10-10-10 Rule

Benefit: Better decisions
Prerequisites:

Description

The 10/10/10 is the framing of the outcome of a decision across three timeframes:

The answers to these questions provide a different perspective and usually help the user to find the correct answer without being misguided by circumstances at the time of making the decision.

Practice

  1. Think of a decision you’re going to make.
  2. Write down how you feel for after
    • 10 minutes from now
    • 10 months from now
    • 10 years from now

Example-1

When I was 22, I had just moved to NYC, and I was trying to start my career by landing an interview on Wall Street. Of course, it was imperative for me to dress the part to land the job. With a rapidly evaporating savings account, I knew for a fact that I couldn’t afford a new suit.

I was presented with a dilemma: I could stay in every weekend and start saving up enough to buy the suit… or I could buy the suit by getting a credit card (while enjoying the city life), and hope to pay it off eventually.

Here’s how the 10:10:10 method played out when I thought about buying on credit:

I’ll feel good about myself! I don’t want my weekends to be defined by one purchase, and I don’t want to spend my life scrounging pennies.

If I land a job by then, I’ll be glad I got to enjoy my weekends! But if I don’t, I’ll have to worry about paying off that dress (and not having any income).

Either way, I’ll (hopefully!) have a job by then. If it takes me a while to land a job, though, I know that credit card debt can snowball very quickly, and I could end up regretting pilling on debt for years to come.

Sure enough, I lived very frugally for a while and saved up to buy the suit, and although I did land a job fairly quickly, I avoided going into debt in the process. And, as I learned, job security on Wall Street isn’t the best, so I was very happy about the extra cash cushion I had built up in case the job didn’t pan out.

Resources

https://www.businessinsider.com/i-tried-the-101010-method-inspired-by-warren-buffett-and-ray-dalio-2017-10

https://medium.com/the-mission/why-warren-buffetts-10-10-10-rule-will-help-you-make-smarter-decisions-43d63d5ea124

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