New House Decision

New House Decision

Ceasar Harris

XECO/212

October 24, 2010

Jason Friedline

New House Decision

The decision to purchase a new home is a major decision requiring a substantial financial outlay where the wrong decision can have long term financial consequences. The decision to purchase a home no matter how old or how young one is, it’s definitely one of the most important decisions one will make in their life. In attempting to make a sound decision, there are some factors that I should take into consideration. I will need to figure out which principles of economics directly relate to me purchasing a new home. I will need to compare marginal benefits and the marginal costs associated with me purchasing a new home. I will need to know how the strength of the economy as a whole affected the marginal benefits and the marginal costs associated with me purchasing a new home. I will need to consider the roles of the domestic economy and international trade in my assessment of the strength of the economy as well as what situations or conditions could have led me to making a different decision on one has been made. In regards to the principle of economics, trade-offs which is the first principle was actually the first one that comes into play for me. The question is what I am willing to give up to getting what I want. What things am I willing to give up ensuring that I will have the needed funds in order to purchase this new home? A close review of my finances is needed as well as an estimation of my spending budget, how much money will I have or need to purchase my home of choice. What am I willing to abstain from in order to achieve my goals? This question leads me to the second principle of economics which is, the cost of something is what you give up to get it. After closely reviewing my monthly net income and all of my monthly outgoing expenses I realized that I spent a large amount of money on things that were not necessities, such as going out to...