Category: Money

Pessimistic spending

People convince themselves that a purchase that benefits them in the present will have extended value in the future. For example, buying the highest-end PC with the thought that it will outlive a lower-end PC to the point where the return in value is greater than the added financial cost. Another example is buying an

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Where budgets fail

Money is fungible. A dollar is a dollar. Since money is identical, there is no limit on what it can be spent on. If an unforeseen expense arises a budget remains intact. The money is still spent on, say, eating out. If a budget allows $20 a week to be spent on regular gasoline and

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$100 off

Most people would not travel 30 minutes out of their way for a $100 off a new car. But they would for $100 off a TV. Why is this? The savings is the same as is the level of effort. Is it a question of valuing ones’ time? Or is more about the value returned

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The true price of things

What is the true price of a $100 watch? If your tax rate is 30% then you’ll need to earn $142.85 to receive $100. 100 / .7 = 142.85 And what about the interest lost on that $100 over, say, 10 years? That’s $164.70. 100 * (1 + (0.05/12))^(12*10) = 164.70 Of course, price doesn’t

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