On a recent trip back to Las Vegas with my wife we were taken back at how undervalued an overpriced everything was. There is a large difference between expensive and overpriced. And the difference is value.
Living in America in 2014 is expensive. Living in Vegas where the in town economy is rigged to profit as much as they can from the demand of tourists wanting to experience the best of Vegas is a prime example of overpriced and undervalued.
While walking through the shoppes we stopped into the Louis Vuitton store and checked on some purse prices. I would not mind a nice back pack for my lap top and wouldn’t mind paying a considerable amout (up to $2000 for my personal value consideration). When I saw the back pack was $5200 and the purse was $3250 I declared them as overpriced and under valued. I get zero compensation or reward by walking into an appointment or Starbucks with a Louis back pack. Actually, you’ve likely became a larger target to criminals than a respected consumer to today’s savvy business league.
As we strolled and consumed beverages that are triple what we pay in our hometown of Ft Lauderdale I once again seen the overpriced/undervalued scheme over and over.
One of the days we went on a helicopter tour over the Grand Canyon and paid around $500 for the experience. A hefty sum but the value was infinitely greater than that. Being one of the seven wonders of the world and being an item on my wife’s bucket list and traveling through the sky at 100 miles an hour in a corporate chopper is a manly accomplishment especially overseeing the incredible overwhelm of beauty the experience brings. The cost was minimal in relative consideration to the value.
So how do you know when you are getting a good value?
Much of this comes down to your personal tolerance level of value consideration and largely your income. While walking we seen numerous women walking with multiple high end shopping bags and if I have to put a price on each bag I would say roughly $2500 (just an average). Times this by three to five bags and my internal value calculator says if you make anything less than $150,000 per year with a mostly free and clear life you likely should not be spending more than 5% of your annual income on accessory items and my personal tolerance is much higher.
Living below my means has been a way of life for my wife and I. We make great income and put very little value on material possessions.
The value of the Grand Canyon experience is worth more than the value of those handbags or that back pack. Again, This is my personal tolerance.
Being that I buy discount homes as my profession I have a very hard time overpaying for anything that doesn’t carry a hard value to it. Real estate is an asset that can have value added to sell for more. This will never happen with a hand bag.
Here are a few things you can do to test your tolerance level and begin setting your bar for buying valued items in life.
- Take inventory-Relative to your income, how is your lifestyle? Do you frequently have too much month at the end of your money? Or do you constantly get teased for not having a brand new car like your friends drive? Knowing how to determine which priorities in life provide intrinsic value to you will not only keep more money in your hands, it is proven to make you happier.
- Know the real value of the things you buy-When I was shopping for a newer car (to me there is no value in paying msrp on a brand new model and making a u turn to sell it right back to the dealer and have the price be $20,000 less than I just forked out) I looked at comparable models for the luxury car I wanted. Its easy to get sold on style and sleekness but as a driven entrepreneur and realistic consumer I looked at cost of owner ship. I was looking to buy a used top of the line luxury car and choosing between a Volkswagen phaeton, BMW 6 series and the Lexus Ls 430. I reviewed all the consumer reports and simply discovered I will pay roughly the same price for either of them. The cost of owning the BMW and VW were triple that of my Lexus. That’s smart economics.
- Look at your past purchases-Go through your closet or garage or storage unit and see how much “stuff” you have. How often do you truly sit back and appreciate the value of that stuff? Are you still paying for these items with high interest? Does a $5000 couch make a large difference in your life? What if you spent a fraction of that and paid $500 for a bike that would allow you to reclaim your health? Or $1000 on a good camera so you can capture the experiences of life to treasure once a month while sitting in and having a great bottle of wine with it.
The final step in making the necessary changes are up to you. Most purchases are done simply based on emotion with zero rationality behind it. Anytime we ever plan to buy a large item, we typically sit on it for 30 days and decide whether it really tugs at us to purchase. Undoubtedly if we find a super value, we no questions asked purchase it right there.
Become subconsciously aware of your buying habits. Before every large purchase, ask yourself the questions at the bottom of this page and validate the true value of that item.
Set your own personal value consideration. Know what items are worth to you and don’t go a dime over that amount. Wait until you find it at your price or find the alternative or worst case, Go without.
Dig deep within yourself and become aware of what really means a lot to you. This helps set your limit of your personal value consideration. If you truly desire to have a top of the line new car, then get it. It is your personal preference. Just don’t go forward In life thinking that the new car is going to make you happy. That usually wears off in 4-7 days.
I want to share a story of a set of chairs I really wanted. My wife and I were looking for a set of Adirondack chairs to basically have in our yard for appeal. We likely would sit in them less than ten times per year. We looked at pricing and found that each chair would run us about $220. Not something we were willing to pay for a yard display. One day while driving home I spotted a pair of chairs at the street being ready for disposal. I took them home and began to sand, tightened the screws and repainted them. Not only did I have the chairs we wanted but I have the personal satisfaction of knowing I put my time and energy into making them “our own” and now carry a much greater “value” than the “price” I would have paid for them.
It is my hope that you found a nugget of wisdom in this article. If so, please share so you yourself can impact a life. I appreciate your feedback with any consideration you have with the content mentioned above.
Questions You Should Ask Yourself Before Making That Large Purchase.
#1. Are You An Impulse/Emotional Buyer? If So, Why?
#2. Do You Have Credit Card Debt for Most of Your Material Possessions? If So, Why?
#3. Do You Feel You Live Above Your Means? If So, Why?
#4. How Do You Feel When You Buy Something New? Does That Feeling Last Longer Than The Payments?
Start Considering Putting A 30 Day “Consideration” Period On Your Next Purchases. By Committing To This You Will Tell Your Subconscious Mind That YOU Are In Control And You Will Eventually Stop Purchasing Out of Habit…