That Way We Have It: A lesson in how not to buy things

 

He has won two expensive Mercedes motorcars because of his gold medal performances in the World Championships. He can’t drive! They’re both sitting in the garage back home. But my word can he run!

— Alan Parry, commentating while watching Haile Gebrselassie obliterate the 5k world record in 19951You can watch the majority of the race here, if you’re interested.. It’s funny how things don’t get used sometimes.


It was the week of Thanksgiving, circa 2012, and the boys and girls were coming home from college. My sister, three friends from high school, M+M guest poster Robbie, and I all piled into my Toyota Highlander for the 8 hour drive back home. My dad had bought me this car a year or two earlier slightly used at a car dealer’s auction, and today we were taking full advantage of it. Even factoring in the cost of driving, it was the picture of efficiency. Instead of paying for 6 plane tickets, we were able to take the trip in one car. Mostly thanks to the fact that that car was an SUV, and could carry 6 people and their luggage without too much of a problem.

I still have the Highlander, and for the better part of a decade it’s been a great, reliable car. But I can’t say I’ve taken much advantage of the fact that it’s an SUV. Indeed, the vast majority of my driving is done alone or with one or two passengers. And while I do enjoy shopping at Costco, even the largest hauls might barely use up half the capacity of the trunk, and could probably fit in any compact car. That leaves a few rare cases, like when I help someone move a large bookshelf or go on a road trip with 6 people, where I actually “need” an SUV. But what’s the cost?

The difference in price between a small car and a mid-size SUV can be upwards of $10,000! That’s $10k that can be invested in the stock market and more than double over the lifespan of the car. (And we’re not even factoring in the difference in fuel efficiency.) That’s like…worth a brand new SUV!

But what about those times when you need the SUV, you ask? Should we just fork over the extra ten grand for those 6 or 7 times? Absolutely not! We can easily rent some sort of monster truck or large van or SUV whenever we need it for a fraction of the savings we have from going with the smaller car.

The above analysis makes it seem like a compact car is the obvious choice for most people. However, looking around you on any road will tell you that people are more than willing to fork over the extra $10,000+ for the few times they’ll actually use a large vehicle. In fact, this attitude is prevalent in many different types of purchases. Let’s look at another example.

My phone plan costs $60 per year. That’s $5 a month, which saves me ~$40 per month, every month, compared to the typical US phone plan. One push back I get about my plan is that it doesn’t include international travel. Well guess what? With one month of cell phone plan savings I can easily pay for a separate international plan with Red Pocket, or buy an international SIM card, or purchase any other method of short term international cell phone use.

One could also argue that these work around methods are generally less convenient, which is true, but I think you’d have to value your time at ridiculously high rates to make this argument. Booking a rental car or purchasing an international cell phone plan is not that difficult or time consuming. For hundreds or thousands (or tens of thousands!) in extra savings, it’s probably worth your time. To be honest, with all the savings that come with common sense purchasing, you could probably hire a secretary to do all that for you and still come out ahead!

The silliness of the “just in case we need it” mindset is nicely illustrated by this ridiculous scene from Arrested Development, where Lindsey and Tobias meet with a Real Estate agent to buy a house:

At some point, we need to graduate from the “that way we’ll have it” mindset. Incorporate some common sense into large-purchase decision making. And when the time comes when you actually do need something bigger or better–well you’ll have plenty of extra money to deal with those situations.

2 response to "That Way We Have It: A lesson in how not to buy things"

  1. By: Haskell Posted: August 17, 2019

    Interesting post, Joey. Would like to hear more about how you know when you “actually need” something. There is an argument to be made that we don’t really “need” cars or cellphones at all. In NYC, dishwashers, AC, and in-apartment laundry were considered luxuries by many of my friends, whereas here nearly all of my friends would classify them as “must haves.” Lopez Lomong didn’t “need” shoes in Sudan and Kenya, but I think most of us would consider shoes a necessity, at least in the relatively broad sense. So is “need” relative to our culture, to our community? If so, won’t our “needs” tend to increase as our peers get older and wealthier?

    • By: Joey Posted: August 17, 2019

      To be honest, most of things we have probably shouldn’t be classified as “needs”. I think our definition of needs is definitely influenced by our culture/community, and I also think people tend to get…let’s say “softer” as they age :). But we can still try to be reasonable. In-apartment laundry is not a need. We have legs and can carry a laundry basket for a couple minutes. AC/heat aren’t a need, but they make life more comfortable. But recognizing they’re not a need allows you to do things like we do at my place: no heat in the winter (it typically stays above 60 anyway) and judicious AC use in summer (79ish when we’re home, off when we’re not). Realizing that cell phone mobile data isn’t a need but a nice luxury allows you to enjoy 500 mb for $5/month instead of unlimited for $45/month.

      Basically I think there are things we actually need, things that make life a lot more comfortable, and things that are clearly way above and beyond even what many would consider a luxury. I think most people spend their time shopping in the third category. I think we’d be just as happy in the second category.

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