Monday, September 28, 2009

Weighing the cost

scale In today’s consumption-focused society, we are conditioned to look for bargains.  Before jumping headlong into a “great deal”, you must first understand the full implication of saving in one way when there is a chance you may be making up for it in another.

There are at least two major types of cost swapping that you should consider to avoid paying more than what you bargained for.

One for the other 

There are many different types of costs.  To name a few, there are costs to your wallet, costs to the environment, costs to your  quality of life, costs to your reputation, and costs to your time.  Often, the lowering of one cost will be accompanied by the increase of at least one other cost.  For example, DIY furniture impacts your wallet less, but can be a drain on your time.

When making a purchase, preparing to sign a contract, or selecting a particular path to take in a project, make sure to consider all the costs that are important to you.  Also, recognize that a cost you may not care about could ultimately impact one that you do.  (e.g.  Perhaps costs to the environment don’t bother you so much, but the impact this fact could have on your reputation does.) 

Now versus later

How many advertisements hype how little you have to pay up front?  Zero downNo initiation fee!  Gack.  The housing bubble, in part at least, is indicative of how bad things can get when folks cannot see tomorrow’s cost over today’s.

No matter how good today’s cost looks, take the time to consider all the associated future costs and incorporate that information into your overall decision.  Here is an example of future costs associated with a car purchase:

  • Maintenance costs
    • How regularly does this type of car tend to break down? 
    • How costly are the replacement parts? 
    • Does the local mechanic know how to service this type of car?  (Will I have to take time off of work in order to get my car repaired?)
  • Fuel costs
    • What type of fuel does the car use and how expensive is it? 
    • How efficient is the car?  (How much will it cost to keep the car full of gas?)
  • Insurance costs
    • How much more does my insurance provider charge to insure this type of vehicle?

With practice, asking these types of questions will come more naturally.  Start today for less costly tomorrow.


Good luck!

1 comment:

AlwaysJoy said...

Ahhh Elsa -
THIS is something I REALLY need to work on...
I am really thinking this way with the house purchase


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