Cash vs Credit and budget creep
Have you ever noticed that when you look back on products you once thought were awesome, many of them seem not that great anymore? Often times something you covet (or something you bought) is replaced by something better. It’s not that what was there before is bad, it’s just that by comparison it’s not as great. Computers are a prime example, computing power becomes much cheaper every year. But this is true for many things. For cars, a new model with drastically different features or a redesigned engine with more power can quickly change your opinion of the car you recently loved.
I really started to consider this comparison effect today while reading the tech news. I have been thinking about buying a new digital camera for a few months now, and am slowly saving up enough to purchase a fancy new dSLR. I had been eyeing the Nikon D40, Nikon’s entry level dSLR camera which has steadily been coming down in price. But today I read that Nikon would be releasing the D60 as the new entry level camera. This should be great news for anyone looking to buy a D40, as the price will likely come down. But now I find myself thinking about buying the new, and likely more expensive, D60 instead. It’s not that I don’t like the D40 anymore, the D60 just seems to have enough features to justify its higher price.
But this reasoning can quickly and easily lead to an escalation of costs. The next camera in the lineup is only a few hundred higher and has useful features too, so why not buy that one instead? But what stop there when I could spend just a little bit more and get the much better Nikon D200? Or the D300? Many people can see the faulty line of reasoning here, since you simply set a budget and buy what fits. But when you have a huge credit line, it’s easy for that budget line to creep higher and higher.
This is where savings and buying with cash come in. By saving the money to buy the camera I will buy only as much as I can actually afford, instead of justifying a bigger purchase with credit. This is almost always a good plan for buying anything, from a new car (or a used car) to electronics to clothes.
So how do you manage purchasing new tech gadgets? Is it always cheaper to stay one upgrade cycle behind? Or is it ever worth buying the latest and greatest? And how often is it appropriate to upgrade to something better?
