Page 110 - Hard Goals

Required 101

rate. If I only need $120 in a year, I’ve got a 20 percent discount
rate. If I need $180, I’ve got an 80 percent discount rate.
Think of it this way: if you buy a CD from your local
bank, you’re basically saying, “I’ll give you $1,000 right now in
exchange for $1,010 in one year.” Parenthetically, notice how
ridiculously low that discount rate is. In fact, as I write this
book, CD interest rates paid by banks are around 1 percent.
(Obviously the math gets a lot more complicated if you’re doing
this for multiple years, and so forth, but I’m keeping things
simple to illustrate a point.) The higher your discount rate, the
less you value the payoff in the future and the more you value
the payoff right now.
Now, let’s apply the concept of a discount rate to something
like dieting. Imagine you’re going out to dinner tonight and the
waiter brings by a dessert tray with a molten chocolate cake.
You want that cake right now, but you also have a diet goal that
requires you to reduce your daily food intake by 300 calories.
The cake will put you over your calories for today by 800 and
put you behind on your weight goal when you check the scale
next week.
With this as background, let’s analyze the situation. If I eat
the cake today, I get to enjoy the sweet chocolate as it oozes into
my mouth, creating a biological chain reaction that culminates
in a four-alarm pleasure emergency in my brain. That’s a good
immediate payoff.
But what about my future payoff if I stick to my goal and
skip the cake? Well, looking toward the future, I’ll probably
like the way I look, I’ll be emotionally empowered by my self-
control, I’ll be healthier, and I’ll fi t into my skinny jeans. These
are signifi cantly bigger payoffs than what I stand to gain in the
present, but they’re occurring at a later time than the enjoy-