Dollars and Sense | Clint Murphy & Ginger

ChooseFI | Financial Independence Podcast

Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc

Investing, Business, Careers

4.8 • 5.2K Ratings

🗓️ 22 May 2023

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

Psychology shapes every dollar you spend, yet most financial advice ignores the irrational thoughts that drive your decisions. Brad Barrett sits down with licensed therapist Ginger and Growth Guide podcast host Clint Murphy to unpack Dollars and Cents by Dan Ariely and Jeff Kreisler, a book that examines the mental shortcuts sabotaging your wallet. Their conversation reveals why paying for things in advance makes spending feel painless, how sunk cost fallacies keep you locked into bad choices, and what the peak-end rule can teach you about getting the most satisfaction from your experiences. [00:00:02] Introduction to the Book Club Overview of themes in Dollars and Cents related to behavioral finance. [00:05:00] Understanding the Pain of Paying Explanation of how payment timing affects the enjoyment of experiences. Paying in advance can make consumption feel painless. "If you pay for something before consuming it, the actual consumption of it feels almost painless." [00:05:20] [00:19:00] Exploring Opportunity Costs Every financial decision has a trade-off. Evaluating purchases based on future value rather than past investments can lead to better decisions. "Every choice implies a trade-off—what are you sacrificing?" [00:22:55] [00:39:00] Sunk Costs Understanding the reluctance to abandon projects due to previous investments. "Abandoning sunk costs can lead to better decisions; focus on future value." [00:43:05] [00:52:00] The Importance of Experience Endings How the endings of experiences influence overall satisfaction. Introducing the peak-end rule in relation to vacation planning and experiences. "Adaptability is key: embrace change when new information arises." [00:45:10] Key Concepts: Pain of Paying: The emotional discomfort experienced when making a payment, impacted by timing and payment methods. [00:05:20] Opportunity Cost: The loss of potential gain from other alternatives when one alternative is chosen. [00:19:00] Endowment Effect: The phenomenon where individuals value things more highly simply because they own them. [00:46:51] Sunk Cost Fallacy: The tendency to continue an endeavor once an investment in money, effort, or time has been made. [00:39:00] Resources: Dollars and Cents by Dan Ariely and Jeff Kreisler

Transcript

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0:00.0	Hello and welcome to Choose Out Fire. Today on the show we have another episode of our book club.
0:05.9	Today we're reading Dollars and Sense, How We Miss Think Money and How To Spend Smarter
0:11.4	by Dan Arieli and Jeff Kreisler. This book was chock full of all of the behavioral finance
0:19.2	and psychological aspects, these little tips on why we spend, why we think about this,
0:25.8	some things that seem illogical but may or may not be, frankly. And that's what's cool about
0:32.4	money and what we talk about here at Choose Out Fire all the time is if it was just the nuts and bolts
0:37.1	of money, this would be easy. That's five or ten percent of it, but the other 90 percent,
0:42.3	it's all about the psychological. And I have two wonderful guests here today to help me talk
0:46.8	through this book who are uniquely suited to talk about psychology. So we have Ginger, who everyone
0:52.4	on the podcast knows, this is her I think fourth appearance on the show, and Ginger is a licensed
0:56.9	therapist and we have Clint Murphy and he's the host of the Growth Guide podcast and actually his
1:01.4	Twitter bio says it all, I simplify psychology, success and money by sharing advice for millionaires,
1:07.8	expert authors and my life. So I think we're going to have a fantastic conversation and with that,
1:12.8	welcome to Choose Out Fire.
1:21.4	All right Ginger and Clint, thank you so much for being here Clint, welcome to Choose Out Fire.
1:25.8	Thank you for having me, it's great to be on the show.
1:28.4	Yeah man, this should be fun. So you and I talked offline about a month ago and just had a
1:32.4	wonderful conversation. It's actually astonishing how many similarities we have in our lives down
1:37.5	to the accounting firm we worked for decades ago and kids the same age and all and an interest in both
1:43.4	by and psychology. So if you don't mind, just give the audience a sense of where you've been,
1:48.6	I guess on both of those topics, but really you're you're interest in the five world in general.
1:52.9	Yeah, the interest in the five world really came out of a challenging situation where I was leaving
	...

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