While reading The Simple Dollar’s recent post on Paying Cash, it occurred to me that everyone ALREADY always pays cash for everything, whether they realize it or not. It’s just a matter of how much they pay, and when.

What do I mean? Well, for example, if you wanted to do some major home improvement, you could save your money up for a few years and spend $40,000 in cash on the project (or do the project in stages as you get the money), OR you could take out a home equity loan for $40,000 from a well-known bank to do all of the work now. If you choose to take out the loan, you’ll pay between $75,727 (with excellent credit) and $91,098 (with average credit) over 15 years for it. In fact, the work you’ve had done will likely either need replacement or be completely out of date by the time you get done paying for it. No matter what, you’ll still have paid the cash. You’ll just have paid a lot more of it.

In this example, the price of impatience is between $35,727 and $51,098. But paying cash over time doesn’t cost you just in terms of money. It also costs you in terms of opportunity cost (what you could have done with the extra money instead) and stress (worrying about making ends meet). Yeah, sure, saving up $40,000 might seem daunting. But if you know you can meet the payment requirements for a loan, that automatically means that you can in fact save up the money in HALF the time it would take to pay the loan.