Saturday, December 5, 2020

Seasonal Finances


Mysteries of money and finance during the holiday season--

If I buy something that I hadn't planned to buy because it was on sale, how much money did I save?

But, if I buy something on sale, that I needed and was preparing to buy, but would not buy it at the regular price because it was too high--did I save anything? 

Similarly, if I wait to buy something that I need and want until it goes on sale and I would not have bought it at the regular price, did I save anything? 

How much is something worth? 

I have a complicated answer for that question.

Something is worth what it will cost to replace it. The amount that someone will pay to buy something only reduces the the amount that it will take to replace the item, but that is not its true value. We need to remember the total value of an item when buying new items. 

For instance--cell phones have gotten to be incredibly expensive. If I have an iPhone 7 and want an iPhone 12--how much is my iPhone 7 worth? Easy, it is worth the cost of the iPhone 12--which for the sake of argument is $1000. If I can sell my iPhone 7 for $100, then its cash value is $100, but it's worth remains $1000 and I have to find an additional $900 to replace the iPhone 7 

Happy Christmas--don't go broke saving money.

-- Bob Doan, Elkridge, MD

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