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Making decisions is something we do every day.

From the mundane (where to eat lunch?) to the


monumental (where should I go to school or
work? Who should I marry?), decisions are a daily
occurrence.

You would think that with all our experience in


this area, we would be pretty good at it (making
decisions that turned out well almost every time).

If that were true, your life and mine would be getting better with each passing
year.

Why Isnt This Getting Easier?

But, lets face it. Making


good
decisions is not always that easy. Who hasnt
experienced regret from a
decision made? Even one they
sought to make carefully and
wisely?

Here is the sad truth: we


humans are hit and miss
when it comes to making good
decisions.

Copyright WiseInsights.net 1
Its not like most everyone around you is making good decisions they dont
regret or that turn out well and you are the exception.

We all struggle.

Why do you think most people get anxious when trying to make an
important decision? Because they want this one to turn out well not like
some other ones they made!

Even The Smartest People Fail At This

Even when we try mightily and apply considerable brain power, we end up
choosing the wrong option almost as often as we choose
a good one.

In a study of over 20,000 executive searches, 40%


of senior level hires are gone in 18 months (either
fired or they quit). Do you know how much time,
effort and money are put into the process of
finding a good candidate... and yet almost half
the time it is a total bust?

In the world of business acquisitions and mergers,


where extensive analysis by very smart people is
made on which companies to acquire and merge
with, a full 83% of those mergers and acquisitions
fail to help the acquiring company. Can you say
swing and a miss?

In a survey of 2,200 executives who evaluated the


decisions of their organization, 60% assessed the
outcome of those as being bad as frequently as they turned out well.

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Its not just in business and career. In every area of life, we humans often
make choices that dont turn out well (certainly not as well as we had
hoped).

There Has Got To Be A Better Way

What we need is a proven process or system to follow when faced with making
important decisions. One born out of successful outcomes that we can all learn
from.

No, there are no guarantees that every decision you make will be a winner,
even using the best possible system. There are too many unknowns in the
future.

But, by using a process that seeks to counteract the main factors leading to
a bad or inferior decision, and teaches you proven techniques that improve
results, you sharply increase the odds of a better outcome.

In the following pages is a 5 step


process that does just that--
improve your decision making
results. This process comes from
much scientific research on
human behavior, from research
on the decision making
mechanisms of the brain and
from wisdom learned from
successful outcomes.

Final note:
Although there are many excellent resources that touch on how
we process information and make decisions (e.g. Thinking Fast and Slow,
The Art Of Choosing, Blink, Think Twice, The Impulse Factor), I am
personally indebted to Chip and Dan Heath and their excellent book
Decisive.

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In it, they distill what I believe are the main obstacles that significantly
lower your odds of making a good decision and provide an excellent system
to counteract those obstacles (increasing your odds). Do yourself a huge
favor: Go to Barnes and Noble or Amazon, pick up a copy, and study it. It
may be the best investment of your time and money on this topic.

The following is a 5 step process you can use every time you face a difficult,
vexing or important decision.

(1) Entertain Openness

You need to start with your general approach to


decisions. You can use some of the techniques
and tactics I go over in the coming steps, but if
your initial approach is all wrong, you are doomed
to fail.

Your general approach needs to be open to


discovering the best possible option. We often say we are but many times
we already have a horse we want to ride.

Here is the question: Are you trying to find the best decision for a situation
you are facing or are you trying to make a certain decision work for you
(which may not).

Your Favored Choice Could Be A Disaster

It is like trying to decide on the best way to go from Nashville to Houston.


You can evaluate a variety of routes and methods of transportation, or you
can (secretly) be convinced that heading north will make you happiest.

In the end, you will be very cold and no closer to a good outcome (Houston).

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To make a good decision, you need to approach the decision with an open
mind, open to an option you might not have originally liked or even thought
of when you started.

Heres the point: Be honest with yourself and put on the table any
unspoken desires that are secretly steering you in one direction. That
direction may, in fact, be a good one. But, open yourself up to other choices
and options that may be even better.

Really
Are You Listening?

There may also be spiritual dimensions to


consider. Many times there are decisions you
are facing that God has a direction he wants
you to go. Have you asked God what he
wants you to do? Are you ready and willing to
go in that direction whichever way it leads?

God really isnt looking to ruin your life. He


has good plans for you if you will let him
lead you.

I cant tell you how many times I have started running down a path that I
thought was best, only to have God nudge me about a different option I
hadnt fully considered. One thing is certain: if you want to ensure a bad
ultimate outcome, disregard the wisdom and guidance of God.

Remember: you dont know what you dont know. A little guidance from
above is a great thing.

(2) Expand Your Choices

If you only put into action one thing from this book, it would be this step. In
fact, this is probably the #1 reason we dont make a good decision we are
only looking at a situation one way or trying to decide on a single option.

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Should I take this job, or not?
Should I quit this job, or not?
Should I buy this car, or not?

Researcher Daniel Kahneman calls this human tendency What you see is all
there is. This one thing we are fixated on or evaluating is all we see or
consider.

Studies have confirmed two things:

1. The most common type of decision we make involves evaluating a


single option.
2. Single option decisions usually produce fewer good outcomes.

Fascinating Research On Using This Approach

Here are just two rigorous studies that come from the world of business.
These are particularly instructive because these decisions were not made
impulsively or from the hip. Instead, these companies were diligently trying
to make a good decision.

Two German professors examined every major decision made at a


technology firm over an 18 month period. With the assistance of the
company, they were able to assess what was being evaluated, the
process they went through to make the decision and the outcome of
that decision several years down the road.

What they found was that of the 83 major


decisions made during that period, the company
itself in hindsight rated a decision as very good
only 6% of the time when it involved a single
option, but 40% of the time when two or more
options were considered.

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In other words, this study concluded that the company was 6 times
more likely to have a very good outcome if it made a decision with
more than one option.

Researcher Paul Nutt carefully evaluated 168 decisions made by


various companies and determined that only 29% of the time
companies made decisions based on more than one option. 53% of
the single option decisions failed over the long run, compared to only
32% of the decisions turning out poorly when evaluating more than
one option.

Bottom line from this study: Companies were 65% more likely to
make a bad decision when evaluating a single option.

Why This Approach Often Doesnt Work Very Well

Why does this single option approach fail so much more often?

One obvious reason is you are limiting your chance to find a good (the best)
option if you only have one horse to bet on.

Another reason is what I alluded to in step #1: People are often looking at
an option they subconsciously want to work. Instead of spending their time
honestly evaluating its merits, they are trying to figure out how can I make
this work?

Regardless of the reason, the numbers dont lie. Making a decision based on
a single choice significantly increases the likelihood the decision will not
turn out as well as when you are evaluating multiple options.

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How To Increase Your Options And The Odds Of Making A Good
Decision

The problem is that often, we cant see any other options. We are faced
with a situation and we feel like we have only one option: to do it... or not
to do it.

How can you increase the choices and options you have when making a
decision?

I suggest using what I call


The Panorama Techniqueto expand your
perception of other options you might not have considered.

Instead of looking through binoculars and fixating on the single, apparent


option before you, you need to consciously take a 360 degree,
3-dimensional panoramic view of the situation and your possibilities. With
a little creativity, you will begin to see other options that might turn out to
provide a better outcome.

Ways To Expand Your Awareness Of Additional Options

Here are some suggested ways to increase your perceived options (and the
odds of finding the best choice):

Talk to others
. Other people often have a different perspective than
you do. They can brainstorm with you. What about this? What
about that? Have you considered Dont be too quick to dismiss
their suggestions. Instead, be open and give them time to be
evaluated. The very best people to pursue are those who might have

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faced a similar decision you are now facing. They can often give you a
helpful perspective from their success or failure.

Consider you opportunity costs . An opportunity cost comes from the


world of economics. It is the loss of potential gain from other
alternatives when one alternative is chosen. In plain English, it
simply means what else you could have if you didnt spend it on your
first choice.

For example, if I am thinking about getting another car, ask yourself


if I didnt spend my money on that car, what else could I do with
that money? You could get a less expensive car plus use the
difference to go on vacation. Or you could use it on some home
project you have wanted to do. Or you could keep saving your
money to get the car you really want vs. settling for one you can
afford now.

What other options do you have if you took the time or money or
whatever cost is associated with one choice and used it in other
directions? Get creative!

This little exercise can help you generate some options you may have
never considered.

Remove the current options . If you removed the current single


option as though it is not available anymore, what other options do
you have?

For example, if you are trying to decide whether or not you should
attend a certain school, what would happen if that option was
suddenly gone? If you are determined to get your degree, you would
begin to look at other possible schools. If they were off the table, you
might look for a job in the field you are wanting a degree in.

This exercise forces you to get creative, think outside the box and
helps you identify new ways to get where you want to go.

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Combine parts of options
. Instead of just considering one way to do
something, why not mix and match possible options?

For example, if you are trying to decide whether to stay or quit your
job, why not consider different combinations of staying and leaving?
Staying doesnt have to be same as it is now. Maybe look to move
into a different role or different area of the company that you would
enjoy more. For the leave option, it doesnt have to be an all or
nothing. Perhaps you could work part-time while you do something
else you want to do or pursue.

I understand not all these possibilities are true possibilities, but the
goal with this exercise is to force yourself to see new possibilities.
Who knows? Some idea you had never considered or some hybrid
approach may turn out to be the best solution.

Ok, lets assume you now have more choices to work with (limit it to 3-5),
now how to decide? There are still more mines you might step on, blowing
up your chances of making a good decision. These obstacles are built into
your nature so you cant see them in yourself although you can see them
in others.

(3) Expose Your Bias

Another reason why we often make


poor decisions is that we are all
victims of what is called
confirmation bias. This is where we
unconsciously seek, retain and use
information that confirms our initial
assumptions.

In other words, we often make decisions based on bias interpretations of


the facts.

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For example, you could be house hunting and find this great house.
Because you like it so much, you begin to downplay the problems with the
house (roof leaks, structural defects, money needed to address the
problems) and convince yourself, based on other facts, that this is the best
choice.

You only see certain facts, while selectively ignoring others.

The Research Reveals Our Bias

Researcher William Hart analyzed 91 different studies involving over 8,000


participants and noted from all this research that the numbers indicate
we
are more than twice as likely
to receive and favor information that aligns
with our current viewpoint than to heed disconfirming information.

Heres a great example.

In a study by psychologist Drew Westen, people with different political


views were exposed to contradictions in statements from candidates they
liked and didnt like. As they reviewed these different statements, they
were in an fMRI machine so researchers could see the activation of key
parts of their brain that indicated the information was registering.

The results?

For the candidates they didnt favor, they noted


all
the contradictions
(confirming their original assessment of the unsuitability of that candidate)
while only half the contradictions made by their favored candidates were
noticed. The rest of the contradictions were dismissed or explained away.

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Twisting The Facts To Reach A Conclusion

Sounds kind of like the old statement: I already made up my mind. Dont try
to confuse me with the facts.

This begs for a classic joke.

Perhaps youve heard of the man who thought he was dead? His
delusion became such a problem that his family finally paid for him
to see a psychiatrist.

The psychiatrist spent many laborious sessions trying to convince the


man he was still alive. Nothing seemed to work.

Finally, the doctor tried one last approach. He took out his medical
books and proceeded to show the patient that dead men dont
bleed. After hours of tedious study, the patient seemed convinced
that dead men dont bleed.

The doctor then took out a pin and pricked the


patients finger. Out came a trickle of blood. The
doctor asked, What does that tell you?

Oh my goodness! the patient exclaimed as he


stared incredulously at his finger Dead men do
bleed!!

Bottom line:
we often make a poor decision because we unconsciously find
and embrace information that confirms what we already believe (or want to
believe).

No
One
Is
Immune
To
This
Bias
.

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How To Combat The Problem

What can you do to counteract it and ensure that you are assessing your
options fairly so you can select the best option?

Argue the opposite with yourself


.

One way to fight against confirmation bias when making an important


decision is to argue in favor of easily dismissed options. You know, be your
own devils advocate.

Try asking yourself: What would have to be true for this less favored option
to be the best option, the right answer, to work the best and have the best
outcome?

Another way to say it: What if my least favorite option were actually the
best one? What data might convince me of that?

Seek out a contrarian.

Since we are often stuck in our own perceptions, arguing the opposite is not
enough. We need outside input.

Find people who can play devils advocate with you. I suggest you use
someone who is not arrogant and opinionated since even if they are right,
you will unconsciously resist their viewpoint.

If, however, you can speak to someone who is humble, open minded and
thoughtful, they can potentially help you see your less favorable option in a
different light.

Ask tough questions of your favored option(s).

Honestly and unbiasedly assessing your options means not only to consider
the least favored decisions but to challenge the favored options.

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Why let them just skate to the front of the line without a closer
examination? Instead, probe that favored option with real questions (not
softball questions).

I remember launching ahead with a new business without giving it a real


grilling. Why? Because it all made so much sense, seemed like a no-brainer,
couldnt fail, etc.

I know Im an idiot.

In retrospect, all the gushing assessments of how this thing couldnt fail
should have sent off warning bells in my head (not so fast, partner!).

Instead, if I had been a little more rigorous in evaluating the numbers and
challenged my assumptions that everyone would want this new technology,
I might have saved myself from a rude awakening.

Dip your toe in the water

So far we have been analyzing our


potential options in an attempt to
determine which is the best one. If
possible (not always the case), run a
test. Try something out for a limited
time to see what you think.

Heres an example of where I wish I


had thought of this. When I was in
college, I had to figure out my
major which isnt always easy. I
knew what I didnt want to major in,
so I ruled those out. In the end, I
decided to go down the path of
accounting.

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Why?

Well, I reasoned that I was good with numbers, and in the one and only
class on accounting I had taken up to that point, I did pretty well.

It was only after I graduated and took a job in accounting that I knew: I hate
this! I had to grind it out for about two years but then quit. I probably
should have been on a suicide watch the entire time.

Only after I took several years of accounting classes, graduated and started
working at an accounting firm did I find out I could have done a summer
internship, or a year-long internship to test out my assumption that this is
what I wanted to do as a career.

Why try to predict the best option when you can find out for sure?

Quick recap: you have expanded your options and have sought to evaluate
those options in an unbiased manner by counteracting your confirmation
bias.

There are still a few more landmines to address.

(4) Escape Your Emotions

Actually, you cant and shouldnt totally escape your emotions. They can
play a helpful part in the decision making process as Jonah Lehrer points out
in his book How We Decide. I am not advocating a complete rational
approach to decision making (which isnt really possible and which research
has shown can be prone to errors in decision making).

Instead, we need to keep our emotions in their proper place.

Your emotions can distort your perception of your options and lead to poor
decisions. Thats why it is foolish to go grocery shopping when you are

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hungry. Things you wouldnt normally buy suddenly seem like a sensible
decision (which you later regret).

The Distorting Power Of Emotions

Research reveals just how much our


decisions and perceptions are
influenced by our emotions.

Professor Dan Ariely, author of the


fascinating book Predictably Irrational,
noted research on men and women
who were asked to make decisions
while in the clutches of sensual arousal.
Foolish decisions they would have never made moments earlier suddenly
seemed like good decisions when their minds were flooded with emotions.

You dont have to experience highly emotional situations to have your


perspective skewed.

Research shows our brains automatically and instinctively cling to the


familiar (The Exposure Effect). The more we are exposed to something, the
more comfortable we become with it and it becomes increasingly difficult to
go in another direction (even if we sort of want to).

This unseen gravitational pull can hinder you from embracing better
choices.

The Irrational Fear Of Loss

In addition to the exposure effect, there is another known quirk of our


brains noted by researcher Daniel Kahneman called Loss Aversion. In simple
terms, we humans experience twice the level of the emotional impact from

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losing something as from the anticipated pleasure of gaining the same
thing.

One fascinating study Kahneman did with his students


involved a coffee mug. Half of the test students
received a coffee mug with the universitys logo on it,
while the other half did not. They asked the half who
did not receive a mug how much they would be willing
to pay for the mug. The average was $2.87.

However, when they asked the students who had


received the free coffee mug how much they would be willing to sell them
for, they said $7.12.

Whats going on here? The pain of giving up the mugs (which they
received only minutes earlier) was significantly higher than the pleasure of
obtaining a mug. Yet, both thought they were assessing the value fairly.

Heres the point: your unseen emotions and irrational perspectives can
unknowingly skew your ability to assess your options objectively.

How To Battle These Hidden Forces

Try these approaches to getting a healthier emotional perspective on the


options you are trying to evaluate:

1. Time perspective . Try to imagine how you would you feel a year from
now and then 10 years from now if you moved forward with a
particular decision? Do you find yourself seeing this as a regrettable
choice once you got some distance from it?

2. Defending your decision . A year down the road, imagine having to


explain your decision to your spouse, or your children or a significant
person in your world. Is this something you would be proud you did?

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Or embarrassed?

3. Counseling others.How would you counsel a good friend who


approached you in the same situation you are now in? It is amazing
how often our advice to someone else would be different than what
we are advising ourselves.

This is why one piece of sound advice is always to sleep on it before you
make a decision. That gives you a chance to get some distance from the
heat of the moment.

There is one more decision making problem we face

(5) Prepare For The Worst

Our final step seeks to combat a factor that


can often lead to a poor decision. That
factor is the propensity we all have for
being overconfident and overly optimistic
in the outcome of our decisions.

A classic example on which banks and


credit card companies have become rich:
our overconfidence in our financial future.

We buy something on credit because, in part, we believe we can and will


quickly pay off the charge. Sure, things might be financially tight right now
but in the near-term future we think will be in much better shape so paying
this off isnt a big deal.

Uh-huh.

Research confirms the overconfidence bias:

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A study analyzing doctors accuracy in a diagnosis indicated that even
in the cases where they were completely certain, they were wrong
about 40% of the time. Im feeling good about this assessment is
not necessarily inner confirmation you made the proper evaluation
of a situation.

In research reported by Max Bazerman, people are correct in their


estimates and predictions only 40-60% of the time, even when they
are reasonably certain of their guess.

The reality is there is no possible way to accurately predict the future. There
are just too many variables and too many unknowns.

How To Counteract Our Unreliable Predictions

If we are wrong as often as we are right in predicting how the future will
turn out, what can we do to prepare for the high likelihood things wont
turn out like you think?

1. Premortem. Most of us have heard


the term postmortem since there
are plenty of forensic CSI type
shows on TV. It is the process of
analyzing why someone died. A
premortem, a term coined by
psychologist Gary Klein, describes
the process of analyzing why
something might go wrong before it
happens.

For example, you are thinking about taking a job with a certain
company and would have to relocate to another city. You are excited
about this opportunity and feel confident that this will be a good move.

It might. But, what if it doesnt turn out quite like you thought?

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A premortem has you mentally put yourself into that situation and
imagine things a year from now. What things would cause it not to
work out? You dont like the new city. Or, you have difficulty getting
connected to life outside of work. Or the job is far more demanding
(hours, stress) than you were led to believe. Or you miss family and
friends where you live today.

The goal is not to convince yourself it will all turn out badly or to get
depressed about the future. It is to identify areas that could contribute
to the outcome turning out less favorably than you anticipated. Once
you have those on the table, you can then better assess that option and
take some action steps.

For example, research the climate or the culture of the city before you
decide. Or, develop a plan to promote your connections in that city
(join a club, research good churches, learn how the natives like to spend
their free time-- if it is doing things that dont float your boat, well, now
you know).

A premortem not only helps you obtain a fuller picture of what could
happen (so you can make an informed decision), it also helps you
prepare yourself for those possibilities if you do decide to move ahead.

Of course, since you cant predict the future, and a choice you make (or
dont make) now could go wrong, what can you do to limit the
downside and minimize the regrets?

2. Set a tripwire. Chip and Dan Heath in their excellent book, Decisive,
introduce the concept of setting tripwires in your decision making.
The term comes from the realm of the military and describe a wire
stretched close to the ground around the perimeter of a camp, so
that when someone disturbs or trips the wire, it sets off an alarm
that stirs the soldiers in camp into action.

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A tripwire in decision making identifies conditions determined in
advance that warrant action.

Time based. These conditions can be time based, if this


happens (or doesnt happen) within the next 6 months, then I
will respond by doing X.

Situation based . The conditions could be a certain event


happening or not happening. If the stock gets below X, I will
sell it regardless.

For example, I was running my business but had a very promising


opportunity arise in another business. I knew I couldnt do both, but I
felt the new opportunity had great potential. What could I do to limit
the potential downside if I moved forward?

I set up two tripwires- time and situation based. The first tripwire
was to pursue this new opportunity for only 6 months. If, in 6
months, I had not made a sale, then it was over. This prevented
compounding a bad decision. It is always difficult to let go of
something you have invested a lot of time and energy into. A tripwire
helps prevent that.

But, what if I made several sales but continued to see little income?
Should this continue indefinitely?

The second tripwire was situation based: if this venture was not
consistently generating at least $1,000/mo of income within the first
9 months, then I needed to move on.

What decision are you looking at that could use some tripwires?

Here Comes The Hardest Part

Now, here comes the hardest part of the 5 step process:

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Putting

---------> what
you
just
learned
into

action

Here are some recommendations to help you in that department.

Focus only on a few suggestions . Maybe you arent ready to work


through all this material. But, there were a few suggestions you really
liked. Use those.

Revisit this material regularly (since you will make more than one
decision in the future, right?). The more you read it, especially in the
context of a new decision, the more you will slowly incorporate it
into the way you approach decisions.

Create a checklist.In his book, The Checklist Manifesto, Dr. Atul


Gawande reported that in a study of 7,600 operations in 8 cities,
researchers found that the rate of death dropped by almost 50% and
other complications dropped by over 30% when doctors followed a
very simple checklist. Checklists ensure we do those things that we
fully intend to do but sometimes forget in the moment.

If you are feeling like, this information is good but it is too much work
then let me remind you:

Isnt it worth a little bit of effort to have a better life? Whats the
alternative?

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FinalRequest

Ihopeyoufoundthisinformationhelpful.Ihaveasimplerequest
well,actuallyitistworequests:

1. Sendmeamessagetomypersonalemailaddress
patrickm@wiseinsights.net andletmeknowwhatyouthinkofthis
report.Iftherewasaparticularideayoufoundhelpful,sharethat,
too.

2. Doyouknowsomeonewhomightbenefitfromthisinformation?
Dothemafavorsendthem thislinktomydecisionmaking
resourcepage .Whoknows?Theremightbesomeresearchthat
trulyhelpsthem.

AboutTheAuthor

PatrickMcDanielisthefounderofWiseInsights.net.HeisaGoogle
certifiedinternetmarketer(Adwords/Analytics)whohasdoneextensive
researchintheareaofdecisionmaking.Hewaspropelledinthisareaafter
gettingfedupwithmakingchoicesthatseemedgood,butturnedout
poorly.

Patrickisthefatheroffourgreatkidsandthehusbandtoonegreatwife
for27years.Oneofhishiddentalentsisbeingabletofindawaytofitone
moreiteminafulldishwasher.Tryputtingthatonyourresume!


CopyrightWiseInsights.net 24

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