that I don't need to decide what to do with my futon after I graduate. That decision is for the future. Roger: You. You have a futon? Nicole: Yeah. Last time I was home I bought this cute Futon for 30 bucks. Roger: No Way. I just saw that the guy next door to me is selling his futon for 40 bucks. Nicole: Ah. Well my futon is still at home. I'm working on a way to bring it back to school. I already looked into getting it delivered. It's going to cost me 50 bucks. Roger: Wait, you should just buy the one from the guy next door to me. It's in great shape. Nicole: I'm not going to buy another futon I already paid for one. It makes more sense for me to have the one I already owned delivered. Roger: Nicole.

Nicole: What?!

Roger: Trap! Nicole: You're right. It's sunk cost and it got me again. Roger: It's a tough one, isn't it? People often feel like they have to use the products they've paid for or continue doing something they've invested a lot of time in or else they'll be throwing away money or time, but they're missing the point. The money's already gone. Nicole: Rather than focusing on the 30 bucks I already spent for the Futon at home. I should've been thinking about whether I wanted to spend 50 bucks to get it here or 40 bucks for your neighbors. Roger: It's just so easy to forget to stop for a moment and think about what you're thinking. Like last night I ordered a mega burger for dinner and about three quarters of the way through I was completely stuffed, but because I paid five bucks for that big boy, I forced myself to finish the entire thing even though I knew it would make me feel sick. Nicole: But the money was already spent the second you bought the burger, so it really didn't matter if you finished it or not. Roger: Exactly. It helps to think about the money you would pay from this point on and ask yourself, what do you really want? Would you rather shell out less money and have more in your wallet or feel like you haven't wasted the money that you already spent. Nicole: When you put it that way? Of course, I want to spend less money for the same thing. It's just a

tough one to get my head around. Roger: I know, and that's why so many people fall into this trap. The best tool you can use is to focus on the future. Nicole: Before I buy anything, I want to make sure I'm clear on how I frame this problem. Roger: Okay. Let's start with how big of a decision is this?

Nicole: I'm looking for a change and I'm willing to spend a decent amount of money on it. This will mostly impact me because it will put a dent in my savings, but it should hugely affect my mood when I'm in the apartment and make me want to spend more time there and while it isn't really permanent, I'm not going to redecorate before I move out at the end of the year using HIP, I realized that this is a moderately important decision for me. Roger: Nicely done. And how about the head heart considerations as we discussed in thinking of a feeling? Nicole: I see a lot of head issues, like how much is it going to cost me and will it be worth the investment of time and money, but there's also a lot of heart and this for me, which I didn't expect. I'm hoping that I will feel happier if my room is a more comfy place to study. It's head and heart and I need to consider both. Roger: How about the amount of time you're willing to spend on this? Nicole: This is a midsize decision, so I think a few hours over the weekend will give me plenty of time to think and I'll have to allow time to shop for anything I decide to buy. I don't want to take too much time because the later we get in the school year, the less valuable the project will be to me. Roger: And have you considered the best perspective for this decision? Nicole: Yeah, I know that whatever I do is ultimately my choice, but I do have to consider the views of my landlord and roommates. Roger: Good start. Finally, Nicole, are you fit to make this decision? Nicole: Yes, I am fit, but as my friend thanks for asking Narrator: Today on “ It's your choice” we talked about defining your purpose and scope as critical parts of developing your approach to a decision. We introduced the scope timeline which helps identify what you need to focus on now. We also saw some examples of sunk cost and how to avoid it by focusing on the future and we reviewed all the steps necessary to develop a helpful frame for a decision. Roger: You have to admit I just saved you from committing some pretty serious mistakes and gave you a great tip on where to find a cheap futon.

Nicole: True. You did really helped me today by talking me through the whole framing process. Roger: Hey, I'm always here to help. Nicole: Thanks Roger. Because once I make my decision I’ll need help moving things and possibly painting. Roger: but I only “meant” decision help. Nicole: Too late. Join us next time on. It's your choice.