"I can make a decision with 30 percent of the information, anything more than 80 percent is too much." - Colin Powell
This quote is so powerful, but maybe not for the reason you may be thinking.
I can make a decision with 30 percent of the information...
At the lower extreme (30%), as logical beings, we are able to make a decision with very limited information. We can decide to buy a pair of shoes just by looking at the price, a picture of it online, the brand name and a return policy.
That might be all the information we need to make this snap decision. Yes, the price is within reason. Yes, they look good in the picture from 6 different angles. Yes, it's Nike, a brand you've bought before and know the sizing fits well. Yes, you can return it if you don't like it.
But this is only 30% of the information. You don't know where the shoe was made, what materials it was made with, and most importantly, if it's comfortable. You've probably bought shoes that have given you calluses on the back and bottom of your foot. This is a deal breaker for me. If it hurts I won't wear them ever again. What's the point?
And the reality is that if you wear those shoes outside, you won't be able to return them, most of the time. Most of us will give a shoe a breaking in period, which means you aren't returning them unless you wear them exclusively in your house.
We often make decisions with only 30% of the information. And what's worse is we don't even have the most important information when we make those decisions.
Quick decisions on too little information can be a "money-sink".
...Anything more than 80 percent is too much
Buried beneath these words is the power of decision paralysis.
Knowing everything is paralyzing.
Think about a time when you were looking for the perfect pair of shoes. You specifically wanted an all-white shoe. Something light. Something comfortable that you could wear all day every day. You've tried 100 different shoes and you've narrowed it down to the perfect shoe. You knew the comparables, you knew every store selling that exact shoe. But you knew that under the right circumstances you could get a deal on those shoes. You didn't have to pay the $90 price tag to get your perfect shoe.
You ended up waiting, and waiting, and waiting for the perfect sale. Months passed but it never came. You had all the information, but you never dropped the hammer.
The shoes ended up going out of stock and out of production.
Did you read this scenario positively or negatively?
If you looked at it negatively, in the end, you would have been sad you didn't get the shoes.
If you looked at it positively, in the end, you would have saved yourself from buying shoes you didn't really need. After all, you survived months without them. And you probably didn't buy the second best shoe.
Use this to your advantage.
Whenever you want (not need) something, get as much information about it as you can. Research the different styles, makes, models, colours, prices, stores that sell it, learn about how the product works, the benefits and disadvantages of each option. Know everything there is to know about it. Find out when the sales are and if you can get a deal.
Then wait in the shadows for your moment.
If your moment comes, then you'll get a great deal on the perfect _______. And if you're moment doesn't come, then you saved yourself from buying something you didn't really need. One less thing to clutter your life.
Save Money Retire Early is written by Jon Lo, a barely 30 something change optimist, and personal finance guy. I believe anyone can be rich or poor, it's what you save that makes the difference.