Each action we take creates another action needed. Each path we choose has a path we do not choose. Each dollar committed to one thing is a dollar that cannot be committed to another thing.

Yesterday I wrote about finally getting a bed and discovering we did not have enough pillow cases. You think, “A bed, we need a set of sheets and pillows.” You get a set of sheets. You get two pillows for each person. You wait for the bed to come. When the bed comes, you set out to make up the bed. You remember by being shown that most of us use two pillows—four pillows for two people. A double bed or larger sheet set comes with a top sheet, a bottom sheet and two pillow cases—too few pillowcases; two more are needed.

A goodly portion of those of us who live in resource rich environments use more than we need. When we use the minimum amount we need, it is just that. It is what we need. When we use more than the minimum amount we need, we are faced with choices. The question then has two parts: “Is this what we need?” and if it is, “Do we want some more of it?”

Because the fire requires us to deal with the loss of our entire home, we constantly wrestle with figuring out what we want and what we need.

We have just one set of sheets and two extra pillowcases. Our shopping list says we need another sets of sheets—and of course, two more extra pillowcases. Why do we need another set of sheets with two more extra pillowcases? We only use one set at a time and we sleep in the bed less than half of a day. We don’t get up, strip the bed, wash the sheets and put them back on the bed. We get up, strip the sheets from the bed, drop them in the laundry, and then at the end of the day when it is time to go to bed we remember we need clean sheets. Ergo, the need for two sets of sheets each with two extra pillowcases.

We justify believing that we need two sets of sheets by believing two sets of sheets owned simultaneously will last longer than two sets owned serially. If we rotate them, like tires, we get more mileage out of the sheets. I don’t know of any research that shows us this is a plausible hypothesis but it seems plausible. So, there are two sets of sheets each with two extra pillow cases. Since we can use only one set at a time there is the need for a storage space for the extra sheets and the two extra pillow cases. Not so bad you think, but double the storage space required if you want two of everything you want.

Fire makes you think about how many of something you actually use, not want. Having to replace everything in your home is downright frightening because of the rate at which you spend money. An insurance policy is for a finite amount of money. If you have a certain type of policy, you are reimbursed for the actual cost to replace something regardless of whether the replacement is more expensive or less expensive than the original item. Things you don’t replace are valued at a depreciated rate based on cost and age of the original item.

Let me give you an example. We had a small backpacking tent in excellent condition. It was old but had been used sparingly and well taken care of. Using the depreciation method, I calculated the value of the tent to be $25.02. This may well be a yard sale price. In fact, a yard sale price might be lower. But, of course, this means you have to find a yard sale and it needs to be a yard sale that has the tent.

We wanted to replace the tent. Off I went shopping to find something as close to the burned tent as possible so it was a replacement, not just a new tent. I shopped diligently considering sale prices, free coupons, and quality of tent reviews. Finally I settled on one that was $9 more than what we paid for the tent that burned. We have a replacement tent, but, because there is a finite amount of insurance money, choosing to replace the tent means we have less money to spend on something else.

Ergo, the need to discern what you really need and what you really want. You face what economists call an opportunity cost. Each chance you have to make a decision you have more than one option. In the simplest terms, you have the choice you make and the one(s) you don’t pursue. While you can judge the value of the path you choose, you can only imagine what might have happened with the forgone opportunity. Because we spent it on the tent, we will never know what that $25.02 alone might have brought about. It is an opportunity forgone forever.

Each action we take creates another action needed. Every time we use money from our insurance policy, it is a challenge to discern the opportunity costs and choose among the options we have. Is this something we need, is it something we want? What are the opportunity costs? It is abundantly clear we will never know the outcome of our forgone opportunities. All we can do is make a decision. We must choose wisely and have the courage to live with the forgone opportunities.