Opportunity cost is a concept from economics that states whenever you make a choice to do something, you are also making a choice not to do many other things. Oftentimes, those other choices had benefits attached to them that you will now miss out on because you chose another seemingly good option.

Great examples of opportunity costs in action can be found on any number of TV games shows like Who Wants to Be a Millionaire or Deal or No Deal. In these shows, a contestant has to make a tough choice between taking a sure thing like $25,000, or taking a chance of winning $1 million or going home broke. If you choose the $25,000, it costs you an opportunity to possibly leave with a million bucks. If you choose to roll the dice and you lose, you missed an opportunity at a guaranteed $25,000.

Everything in your personal finances has an opportunity cost. If you pay down your debt, you lose the opportunity to do all kinds of fun things with your extra cash, from spending it to investing it. However, if you pay down your debt, you’ll likely be debtand stress-free much sooner.