$ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ Intentional Investing Newsletter February, 2005 $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ IN THIS ISSUE: 1. Note from Your Editor, Lynne 2. Article: Choice, Missed Opportunities & Regret 3. Resource Spotlight: Valentine's Day: Opportunities Not to be Missed 4. Intentional Investing Announcements ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ **Due to technical difficulties, this edition did not reach you by Valentine's Day. However, I think you'll still find the content of interest! Lynne -=- Note from Lynne -=- Dear Reader, Happy Valentine's Day! May your day, week and month be filled with a sense of love and abundance, whether you have one special love in your life or not. I was single for many years of my life -- often on Valentine's Day. I remember some painful times of feeling sad for myself, wondering if I'd ever find the "right guy." I would second guess my dating decisions and fret about "What could have been" with Chet, or David, or Jack. I'm glad to say that I now have a fabulous man in my life. And, I met Jud after I let go of the notion of a "right guy"... Most importantly, what I learned during those years of singlehood was to appreciate the abundance of wonderful people and experiences that I did have in my life. I came to appreciate the sustaining value of their love for me, and mine for them. Reflecting on those experiences, I decided to pen this month's feature article on choice and money with a focus on missed opportunities and regret -- and the antidotes of "good enough" and gratitude. As we know, we have relationships with people and with money - and they can be parallel or very intertwined. Missed opportunities and regret play a pivotal role in both arenas - and there are also practical and forward-moving solutions. Be well. And, as always, I enjoy receiving your comments and suggestions for future newsletters. Warmly, Lynne ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Lynne Hornyak, Ph.D., Editor e-mail: Lynne@LMHServices.com Coaching successful professionals to greater financial freedom and well-being. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Feature Article: Choice, Missed Opportunities & Regret -=- "Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard." Barry Schwartz in his terrific book "The Paradox of Choice" identifies one of the most difficult aspects of modern life -- choosing well in a world of unlimited possibilities. What is the downside of unlimited possibilities? One downside is the necessity of making trade-offs when faced with a decision. And why is that a downside? Because trade-offs affect our happiness and satisfaction with the option we finally choose -- and may affect whether we make a choice at all. Let's examine the downside of unlimited possibilities, using an example in the realm of money, and one in the realm of love in honor of Valentine's Day. Our Two Examples Let's say you've budgeted $25,000 to buy living room furniture. You visit one store that is very contemporary and sharp. You love the persimmon leather sofa and armchair, glass coffee table and curved lamps that scream "flair." You go to another store filled with antiques that are fabulous. You zero in on a beautiful 19th Century French sofa, two matching side chairs, and an oriental rug in excellent condition. They scream "taste and elegance." The search goes on, with more of the same. Each style has its advantages, and reflects some aspect of your personality and taste. Let's say you're "heavily dating." You hit the bonanza and met three interesting guys (or gals.) Mark (Marcia) is a lawyer who is intellectually sharp, witty and ambitious like you. John (Jane) is a free-lance journalist who has traveled the Middle East, taken lots of risks to get hot stories, and is very challenging. Really speaks to your love of adventure. Peter (Patricia) is a psychologist - warm, empathic, and highly supportive. You love to be around him (her) because he (she) makes you feel great about yourself and your relationship. The Downside of Unlimited Possibilities Let's look at five factors that influence our decisions, and satisfaction with our choices: opportunity costs, personal responsibility for results, reversible decisions, counterfactual thinking, and regret aversion. (from Schwartz, 2004) 1) Opportunity costs When we make a choice, we necessarily pass up opportunities that other options would have given us. That's what "opportunity costs" means. So, in our money example, if you choose the contemporary furniture, you are opting for flair. You pass up the opportunity to express your elegant, sophisticated side (represented by the antiques), as well as aspects of your personality that other furniture styles reflect. It's not to say that any piece of furniture *objectively* expresses one quality. That's how YOU view it. So we're looking at *subjective* missed opportunities. In our relationship example, if you choose Mark (Marcia) you are likely going for a life of dual-career ambition, rather than risky adventure (John\Jane) or warmth and security (Peter\Patricia). That's not to say that Mark (Marcia) doesn't have those other qualities, just that you're emphasizing one set more than the others. Failing to assess opportunity costs -- which each style of furniture or each relationship offers -- can lead you astray. You could be overlooking something very valuable to you if you don't assess these factors. Yet, Schwartz and his research colleagues observed that when we have more alternatives to choose from, we are faced with more opportunity costs to pass by. As opportunity costs increase, the less satisfied we tend to feel about our choice. Not only that. To avoid the unpleasantness, we simply may avoid making any decision rather than face the missed opportunities squarely. 2) Personal responsibility The irony of our cultural emphasis on choice and independence is that when it comes down to dealing with trade-offs, people really prefer that someone else make the decision because they don't want to feel responsible for making a bad choice. A bad choice implies losing out or failing. Schwartz also found that the stakes go up when people *believe* that the decision, no matter how insignificant, reflects something significant about themselves. That belief really "ups the ante." Our money example: You may believe in your heart that choosing contemporary "flair" reflects that you're not "elegant and sophisticated." So, in that situation, you may attempt to get someone else to make the decision, or not make the decision at all, just in case choosing flair over elegance is the "wrong" decision. Our relationship example: You may believe that Mark(Marcia) is the most practical choice for you. Both of you are career-oriented. You won't end up starving on the streets, and you'll likely move up into higher social circles as your careers progress. Yet, you worry about becoming a "boring couple," which would "never happen" with John(Jane). Or you worry about becoming competitive and critical of each other, which would "never happen" with Peter(Patricia). So, you waffle on making a decision, or wait until two of your dates get so frustrated with your indecisiveness that they reject you. Now you don't have to make the choice. 3) Reversible Decisions If you're scared about being trapped by your decision, wouldn't having the option of changing your mind make sense? For example, you could decide to return all of the furniture. Or, you could get married, but view your vows as a contract that can be broken or changed by mutual consent. Yet, what does the research say? Studies show that participants who could change their minds about a purchase were less satisfied with their purchases than those that didn't have that option. The same for "nonreversible" and "reversible" marriages. In fact, that flexible attitude might actually be a causal factor in relationship failures. 4) Counterfactual Thinking Isn't that a great phrase to toss into your next conversation -- counterfactual thinking? What it means is focusing on what the world isn't, or how it might be, or how it might have been rather than what is. When we engage in counterfactual thinking, we contrast what actually is with something imagined. With "upward counterfactual thinking," you compare your actual choice with what could have been better. For example, you buy the contemporary furniture. Your imagination gets triggered and you imagine that the partners of Mark(Marcia)'s law firm are over for dinner. You picture them fawning over a roomful of antiques, while making derogatory remarks about contemporary furniture. Consequently, you doubt your choice and feel less satisfied. In the relationship scenario, you marry Mark(Marcia) but you occasionally fantasize about exciting globetrotting trips with John(Jane). You compare this to attending law firm retreats as Mark (Marcia)'s spouse. The comparison makes you feel stodgy, that your life choice is boring. 5) Regret Aversion Schwartz believes that risk aversion is often based in regret aversion. We don't take risks because we don't want to feel the negative emotions of regret, and what we tell ourself about that. Schwartz points out that avoiding regret actually may influence decisions more than the desire to achieve what you want. For example, you bought the contemporary furniture. It suits you well, right now. Over the next 5 years, you rise to a significant position in your organization, and that contemporary style becomes outdated. However, to avoid regretting your decision, you hold on to the furniture, and turn down opportunities to buy some truly fabulous antiques that are better suited to you now. In our love example, you commit to Mark (Marcia) and say goodbye to the others. Over the next five years, Mark(Marcia)'s workaholism and unavailability escalate. You ignore the signs, work harder and travel more for business. Not wanting to face how unhappy you are in your relationship nor face your regret at losing John(Jane) or Peter(Patricia), you stay in your marriage and have an "affair" with your work. Antidotes to the Trap of Overchoice, Missed Opportunities and Regret The good news is that there are steps we can take to mitigate the stress and distress of overchoice, missed opportunities and regret in love and money. 1) Dealing with Opportunity Costs Being aware of opportunity costs is a good thing. It helps us to be more evaluative of our choices and avoid overlooking possibilities. Since research shows that dissatisfaction increases with the number of options, choose to limit how many options you'll consider. Prioritize your options, take the top two or three, and compare them for their advantages and opportunity costs. Opt for a "satisfier" rather than "maximizer" attitude. As we discussed in a previous issue, maximizers examine all options with the goal of finding "The Best." Satisficers set a goal of "good enough." 2) Personal responsibility Realize that the heaviness of many decisions is more subjective than objective. How many decisions are truly life-and-death, or totally life-altering? That approach can help to keep decision-making in perspective, take the pressure off, and make decisions less onerous and more likely to be accomplished. Learn the difference between owning that you're responsible for making the choice and judging yourself about your decision. 3) Reversible Decisions Schwartz recommends making decisions nonreversible. For example, you purchase your furniture but continue to wander through stores to see what's a "better catch." The same happens with dating. You commit to one person but continue your search. Tell yourself "Let's not go there." Commit to giving the relationship your full efforts. Of course, it's reasonable to identify criteria for which you'd legitimately change your contract for furniture or a relationship. For example, you discover that the furniture is poorly constructed. Or, your partner becomes agressive and abusive, and won't go to counseling. But for the typical love or money decision, choose to let "good enough be good enough." 4) Counterfactual Thinking Catch when you're engaged in upward counterfactual thinking and stop it. Downward counterfactual thinking has its purpose, When you imagine situations that would be worse than your choice, it tends to make you feel better about your decision. So engage in more of this type of thinking. For example, you could imagine your beloved golden retriever breaking your fragile antique furniture, yet gently settling down against the base of your beautifulleather sofa. Or you imagine John(Jane) heading to Iraq, breaking all the rules, and being taken hostage. 5) Regret Aversion Remember that the emotion of regret has a purpose. It can remind us to take our decisions seriously so we *don't* feel regret. Yet, on the other hand, regret is part of a complex life. It's rare that one decision will meet all of our needs across all situations, or be life-transforming. Celebrate the complexity and practice satisficing (making a good enough choice.) Finally, take time each day to identify what you are grateful for -- the people in your life, your accomplishments, the small decisions you make each day to live life as you want to be living it. Gratitude is the antidote to regret. So this Valentine's Day, remember to let those special people know why you're grateful to have them in your life. And don't forget to be grateful for yourself. Reference The Paradox of Choice: Why More is Less," by Barry Schwartz (2004). New York: HarperCollins Publishers Inc. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Like what you're reading? Then send this newsletter to friends, family, and colleagues who are interested in moving toward greater financial freedom and well-being. They can subscribe at www.lmhservices.com, or by sending an e-mail to Lynne@LMHServices.com with "subscribe newsletter" in the subject line. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Resource Spotlight: Valentine's Day: Opportunities Not to be Missed -=- For Free and Fee What are ten great ways to let someone special know that you love them and have their financial health and happiness at heart? 1. Subscribe them to Intentional Investing. (FREE - Go to www.LMHServices.com to subscribe) 2. Buy them a subscription to Worthwhile magazine. Worthwhile's philosophy is that people owe it to themselves to search for happiness in their work. (INEXPENSIVE) 3. Sign them up for an Intentional Investing teleclass. (FREE) 4. For a loved one who is looking for love, send them to www.Find-a-Sweetheart.com for expert advise and coaching from Kathryn Lord. (Coaching has a fee; *E-MAIL to E-MATE* newsletter is FREE; subscribe on the website) 5. Buy them some easy money management software, such as Quicken. (INEXPENSIVE) 6. Better yet, buy the money management software AND set up their list of accounts and categories for them. (INEXPENSIVE; takes some time but likely to be greatly appreciated if they have nothing to hide financially) 7. If your money is intertwined or to be intertwined, offer your love one evening of loving listening and discussion about your mutual finances, dreams and life goals. (FREE, except for the energy it may take to censor your complaints and critiques) 8. Register them for an adult education class on some aspect of money and finances that they'd like to know more about. (INEXPENSIVE - MODERATE) 9. Buy 1-2 hours with a financial advisor for them\the two of you. (MODERATE - EXPENSIVE) 10. Buy them a consultation with a money coach to improve their money attitudes and habits. (PRICELESS) Have a fabulous Valentine's Day! ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ If you are interested in coaching, contact me for a free half-hour consultation at Lynne@LMHServices.com. or (202) 387-5923. Please include your name, e-mail address, phone number and brief description of your interest in being coached ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Intentional Investing Announcements -=- $ Free Spring Teleclasses $ Take Charge of Your Money Life Tuesday, March 22 7:30 - 8:30 pm Eastern FREE Facilitator: Lynne Hornyak, Intentional Investing You say you want to take charge of your finances, but "it just doesn't happen." Want to get unstuck? This teleclass will help you to understand what keeps you in that rut. Examine your relationship with money. Discover common mind traps and trap busters. By the end of the class, you'll leave with action steps to move you forward! Register by March 21 by sending an email to Lynne@LMHServices.com with “Register March 15” ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4Love+Money – “Talk to the Coaches” Series Who Pays These Days? Tuesday, April 12 8:00 – 9:00 pm Eastern FREE Facilitators: Lynne Hornyak, Intentional Investing and Kathryn Lord, Find-a-Sweetheart.com Confused about the rules of paying for dates? Join our lively discussion of this controversial topic! Watch for more details in upcoming newsletters. Register by April 11 by sending an email to Lynne@LMHServices.com with “Register April 12” ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Have you been to the Intentional Investing webpage lately? Go to www.lmhservices.com and click on "Changing your Relationship to Money." On the Intentional Investing webpage, you can take a self-quiz on Your Relationship to Money, participate in a survey on gender and money, access articles written by Lynne as well read previous editions of this newsletter! ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ PLEASE NOTE: Intentional Investing [TM] is intended for informational and educational purposes only. It is not a substitute for financial, legal, accounting, psychotherapeutic, or other professional advice and consultation. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Copyright 2000-2005 Lynne Hornyak. All rights reserved. The above material is copyrighted but you may retransmit or distribute it to whomever you wish as long as not a single word is changed, added or deleted, including the contact information. However, you may not copy it to a website without my permission. Reprint permission will be freely granted upon request. Advance written permission must be obtained for any reprinting of this material in modified or altered form. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ $=$ CONTACT INFORMATION $=$ Lynne Hornyak, Ph.D. LMH Services Coaching and Consulting 3818 Klingle Place, NW Washington, DC 20016 Phone: (202) 387-5923 Fax: (202) 244-3373 e-mail: Lynne@LMHServices.com Web: www.LMHServices.com