Depreciation and Frugality

Posted By: Dr. Frugal in Frugality on 06/07/2007 at 17:52:23

Frugal people buy things. They even buy expensive things, if you can believe it. What separates frugality from typical purchase types is the value of the newly acquired item. Frugal people will spend big money on items where the value is going to appreciate. Things investment-related. A friend once told me she bought a name brand purse and referred to it as "an investment purse". Hardly. You might think purchases with large price tags equate to sound investment but think again. Once you drive that new BMW off the lot it looses 20% of its value. That 52" plasma TV? 50%.

The media unfairly portrays the value of collectibles. Things YOU find collectible, while possibly having limited value to limited other people, are rarely good investments. Things like the Beanie Baby Scare of the late 1990s is a perfect example. What are those worth now? That's right, nothing. Well, next to nothing. It's all about the market but I can tell you right now that 0% of my nest egg is going into anything plush.

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