Is the Juice Worth the Squeeze? A Decision Making Tool

Have you ever done something and then later wondered if you did the right thing? Are there times when you are torn on whether you should continue to do something?  How about times when you aren’t sure if you should do something at all?

I think it’s safe to say we have all asked ourselves these types of questions; probably recently, and often! I know I sure have.

For example, I went home to Canada for my Dad’s retirement party. Unfortunately, my Air Canada flight got delayed by 10 hours, so instead of arriving at 3 pm, I arrived well after midnight.

The question is, is there a decision making tool I could use to evaluate the purchase of my flight to help me make a better decision next time?

Yes, there sure is! And today I am going to introduce a concept from the world of business that you may consider using as a decision making tool to help you make better decisions in these various situations.

We will get back to my story in a little bit.

Now, for all the non-math readers, before your blood pressure hits the roof and you get all sweaty and gross – relax! I’m going to explain it in a way where no calculations or calculators are necessary.

The concept that I will use as a decision making tool is what is known in business as ‘return on investment’ or ROI.

What is ROI?

Again, without getting too technical on you and overwhelming you with calculations, let’s discuss ROI as a decision making tool in a conceptual way.

ROI is simply the amount that a business earns (the return) on an investment(s) they make, over time. Typically, at a minimum, the business needs to at least recoup their investment(s) to break even.

The investment part can be anything they spend money on now that they expect will translate into more money in the future. Some examples of investments are: hiring new employees, building new plants, offering new services, purchasing advertising, investing in training programs, getting all of their employees to read Prime Your Pump, to name just a few.

“How Can I Use ROI as a Decision Making Tool in My Personal Life?”

While ROI is something you can certainly sit down and calculate in terms of money invested versus money gained – such as your stock market portfolio. I am going to discuss it in more of a philosophical way as both a decision making tool, as well as a way to look back on decisions made as a sort of ‘lessons learned’.

As I said in the introduction, there are three ways to use the concept of ROI, which are to:

(1)  Help determine if you have done the right thing after the fact.
(2)  Figure out if you should keep doing something.
(3)  Decide whether or not you should take a certain course of action in the future.

ROI Is Not Always Calculated in Dollars and Cents

In business, traditional ROI is typically all about the ‘Benjamins’, or dollars and cents.

However, in your personal life, while money can be a factor, there are many other factors that can be used to look at the investment made and the return on that investment, such as:

  Emotional
  Physical
  Mental
  Spiritual
  Time (temporal)

To help further explain the concept, let’s look at some examples of how you could use ROI in your personal life:

Example 1 – Did I do the right thing?

Our first example will use the concept of ROI to look back on something you have done to evaluate whether you made the right decision. You can think of it almost as a way of determining lessons learned. The example here is evaluating a restaurant you visited to help decide if you will go back.

To figure out your ROI, you need to consider your return (what you are receiving) as well as your investment (stuff you are giving up).

In terms of the return (what you received), some of the things you may want to consider are the:

  Quality of the food
  Service
  Atmosphere
  Physical ailments – what if you get food poisoning? Not all returns are good.

In terms of the investment (what you gave up), some of the things you may want to consider are the:

  Price of the meal
  Time you spent waiting to be seated
  Travel time to the restaurant
  Parking cost
  Your emotions – if you receive crappy service

After thinking through the return and the investments made you can ask yourself, ‘what was my ROI of going to that restaurant?’ ‘Was the return worth the investment?’ This is all dependent on you, there is no right or wrong answer. There are different factors that carry more importance to some of us than others. You may say to yourself ‘it was expensive, and it took a while to be seated (investments), but the food was so good (return) that I will go back.’

Example 2 – Should I Continue with This Relationship?

Our second example will use the concept of ROI as a decision making tool to help you decide whether you should continue with something you are doing.  Let’s say you are dating someone, and want to know if you should continue dating them.

Since you are already dating them, you know what most of the investments and returns are. So, again, you need to consider your return (what you are receiving) as well as your investment (stuff you are giving up).

In terms of the return (what you have received/will receive), some of the things you may want to consider are:

  Finding the man/woman/transitioning person of your dreams
  Getting laid
  Having fun
  Companionship

In terms of the investment (what have given up/will give up), some of the things you may want to consider are:

  The cost of clothes, makeup, meals at restaurants, flowers, condoms etc,
  Time spent getting your hair done, shopping, gossiping to your friends about them, stalking them on social media
  Emotions invested

After thinking through the returns (you are having fun, the sex is great, and they could be the one!) and the investments (mostly your time and money spent on looking good), you decide to keep dating them as the ROI is positive.

Example 3 – Whether or Not to Join a Gym – Should I do this?

Our last example will again use ROI as a decision making tool to help you decide whether you should take a future certain action. For example, you are contemplating joining a gym but aren’t sure since it is expensive.

This time, you are going to need to project your future ROI. Some of the investments and returns are known but since it hasn’t happened yet, you will need to project and estimate some of the others.

In terms of the return (what you are receiving), some of the things you may want to consider are the:

  Health benefits you receive (mental and physical)
  New people you meet
  The way you look and feel

In terms of the investment (what you are giving up), some of the things you may want to consider are the:

  Cost of the gym membership
  Time you spend there
  Parking costs
  Physical and mental energy you will expend
  Possibly hurting yourself and ensuing medical costs

 After thinking through the return and the investments you will have to make you can ask yourself, ‘what is the potential ROI of joining that gym?’ ‘Is the potential return worth the investment?’

So, you think about it and weigh all the investments you will need to make, especially the high cost. Then you think about the potential health benefits and how good you will look and feel – which are more important to you than the cost. In the end, you decide to join the gym.  Good for you!

“Can I do anything to affect the ROI?”

Great question! In my opinion, yes you can. Here are some examples of how you can improve the ROI in various aspects of your life:

  Your vehicle: Getting regular maintenance done such as oil changes, tire rotation etc. may necessitate an investment in the short-run, but it will save you in the long-run as the vehicle will last longer and you will avoid more costly issues down the road – pun intended.

  Your body: You have decided to join the gym because you want to get in shape and live a healthier lifestyle. Going home and eating a box of donuts is not going to improve the return on your investment of time and the cost of a gym membership. But eating healthy and getting plenty of rest will positively affect your ROI.

  Relationships: Making sure you communicate in all of your relationships, be they romantic, family, work, friendships – whatever, will only help you improve your return in the long-run.

Back to My Story…

To make a long story short, my flight was delayed almost 10 hours because Air Canada could not find a spare tire in the entire Miami airport. They emailed me the next day and were going to offer me a $100 Canadian discount off my next Air Canada flight. After a few emails back and forth the next day, they said that $100 was the best they could do.

Incidentally, $100 Canadian may get you a latte at Starbucks in the U.S. Ok, I am exaggerating, but the Canadian dollar is worth quite a bit less than the U.S. dollar these days. On a funny aside, I once had a friend here in the U.S. see some Canadian money in my wallet and ask why I was carrying Monopoly money around – ha!

So anyway, as I often do, I did a quick little mental ROI to reflect on my purchase and whether I would fly Air Canada again:

In terms of the return (what I received):

  Safe flight where I arrived at my destination
  A $20 meal voucher for my troubles (which sadly did not include the beer I bought)
  A cute baby in the seat behind me that cried most of the trip

In terms of the investment (what I gave up):

  Price of the ticket
  Baggage fees
  10 hours spent in the airport
  Money spent on food and coffee in the airport
  Sleep
  Time with family

As crappy as my experience was...

…most airlines are crappy these days, so I was leaning towards giving Air Canada another chance.  Then last week I got an email from an Air Canada customer service rep telling me they were going to give me $100 for my troubles.

I was confused, as I thought we had already settled things a month ago? I was assuming this latest email meant they were open to negotiation, why else email me again? Surely, they were not rubbing their crappy service in my nose. So, I responded with how disappointed I was blah, blah, blah and that the least they could do was give me a free flight.

The response from the rep was a typical bunch of b.s. and how they were unable to offer additional compensation. Then she added one final jab that irked the absolute crap out of me, “In our previous emails, we provided our explanations. Continuing to exchange emails will not change our position. Respectfully, we consider this matter closed.”

I considered the matter closed a month ago! YOU were the one that emailed me!

That exchange just added a couple more bullet points to the investment part of my ROI calculation:

  Time wasted spent dealing with rude customer service rep.
  Additional aggravation!

Now I can confidently say that the investment far outweighed the return! Furthermore, I will NOT pass go and collect that $100 of Monopoly money, and will NEVER fly Air Canada again!

Until next time, fly anyone but Air Canada, and as always…PYMFP!

–Rick

Use It or Lose It:

  Simply think through what something is costing you or has cost you (investments) and what you are receiving/have received in return (returns) and determine if you are getting enough return on your investment to do it again, continue doing it, or do it in the future – depending on your situation.

When and Where to Use It:

You can use ROI in the following situations:

(1)  To help determine if you have done the right thing after the fact.
(2)  As a decision making tool to figure out if you should keep doing something.
(3)  As a decision making tool to decide whether or not you should take a certain course of action in the future.

 What Do You Think?

Do you use ROI either as a decision making tool or as a way to reflect on past decisions in your life? Can you see yourself using this technique? Please share in the comments below!

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