It Only Costs...

Chances are, you have heard a friend or family member (or yourself) say "It only costs..." and then go on with all the reasons why something is worth what they paid. We never say that about bread or potatoes unless we truly got a good price. We don't need to justify buying necessities.

Of course there is no need to justify luxuries either. If you earn the money honestly and have paid your bills and you want an expensive massage or a new deck to watch the sunset from - it is nobody's place to criticize you. Still, when we are not internally at peace with a purchase we feel the need to convince ourselves by convincing others. That's why we not only feel the urge to argue for the value of our purchase, but to pretend that the cost is less than it is. Unfortunately this easily becomes self-delusion.

As a simple example, imagine if you really had your mind set on having a fish tank with a few exotic fish. Typically, when a person wants something like this, they look at the price of the basic items and add them up (some don't even do that, of course). Tank, six fish, stones for the bottom, other equipment and decorations: $150 total. That's what it will cost, they imagine. Knowledge of the true cost is not desired, and so not sought.

The total cost of course, is not just these things, but the ongoing expenses of fish food, new gravel occasionally, replacement of dead fish and old equipment, and electricity for the lights, heater and water pump. Ignoring all of these makes the decision easier. Now, there is nothing wrong with having a fish tank if you can afford it and it is worth it to you given all the options you have for other ways to spend your money. But there is also nothing wrong with looking at the real cost before making that purchase. Let's look at bigger examples.

Most people who own big "toys," like snowmobiles, boats and RVs, have no idea what the true cost is. For example, I once convinced a friend to add up the real costs of owning his jet-ski. By the time he figured in the the interest on the payments, the insurance, the gas, repairs, cost of the trailer and more, we figured it cost him about $500 for each time he had used it.

This isn't about denying the fun these things can bring. But if it was just the fun he wanted, he could have rented a jet-ski for probably $200 per day. Is the other $300 too much to pay for the added ego pleasure of being able to say, "My jet-ski"? He seemed to think so, once he knew the real cost.

How much does it actually cost to have a large recreational vehicle? Let's say that you buy one for $40,000 and it has a resale value of $10,000 twelve years later. Depreciation alone cost you $2,500 annually. Of course you probably borrowed to buy it, so add $12,000 in interest to the cost. Insurance is necessary - at least until the loan is paid. There is the storage cost in winter if you don't have room in your yard. There are repairs, plates and registration that need to be paid for every year, cleaning and maintenance. All that might add up to another $1,700, for a total costs of $4,200 each year.

But we're just getting started. When you use it you have expenses. Gas can be $75 per day (30 gallons times $2.50, going 180 miles and getting 6 mpg) Add RV park charges of about $30 per night. Then add oil, pumping out the tank, and miscellaneous other expenses and you have a total of about $115 per day. Now, you may discover that contrary to the story painted in your imagination, you only have time to travel in your RV twenty days per year. If you add $115 to the $4,200 annual cost (divided by 20 days equals $210), you get a true cost of $335 for each day of use (at least that's less than my buddy's jet-ski). And what if you only can sqeeze in two weeks of use each year? $415 per day.

There is nothing wrong with that if you can afford it and if you really enjoy the style of travel that much. Of course, it would be far cheaper to spend $25 on gas for your car each day and stay at relatively luxurious hotels for $200 per night. That doesn't allow you campfires or the pleasure of showing off your RV of course, if those have some value to you. And of course if you spend half of each year living in your RV in Florida it might be much cheaper per day.

But the real question is how many people ever know what they'll really pay before they make the decision? How often do their egos and imaginations hoodwink them into buying something that isn't actually worth the real cost to them? The dream of many weeks on the road (and with no breakdowns or other hassles) is perhaps just the start of the self delusion, which then continues with "It only costs..."

How much does a swimming pool really cost per hour of use? How about a boat, or a timeshare condo on the beach? Perhaps there is some value to you in being the proud owner of these things, and not just in your use of them. No one can tell you what something is worth to you, or why, except you. The problem is that you can't even say if it is worth it if you don't have any idea what it costs.

Self delusion is expensive and ultimately stressful, and there may be happier ways to spend your money. Buy expensive things when it makes sense - but why not buy them consciously and honestly?

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