Saying No to a Good Thing
April 10, 2007
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It was a tremendous opportunity.
The first pass over the numbers was exciting. In theory we’d be increasing our net worth considerably, lots more equity the moment we signed the papers.
When we looked at the property it was just the sort of thing Gorgeous and I’d been talking about. And in the right location too.
We’d already been talking about refinancing anyway, so why not just pull some of the equity out of our house, use it as a down payment on this good deal? Then we could rent our our current house and we’d come out way ahead at the end of the day.
In theory.
But the thing about theories is they don’t always play out as expected when put to the test. Like Yogi Berra said,
In theory there’s no difference between theory and practice. In practice there is.
When I was finally able to pull together actual numbers (instead of the probably “about” numbers we’d been theorizing over) it was immediately obvious.
That won’t work for us.
Too much into the negative cash flow. And right now we don’t need any negative cash flow! (I mean who really does?)
Putting on the Brakes
So I had to make a bunch of calls and tell the folks involved that it wasn’t going to work for us.
They were professionals and tried to offer up options. “What if we did this…”
We’d already thought through all the options they came up with. No dice.
Those calls weren’t easy to make. It wasn’t fun to tell people, “Well the truth is we really can’t swing this one right now.” More correctly we weren’t willing to put ourselves into an untenable situation just because it was a good deal.
I mean someone would have loaned us the money. I just want to be sure I can pay it back!
Some Food for Thought
So here are some things to think about.
How do you respond when the reality doesn’t match the theory?
Are you willing to make a course correction when things aren’t working out as expected?
Can you cast aside a project you are emotionally attached to when the evidence indicates it isn’t the good idea you thought it was?
I promise making that correction won’t be easy. And it is no fun calling folks to tell them, “I was wrong.”
But we were never promised life would be easy. I can’t find that written anywhere.
Can you do the right thing even when it’s hard?
Tags: Finance, Principles
Ouch. You have to, but the thing is that you never really know.
There’s always that slim possibility that sheer force of will, sheer determination, sheer cajones will make it work.
No excuses. Get ‘er done. Just do it.
But that kind of thinking is hubris. It’s insane pride and it leads to downfalls.
That’s why it’s so important to build tests and assessments into the process early. More and more, when I take on a project, I try to establish the point where every knows up front that we can shut it all down.
It’s still disappointing when we have to, but it gives every project a sense of urgency and immediacy. And it gives us a predetermined time and method of backing out and saving face. And it defines the way to know its time–even if the definition is somewhat arbitrary, it’s the metrix we have all agreed on.
If we don’t reach this goal, by this date, it’s over. Period. And it’s never easy.
Good for you, Chris, for knowing to say no.
Pulling the plug on an idea you are passionate about sucks, plain and simple.
I think yours is a good idea when you are working on a project with others, Mark. Lay out the expectations ahead of time. That way if the plug has to be pulled emotions are ruffled as little as possible.
Very well said, Chris; been there many times. Too often the emotional attachment is the thing that gets us into trouble. If you can’t make yourself see past the emotions, you’re skating on thin ice.
One of the benefits of the decision you were making was the additional insight provided by Gorgeous. A VERY USEFUL RESOURCE we men often ignore to our peril!
You got that right, Robert! She and I balance each other nicely, especially where risk taking is concerned.
Doing something that’s not right in the gut is the worst thing you can do. It can be hard, but you know when it’s right.
And I’m with Robert on the useful resource. As I put it in my “…When to Quit Your Day Job…” post:
“When all else fails, look to a higher power — your better half.“
And in my case, my smarter half too, Tony!
Sometimes we’re all like kids in a candy store and it’s tough to realize we can’t possibly eat all the chocolate.
This must have been a tough decision. Gut tearing stuff. But as you say, life is not easy. The full quote can be found on one of my posts here:
http://www.trevorhampel.com/life-is-not-meant-to-be-easy/
Carolyn, did you say chocolate?! Mmmmm…
Trevor, Thanks for the link (and the quote!) Good stuff. Although I’m still looking for where it’s written that life is supposed to be easy. Probably will be for a great long wile too, I expect.
Kudos, Chris. And Gorgeous. For maintaining perspective. Awesome post!
Thanks, Troy!
And what the hey, Chris; have yourself a Klondike bar…
… and everything’s all right.
Mmmm… Klondike….