I Could Buy That….If I Wanted To

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any.  Dave is from Ontario and is working towards his CGA certification.

My wife and I are currently car shopping or at  least eliminating cars that we aren’t interested in owning.  So far, we have decided on a price (around $15,000 after taxes) and a few models that we are interested in test-driving (Nissan Versa, Honda Civic, Honda Fit, and Mazda 3) as well as the features we would like in the cars.  Before narrowing our choices we realized that we could “afford” almost any vehicle (meaning we could pay the monthly payments dictated by financing deals) but we don’t really value a new car or a fancier car enough to pay the premium cost of a basic, small used car.

Similar to my car decision, I could have chosen a larger house when I was shopping around a couple of years ago, but I did not need a large house and would not have used the extra square footage even if I would have bought a larger home (hence the reason I was campaigning for a tiny house).

I’m not sure how other people decide that they want or need the possessions they end up with, but from observation it seems that there is a lot of consumption without thought.  Instead of going through a decision process where alternative spending/not spending decisions are examined or what the long-term use of the particular “thing” will be once it is owned –  people seem to just buy now and figure it out later.  I think that this unconscious spending is how everyone ends up with junk that they don’t really need because there really wasn’t a spot for in the first place.

I know that I have been, and am still guilty of making purchases like this for myself. Two months ago I bought a video game thinking I would really like to play it, but I have spent a total of 10 minutes with it since the time of purchase – it has turned into a $20 wasted purchase.  I don’t make as many wasteful purchases as I used to, as I try to be more conscious of how I spend my money.

My spending decisions generally take a long time (it drives my spouse crazy), sometimes on the littlest things (less than $20) but by being “hyper” aware of my spending decisions I ensure that my consumption follows what I actually want to spend money on.  Usually, it turns out that what I think I really need and can’t do without is something that would probably end up sitting in the corner of my basement where all my “stuff” goes to die before I list it on Kijiji or Freecycle or throw it out.

So, when I buy my “new” small car in a few months it will (hopefully) be a vehicle that my wife and I will be satisfied with for 6-8 years and that the $15,000 spent is “worth” the decrease in resources that it caused (a significant amount of money for us to save right now while we are paying down our mortgage).

How do you decide where to spend your money?  How do you make sure that you are not wasting the money you make?

5 thoughts on “I Could Buy That….If I Wanted To”

  1. Like you, I’m a maximizer – usually. For most purchases, they get put in the parking lot in my head. Then I wait until the end of the month and put the “under-budget” money I have saved towards them. Maybe. Often I’ll get to the next month and realize I don’t really want them at all. The trick is to not have the mentality of the money burning a hole in your bank account – or pocket.

  2. What’s good about LBYM and not being some compulsive shopper is that if there is something I really need to buy, even a big-ticket item, I know I have the money to go out and just buy it. When my 15-year-old car was dying 4 years ago, I had to go out and get another one. I did my usual research like I had done before, research made easier with the internet, I decided to forgo a high-end car with options I did not need, getting instead more of a no-frills car to save a few thousand dollars. When my aging A/C conked out 11 years ago, I bought another one. When my aging refrigerator conked out 10 years ago, I bought another one. I have the money and I need these items, so I just went out and bought them even if they exceeded some arbitrary budget. Months and years of LBYM will easily offset those expenditures.

    I rarely use my credit card, so if I use it a few times in one month I know I had several months of nonuse surrounding that month.

    I don’t sweat the small stuff very much but I am mindful of a few food items which are often on sale which I can load up on (i.e. freeze) , saving me $20 in a single trip.

  3. I spent some 2 weeks to buy a monitor; I looked into radiation emissions (learnt a lot about TCO that is a Swedish standard), response rate, etc. and finally went for an LG that was not the cheapest but good technical parameters and offered 3 years guarantee at that time, the longest of any other offerings.

    I was pleased with that monitor.

    I spent less time investing thousands of dollars in stocks that of course I lost.

    In a book that I read after the fact the author said that some people spend more time buying a microwave than researching a stock they put lots of money into.

    I was one of them.

  4. I have a hard time with this trade-off, and perhaps it’s due to the fact that I’m in the Echo generation. I feel a conflict between having ‘luxury’ goods and having something that simply works. I gave up my dreams for a BMW and bought a used Corolla. As I age, I have the wealth accumulation to buy a BMW for cash but I just don’t think a $25k purchase makes sense to me for a depreciating asset.

    The trouble I have now is that I don’t know when to call my car toast. I do not want to get to the point where a large repair bill comes and I HAVE to get a new car fast or (maybe worse), I have to pay for the repair. My car is over 10 years old now and is worth $3-4k. When do I just call it a day and buy another car? Before I have to buy new sets of tires ($400) or before I need new shocks ($1000 and maybe inevitable). I’m only at 140,000 kms but the car shows minor signs of dying (automatic window problems, slow turnover of engine, engine light perpetually on, interior lights not working, etc).

    I would love to hear some rational debate on when is the proper time to let the car go from an economic/risk vantage point.

  5. @ Jacq – I agree – I usually find that the “thing” I thought I really wanted, I’ve forgotten about when I think about it a few weeks later.

    @ degee – It is nice to have a robust savings account to pay for things like a car or air-conditioner.

    @ cynical investor – I agree about the stock purchase and consumer goods “shopping time” research. I think that there are a lot more bells and whistles to compare with a microwave/monitor then a stock though, which adds complexity to the purchase.

    @ eclectic indulgence – I would have had the same problem with my car – whether to spend an extra $500 on a repair or not, but my wife decided that she wanted to learn to drive this year and was not willing to learn on my standard-transmission car. The trade off of being able to be driven around compared to possibly being put into the position of paying more in repairs then the car was worth was taken out of my hands, which is both expensive but also useful because I will hopefully not have to address this kind of decision at this time.

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