Hankincents theory of Relativity

Creative Commons photo via www.flickr.com/people/nostri-imago/

When I was trying to come up with a name for this blog, one thing that leaped to mind was the story of the apocryphal magi from everybody’s favorite Christmas carol. They came with really fancy gifts that were probably well-received. But here in 2009, I’d just as soon have a big, fat check as some myrrh or frankincense.

That’s what’s so tricky about financial planning. We all have different ideas about what things are worth. While I’d certainly be grateful if somebody handed me a $65,000 Lexus, there’s also no way I could afford the insurance or consistently find a place to park on my crowded street. I’d probably rather have $90 to cover a wheel rebuild for my cranky, old bicycle. Then again, I’m racking up some Lexus-sized debt for a degree in journalism. I’m willing to take the risk because I believe my degree will increase my value as a potential employee. I feel like it’s worth the time and money not just for that, but because being really good at journalism is valuable to me as a person. But I know lots of people would take the wheels.

A couple of years ago, thousands of Americans in the market for new houses probably felt the same way. They were pinning their savings and credit ratings to something they valued more than other options, for the chance to have a better quality of life or to turn it over for a profit.

It’s a risk we all take, buying one thing instead of another. Our decisions might not always seem totally informed or rational, but most of us know what we want.

With Hankincents I’m trying not to peg my thoughts to what old dusty books from the past say we should value, because getting our monies worth from the choices we make really is pretty relative.

This entry was posted on Monday, July 6th, 2009 at 10:36 pm and is filed under Commoncents, opportunity cost. You can follow any responses to this entry through the RSS 2.0 feed.