Category Archives: Problems

The Cost Of Twisting Opportunity Costs

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While reading https://financefreelancelife.com’s post on Opportunity Costs, I decided to write about a concern I have on Opportunity Costs.

In economics class in college, students learn of the concept of “Opportunity Costs”.  Opportunity Costs questions where it’s worth the time and money to do an activity, and if there isn’t a better way to spend your time and money.  It’s about weighing and choosing the best option given the chance to do two activies but time to do one. 

Most students grasp the concept of working on Wall Street instead of a fast food restaurant.  But once they are employeed, some students twist the “Opportunity Cost” concept into something else.  Once they have a dollar amount per hour pegged to what they earn in their primary job, from their perspective, all work that they do has to be worth at least an equivalent amount of money.  So if they make, let’s say $40/hr, then if they look for a side job they feel that then need to at least make that $40/hr rate. 

So, is that true?

No, it’s not.  Often time the same student will watch a movie or go out to the bars.  So instead of earning a rate of pay, they’ll actually pay for the “Opportunity” to not earn money…  Eventually, even watching TV is a better opportunity than trying to work a side job to make additional money.  The funny thing is, that they don’t understand the real concept of opportunity costs.  Their leisure is costing them additional security and social interactions that could enhance  their life above the rate of pay.  If you work an additional job, you can choose something that you are passionate about.

Why am I bring this up?

One of my friends, use to make a decent amount of money for the city that he lives in.  Well, he got laid off and is now on unemployment benefits.  The funny thing is he had a few opportunities to be employeed, but decided not to because they were less than the rate of pay as what he use to make.  Now he’s in the situation where his unemployment is about to expire, and he still doesn’t have a job.  You can say that he was holding out for a better opportunity, but the hidden opportunity cost of deciding to hold out will cost him.  His resume now has a huge hole, that he can’t honestly fill.  He’ll be making a $0/hr rate of pay after his unemployment benefits run out.

I guess what I’m trying to say is, don’t twist a concept like “Opportunity Costs” into something that it’s not.  My buddy twisted it to justify him blowing off great jobs that while not perfect, were great opportunities.  Actually one of the jobs was for the same rate of pay, but the commute would have been a little over an hour for him…  Unbelievable!

-D

Beware of Phishers and Their Tricks

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I have an early Hotmail account, I got it back when I was in school.  I was lucky to get an account that had first letter of my fist name, and my entire last name ex.) [email protected]

I thought it was pretty cool at the time, but now I get mail for Dan, Dana, David etc…  So I get about 100 emails of junk a day.

 

No Phishing allowed!

No Phishing allowed!

 

What I really hate about my account is all the Phishers that try to scam me. Phishers are con artists that send you what looks like a link to a legitimate business (Ebay), but instead routes you to a scam site (that even looks like Ebay, but isn’t).

Phishing is a technique that the bad guys use to try to steal your credit card numbers.  Often time, older people who aren’t familiar with these techniques fall prey to such underhanded methods.  But other people fall for it too.  I have a relative (a recent graduate from a prestigious college) tell me that one day he wasn’t paying attention and click on an Ebay link in his email and logged in.  Realizing what he did, he instantly closed the existing browser and opening a new one, next he logging into Ebay and changed his password (luckily, he didn’t re-enter his credit info when they asked).  Next he call Ebay’s customer support just for the extra feeling of security.

So what do you do when you get an email for your bank or Ebay informing you a problem has occurred or you messed up and need to log in to fix this problem, etc…

  • Delete the email in your inbox.
  • Close all browser windows you have open, including your email account to (if it’s a browser type email client like Hotmail, Gmail, yahoo, etc)
  • Open a new internet explorer (or foxfire or safari) and Google the business that supposedly emailed you.
  • On the site search for the customer support phone number, and call it immediately.
  • If you mistakenly provided a credit card number, call your credit card company and have them issue you a new card with a number immediately.
  • If you get an email stating that you’re entitled to, won, inherited, or ect. a multimillionaire sum…   9.9999 times out of 10 don’t believe it. delete these emails too

I know people who when they log onto any web site on the web, they enter their account and then a bogus password just to make sure that the site is legitimate.  If the site lets you log on, even though you provided a bogus password, then it a Phishing site, close your browser!!!

Phishing is a horrible way to lose money.  Don’t fall for it!!!

Christmas Ebay Auction Mistakes

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My mother bought my son that hot, new “Mind Flex” game by Mattel (I have to admit, I want to try it out too).  But, my son already wrote a letter to Santa asking him for one.  I’m sure Santa will fulfilled that request.  After all, he is Santa…  😉

Since I’ve dabbed with ebay in the past, and I know that the game currently sell for a small markup (it’s sold out in the stores), I told her I would buy it from her and try to sell it on ebay.  I bought it from her for $75 dollars, and I put together a quick on-the-fly auction for it on ebay.  Now some of the units were selling for $149 + shipping and handling.  So I thought it should at least sell for $135.  Unfortunately, my auction only went to $117.50…  I was surprised that it sold for so little, I really expected more.  And I was really disappointed after I subtracted the cost of the ebay, paypal and other miscellaneous  fees.  My profit on the auction was only $26 dollars.  Hardly worth the 2 hours I put in posting the auction, packaging it, and driving it to be shipped…

So what did I do wrong?

  • My first big mistake was that I didn’t spell the name like it was on the package!  I listed the package as MindFlex, but on the package it’s “Mind Flex“.  WOW, talk about a rookie mistake!  I should have known better!  Ironically a lot of other people spelled it the same way I did.  Still I cut down my audience by at least 50%.
  • My second mistake was that I posted the auction late on a Sunday night (well at least after 8:00pm)…  This isn’t the optimal time to list an auction one ebay, especially at that hour.  This cut down the audience too, although the customer loss wasn’t near as damaging as my “first big mistake“
  • My last mistake was because I posted the auction to quickly.  I set a fixed shipping and handling cost that I thought would cover any shipping cost in the United States.  Unfortunately, Hawaii is also part of the United States (insert long, drawn-out scream here)…

What I want to communicate with this post is to take your time with ebay and other transactions that involves money.

Saving Money Using Google

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Google is great for searching for your favorite topic of interest, but did you know you could use it to save money too?

Last Feburary, my dryer started making a horrible metal grinding sound (I tried turning up the TV to drown out the sound, but it got louder). I didn’t want to buy a new dryer (these are hard time afterall…), so I decided to try to figure out how to repair it myself via google.  So for the search criteria, I entered “whirlpool dryer squeak” and I was able to find some good site on what the problem and how to fix it.  I like to put just the key words in the search windows.

I tried to type things like “whirlpool dryer is making a squeak sound“, but that wouldn’t give me as good of results as “whirlpool dryer squeak“.

I didn’t even know how to get the dryer apart to figure out the problem… until I googled it. It turned out to be the felt gasket, that the drum twists around over. It cost me $20.00 in total to fix the dryer.  I ordered the part (off of ebay), and install it. Normally, to get a repairman out, it would probably cost me at least $150 to $200 and they would do exactly the same thing that I did myself.

I’ve been able to do this with my car brakes and with other car repairs too.

During one of the coldest days of last winter (-10F), my heat pump decided to stop working.

Using google, I was able to quickly figure what the problems was, but I didn’t have time to order the part. From a few websites, I was able to determine what to do, and I was also able to determine that the part would cost me only $26. Unfortunately, I didn’t want my pipes to freeze, so I called a repairman so they could get it fixed that day.

The repairman did exactly what the websites stated to do, but instead of costing me $26 by doing it myself, the repairman’s fee cost me $234.

The moral of the story, the internet (using google to find a fix-it guide) is a great resource for saving money by diy (doing it yourself).

Google rules!

-MR