Let’s Talk “Opportunity Cost” - Passive Income MD

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Episode #126

Let’s Talk “Opportunity Cost”

Netflix doesn’t cost $17.99, It costs “your time.”

12 Min • September 27

Episode Highlights

Netflix doesn’t cost $17.99, It costs “your time.”
A fast food value meal doesn’t cost $4.99, it costs “your health.”
Social media isn’t free, It costs “your focus.” There is always a hidden cost.

It’s important to think about a lot of things in terms of “opportunity cost.”

In this episode, Dr. Peter Kim will define “opportunity cost” and the risk or fears that are often associated with it. 

Now, let’s look at what we discussed in this episode:

  • Definition “Opportunity Cost” 
  • Mindset thinking that includes yes, no, or what else can be possible.
  • Definition of Fungibility regarding money
  • Problem #1: Fear Of Missing Out
  • Problem #2: Analysis Paralysis

Episode Breakdown

[1:49]

Oxford dictionary defines opportunity cost as “the loss of potential gain from other alternatives when one alternative is chosen.” Consider when you are making a choice, you are shutting off all other opportunities at that moment. This is when you take in to account the pro’s and the cons of every decision you make… financial or personal. 

[2:32]

So when you consider a larger financial decision, like where to invest $25k+, make sure that you don’t just evaluate the deal in front of you, think about where else you could allocate this money. Could this money be better used somewhere else?

[3:57]

With every decision, consider not just the possibility of “yes” or “no,” include “what else can be possible.” Fungibility means that you can replace one thing with another, things are mutually interchangeable. Money is a classic example of this. The decision is where the best use of your money. 

[8:03]

Use the same mindset of “yes, no, or what else can be possible” with managing your time & energy.

[9:28]

There are two problems that come with going overboard on this type of thinking: 1) FOMO (fear of missing out), 2) Analysis Paralysis.

[10:44]

The worst decision is not making the wrong decision, but to do nothing and lose out on more opportunities in the future, to not try, to take action then course correct to help you get closer to the goals that you have.

The positive side of “opportunity cost” thinking is that you become intentional in how you spend your time, energy, and money. In the end, those are the resources you have to shape the life that you want. Spend it doing the things you love with the people you love.

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