What’s It Worth?
August 14, 2009
When making purchase decisions, cost isn’t always the most pressing consideration – sometimes there are other factors that take higher priority.
We’ve been playing “musical cars” at our house recently. Our son’s 2003 Camry recently died, just shy of 200,000 miles (precisely the reason we bought another one last year for ourselves.)
Our daughter starts college this week, so we’ve been trying to find a reliable and affordable car for her to use. And the “Cash for Clunkers” program had us considering replacing an old 1995 Jeep Cherokee that was beginning to show its age.
Teenagers and cars make for a complicated mix, so a few years ago, we decided to let our son drive the old Camry, and we’d replace it with an inexpensive “basic transportation – gets you from A to B” kind of car that we’d keep until both kids were out of the house.
We asked our mechanic to keep an eye out for something, and he found one for us – a 1995 Subaru Legacy that one of his customers was selling. The mechanic had been taking care of this car since it went out of warranty, and his recommendation was good enough for us to consider it.
We dutifully looked up the Blue Book value of the car and came up with a figure we were willing to pay, and contacted the owner. After a test drive, we made our offer, but she was unwilling to budge from her original asking price which was about $600 more than our number. We said, “thanks, but no thanks.” and drove back home.
On the way back, though, Lorie and I talked about it and arrived at these conclusions:
* The car had been maintained by a mechanic we trust
* It was what we needed to hold us over until we were ready to get newer cars
* We would have to spend more time and effort to find something comparable
It was this last point that convinced us to call the woman back and tell her we’d take the car at the price she was asking. (Our son is now driving this car until he finishes college in December.)
You see, it’s not only a matter of cost; sometimes you have to consider opportunity cost – the value of your time and what you’re not accomplishing when you choose to do something else.
We could easily have spent more time and effort looking for other cars or waited until our mechanic heard about another option, but then there was the issue of what we wouldn’t be getting done while all this was going on – activities that would have generated significantly more than $600.
Sometimes you have to consider the big picture when determining how to use your time. Make sure you understand what an hour of your time is worth, and make decisions that will maximize your earning potential – even if it means spending a bit more elsewhere. Remember: how much you make isn’t as important as how much you keep.
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good article on buying but what action is there for a person selling/marketing to take. I do not think telling my customers it will be more expensive to take time shopping is the best idea