With much discussion at the  Mud Puddle and elsewhere about what it takes for a new lawyer to start up his own firm, a post by  marketing guru Seth Godin struck home.

Making big decisions about money

We’re bad it. And marketers know this.

Consider: you’re buying a $30,000 car and you have the option of upgrading the stereo to the 18 speaker, 100 watt version for just $500 more. Should you?

In a surprisingly large number of cases, we take the stereo, even though we’d never buy a nice stereo at home.

In case nothing about his example struck you as curious, the point is that you might not be inclined to lay out $500 for a stereo upgrade if it was not connected to a car. Does the fact that it’s just another $500 when you’re already buying a car make it digestible? Godin explains.

Here’s one reason we mess up: Money is just a number.

Comparing dreams of a great stereo (four years of driving long distances, listening to great music!) compared with the daily reminder of our cheapness makes picking the better stereo feel easier. After all, we’re not giving up anything but a number.

In other words, Godin says we don’t connect the value of the price to anything real, and therefore don’t feel as if there is any actual cost involved.  His solution:

Here’s how to undo the self-marketing. Stop using numbers.

You can have the stereo if you give up going to Starbucks every workday for the next year and a half. Worth it?

Interesting that Godin, a marketer, would use Starbucks as his example. From my seat, I wonder why so many people choose a cup of joe at Starbucks while watching the world go by on their iPad. I love coffee. I drink a ton of it, but mine is made in a pot and the cost is negligible, even with the price of my beloved half and half factored in.

Last weekend, Dr. SJ bought a new Prius. She could have gotten the 2012 model with a very cool navigation system that allowed the driver to talk to it and it talked back in return. Instead, she selected a 2011 model and passed on the nav system, which would have added another $2000 to the price. While she’s tough on cars, regularly haranguing them for not doing what she thinks they should, she doesn’t drive to places that would require directions frequently. For the rare time she does, she has a Hagstroms. I asked the salesman if he knew what a Hagstroms was. The very nice young man did not.

The question wasn’t whether Dr. SJ was cheap, though she can squeeze a nickel until the buffalo cries. Rather, the question was whether the nav system (which really was pretty cool) was worth another $2000.  She had managed to get around pretty well without one for a long time. Her need for one was limited. By the time the car was passed to its next owner, the tech would be archaic and return no value.  And cool wasn’t worth $2000.

Godin attributes this fiscal disconnect to marketing plus the inability to convert empty numbers to real life experience.  Over the years, I’ve watched from a slight distance as a variety of new-fangled necessities were created and embraced by younger folks. Between cable TV, plus the cost of the box and clicker, and smartphones, plus unlimited texting and 4G internet access, not to mention the vente mocha frappucino, I pondered the costs that they happily took on. For people who weren’t making money hand over fist, the few hundred bucks struck me as exorbitant and wasteful. But that’s me. They didn’t blink.

One fellow who road the train with me every day did pretty well, and had every toy a guy could have to show it. He always had the latest gadget. He drove the coolest car. He wore expensive clothing and took fabulous vacations. Unlike his envious friends, he was making the money to pay for his toys. But when the economy tanked, so did his income. We learned that he spent every penny he made, plus some, to live in grand style. At first, his demeanor changed from cockiness to quiet desperation. One day, he wasn’t on the train. We never saw him on the train again.

I ran into him on the street one day and asked him how he was doing. He told me he had gotten divorced, as the fights with his wife grew in direct inverse proportion to his fortune.  He told me that with all the fun things he owned, he neglected to put anything away for a rainy day. He was unprepared when the storm hit.  Not only could he not afford the toys that were once an integral part of his life, but creditors were knocking down his door.  The freedom to spend money, even more than he had, became his prison. And he was a hedge fund guy.

For new lawyers, busy debating the merits of the new iPad or the slimmest computer capable of doing wonderful things, I’m constantly befuddled by one question: Why? When I get a call to talk from a new lawyer asking for advice on setting up their practice, and learn that they can’t afford a real office but have unlimited internet access, I can’t help but wonder whether they realize that they’ve traded their monthly office nut for a toy they can live without. 

Then again, even the gainfully unemployed have all the toys. I assume their parents pay the bill, which makes me wonder what their parents are thinking.  But nobody seems to have connected the dots between things they need, things they want, and what it means in their life.

When Dr. SJ passed on the cool nav system, I told her to get it if she wants it. She said no, that if she needed a navigation system, she would pick up a Garmin for $100, but she suspected that her Hagstroms would do just fine. It had gotten her wherever she needed to go for a few decades, and there was no reason to throw $2000 in a hole for nothing. 

But then, when she started her practice, she had nothing and scraped her way to solid footing by figuring out what she really needed, what she could afford and what was worth the price.  It’s a lesson that stays with you for the rest of your life.  Does anybody still learn that lesson?