Reggie Geiger
Economics
May 9, 2012
Final Project: A New House - Decision
The first principle I would use in the decision to purchase a home. Would be the First Principal the Principal that people face trade off, when you make any kind of a decision to buy you always face tradeoffs. A Trade off is a decision to give something up so you can obtain another thing that you feel is more important in the long run after weighing the options. An example of a trade off to purchase a home would be the choice to downsize a car so that you can purchase the home of your dreams. Or if you have to work more hours to be able to afford your new home that would also be a trade off because you are giving up your time for the new home and time is one of the most important assets a person has.
The next principle is the cost of something is what you give up to get it. This is similar to a trade off in the way that you are giving up something to get something, but with a tradeoff sometimes you can do less of the other and still have it, but when you give up something completely that is different. Things you might have to give up when purchasing a home would be going on a vacation twice a year. You might have to give up going on a vacation twice a year and reduce it to once a year. Even the little things can count when giving up something, like getting a cheaper brand of certain products and foods that will save you money. Another principle I am considering before buying the new home is thinking at the margin, this is very hard for me to do. I like to spend money like I have a lot more money than I do. So sometimes I will think I can afford to get the home with the nice view and walk-in closets, but in reality if I buy the home with less of a view and not as many upgrades I would be more financially stable and happier with my decision in the long run. It is very hard for people to