6/11/2009

Opportunity Cost in Action


A few weeks ago, the Mrs. had a nice post about opportunity cost - what it is and how we account for it whether you realize it or not. Also, I had a post last week about robbing the car replacement fund to put the money towards the new roof. This post will tie the two together nicely.

My sister-in-law and her husband were visiting the other day. Her husband and I were in the driveway coincidentally talking about our roof, when the Mrs. Comes outside with the phone and asks, "Do we want to buy Mom and Dad's car for $6500?"

"Sure...." I said


".... if we had the money."

Her parents had bought this car used a couple years prior - a Volvo wagon. It was still in great shape with a lot of life left in it. Besides that, it is a pretty sweet ride (for a family car / wagon) for $6500. At the time, they settled for this car since the one they really wanted just wasn't available. They live on a farm and wanted a diesel car for both the mileage, and the fact that they buy diesel in bulk for the farm equipment.

Well, with updates made to meet newer diesel regulations in the US, the car they wanted was now available. But the dealer was only willing to give $6500 on their car. Good farmers are also good business men, and he would rather sell the car to one of his kids for that amount, than let the dealer steal it for that amount.

A very generous opportunity, but we both had to turn it down. We had made our choice - the cars will have to wait and the roof comes first.

What opportunities have you passed up due to needing to put your money elsewhere?

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