Dollars and Sense

Let’s not get caught up in whether something is priced fairly; instead, consider what it’s worth to us.

We may also be wrong about whether something is a fair price, and about whether or not it took a lot of effort. Let’s also recognize that there is value in knowledge and experience

make expectations a reality Expectations give us reason to believe that something will be good—or bad, or delicious, or gross—and they change our perception and experience without altering the true underlying nature of the thing itself.

and Jeff—want to acknowledge, again, that expectations actually can alter our experiences. We can use such expectations to our advantage or they can be used by others to take advantage of us.

We don’t want to be manipulated unwillingly or unconsciously by someone else, but if we choose to be manipulated or design a system to do so ourselves, that’s okay.

When we don’t have any specific idea about an item’s value, we should do some research.

So how can we increase self-control? By connecting to our future and resisting temptation. Easier said than done

A Ulysses contract is any arrangement by which we create barriers against future temptation. We give ourselves no choice; we eliminate free will.

The most rational approach to long-term saving is to wait until the end of each month and then look at our bills and expenses and, at that point, decide how much we can afford to save.

Whenever he had to take this medication, he’d treat himself to a movie rental. He would get home, inject himself, and immediately start watching his highly anticipated movie, long before the bad side effects kicked in.

What if we tried to bypass our inability to be motivated by future reward altogether and replaced it with another kind of present reward?

our lack of self-control always presents an obstacle to the success of even those brilliant financial decision-making systems we dissect in the pages to come. 17 IT’S US AGAINST THEM A few pages ago, we discussed some tips for counteracting some of our many mental money miscues.

Most of the problems we have in modern life are not due to lack of information,

most financial technology is working against us, because most of it is designed to get us to spend more, sooner, rather than less, later.

technology designed to make spending “easier” doesn’t necessarily make it “better.”

There are several ways to use this checking balance rule to our advantage.

we can spend less by hiding money from ourselves. Yes, if we stop to consider it, we know we’re hiding it and where. But we can take advantage of our cognitive laziness and the fact that we don’t regularly think about how much money is in our other accounts—and we think about it even less if it’s automatic deposit and we don’t move the money ourselves every time.

if the choice is between a salary of $6,000 per month versus a salary of $5,000 per month plus a $12,000 end-of-year bonus, what would happen to the quality of life? The $6,000-per-month “person” would probably increase his or her quality of life with a slightly better car, apartment, meals, but would not be able to do something big for themselves. Whereas the person with the bonus would be able to do special things like buy a motorcycle, pay for a vacation, or start a savings account.

pause and think about what we are doing. That creates a decision point, during which we evaluate, ever so slightly, our actions and reconsider our next steps.

adopting this kind of thinking about every small decision all the time would drive anyone mad.