You are the Dalai Lama of this board.
I like this analogy; it is a logical approach for handling ILIASM. I would like to suggest one more factor to take in consideration when making a decision, something that is often overlooked in decision-making: “Opportunity Cost”. The verbatim definition of Opportunity Cost: the loss of potential gain from other alternatives when one alternative is chosen. Can you put a price on the best forgone option? Can you put a price on the chosen option?
In your credit card example, how much profit could the $3,500 generate? What are the odds that $3,500 will yield $24,681 in 52 years?
A) You chose to pay off the debt right away, your opportunity cost is $3,500 PLUS the gain if you were to use the money in any. That means you do not have the $3,500 available to invest in other opportunities. That is it! You lost the opportunity to invest $3,500 in stocks or even cryptocurrency.
B) If you decide to pay the minimum amount and freeing up $3,320 of available funds to invest in whatever you fancy. Once again, $3,320 is all you have and this is once in a lifetime opportunity to make the investment, which by the way is a roll of dice. You could lose money in the investment and still have your credit card debt to pay.
Thanks for reviving this post, Lonelycat. I hadn't seen it.
Perhaps the 3500 already went to an investment. Say a technical school course to land a better paying job.
Paying off the card over time will be pricey, but the new salary will more than make up for the interest payments once it is paid off.
Perhaps the 3500 was a medical bill and you have nothing to show for it but the good health you had before you went to the hospital.
Maybe the marriage is a motorcycle. You roll it off the lot, shiny and new and hit the streets on an adventure with wind in your hair. The two of you have the wide open road before you.
You could go anywhere there's pavement, but you need to eat, you need shelter form the elements and sleeping under bridges may be a bit too much adventure for many folk.
The adventures you go on with your motorcycle can be fun, but it takes a lot of time to go very far and can be hard on the wallet, so maybe the bike spends some time idle.
Then it needs repairs.
It uses more gas than you thought it would
It's been a good motorcycle. It's fun, it even gets you places you need to be. Neighbors admire the bike and wish they had one that runs so well.
Then one day it doesn't kick start on the first try. How odd. Over time, it takes several tries to get the motorcycle going.
Neighbors see you riding. The bike is freshly washed. You're looking good, but dang that kick start acting up is taking a lot of the fun out of the ride. You're getting a bit tired before you even head out. Sure, it's a classic, but people don't see the work you put into it every day.
You're thinking of trading it in when one day a sidecar just appears on teh damn thing.
Holy crap! The resale on this just took a total nosedive!
I didn't install this! Where'd it come from? And why is there a bill on my credit card?
The dang thing seems welded on! Who did this?
What has my life come to?
Perhaps depreciation is the model, rather than debt. Sunk costs
being the situation. The 3500 is already gone.
The investment (your marriage) has already been made and you expected to come out with more than you had going in (the sum being greater than the parts.)
Maybe you still can. Or maybe it's not what you thought it was and unloading it quick to get what salvage out of it you can is the way to go. Some marriages are Harleys and Hondas. Some are TaoBaos.
Before you do too many repairs, maybe you need to know what you've got.
Maybe you know how to fix the stuff that breaks all the time. You're good at those. The parts are cheap, and face it, you love that old bike. It's a classic. Some folks spend lots of time in the garage not going anywhere with their bike, but just having it there, working on it in spare time is familiar and it's your life now and you're fine with that. It's your Zen of Motorcycle Repair.