Opportunity Costs: No Free Lunch

Truth Behind Opportunity Costs

I didn’t truly understand this saying until I took my first economics class when I was 17 and we were talking about the concept of opportunity cost. I quickly understood that in life, everything bears a cost no matter what it is, and the light bulb came on in my head. I understood that people promising things that look too good to be true would somehow always have a catch or would bear some type of cost to me. I realized if I didn’t go to college, that was an opportunity cost of something else. I knew that the things that I wanted in life at that time, which required a lot of money, would be significantly harder without a college degree. This was my trade-off; similar to the opportunity costs of spending money is a lost opportunity to not save that same money.

Discovering the concept of opportunity costs was an eye-opener for me, applicable to every facet of life. Every choice we make involves giving something else up—a fundamental principle at the core of everything. Financial minimalism isn't about being unable to buy everything, but rather prioritizing what truly matters. Aligning our spending with our priorities is essential. It's crucial to question and consider alternative perspectives. Would I sacrifice something without expecting anything in return? While true altruism is commendable, even Jesus recognized the limitations as Paul brilliantly described that finding a righteous man it is rare that would be willing and ready to lay down his life for someone else (Romans 5:7) If someone offers you free pizza, a complimentary course, or even advice, there's always something else in the mix.

True Cost of "Free" San Lucas Offers

Fundamental knowledge often lies within our grasp, yet we sometimes overlook it, as we did during our trip to Cabo. Upon arriving in Cabo San Lucas for our honeymoon, we quickly realized that our unfamiliarity was evident to the locals. With expressions betraying our lack of experience, we longed for a complimentary meal. Little did we know, many locals supplemented their income with side hustles, often involving timeshares which included all the following people we experienced from taxi driving, recreational vehicle operations, or hotel work. I think I even saw the lemonade girl offering buy 2 get 1 stay.

Our introduction to the world of timeshares occurred at our all-inclusive hotel lobby, where we were approached by individuals offering a 50% discount on excursions. Skeptical, I immediately recognized the adage: "There is no such thing as a free lunch." I queried about the catch, to which they responded that we only needed to attend a sales presentation. Although assured we weren't obligated to purchase anything, the early morning timing of the presentation raised suspicions.

Despite my apprehensions about being held hostage for a complimentary excursion, I rationalized that attending the presentation couldn't hurt. Yet, as expected, the sales pitch ensued, accompanied by a colorful display and enticements. In exchange for four hours of our time, we secured our free excursion and a modest $2 Mexican blanket. This encounter marked the first of many "free lunch" offers during our trip.

The second offer, however, proved more tempting—a four-day, three-night stay upon completion with immediate use of a $75 credit for food, drinks, a massage, and lunch included. Recognizing the allure of complimentary incentives, we deliberated over the deal. The offerors understood the psychology behind offering something for "free," knowing it often leads to eventual purchases.

In hindsight, while enticed by the allure of complimentary offers, we understood that they came at a cost—whether it be time, attention, or potential future purchases. They knew you are more likely to buy from them if not now then late by offering something for “free”. There is nothing wrong with being motived by something that is “free” we just need to know that it comes at a cost. This experience served as a reminder that in the world of "free" incentives, there's always a price to pay.

Conclusion: Lessons from Christ to Financial Decisions

When I apply this same concept to Christ, it’s quick to see He gave everyone the greatest gift in life, but it did come at a cost to Him—the ultimate price was paid with His life.

This simple concept helped me to stop seeking the easiest and cheapest options. I realized that this same concept can be applied to buying goods and services. This doesn’t always hold true, but in most cases, you get what you pay for. The hidden costs and risks of financial minimalism can actually end up harming people if taken to the extreme. Understanding your balance is key, and if you are an all-or-nothing person, finding balance in life can be rewarding.

If you follow a budget so strict that it causes deprivation, you're missing the point of budgeting. If you align your budget with your values, deprivation is never an issue. To truly grasp the mechanisms of opportunity cost, we need to understand the simple semantics of a free lunch.