I recently met with a client who owned a family home. Eight years ago, his wife died and he moved to Cleveland for a better job. One of his adult children lived in the home for a few years and since that time he has sporadically rented the property. Even when rented, the house was a financial drain. The client had no future plans to return to the home and his children were raising families of their own in other cities.

We sat down and crunched all of the numbers, which showed that the house was costing him between $6-10,000 per year–money that he desperately needed for his future retirement. However, because of emotional ties to the home, he was having an extremely difficult time “cutting his losses.” Ultimately, he decided to sell the home and move on with his life.

I recently discussed how people make tough decisions with Paula Brazil, president of Brazil Training and Consulting of Cleveland, Ohio. “People have to be clear about what their mission, purpose and goals are. There is nothing wrong with having emotional ties to something or someone. The challenge is remembering our priorities and keeping our choices balanced with our overall business or life plan,” she says.


In her consulting business, Ms. Brazil provides organizational and individual development training in the areas of self-esteem, customer service, time management and mission building. “One of the things I do is to help clients develop a clear vision of where they are going and what they really want out of life and their business. Accepting and adjusting to change is not easy, but in order to be successful one must simply be willing to do what the unsuccessful person will not.”

During a lifetime or career, there are a number of times that we will have to make tough decisions, for example: disposing of a family holding; selling a losing investment; discharging an unproductive employee; closing a losing business; making an important medical decision; choosing a new job; or moving to a new location. Inevitably, we will make mistakes, but the problem in many cases is not the fact that we made a mistake. The real failure comes from not dealing with the mistake, adjusting and moving on. What is the best way to make a major decision and move forward?

Put it on paper
In working with clients on major decisions, I use the following process and we put it in writing. Define and describe the problem or issue in simple terms. Estimate the cost and timing of the problem. How does this issue fit in with your long-term goals? What are the alternatives to resolving the problem? List all of the alternatives even though some may seem unworkable and select the most effective one. How will it resolve the problem and what are the positive and negative side effects. Develop a plan for implementing the solution and include dates, responsibilities and costs. Set up future review dates and modify the plan as needed.

All of the clients that have come to grips with major issues and set a plan in motion have all expressed a sense of relief and a feeling that a burden has been lifted from their shoulders.

Opportunity costs
No matter what we do, there are always tradeoffs. By just maintaining the status quo, we give up the opportunity to invest in alternatives that may have higher value and returns than we are currently receiving. Making the tough decisions and “cutting our losses” provides the opportunity to redeploy assets and energy in a direction that is more consistent with our long-term vision and goals. If there are financial situations in your life that you know should be addressed, sit down with a trusted advisor and discuss the issues and let them help you map out a plan.

(Michael Shinn is a registered representative of the Financial Network Investment Corporation. Visit www.shinnfinancial.com for more information. Questions and comments may be sent via email to [email protected].)