Friday, May 11, 2012

Buying in Terms of Time

I have had my eye a new LCD 42″ TV for the last year.  I told myself to wait until they are priced under $700.  The day after thanksgiving I had my opportunity.  Multiple stores were offering my desire.
So did I buy it?
No. Because I realized what that $700 TV actually cost me.
Let’s say I make $20/ hour.  I would have to work 35 hours just to make $700.  So is 35 hours worth it?  Maybe…
WAIT, there’s more.  What about the taxes? Let’s say I’m in the 25% Tax Bracket.  That TV just cost me 46.5 hours of work.  Now, is it worth it? Maybe…
WAIT, there’s still more.  What about the opportunity to use the money elsewhere.  This is also called opportunity cost.  Instead of buying the 42″ TV, I could…
  • Pay Rent
  • Earn Interest on it and have More Money Tomorrow
  • Apply to a Car Loan or other Debt
  • Start a Retirement Account and Earn Money, Tax Free
I figured I watch about 1-2 hours of TV a day on a 27″ tube TV.  To me it wasn’t worth it to pass up the other opportunities.  Maybe someday I will get the beautiful, sharp, crisp 42″ LCD, but for now I can hold out.

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