50 Shades of Ownership: Financial Version
20 years ago if you wanted to watch a movie at home, most people would buy a VHS tape and take it home with them. Even if you rented most of your movies, you still had a collection of physical films that you would take up shelf space beside your collection of books, CDs and Beanie Babies.
With the rise of the Internet, the world is now making a dramatic shift from physical ownership of content to access to content. For example, how many people do you know that have a dusty $10,000 DVD collection that they haven’t touched since they bought their $8 Netflix subscription?
Ownership gives way to access.
Even this blog is based on the idea that you don’t need to buy a newspaper to get current information. You just want to read the words anyway, so why spend money on the paper.
The black-or-white myth of ownership is starting to take a serious backseat to access on some big-ticket items as well. Here is a financial version of the 50 Shades of Ownership as it applies to getting what you want, now.
Assess your true needs. Think about what you want the purchase to accomplish. Most people who go to a hardware store to buy a drill, don’t actually want a drill; they just want a hole. Do you just want a car to get from A to B? Or, do you want to turn heads when you pull up in your new sports car?
Be honest and specific about what you want so that you are sure you get it, and so that you don’t get distracted by shiny objects on the way to the wizard. If you just want to impress a girl at work, maybe there is a cheaper way to do it than commit to a 5-year lease that will mean that you can’t afford a new pair of pants until after your next raise.
Ownership vs Access. Then before you make any large purchase, find out if it is something that you really want to own or if you can rent or borrow one for much less money. Does it make sense to spend another $15,000 on a boat that you will only use 5 times per year when you can rent a new one for $300-$500 per weekend? Even a nice sports car can be rented for an exciting weekend getaway for a lot less than a single month of interest, insurance and maintenance.
Do your own research. Become an expert in the item that you want to purchase. If you want an iPhone, know which model you want and why it is better than the others. Which features does it have that you want and which features are missing that you don’t care about. This way you are able to make an informed decision and not be swayed once you go to make the final purchase.
Shop in the off-season. For seasonal items, retailers are always trying to move their product off the floor and often offer deep discounts to clear out exactly what you are looking for when no one else wants it. Want a new grill or a 6-person spa? There is no better time then September to pick them up. You may only get a couple of runs from it in the first season, but with proper care and cleaning it can look and act like new for decades.
Frankie says relax. Take your time and don’t feel pressured to sign on the dotted line. Ask questions until you are satisfied, not just until you think they are tired of answering them. If you feel like they are getting anxious for you to complete the sale, it is time to walk away and come back when you can do it at your own pace.
Negotiate. It can’t hurt to ask for a deal. It is amazing how many places give birthday, anniversary and even payday deals. I know one person who likes McDonald’s, and every time he goes there he asks for two Big Macs for the price of one. Usually it doesn’t work, but I am always amazed at how often they just agree and give it to him. It isn’t exactly a bank-busting money tip, but it does show that everything is up for negotiation!
Consider hidden costs. With most items, the purchase price is just the beginning of the total cost of ownership. A $5000 Jaguar sounds like a good idea until you start paying $250 per oil change and $1500 for a spring tune-up.
Try it out. You wouldn’t dream of making a major purchase like a car before you bought it. But you can test drive other major purchases too. If you are thinking of buying a house, visit the neighbors, go for walks to the local park and do your grocery shopping in the area. To be extra sure, you can do a lease-to-own with a 6-month option. In the worst case scenario, you end up spending a few hundred dollars renting a place before you find out it needs a new $10,000 foundation.
Know thyself! It is most important to know what your credit score is and keep it in good standing before you get to the bank. Not only does it make you more confident in the negotiations, but can avoid potentially embarrassing situations. The best way to protect your credit is by staying on top of your payments with a financial organizer like PocketGuard. It not only automatically tells you about upcoming bills and payments, it also scans your account for fraudulent charges and helps protect you from identity theft.
Featured image credit: UNSPLASH