New Cars and Hedonic Treadmills


by David D. Holland



A few weeks ago, I had a great interview for my weekly TV show with Art Markman, Ph.D. He’s a Professor of Psychology and Marketing at the University of Texas at Austin. I just wish I had enough space here for all the interesting “mind” and “money” topics we discussed. Here are two!


Holland FinancialThe Treadmill.
There is a concept called the “Hedonic Treadmill” that highlights the relationship between buying “things” and happiness in our lives. Here’s how it works. You really want something – let’s say, a new vehicle. You think, “If I only had that red sports car with the leather seats, I’d finally be happy.” When you do get the car you’ve been wanting, you are happy . . . for a few weeks. Then, eventually, you lapse into the same state as before the purchase (your normal state of happiness). You have “adapted” to the new reality of having the vehicle. Most likely, a new “thing” has now replaced the sports car on your “if I only had _____, I’d be happy” list – and back on the treadmill you go. It’s the way our minds work!


Know the Game!
And while we are on the subject of car buying . . . car dealer mind games are common! First, always remember, the salesperson is “in the driver’s seat” (no pun intended). He/she has all the information, knows the dealer’s cost and the lowest acceptable offer. During the buying process, some dealers will ask lots of questions to wear the buyer down with “decision fatigue.” Others will stretch out the process with the same desired effect.


You’ll probably take a test drive. Now, the car starts to feel like it’s yours. You might even give a stern sideways glance at someone who approaches “your car.” The salesman may also be taunting you with additional pressure tactics, like, “I have another person interested in the same vehicle.”


Note: The more time you spend negotiating, the more your commitment escalates! Don’t forget, your time is valuable – but the salesperson has to be there. He/she may attempt to befriend you and chat about things you have in common. Don’t fall for it! Before being pressured, please know, “It’s okay to walk away!” Make car buying decisions on your terms and schedule.


P.S. There are very good car dealers. I know, because I’ve purchased from them. And, if you are in the market for a new financial adviser, give us a call. No pressure, no gimmicks, just straightforward advice!


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