Dollars and Sense

We should realize that money is just a medium of exchange.

When we move from comparing money to things to comparing things to things directly, it puts our choices into new perspective.

What if we said, “You know what, the bigger house costs me the same as the smaller house plus one yearly vacation, a semester of college for each of my children, and an additional three years of working before retirement. Yes, I can afford it, but maybe it’s not worth exchanging all those things for an extra bathroom and a larger yard.”

When it comes to making financial decisions, what should matter are opportunity costs, the true benefit a purchase provides, and the real pleasure we receive from it compared to other ways we could spend our money.

If we were perfectly rational, language, rituals, and expectations should not influence our spending decisions.

Think about transactions in terms of opportunity costs by considering more explicitly what we’re sacrificing for what we’re getting.

Buying a $60 shirt marked down from $100 isn’t “saving $40”; it is “spending $60.”

The pain helps us pause before purchasing and consider whether or not we really should spend our money then and there—it helps us consider opportunity costs.

we should be skeptical of the latest financial technologies, especially those that are designed to demand less of our time and attention and make it easier for us to part with our money.

From time to time, let’s stop and question our long-term habits.

Renovating is fine, as long as we head down that path recognizing that it might only increase the value of the home to us.

Let’s not get caught up in whether something is priced fairly; instead, consider what it’s worth to us.

We may also be wrong about whether something is a fair price, and about whether or not it took a lot of effort. Let’s also recognize that there is value in knowledge and experience

make expectations a reality Expectations give us reason to believe that something will be good—or bad, or delicious, or gross—and they change our perception and experience without altering the true underlying nature of the thing itself.

and Jeff—want to acknowledge, again, that expectations actually can alter our experiences. We can use such expectations to our advantage or they can be used by others to take advantage of us.

We don’t want to be manipulated unwillingly or unconsciously by someone else, but if we choose to be manipulated or design a system to do so ourselves, that’s okay.

When we don’t have any specific idea about an item’s value, we should do some research.

So how can we increase self-control? By connecting to our future and resisting temptation. Easier said than done

A Ulysses contract is any arrangement by which we create barriers against future temptation

A Ulysses contract is any arrangement by which we create barriers against future temptation. We give ourselves no choice; we eliminate free will.