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Look closely and you'll find them. They tool around in old trucks with homemade campers, they create wild sculptures from scrap metal, they fix what's broken and improve what's not, and they putter contentedly in basements and garages deep into the night.

I’m tempted by a lot of purchases. Books. Food. Board games. Gadgets.

For me, the best single tool for controlling those kinds of temptations is to give myself a monthly allotment from which I can spend freely. For example, I might cap my personal hobby and entertainment spending at $100 a month and we might have a monthly cap on food eaten outside the home set at $150.

The challenge comes out when I realize that I have more than $100 worth of hobby temptations in a month. How do I figure out the best method for spending that money?

To solve that problem, I’ve been taking advantage of a little bit of economic theory.

What Is Opportunity Cost?

Wikipedia gives a wordy definition of opportunity cost:

This article is by staff writer Holly Johnson.

Last week I was out walking with a friend when she admitted she was scared she would never have kids.

“We’ll never be able to afford them,” she said as we made our way around the block and up the next street. She and her husband are about our age (and not getting any younger), and I could tell she was worried.

“Oh, I’m sure you’ll figure it out,” I said as I tried desperately to change the subject. That was terrible advice and I knew it, but it was the same advice someone had given me several years before. (And probably for the same reasons.)

When it came to having a baby, I’m glad I followed bad advice

Here's an email I recently received from a reader:

I was hoping to get some help from your readers in determining my best option.

I received an offer from a former employer with whom I am entitled to receive a pension when I turn 65.  I am currently 51.

I have 3 options:

    1. Do nothing.  When I turn 65 I would receive $187 a month for life with a 100% survivor payment for my wife.

    2. Take a lump sum payout now of $13,705 which I could take as cash, rollover to an IRA or Roth IRA.

    3. Take an immediate annuity that pays $67 a month for life with a 100% survivor payment for my wife.

What's your advice for him?

Last year, I signed up for a program called “Connections” through my college alma mater. The program is designed to bring a group of the college’s current juniors and seniors to the big city, for a pow-wow with both recent graduates and ancient grads like myself, who work in the students’ prospective career fields.

On the day of the confab, a handful of us alumni sat on the dais, facing a dozen fresh-faced undergrads. After we alums painted a verbal picture for the kids of the work world we inhabit on a daily basis, it was time for the question-and-answer session. It took a while, but then one coed held up her hand and asked, “What do you wish you knew when you were our age that you know now?”

It was the question I’d waited for, the one that allowed me to make what I hoped would be a significant contribution to the collective joy of the student group, not then but approximately four to five decades into the future.

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