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Adding Value – a Bicycle, for Example

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Adding Value – a Bicycle, for Example

When I was a kid I took my dad’s bicycle apart – and never figured out how to put it back together.  Today, seventy years later, the wheels, handle bar, and seat probably remain exactly where I hid them – under the house I grew up in.

Recently, I shared this story with my friend Ron. That’s funny,” he said.  “I did exactly the same thing. The third time it only took me twenty minutes to put the bicycle back together again.”  Did I mention that Ron is an engineer? A few years ago, he replaced the foundation of his house all by himself.

For good reasons, I did not become an engineer. I became a tax attorney and specialized in tax-advantaged investments.

Isn’t adding value the story of our lives?  A pile of bicycle parts has little value.  But an assembled bicycle has great value. That’s what our jobs should be about – finding the best way we can to add value.  That’s why dinner at a restaurant costs more than the same ingredients at home. We’re paying for the expertise and added value the chef brings to the table (pun intended).

In a personal relationship we also add value. At home I shop for the groceries (today I often use Instacart), and Daveen washes the dishes.  I like grocery shopping, but I hate cleaning up.  When I was a kid I found that if I “accidentally” dropped and broke enough dishes my parents stopped asking me to wash them.  Daveen and I both think we have a good deal.

This intersection of attitude and aptitude is where each of us can add the most value.  In an ideal world we would each figure out what we enjoy doing, and what we’re good at.  Hopefully, those are the same.

At the end of our conversation I made a deal with Ron.  I’ll help him with his income tax return, but he won’t ask me to help him replace the foundation under his next house.

Alan

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The Freedom of Sunk Cost

by Alan Fox 0 Comments
The Freedom of Sunk Cost

On the last day of class Richard Wicks, my law professor for Contracts, said, “By now I’ve taught you all you need to know about the elements of a contract. But today I’m going to share the final, most important, lesson.”

The hands of seventy first-year law student were poised to take that final note.

“The ultimate clause of every contract should always state, ‘And I mean it gosh darn it!’”  Professor Wicks said it more colorfully, but you get the point.

In my blog during the past eight years I’ve covered many topics, but one principle that I follow often, that deserves a return appearance, is the theory of Sunk Cost. When making a decision you should consider only the future and ignore the “Sunk Cost” of the past.

For example, imagine you are watching a movie in a theater (remember that experience?) and after the first ten minutes you are terminally bored.  But you have already paid for your ticket.  That is your sunk cost because you’re not going to get your money back.

Do you sit through the rest of the film “”to get your money’s worth,” or do you simply leave?  And what about your companions, who may want to stay?

Years ago I was at a movie with Daveen and my parents.  I found it offensive, but I didn’t want to create a scene.  I whispered to Daveen, “I’ll wait for you in the lobby. You can all finish watching the movie.”

Normally, if Daveen starts watching a movie she finishes it.  I was surprised when, ten minutes later, the three of them also walked out.

My point is, I’d already spent the money, and invested my time.  But the only real question I should be thinking about is how I want to spend the next hour.  Do I always have to finish something I paid for?  When I’m attending a sports event in person (remember that?) and my team is leading by forty points I don’t have to stay for the last five minutes of the game.  I prefer to beat the other cars out of the parking lot.

We can’t escape from the fact that our lives must be lived totally in the future.  But past experience is useful as a guide, not a prison.

I encourage you to free yourself from the tyranny of sunk cost.  And I mean it, gosh darn it.

Alan

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Bye Bye Brownies

by Alan Fox 0 Comments
Bye Bye Brownies

When I was a kid I loved to bake brownies. I would buy a prepared mix, add walnuts, and my family and I would enjoy brownies for a week. They were one of my favorite treats.

A few months ago Daveen ordered brownies, with walnuts, from a friend of hers, a teacher who became a baker during the pandemic.  The brownies were delicious, though I tried to limit myself to one (or two) a day (per meal).

Several weeks ago Daveen arrived home with a large number of boxes of brownies.

“Why so many boxes?” I asked.

“For us, and for gifts.”

“That’s great.  We’ll have lots for the holidays.”

“Yes.  But this is my last order.”

“What!? Why?”

Even though the brownies were priced at the same (high) cost per dozen they had been, each brownie in the new order was only half the original size. In effect, her friend, the baker, had covertly doubled the price – and Daveen was not pleased.

I agreed with Daveen, and even though I was disappointed I imagine I’ll be happier in a few weeks when I step on the scale.

I believe that sustainable relationships depend upon a mutual perception of equity. You expect, over time, to get as good as you give.  If a grocery store suddenly doubled its prices most people would leave and shop elsewhere.

We all make mistakes, but when you burn a bridge in a relationship you can’t reasonably expect to cross back to the other side.  I like to maintain relationships, and have had many of the same friends for most of my life.  One woman who began to work for me more than fifty years ago has retired, but she is still a trusted friend who works in my office some weekends.  Daveen and I separated in 2016.  At lunch two years later we decided, happily, to resume our relationship.

But now it’s bye bye brownies.  I certainly could still bake them myself, except…well, I must admit that I really don’t need the calories.

Have a great 2021, as we leave behind some of last year’s perils and pleasures.

Alan

 

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