Decide Better!

Overview

• The most recent polls show roughly 5.7% of voters identify themselves as being undecided (realclearpolitics.com review of 8 recent polls)
• Are undecided voters actually undecided, or are they simply saying making excuses?
• Do undecided voters not vote on election day more than others? Maybe they just don’t care.
• Not all undecided voters should be considered equal:

- There are voters who span the continuum from extremely liberal to extremely conservative that easily identify with one candidate. They find a candidate that shares their opinions and they make a decision.

- Then there are the voters that are very partisan and will vote for the member of their party. Their decision is semi automatic and they tend to make it early and stick to it.

- But what about those voters who’s beliefs fall between the two major candidates? They have a series of decisions to make about their own beliefs before they can commit to a candidate. Therefore, they could be undecided on which candidate they are going to support even right up to Election Day.

They may not be waiting to hear something new from the candidate but instead are deadlocked in their own prioritizing of which issues/characteristics are more important than others.

Example: A voter may be fiscally conservative and socially liberal – so which candidate do they support?

Applying Traditional Indecision Mechanisms to Voting

If it is indeed true that undecided voters are individuals who suffer from chronic indecision, then it should also be possible to apply some strategies for combating indecision to this situation.

Problem 1. Search for Perfection

Some people are indecisive because they want to make the perfect decision or are afraid to make the less-than-completely correct decision.

Solution – It’s frequently better to make a good decision that is timely than a better decision that is too late. As Teddy Roosevelt said, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”

Application to Voting – Voters obviously don’t have to make up their minds until the moment they’re in the voting booth, but the danger of being undecided is the danger of not voting. While it’s strategically questionable whether voting for the wrong person is worse than not voting, it is still important that people get out and vote.

Problem 2: Fluctuating or unclear criteria for making decision

If you don’t have clear criteria or objectives for your decision then it can be impossible to make a choice among two alternatives. One alternative fits certain criteria while another alternative fits other criteria.

Solution – Decide on the criteria for your decision first and rank them in importance.

Application to voting: For many voters it’s easy: if you are a republican you vote for the republican candidate, etc. Or they decide they don’t like Obama because he smokes, or will vote because they like or dislike Sara Palin, etc. What is the most important characteristics of the next president? You can use our worksheet as a reference.

Problem 3. Perception of Not Enough Information

Some people need to gather more and more information before coming to a decision. Do they know everything they need to know to make the perfect decision? Maybe not. But do they know enough to make an informed decision?

Solution – Frequently when people are indecisive because they keep seeking out more information get to the point of diminishing returns. Will more information help you make a better decision?

Application to Voting – Voters who are indecisive because they believe they don’t have enough information about either candidate need to spend some quality time evaluating the platform, personal experiences, and character of the two candidates. Once they’ve obtained a solid base of information, they simply need to make the decision.

Problem 4. Too Much Information

Some people are indecisive because they have too much information and are unable to process it all to make a good decision. This is known as “analysis paralysis.”

Solution – You need to sort through the important information from the less-than-important information. One thing that can help is to make a list of the information, listed from the most important to you to the least important. This will help you sort out what information should be weighted more heavily in your decision.

Application to Voting – Being able to prioritize what’s important to you is important when evaluating candidates. Nobody can tell you what you think is important in a Presidential candidate. Try sitting down and putting on paper all of the issues and characteristics important to you. This will enable you to sort the truly important factors from those that are merely tertiary.

Combating Voting Indecision

• Use the Decide Better worksheet
• Spend some real time (several hours) going through and analyzing the candidates
• If all else fails, flip a coin. While you don’t have to accept what the coin tells you, your reaction to the coin’s “choice” will help you come to terms with what you already know to be the candidate whom you support the most.

We have just obtained a digital copy of Michael’s recent TV appearance on Fox Business News. If you would like to see the interview, it is available at the following link:

http://www.decidebetter.com/interviews.html

Michael has written a guest editorial in the Times-Tribune in Scranton, Pennsylvania about voting and the Electoral College. The article, titled One Person, One Vote, or a Percentage Thereof, can be found at:

http://www.scrantontimes.com/articles/2008/10/23/editorial/guest_columnists/sc_times_trib.20081023.a.pg15.tt23mcgrath_s1.2032897_gue.txt

Michael will be a guest on CBS-11 (KTVT) on the News This Morning show at 5:30 AM CST. Michael will talk about his new book, decision-making in general, and how people need to make more difficult decisions during this tough economic time. If you are in the Dallas/Fort Worth area, tune in on Monday morning to watch Michael be interviewed by hosts Ginger Allen and Scott Sams. You can also tune in online at:

http://cbs11tv.com/

The Midwest Book Review has posted a review of Decide Better for a Better Life on their website. The review is excellent and call the book an “entusiastically recommended guide for readers who take the wrong road all too often.” To see the entire review, please visit the Midwest Book Review website at:

http://www.midwestbookreview.com/sbw/oct_08.htm#Self-Help

Now more than ever before, people need to make better decisions, and Michael E. McGrath, best-selling author of Decide Better! for a Better Life, shares his recommendations on how to make the tough decisions in today’s economy.

Until recently, the relatively strong economy enabled people to make easier decisions: spend money you didn’t have, run up credit card debt, spoil yourself, buy bigger homes and better cars. But now that has all come to an end, and you will need to make tougher decisions. By making these tough decisions, rather than just worrying, you will find that you will take more control of your life, reduce stress, and improve your future.

Spending Decisions

If yesterday’s motto was “You only live once, so buy it now,” then today’s motto is “Live to spend another day!”  You need to make much better spending decisions in today’s economy, and in general that means spending less.

·         Decide to use cash instead of credit cards – Limit your spending to money you actually have. Decide to stop using your credit cards for a while – give them a vacation. If you don’t have the money, then don’t buy things.

·         Decide to postpone major expenditures – Delay purchasing that new car or going on that great vacation for a while. It’s OK to postpone these sometimes during your lifetime, and that time is now. By postponing them, you will be able to save money or defer credit. Better do it the old fashioned way. Start saving now and make that purchase with cash.

·         Decide to delay gratification – Give yourself those shoes you want or that new HD TV, but hold off buying it for a few months. You can feel happy about your decision to give it to yourself, but defer the expense a little. In many cases you will find later that you don’t really need it, and you saved a lot.

·         Decide to reduce you budget for the upcoming holidays – Estimate what you spent for gifts, entertainments, decorations, etc, last year, and then set your new budget at a portion of that. This year everyone will spend more prudently. Better yet, decide to give others non-monetary gifts.

·         Negotiate hard before deciding to purchase something – As a buyer you are in control now. Negotiate everything until you get the best deal. Don’t be afraid to walk away from any sale; it will probably get cheaper over time.

Borrowing Decisions

If you are like most American’s, you probably have too much debt. Your borrowing decisions need to focus on reducing your debt, not increasing it. Start with credit card debt. Pay down as much as you can. Avoid temptations to take on more mortgage debt.

·         Decide to consolidate credit cards – Reduce the number of cards you use and reduce your borrowing limits, so that you won’t be able to borrow more. Consider cutting them up as a demonstration of your decision to use them less.

·         Do the math before you make a decision to buy something – It’s expensive to buy on credit cards. If you use your credit card to buy something that is discounted 15%, and then pay a 20% interest rate on your credit card, then you are paying 5% more. Do the math!

·         Decide to reduce your credit card balance – Decide to set an objective for yourself to reduce your credit card balance. Whether it’s $100 a month or $1,000, set your goals and reach them.

·         Decide to sell something – Now is the time to sell some of those things that you bought over the last few years that you really didn’t need. Have a yard sale or sell something on E-Bay. But be sure to use the money you get to repay debt; don’t just go buy something else.

Job Decisions

Many people have lost their jobs, and many more will lose them before this is over.  You can’t take having a job for granted right now, so you need to make tougher job decisions.

·         If you don’t have a job, decide to get one right away – No job should be beneath you. Don’t pass up any job right now. Try to get the best one you can but don’t hold out too long.

·         Plan now for what you would decide to do if you lost your job – What decisions would you make if you lost your job? Start preparing for that right now. Where would you get another job? Would your spouse go back to work? Would you move?

·         Decide to get a second job – Consider getting a second job. It would give you some additional money to pay off your debts, and a little insurance in case you lost your primary job. Even though it will take time away from other things, it’s OK. We are entering a tough period and everyone needs to work a little harder.

·         Decide to go to school – Sometimes it’s better to go to school during difficult economic times. You can improve your skills and then look for a job when you graduate.

Retirement Decisions

Many people are close to the retirement they have been looking forward to, but now they need to make tougher decisions because the money they saved for retirement is greatly reduced.

·         Decide to delay your retirement – Work for a few more years to make up the loss of your retirement funds. It’s tough to swallow, but the drop in the stock market is forcing you to work a few more years.

·         Decide to tighten your retirement budget – Re-budget your spending in retirement. Re-calculate how much you now have to spend based on your lower level of retirement funds.

·         Decide to get a part-time job – Even though you may be retired, you can benefit from a part-time job to defer the losses of your investment income. A $5,000 per year part-time job makes up for a $100,000 loss in investments.

Investment Decisions

With the stock market dropping and a run on money market funds, it is difficult to make the best decisions on your remaining investments. Other than digging a hole in the ground to bury your money, there is no clear answer, but there are decisions you can make.

·         Decide to invest time in managing your investments – Don’t just get depressed, start managing your money. Understand where your money is and understand what is happening. Read about trends and opinions. Become your own expert. Don’t just grumble as your investments wither away.

·         Get advice before making any more investment decisions– Talk with experts as well as your friends. But pause before you make any investment decisions.

Budget Decisions

If there ever was a time to have a household budget it’s now. Balance your uses of money to the money you make, not more. Doing a budget will drive important decisions on how to allocate your money.

·         Decide how you can save money on energy – With the increase in cost of heating and gas, this is one of the most likely expenses to try to reduce in your budget. Decide to implement conservation practices and reduce you driving to save the cost of gas.

·         Decide to allocate something to savings or debt reduction – Even though it will be hard, allocate something in your budget every month to savings, paying down more of your credit cards, or paying a little more toward reducing your mortgage. Put it in your budget.

·         Don’t cut back critical items like medical insurance – Don’t put yourself at a high risk for an even worse financial crisis.

Home Decisions

Some people are facing difficult decisions on their homes: they can’t pay their mortgage, or they are thinking of moving.

·         Think twice before you decide to buy a new house – Sure housing prices are lower, but they may get lower still.

·         Decide to get help if you can’t pay your mortgage – Talk with your lender and look into other programs to assist those who can’t afford their mortgages. It may be worth the effort.

·         Be careful of deciding to sell your house.—Although there are exceptions, houses are taking much longer to sell and prices are lower. Be sure to seek advice, from people other than real estate agents, before selling your house.

These tougher decisions will help you to regain control over your life in these tougher times. They are much different decisions than those you needed to make a year ago, but tough times call for different decisions. Those who make better decisions now will reduce their stress and put themselves into a better position for the future.

Ironically though, if everyone makes these tougher decisions, it will make the economy even weaker. Reduced consumer spending will cause a weaker economy, as consumer spending is a big part of the economy. The economy benefitted from the easier borrow and spend decisions of the past, but that it was the excessive borrowing that caused the problems we are in today. Despite this, you should focus on the tough decisions that are best for you right now, let the broader economy take care of itself over time.

Michael will be a guest on Robert Hallmark’s morning show at 7:30 AM CST in Odessa, TX this Thursday, October 16th talking about how to make decisions during the financial crisis. You can tune in to listen to the interview live on the KCRS website at:

http://www.newstalkkcrs.com/main.php

We have just received the audio of two radio interviews Michael participated in recently and have posted them to the website. They are in MP3 format. To listen to them, click on the links below:

KKNW Interview: http://www.decidebetter.com/radio/KKNW_08_6_08.mp3

WJNO Interview: http://www.decidebetter.com/radio/WJNO_6_12_08.mp3

We will continue to add radio and TV interviews to the website as they become available.

Michael will appear live today on WROW in Latham, New York at 5:25 PM EST. You can listed online to the interview at:

http://www.wrow.com/

The recent decisions by Congress around the so called “Bailout Bill” illustrate how politics affects and sometimes undermines decisions. While on the surface this can be entertaining, it also exposes too clearly a vulnerability of the American democratic leadership process. Let’s look at the steps along the way to illustrate different examples of the politics of decisions.

In September of 2008, the American financial system began to melt down. To many it appeared that the quick action was required to avert a catastrophe. The Bush administration proposed a plan they believed would avert or reduce this crisis. It quickly went to the House of Representatives for approval. And this is where the fun begins.

Congressional Indecision

The House leadership crafted this plan into a bill, and after some modifications expected it to be approved. Members of the House wanted to go home, but they had to stay to vote on this bill. Congress was scheduled to adjourn so its members could go home and campaign for re-election. There was a powerful reason for them to approve this and get back home. On Friday on CNN International, I stated that I thought the bill would be approved because of the urgency of the Members to get back home to campaign. In normal times, legislation – even something urgent – could stall for weeks or months.

But over the weekend, the members of congress were struck with indecision. They started to hear complaints about the bill, and it quickly became a political issue. Many realized it was necessary but many of their constituents who would be voting for – or against – them in five weeks were not happy about it, mostly because they didn’t understand it.

Poor Packaging/Poor Assumptions

One of the reasons that people were against it was that it was poorly communicated. It was labeled a “$700B Bailout Bill” when it was neither $700 Billion nor a bailout. It wasn’t a bailout bill because it was intended to purchase home mortgages and other related investments at distressed prices to provide liquidity to enable banks and others to resume lending money to those who needed it. The Wall Street investment banks and other large banks that were stuck with these bad mortgages were already “toast” and this wouldn’t help them at all. Neither was it $700 Billion. It authorized up to $700B to purchase these mortgages at distressed prices, but unless most of the homes were worthless, the losses on these mortgages would only be a fraction of the $700B. While it was impossible at the time to know the eventually cost, I estimated it would be more like $50B-$70B, a further loss of 10% or less from the already distressed prices. Perhaps even some Members of Congress assumed that it would really cost $700B, which was a faulty assumption. It would be like buying a house for $250K, and assuming that it would be worth $0 in a few years. If you did, you obviously wouldn’t buy it.

The $700B Bailout Bill provided a lot of fuel for talk shows and the many Americans already frustrated with the declining economy. Why should we bail out the fat cats on Wall Street who made millions? Why can’t they suffer for the mistakes like everyone else? How can we afford $700B? Just think of how we could spend $700B on health care or education? While provocative, this anger was not accurate at all. Most people just didn’t understand the plan being proposed; instead they got emotional about its misconceptions. Many bad decisions get made because of a misunderstanding of the decision itself.

Speaking on Fox Business News, I proposed that it would have had a better reception if it had been labeled the Capital Stabilization Investment Fund. The final bill was called the Mental Health Parity bill, which was ironically appropriate. (It was tacked onto this bill in the Senate.)

Saving Jobs

As the bill drifted throughout the weekend, the Members of Congress now realized how important it was to save jobs – their own jobs! Almost all of them were up for re-election in five weeks and they started to have bad dreams about the attack ads that their opponents would run. “He/she supported bailing out those rich Wall Street barons.” “You will end up paying $5,000 each to support these fat cats.” “He/she cares more about rich friends than you.” “He/she wasted $700B that we could have used to improve education or health care.”

As the bill came to a vote on Monday, many Members of Congress were torn between supporting what they knew was not perfect, but necessary, and saving their own job. And many of them voted for their own job, potentially sacrificing millions of jobs for other Americans. The House defeated the bill.

A couple of congressmen voiced what many others felt: “Many of us hoped that it would pass without being on record to support it, so we voted against it.” Their decision was divided between doing what was probably right for the country and doing what was most likely necessary to save their job. For many, politics and personal interest were the criteria they used for deciding. There were also a few courageous congressmen who voted for the bill because they knew it was necessary even though they realized it would cost them their re-election. One analysis measured that almost all of those who were in close elections voted against the bill. 

In reaction to this defeat, the stock market had one of the biggest drops in history, 7%, and lost over $1 trillion of value. The investments of retirement funds, college funds, and endowments suffered with the resulting consequences throughout the country. The $50B-$70B (admittedly could be a lot higher) were saved but the investment losses were many times greater, and the problems were still there. By the end of the day on Monday, many members of the House of Representatives may have saved their own jobs, but the enormous financial losses and continuing credit restrictions were felt throughout the economy.

Christmas Time

The leadership and many members of the House of Representatives realized that failure to approve this bill was a mistake. They knew that it failed for political reasons, and they kept congress in session to figure out how to get it passed, so they could all go home. Now another political factor entered into the decision. It would look bad to adjourn while the country was facing a crisis, yet they needed to get home to campaign.

At this point the Senate stepped in to turn it to its advantage. There were some things that the Senate wanted to get approved, but could get the House to agree. Tax break extensions of $150B were tops on this list. So, they bundled these things and some others together with the provisions of the defeated bill. It’s a little like Christmas time, hanging all the ornaments you want on the tree. Most of these additions were not related to the financial plan, but went along for the free ride. The Senate figured that if they passed this bill the house would not be able to vote against it and they could get other things they wanted in the process.

The additional provisions also provided better window dressing. The tax decreases, additional insurance coverage for mental health support, funding for rural education, and other goodies provided more political cover for those up for re-election. They also realized that they needed to provide some superficial justification for Members of the House to change their vote the next time around.

The Senate also had a big difference when it came to this decision. Only 1/3 of the senate was running for re-election in five weeks, so most of them weren’t worried about losing their job by supporting this. On Wednesday the Senate passed the bill by a big majority. Because the Senate cannot initiate a bill like this, they added all of the financial plan provisions, and the other goodies, to a bill requiring insurance companies to provide additional benefits for mental health.

Try Again

On Friday, the Senate bill came to the House of Representatives for approval. During the week, the stock market collapsed and the problems of debt became more visible. Automobile sales dropped almost 30%, primarily because there wasn’t enough money available for as many leases or car loans.

This time the bill passed by a wide margin with 58 Members of Congress changing their votes, including 32 Democrats and 26 Republicans. It’s difficult to tell why so many changed their votes. Maybe they realized that if they wanted to the bill to pass, they couldn’t hide behind a negative vote. Maybe they liked the additional goodies that were added by the senate. Maybe they saw the stock market reaction and the problems with the economy.

Ironically, once the bill was approved, the stock market dropped and continued dropping for the next week.

The politics of Decisions

This case study provides interesting insights into decisions:

1.      People frequently make decisions in their own best interests, even though they may not be the right decisions rationally and may harm others. In this example, the American political process initially prevailed over logic. But this is also true for a manager focused on making decisions to save his job too.

2.      The American democratic process has some major flaws. Representatives who need to be re-elected every two years become obsessed with saving their own jobs. They can become driven by doing what they need to do to be re-elected, at the cost sometimes of doing what is right.

3.      It really matters how a decision is presented, particularly a complex decision like the financial plan. Sometimes the title or headline dominates the decision over the substance. Too often people are quick to criticize without taking the time to understand the details of the decision. This is a classic problem of form over substance.

4.      Sometimes the urgency of a decision is more important than perfecting the decision. In this example, an urgent decision was needed, but there were many opinions on how to change it that delayed the decision. It’s like an accident victim who is bleeding to death. You need to stop the bleeding before you completely understand how to address the other injuries or figure out who is responsible for the accident.

5.      The American legislative decision process with two bodies (the House and the Senate) is an odd way to make decisions. It is carried over from the political compromise of the original Constitution, but maybe it worked in this case.

6.      If you include more and more in an alternative more complex, eventually you find something for everyone to decide to support it.

Michael E. McGrath, decision-making expert and best-selling author, is the founder of Decide Better!