$50K On the Kitchen Table
More than three years ago, I wrote about something I call the "pile of cash test." It's a little behavioral hack that can help us combat the psychological warfare caused by debt. You can read the original piece at the link above.
Well, I've used the pile of cash three times in the past month. Most notably, I have one particular story to share with you. One of my clients wanted to purchase a new vehicle, around $65,000. After accounting for their trade-in, the remaining amount due was $50,000.
I think we can all agree that $50,000 is a lot of money. Therefore, they naturally decided to finance it. Whoa, whoa, whoa!!!! I was walking alongside them while they painfully and frustratingly paid off a ton of debt, and now they want to go back into $50,000 of debt to buy a vehicle?!?!
"I don't care if you buy this vehicle," I told them. "However, if you decide to buy it, use cash. Please don't fall into this trap again."
"I don't think we would feel comfortable taking $50,000 out of savings to do this," they responded.
"I guess you don't want the vehicle that badly, then." That comment didn't go over well.
They were still waffling when we left the room. That's when I gave them the pile of cash test challenge. Go to the bank, withdraw $50,000, set it on the kitchen table, then decide how important that vehicle is.
It wasn't easy for them to withdraw $50,000 from their bank, but they did it!!! They even joked that it felt like they needed to hire armed bodyguards just to have it in their home.
The result? Here's what they wrote back: "It was an eye-opening experience. To be honest I'm not sure we could ever spend $50,000 on a car ever again after doing that. It puts much in perspective. I think we need more contentment or more humility. Maybe both."
The pile of cash test never fails. Put this one in your toolbelt for a rainy day. It just might come in handy if you're ever in need of a fresh perspective.....or a fun behavioral science experience.
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