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

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!

Tags: ,,,