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Speaker 1: Welcome to Before Breakfast, a production of I Heart Radio.

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Speaker 1: Good Morning, This is Laura. Welcome to the Before Breakfast podcast.

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Speaker 1: Today's tip is to think about the opportunity cost of

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Speaker 1: big expenditures. We have a tendency to think of things

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Speaker 1: in categories and then judge what is acceptable for spending

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Speaker 1: in each category. But with money, categories don't really mean anything.

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Speaker 1: Every dollar is worth the same, and by choosing to

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Speaker 1: spend less than normal on some big things, we can

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Speaker 1: free up money for all sorts of fun without having

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Speaker 1: to be too frugal or feel much deprivation. This episode

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Speaker 1: is first airing right around Valentine's Day, which is a

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Speaker 1: common day for big expenditures, dinners, flowers, gifts, even engagement rings.

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Speaker 1: People might send a send price e roses on Valentine's

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Speaker 1: Day because this is expected, but the same amount of

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Speaker 1: cash devoted to other flowers could mean a nice grocery

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Speaker 1: store bouquet every week for months. Valentine's Day roses seem normal,

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Speaker 1: but when you expand the category a bit, you can

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Speaker 1: get a lot more happiness for the same amount of cash.

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Speaker 1: This is even more true with big expenditures like houses

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Speaker 1: and cars. It is a trope in personal finance literature

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Speaker 1: to scold people about buying lattes or avocado toast or

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Speaker 1: anything along those lines. But let's look at two people

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Speaker 1: with a take home pay of five thousand dollars a month.

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Speaker 1: One spends thirty percent on housing, which is a month.

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Speaker 1: The other spends twenty eight percent, which is four a month. Now,

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Speaker 1: those seem like they're in very similar ballparks when it

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Speaker 1: comes to something as big as housing. It's all normal, right,

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Speaker 1: But the person paying percent could buy a latte every

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Speaker 1: single work day and still be able to save the

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Speaker 1: exact same amount as the person paying The person looks

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Speaker 1: on the surface to be profligate all those lattes, but

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Speaker 1: not really. They're having their housing, their savings, and their

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Speaker 1: latteest too. So if you also want to build up

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Speaker 1: savings without depriving yourself, look at the big stuff. First, housing,

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Speaker 1: your location, both the cost of living in any local

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Speaker 1: tax rates. You know how this goes, drive your car

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Speaker 1: for an extra two years, and then you have the

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Speaker 1: cash to fund a weekly date night babysitter, which do

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Speaker 1: you think will make life more fun? Or maybe you're

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Speaker 1: getting engaged this winter so exciting I have interviewed a

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Speaker 1: few couples in the past who opted out of the

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Speaker 1: diamond size comparison race chose something completely different. A huge

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Speaker 1: rock of some other riety might run a few hundred

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Speaker 1: dollars compared to a few thousand, and Wow, for many people,

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Speaker 1: this could double your emergency fund. Lots of people are

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Speaker 1: looking at mortgage rates right now. It is true that

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Speaker 1: they are at historic lows. Shopping around for a good

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Speaker 1: rate really matters. Two tenths of a percentage point over

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Speaker 1: thirty years on a three hundred thousand dollar loan can

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Speaker 1: give you enough extra cash in your budget to take

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Speaker 1: a friend out to lunch every month for three straight decades.

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Speaker 1: It's worth it to get this right. And if you

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Speaker 1: do get it right, then enjoy your lunches, all three

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Speaker 1: hundred sixty of them. The personal finance scolds can think

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Speaker 1: you're spending for not brown bagging it and for treating

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Speaker 1: someone too, but you know what, You're actually spending your

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Speaker 1: money just right. So today, think about whatever money is

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Speaker 1: going out of your life when it's in a bigger category,

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Speaker 1: ask yourself what else could that buy. You might be

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Speaker 1: surprised how easy it is to buy happiness in the meantime,

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Speaker 1: this is Laura. Thanks for listening and here's to making

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Speaker 1: the most of our time. Hey, everybody, I'd love to

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Speaker 1: hear from you. You can send me your tips, your questions,

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Speaker 1: or anything else. Just connect with me on Twitter, Facebook

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Speaker 1: and Instagram at Before Breakfast Pod. That's b E the

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Speaker 1: number four, then Breakfast p o D. You can also

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Speaker 1: shoot me an email at Before Breakfast podcast at i

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Speaker 1: heart media dot com that Before Breakfast is spelled out

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Speaker 1: with all the letters. Thanks so much, I look forward

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Speaker 1: to staying in touch. Before Breakfast is a production of

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Speaker 1: I Heart Radio. For more podcasts from my heart Radio,

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Speaker 1: visit the i heart Radio app, Apple Podcasts, or wherever

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Speaker 1: you listen to your favorite shows. Yeah,