Opportunity Costs

Awhile back, I had a couple of job offers. The job with the highest pay rate also had the worst boss and worst job description of all the offers. The job with the lowest pay rate had the best boss and best job description of all the offers. (Because I'm a student, I'm paid at student rates and can't negotiate the standardized pay rates.)

I asked my brother what I should do, and he said it was a no brainer: take the lowest paying job. I complained about the low pay rate, and he simply said to me: "opportunity cost." I had no idea what he was talking about.

He explained to me that many times in life you'll be given option A and option B. The problem is that one option will always come at the cost of another option. So for me, the lowest paying job would be most beneficial for my career in the long run--but it would come at an opportunity cost of lower pay rates in the short term.

I'm kind of faced with opportunity costs again now. If I don't go on exchange next year, I won't have to dip into my savings in order to pay off my student loans. In fact, I would be able to pay off all of my student loans and graduate with most of my savings intact. But the idea of being able to study in another country for five months, the chance to meet amazing new people from around the world, and the option of traveling in Europe, is just too good to pass up. I'll be able to go study in the UK, but it's going to come at the opportunity cost of being able to graduate debt free without using my savings.

But after all that is said and done, I know I'm extremely fortunate. I mean, what a 'dilemma' I have! I have savings AND the opportunity to study in another country. My parents are supportive of my decision to study abroad. That is more than anyone could ask for.

Financial Philosophies

I've mentioned my brother on this blog once, and I guess it made him sound pretty bad because I talked about his spending. So I wanted to kind of clarify that.

I think that in the long run, my brother will make a lot more money than me. We're really close in age (we're both in university at the same time and will be graduating in the same year together) but we have really different philosophies towards money.

My brother lives by the idea that you have to spend money to make money. My parents are afraid he's only got the spending part down and nothing else, because that's all they see. But the truth is, my brother is really smart. While in school he invests his money into different types of investments, like stocks. And he manages to make some money at it too. He thinks that he should take risks and learn while he's young. Last year, he got a $1000 bursary. Instead of using it to pay for school, he started investing it. He said that he'd rather make mistakes now and learn from it so that he can make smarter financial decisions after he graduates.

My whole financial philosophy is slow and steady wins the race. I hoard money and put it into savings accounts. The idea of having debt makes me nervous, which is why I'm working so hard at having my debts paid off before graduating.

The thing is, I'm not enough of a risk taker. I'll always be working at making money, but my brother will always be making his money work for him. So even though he spends a lot now and doesn't have as much to show for it, I'm confident that he'll make more money than me in the long run. And that makes me both proud and happy as a big sister.

Me, My Parents, and My Visa Bill

Ever since I started university, my parents have watched every single bill I get. Yes, my parents open my bank statements and my visa bills. They do this with my younger brother as well. They claim they do it because they're afraid we'll miss a payment or make a late payment otherwise, but I know the truth is that they want to know exactly where we spend our money.

My brother spends freely like money is water, and so he gets a lot of heat from my parents for his insane visa bills. He'll even make late payments!

I try to cut down on my spending by eating more cheaply. This concerns my parents a lot. They think that I am starving myself to pay for school, so they always tell me "remember to eat" even though it's ridiculous--how can I forget to eat?

The other thing my parents have done in the past when they've worried I've been cheap on food in order to pay for school is that they'll occassionally pay my visa bill for me. Now, that makes me concerned, because:

1. They don't even have enough money to retire, how can they start paying my visa bills?
2. What kind of financial responsibility will that teach me if I can just rely on my parents to pay off my visa?

So what I end up doing is not watching the payment due date like most people. Instead, what I do is go online to watch the statement issue date like a hawk. About two days or so before the statement is issued for the month, I go in and pay the balance. That way, when the visa statement arrives at my parents' house, they'll open it and see a ridiculously low balance. Hence, they think I'm frugal, and I get them to stop paying my bills.

I'm writing this cause my statement will be issued in another two days. Time to go pay off that balance.