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You Decide On Emotion, Confirm With Facts

Posted By Jim On 10/30/2008 @ 12:28 pm In Personal Finance | 5 Comments

It’s a well known advertising and marketing fact that human beings make decisions based on emotion and then confirm it with facts. It’s why salespeople are taught to sell benefits (how something helps you, what problems of yours it solves) rather than features (this thing can do this or that). Some sales tips say that rather than straight up selling benefits, get your prospect worked up and emotional about their problems… then hit them with benefits or solutions to those problems.

Emotions sell and facts confirm.

Want a prime money example of this idea at work? Consider Dave Ramsey’s snowball approach to paying off debt [3], it’s mathematically sub-optimal. By sub-optimal, I mean his approach does not result in the least amount of interest being paid and the shortest payback period. His approach states that you pay the smallest balance first, then take that payment and add it to the next smallest, etc. The optimal approach is to pay the highest interest rate balance first, and then moving to the next, the next.

His snowball approach has a huge number of supporters because it appeals to emotion (and the psychology of motivation). You feel the happiness of progress, of paying off your mountain of debt, of not feeling like you’ll be in debt forever. Those feelings are very real and they are exceptionally motivational. The approach is backed up with facts too. While not mathematically the best, it works. You might pay more in interest but the end result is that you will be debt free and thousands have achieved this with this approach.

Another great example is whenever you buy a car. Car salespeople want you to get into the car and drive it, to make a connection with the vehicle and for you to picture yourself driving it. They want you to imagine yourself strapping your kids into the back, packing the trunk with your golf clubs or your vacation gear, and driving it down the street with the top down. Once you’ve imagined that, they take you into the showroom and give you the facts. You find out how much trunk space it has, how many cup holders, its horsepower, the fuel efficiency, and finally the price. If you can afford it, and sometimes if you can’t, the facts merely confirm whether or not you want the car. If you don’t like how it handles or can’t see yourself driving it around, the MPG and horsepower won’t matter. The facts just confirm your decision, a decision made on emotion.

Is it wrong to be swayed by emotion? No, unless you begin bending facts to justify a decision. Think about the political party affiliation on your voter registration card – mine says Democratic Party. Does that mean you blindly justify everything your candidate says? My emotion says that Barack Obama wants to bring change to Washington. I firmly believe he does want to bring change, however he, and his advisors, carefully planned his actions over the last two years such that he’d be at his political peak right now. He might be new to Washington but he’s not new to the same old Washington politics. I could easily take that idea and say that Obama is new to politics but his advisors aren’t, but I think that’d be naive of me to believe. He might be new, but he picked up on it real quick.

Just be aware that you decide on emotion and confirm with facts, that alone will protect you in many ways.


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[3] Dave Ramsey’s snowball approach to paying off debt: http://www.bargaineering.com/articles/dave-ramsey-is-brilliant.html

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