    That seems to be the question for many things we own.  For example, our dishwasher received a recall notice last month.  Normally if it was broken we would think twice about calling for a repair service, depending on what might be wrong. The charges for labor and parts alone would probably be half as much as a new dishwasher.   But for the recall notice, after checking with the company we were given two options:
- Parts and service to make the required repairs, or
- A $75 voucher credit towards a new dishwasher.
   Our dishwasher is about 8 years old. Which would you choose? We chose the repair service because the dishwasher works very well, and has always done an admirable job cleaning dishes.  If the dishwasher had been running poorly and not cleaning dishes properly we may have rationalized gettting a new one. But spending $300-$500 for a new dishwasher was not a good option for us, especially with the company only offering $75!  I guess they ran the statistical numbers for their own costs, but the repair gentlemen that came out today says it costs the company more than the price of a new dishwasher for all the parts and labor. Go figure. I would have loved a new, free dishwasher!
   But we face these same decisions every day really. Economists call it opportunity cost and it relates directly to the value of a different choice that we give up when making a decision.  We are giving up the next best alternative when we make our decision. In our case, the next best alternative was $75. That was the opportunity cost involved in having it repaired instead. Some may argue the real opportunity cost is based on $75 plus the quality and operability of a new dishwasher over a longer lifespan as compared with our old one. But we would have spent an additional $300-$500 for that new one, which could also be considered opportunity cost. Lots of ways to look at it, but I think we got the better deal.Â
    Sometimes we can make unreasonble assumptions or rationalizations as a way to justify our desire for having something. Our wants can become so important that when we hear funny noises from our car, or the TV picture doesn’t look quite as good as the new TV’s in the store, or the shoes we have on just don’t look or feel right anymore? We go out and buy new things, even if the old ones are working just fine. We are making opportunity cost decisions, and in many cases we know that keeping the old, used car and running it a few more years will save tons of money over time. The opportunity cost is not only based on purchase costs saved, but also the investment return the money could have provided in later years.  That’s something we don’t often consider… but it’s very important. When we select one investment over another, or only invest $100 per month as opposed to $300 per month in our 401(k)… all those decisions can be looked at from an opportunity cost perspective as well. Considering those decisions in the context of retirement 20 or 30 years from now can really involve incredible sums of money.
    But there are also other times when we know getting a different car or pair of shoes is just the right thing to do. It may have absolutely nothing to do with money or logical-analytical decision making. It may be an emotional thing that makes us feel better, and helps us do our jobs better while enjoying life more.  I’m all for that… and that’s why life and money management is all about balance, and choice!
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