Funny Money Ain’t So Funny When It’s YOUR Money

by drjim on July 23, 2008

Be careful when you negotiate about funny money

Be careful when you negotiate about funny money

In the world of negotiating we spend a lot of time talking about “funny money” and so you should know what it is because it can end up costing you a lot of real money even if you don’t think that you made any concessions during the negotiation! We all know what “real” money is – we can touch it, we can spend it, and we know how much of it we have. Funny money is exactly the opposite of this: taxes, credit cards, monthly payments, and interest rates all fall into this category of money.

Watch any car commercial on TV and you’ll see that car dealers learned a long time ago that it is much easier to sell a car as “$300 a month” instead of a very scary $40,000. The current subprime mortgage mess is yet another example of the same thing: even if you really can’t afford a $200,000 house, maybe you can afford $500 a month until interest rates go up.

A few examples of how funny money sneaks its way into negotiations include:

  • Dollars per hour
  • A five year warranty
  • “Points” (percentage points on a deal, often found in real estate deals)
  • Price w/o delivery
  • A 5% fee.
  • Monthly payments

In the end, the key thing to remember about funny money when you are negotiating is that you should never negotiate for or about funny money unless you have spent the time BEFORE negotiating to think things through completely. Funny money may not really exist; however, you know what real money is and you can lose a lot of that if you don’t watch what is happening with the funny money!

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{ 3 comments… read them below or add one }

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Ted Linklater April 7, 2009 at 3:23 pm

Valid comments about funny money.

From a sales point of view, “Funny money” is NOT used to deceive but rather to prevent “red flags” from obliterating the message. (At least not used by myself when I was in sales.)

This blog was certainly useful to be reminded how ubiquitous “funny money” is and in what forms.

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Dr. Jim Anderson April 11, 2009 at 2:13 pm

Ted: a ah! You’ve pointed out the key point here – “funny money” is actually a double-sided coin. It can be used to fool & deceive or to put more cards on the table in order to keep things moving forward. It’s truly a measure of the sales negotiator as to which side of the coin is facing up during any given negotiation…

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