This Christmas, I asked my kids for a very expensive gift. I asked them for a new Craftsman roll-away toolbox. It’s something that I have always wanted but I could never quite justify buying for myself. Receiving it as a gift gave me the excuse I needed to upgrade my entire tool situation. The good news is that the box I wanted was on sale. And, I kicked in some money just to make it happen.
The Hidden Costs
Of course, it’s not so easy putting a bunch of beat up old tools into such a pretty new tool box. So, I needed some new tools to go with the box. I had already been looking at tools for months and I quickly filled the new box with some choice new tools. By the time I had finished, I had invested twice as much in tools as the new toolbox cost.
The costs of extras, accessories and upgrades really add up on any purchase. In this case, I had already factored it in. But, many people are taken by surprise by how much it costs to gear up for a new purchase. For some items, like sports equipment and aquariums, there is more profit in the accessories than the item itself. For other items, like houses and automobiles, the costs of insurance, operation and maintenance can be the budget killers.
There are lots of ways to justify an extravagant purchase and most of them are bogus. Some of the most obvious are the “I deserve it” or the “I got such a great deal”. Advertisers and salespeople use these ploys to convince people to buy. But, there were some legitimate justifications I had for buying the tools.
It will save me money – Anyone who has read my blog knows I maintain my house and cars myself. I take pride in doing it myself and I save the family a small fortune. The amount of money I just spent on tools was about the same as most people pay for a brake job and a couple of oil changes. Since we have two cars, two trucks, three motorcycles and an ATC, I can’t afford to pay the shop rates. Plus, we are renovating our 38 year old house.
They will last a lifetime – I have been working with some of the same cheap Chinese tools that I bought in high school to work on my first car. And, even though they still do work, they are shot. Some tools are bent, some are stripped and some pieces are missing. I started thinking about how many projects I completed with these tools over the past 30 years and I realized that the tools I buy now will probably last me the rest of my life. Thirty years from now, I’m going to be too old to crawl under sinks and automobiles.
They will save me time and trouble – Four years ago, I was working on my daughter’s motorcycle and I stripped a screw with an old worn out screwdriver. It set off a whole series of problems that cost me months of hassle and hundreds of dollars. There is nothing like having the right tool for the job. The new tools I bought were each chosen carefully over a couple of months.
The Lasting Value
When it comes to purchases, there are four kinds of things you can buy:
- Things that increase in value – Investments & Real Assets
- Things that that hold their value – Useful Items and Staples
- Things that depreciate rapidly – Cars, Clothes & Electronics
- Things that are gone immediately – Food, Fun & Vacations
The easy secret to financial success comes in buying more of the things that increase in value and avoiding more of the things that depreciate or disappear. Most Americans need cars to get to work, but nobody needs a Ferrari. People who can afford one shouldn’t feel bad about purchasing it. Others, should avoid the temptation, unless they want to wind up broke in the future. Athletes and entertainers are examples of people who blow through tons of money and have nothing to show for it.
Buying something with a long useful life ensures you will get a return from the purchase. Consumer electronics are designed to become quickly obsolete to ensure a steady revenue stream for the manufacturer. The wrenches in my toolbox will last a lot longer than the TV I just purchased. My Blackberry is already obsolete and it’s only a year old. The Androids and iPhones aren’t far behind.
The Bottom Line
The bottom line is that spending wisely on a purchase can often pay off in the long run. Just be sure you know all of the hidden costs before you pull the trigger.
“Have thy tools ready. God will find thee work.”
Charles Kingsley – English priest and professor
This post was featured on the Carnival of Personal Finance over at The Jenny Pincher. If you aren’t familiar with the Carnival of Personal Finance, you need to check it out. It’s full of fascinating stories and great advice.