Tuesday, September 16, 2008

Dangerous Penny-Pinching

(NOTE: This post references a sensitive topic and is not intended to be a political commentary about Palin or her tenure as mayor of Wasilla.)

I recently read this article that during Palin’s tenure as mayor of Wasilla, the city charged rape victims $300-$1,200 for the cost of rape kits and forensic examinations. The Police Chief of Wasilla opposed a state bill to stop this practice, saying it would require the city to come up with more money to cover the costs of buying the rape kits and conducting the examinations.

Beyond offending all sense of justice and common sense, Wasilla’s now outlawed policy is a perfect example of “penny-wise, pound foolish” idiocy. Assuming that the 1998 national rape rate applied to Wasilla (pop. 7000 people) at the time, Wasilla’s cost for this item would have been less than $6,000/year. This type of bone-headed, bean-counting policy presumably discourages victims from reporting sexual assault crimes which consequentially would make any city less safe for its residents.

As indicated above, I am not citing this article to throw partisan political stones at Palin, the Police Chief or the good citizens of Wasilla. (Although I will admit I was angered when I read about it.) Rather, this article made me think of ways that I pinch pennies that are short-sighted, irrational and may ultimately be harmful or dangerous in the long term.

A recent example is my reluctance to repair the cracked windshield on my car that I’ve had for 2 weeks. Since the crack is over 6 inches long, I need to get my entire front windshield replaced, which would cost me $250 (the amount of my automobile insurance deductible). The dangers of driving with a cracked windshield include police citations, roof cave-ins and broken glass injuries.

I have absolutely no reason not to get my windshield repaired other than I’m being cheap at the expense of my own safety. Since I currently have $100 earmarked for future car maintenance and have over $3,000 in my emergency fund, I can easily afford the $250 deductible, yet I’m being completely irrational.

Not to make excuses, but this form of myopic loss aversion is not uncommon, since humans would rather avoid losses than reap future gains. This month, I've been helplessly watching my net worth plummet everytime the market tanks. In my mind, repairing the windshield is an immediate, real reduction of $250 of my net worth, while repairing the windshield only eliminates a potential danger posed by driving with a cracked windshield. Absolutely idiotic and insane. I cannot believe I am weighing the loss of $250 over the benefit of driving a safe car!

Now that I’ve identified my irrational behavior (and since those living in glass houses shouldn’t throw stones), I am getting off my soapbox to get my windshield replaced ASAP…


Sallie's Niece said...

Wow, what a terrible terrible law. But I know what you mean about the general topic of how trying to hold onto your money can be dangerous or stupid. I thought most insurance companies covered window crack repairs? I know my grandfather got his replaced for free. Better get that taken care of ASAP!

FruGal said...

What a disgusting law. I'm really quite dumbfounded by that! But you're not alone, I think we're all guilty of being a little bit short sighted when it comes to finances every now and then. But you should get that windscreen fixed, otherwise you could end up with much more expensive repairs if you end up in an accident because of impared vision. :)