50 Shades of Ownership: Financial Version

Back in the VHS era, if you wanted to watch a movie at home, most people would buy a tape and take it home with them. Even if you rented most of your movies, you still had a collection of physical films that would take up shelf space beside your collection of books, CDs and Beanie Babies.

With the rise of the Internet, the world made a dramatic shift from physical ownership of content to access to content. For example, how many people do you know who have a dusty $10,000 DVD collection that they haven’t touched since they bought their $8 Netflix subscription?

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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’s a financial breakdown of ownership versus access as it applies to getting what you want, now.

Key takeaways

• Before any big purchase, decide whether you actually need to own it, or if renting/borrowing gets you the same result for less.
• The sticker price is rarely the full cost – factor in maintenance, insurance, and upkeep before deciding.
• Doing your own research and negotiating can meaningfully lower what you pay, even on things that don’t seem negotiable.
• A good credit score gives you more leverage and better terms, whichever option you choose.

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? Running the numbers through a budget calculator before you shop can help you separate what you actually need from what you just want.

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 along the way. If you just want to impress someone at work, maybe there is a cheaper way to do it than commit to a 5-year lease that means you can’t afford a new pair of pants until after your next raise.

Ownership vs. Access

Before you make any large purchase, find out if it is something 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 you’ll only use five times a 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. The same math applies to cars. Generally – see our breakdown of leasing vs. buying to work out which makes sense for you.

Do Your Own Research

Become an expert in the item you want to purchase. If you want a new phone, know which model you want and why it’s 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’re able to make an informed decision instead of being swayed once you go to make the final purchase.

Shop in the Off-Season

For seasonal items, retailers are always trying to move products off the floor and often offer deep discounts to clear out exactly what you’re looking for when no one else wants it. Want a new grill or a hot tub? There’s no better time than September to pick one up. You may only get a couple of uses from it in the first season, but with proper care it can look and act like new for decades.

Take Your Time

Don’t feel pressured to sign on the dotted line. Ask questions until you’re satisfied, not just until you think the salesperson is tired of answering them. If you feel like they’re getting anxious for you to complete the sale, it’s 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’s amazing how many places offer birthday, anniversary and even payday discounts if you simply ask. 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 $5,000 used luxury car sounds like a good idea until you start paying $250 per oil change and $1,500 for a spring tune-up.

Try It Out First

You wouldn’t dream of buying a car without test-driving it. But you can test-drive other major purchases too. If you’re thinking of buying a house, visit the neighbors, go for walks in 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, you end up spending a few hundred dollars renting a place before finding out it needs a new $10,000 foundation. The same logic applies if you’re buying your first home outright – the more you can test the situation before committing, the fewer surprises later.

Know Your Credit

It’s most important to know your credit score and keep it in good standing before you get to the bank. Not only does it make you more confident in negotiations, it can help you avoid embarrassing situations. If you’re just starting out, see our guide on building your credit as a young adult. 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.

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