Debt Workouts: A Reminder: You Must Be Able to Walk Away from a Deal

We all know this, but we sometimes forget, or get lazy or worse of all allow emotional insecurities, like wanting to be liked and appreciated, and thus, adjusting ones actions to accommodate others' emotional needs, and thus, we do not walk away from a deal at the right moment.

Another parallel principle is the need to walk away from a deal to make certain you got or get the right price.

I was brutally reminded of these two co-existing issues this morning when I went to this flea market that we walk frequently on Sunday mornings, and barter and buy junk for small dollars. It is great fun and I get to see pure capitalism at its best, offer and acceptance, negotiation, it is a beautiful thing. I love to watch people do business at so basic a level, determining the price on the spot, as a direct function of what the market will pay, or more brutally what this customer will pay at this moment.

So my wife wanted to purchase something but it seemed too high a price for this item to her, even though it was a very significant discount over normal retail, but in this environment she claimed it should go for ten dollars, the vendor wanted $15.00. So she passed on it without further discussion.

On the way out she said to me 'you go get it', knowing I would get the price down, making her feel better and I would pay for it, even better, a double hit for her.

So I carefully folded two fives into my pocket and approached the table, looking at the item and pointing, saying it was way too expensive, she looked at it and asked me the magic question, ...'what would I pay?' Now we were negotiating and she was signaling me she would accept an offer lower than her asking price.

I said $10.00 she said no and we both walked away from it, me over to my car. Ten steps later, she reconsidered and called me back accepting my offer...$10.00.

So this is what we can learn, my wife was more concerned about how the saleswoman would feel and not wanting to pay the price she preferred to walk away or pay full price. She walked away, no win for either.

I, on the other hand, determined what the item was worth to me, made my offer, not negotiating but rather stating my offer firmly and decisively, and then demonstrated my commitment by walking away, and thus, even avoided the counter offer. I had to walk away to demonstrate my commitment to my offer and then her bluff being called, she called me back accepting my price. Everyone was happy, a deal was made and I maintained my position unmoved by her needs and desires, thus, I maintained my emotional self sufficiency, not changing my actions because of her needs. In fact, she made a sale and gave me my price, thus, a victory for both, a sale at the right price.

Keep this story in mind when you next are in a price negotiation, these principles work for two reasons, if you fail to get the right price, you do not make the mistake of accepting the wrong price. This avoids mistakes. You must be able to walk away from a deal to make certain you got the best price possible, and you must know your price and not exceed it even if it means no deal.

Pay attention, emotional insecurity is our enemy and is the cause of many business errors of judgment. You cannot be affected by the needs of the person selling you; you must determine what is best for you and go get it.