Common Currency: A Primer

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Common Currency isn't your father's personal finance blog.

This is mostly because when your father came of age, Al Gore hadn't invented the Internet yet but in practice this means that you won’t get me to lying or falsely waxing about the latest, greatest mutual fund, interests rates and how to get deals on taffy and boots – whatever your preference.

No sir, no ma’m. These postings will pertain to the economy of life, which unless you’d like to return to the cave painting days with harry but urbane insurance pitchmen, will revolve mostly around that dolla-dolla bill. In large part though it’s about choice, personal alternatives that shape our financial world. So break out your pie charts, this will be 25 percent personal anecdotes, 50 percent about money, 25 percent fiscal philosophy, 100 percent edutainment.

There you have it, now let’s get personal – about finance.

I failed economics class in college and when I say failed, I mean miserably,  like I laughed hard when I came out of the final exam because there was no way in hell that I passed the test or the class. I took the course again two years later and passed with flying colors but that ain't the point. I learned more macroeconomic theory and practice in a failed effort than I did the second time around when I just went through the motions, most notably studying. Go figure.

What did I learn? Two resonating words: Opportunity cost, a stalwart  economic principal, a paradigm for decision andpolicy making and yes a phrase to which I've alluded redundantly and incessantly during dinner conversations, in the process of saving and blowing money, in falling in and out of dating circles, during job interviews and for some reason, on the toilet.

Here's how it works. The determination of the equilibrium in a given market boils down to supplyand demand and....oh who am I kidding. Opportunity cost means that if you choose one alternative, you forego another. In our economy, society and life, we all supply and demand something and thrive or founder on the value of the exchanges.When you exchange one alternative  for another, whether it be a choice about time or money, you’re losing something with each purchase.  

Eat out, save time.  Eat in, save money, lose time cooking and cleaning up. Take public transport, save money on gas and weapons for road rage fights. You’re also at the mercy of forces beyond your control such as a late bus or train. Spend your rent money in Vegas, get evicted. Pay your rent and snarl at your friends when they recall how fun it is to be young and irresponsible.Suffice it to say, many blogs and columns about PF will tell you to make a choice and stick to it. This joint right here, will present the choices and allow you infuse your own philosophy because despite the fact that the savings rate is the worse it's ever been and consumer debt is at an all time high, money, like time, is made to be spent wisely and that starts with knowing the cost of each opportunity.

Now go tell your pops about this.