buy what you want now, so you don't have to rebuy what you really want later.
I used to think this was the right kind of reasoning. But it isn't. You know those guys who run banks and drive Ferraris... you know why they have as much money as they do?
Because of the Time Value of Money principle. This central principle of finance dictates that borrowing money comes at a premium. There are two sides to that transaction... the borrower who wants the money now and has to pay more back later, and the lender/investor who has some money now but doesn't need it now and will collect back more later.
Which do you suppose is the wealthier side of that equation? The problem with people these days is they're constantly living on the wrong side of that equation... thinking that their money will buy better things now than it can later, totally ignoring the fact that investing that money now will produce MORE money later... and chances are, with technology, higher tech products will be cheaper. End result is that, to put it in terms that might mean something to the "gotta have it" folks here: Those who invest/save their money now end up with more cash to buy much cooler toys than those who buy toys now.
Even worse are those who buy toys now on credit under the premise that they can make the payments. But if the premium for that credit is an interest rate anywhere between 9 and 18 percent, as most credit cards are, then you're paying a LOT more later to have that toy now than what it's even worth right now... and it'll be worth even less by the time it's paid off. These people never get out of debt and when they reach retirement age, the younger generation, if they believe the philosophy of the Neoconservatives, will refuse to pay the exponentially higher cost of taking care of those elderly who didn't invest wisely in their own futures.
So what's the real lesson here?
Don't buy what you think you want now... because:
a) You can invest now and have more money and more choices later.
b) Technology will ALWAYS give you more bang for your buck later.
c) What you think you want now you might not want in the near future.
d) What you want now will be obsolete six months from now.
If you don't need it, don't buy it now... save so you can afford later to buy both what you need and what you want.
If you "must" have it... buy what you can afford now. It will go out of style or become obsolete anyway, so unless you have money burning holes in your pockets there's no advantage to being a first buyer other than bragging rights... and bragging rights are intrinsically worthless.
Every time I buy a computer, I buy it just before the new models come out. Why? Because it's cheaper, and the model cycle is a revolving door... every model is going to be obsolete in six months or less and there is always a newer, faster, better coming out... so you might as well stay on the cheaper side of that cycle. You're not going to get any more life out of that computer or gadget if you buy it at its most expensive. You'll replace technology at the same intervals, just time shifted to the end of the release cycle... but you'll be able to afford more machine, more goodies, etc. this way rather than being a first mover.
