Personal Finance Parking Garage…

….questioning our assumptions.

Whenever Micah and I visit Silver Spring, we park in the same garage–directly adjacent an indoor/outdoor mall. Parking garages are strange entities. Like in parking lots, we feel the drive to get the “best” possible spot. It feels like, in garages, the best spots should be on the lower levels, right?

One thing we’ve had to learn at this garage is to head straight up to the 5th level. Often we can find an excellent parking space, close to the elevator (4 elevators, so it’s not a long wait). A good parking space on the 5th floor is much better than being in the farthest back corner on the 2nd.

We spend less time driving around looking for a space and less time walking to the elevator (not that a little walking is a bad thing…).

It’s intuitive to think the lower level are better, but they’re just not.

So what does this have to do with personal finance?

Well, musing on this got me thinking about other choices we make which intuitively seem best but aren’t actually good ideas. Here are a few of them, ranging from smaller to bigger decisions:

1. Buying things we don’t need on sale. Whether they’re things we might need that’ll expire before we use them or things we don’t need at all, this is something we all probably do. We’re trying to be frugal, right? (I’m going to be talking about this on PaidTwice later)

2. Assuming non-generics are better. Now some really are. But much of the time we can do better by buying generics–quality’s about the same and price is better. Micah would like to add that he supports buying Q-tips from Johnson and Johnson. Ok, maybe those aren’t better.

3. Assuming generics are cheaper. Price isn’t always better. Don’t forget to factor in coupons and sales for non-generic items.

4. Assuming that we can beat the stock market. Silicon Valley Blogger got me thinking about this earlier this week. In particular, she quotes the legendary Bogle: “There may be better investment strategies, but the number of strategies that are worse is infinite.” – John Bogle. There may be ways that we can beat the stock market, but I’d say that 99% of us are better off sticking with index funds–especially if we can’t afford to work with stock analysts and the like.

5. [addition] Assuming that a happy Christmas costs a lot of money. In our culture, it’s hard not to make this assumption. But Christmas is what you and those around you make of it!

What are some assumptions you make? Do they really stand up when you think them through?

photo by Omar Omar

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