Innovictor
New Member
Today's post is not the typical blog post where I attempt an exposition on a particular topic; rather, it provides a remarkable opportunity to see different perspectives on opportunity cost. In simple terms, opportunity cost what you must forego in order to pursue a mutually exclusive alternative. I was with a couple of friends yesterday and one of them asked for our inputs and opinions on an important life decision he was about to take. The different opinions expressed during that discussion formed the basis of this post.
The Question
John got a decent job as soon as he returned from the NYSC service year. He works with an auditing firm in Lagos (on the Island). He has been able to save up some money in the last 18 months. John currently lives with his uncle on the mainland but he thinks it is about time he got a place of his own (needs to rent an apartment).
He also fed up with the stress, delays and "high" fare of public transport and he his thinking of buying his first car. Now, the savings he has is only enough to rent an apartment or buy a car. Should John leave his uncle's house and rent an apartment or stay in his uncle's house and buy a car?
Responses
Hemma: Rent the Apartment and Postpone the Buying of Car.
Hemma's position is hinged on the fact that John's staying at his uncle's place provides him with a comfort zone where he probably doesn't put food on the table or pay any of the bills. Hence, when he buys the car while still staying at his uncle's, he will be relaxed because he has decent accommodation and he is now a "big boy" and his saving power might be reduced. That is aside from the fact that every man needs his privacy and a place he can call "my crib".
David: Buy the Car; Continue Staying in Your Uncle's Place
David's position supports buying the car because of the mobility that it provides in reducing the stress that John undergoes daily when on the way to and back from work. David opines that since John's uncle provides him with accommodation, he should graciously accept it with a heart of gratitude, buy the car and start another round of saving up for an apartment.
Patrick: Rent the House and Buy the Car
Patrick opines that instead of being conditioned by the tyranny of renting an apartment OR buying a car, John can actually embrace the awesomeness of renting an apartment AND buying the car. Patrick advices that John can actually buy a smaller, older model or cheaper brand of car while getting a smaller apartment or an apartment in a less-elite neighborhood.
Kay: Don't Buy a Car, Don't Rent an Apartment
Kay posits that John can still live in his uncle's house a little longer and that he can still go on public transport a little longer before buying a car. He posits that if John invests his current savings and he starts another round of savings, he should be able to rent an apartment and buy the car he wants a couple of months down the road.
Final words….
All the contributors have different; yet, interesting insight toward helping John managing his opportunity cost. Whose advice do you think John should take? Let us know in the comments to the thread. Do you have a better contribution on how John can manage the opportunity cost; let us know in the comments to the thread.
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