Opportunity cost–easily the most important economic concept of all to know, yet one that is trickily difficult to understand. Capsulized, opportunity cost is the expense in time one incurs by doing something when you could just as easily have been doing something else. Commuting to and from work in the mornings and afternoons is the classic example of opportunity cost. You may save a ton of money upfront by purchasing a cheap house way out in the exurbs, but in the long run that shitload of time you spend on commuting–time that could have been spent doing something more productive or more enjoyable–must be factored into the final financial equation. Time is truly money, more valuable than money even–everyone agrees on this fundamental point or at least they should–and if you choose to spend sizable blocs of your personal time performing menial activities in order to “save” money, said is no different than tossing one hundred dollar bills onto a roaring bonfire.
Fred's Soapbox 