Framework stage 5: Build
Big money decisions, by the numbers
Run the numbers on the big choices, like housing, cars, job offers and moves, before you commit.
Why it matters
A handful of decisions shape your finances for years: where you live, what you drive, which job you take and when you take on big commitments. Learn to compare total costs, weigh tradeoffs and test scenarios before you sign.
Questions this topic answers
- Should I rent or buy?
- How much car can I afford?
- How do I compare two job offers?
- What does relocating really cost?
- Is graduate school worth it financially?
- How should partners combine finances?
Key ideas
The major decisions essentials.
The concepts that come up again and again, in plain English.
- Total cost of ownership
- Everything a decision costs over time, not just the sticker price or monthly payment: insurance, maintenance, fees, taxes and time.
- Opportunity cost
- What you give up by choosing one option, including what that money could have done elsewhere.
- Amortization
- How loan payments split between interest and principal over time. Longer terms lower the payment but usually raise total interest.
- Upfront vs. recurring costs
- Cash due at the start, like down payments and deposits, versus costs that keep coming back. Both need a plan.
- Scenario analysis
- Testing a decision under several assumptions (best case, expected, worst case) so you know how fragile it is.
Lessons
Go deeper.
- Free lesson · 6 min
Look beyond the monthly payment
Compare the full cost of an apartment, car or other big commitment, with a fictional apartment example and five questions to answer before you sign.
In development
- Rent vs. buy: a decision frameworkPlanned
- Compare job offers on total compensationPlanned
- The real cost of relocatingPlanned
- Financing a car without regretPlanned
- Money conversations for couplesPlanned
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