Personal Finance Advice

When is a deal a good deal? Unless something is absolutely free, we are necessarily paying for it, so how do we decide if something is worth buying? Even if something is absolutely free, there may still be costs associated with transporting it, storing it, using it or disposing of it. The costs may be immediate or future. They may be great or small. They may be measured in terms of dollars, time, lost opportunity or something else altogether.

I face the “should I buy this” dilemma every day. I spend a great deal of time researching and networking on-line and I find that I am often presented with spending opportunities. The older I get, the more quickly I have come to realize that usually a bargain is not a bargain if it causes me to buy something that I would not normally buy or that I do not need to buy.

For example, today I read a jazz-themed blog that directed me to a website that is selling a five disc John Coltrane CD set for $11.99. The regular price of the set is $60.00. I actually have a $5 gift card for the site so my cost would have been $6.99 with no shipping costs since I can pick the product up at a local store.

I love jazz, and John Coltrane in particular. At the same time, I know that I already have so much music in my collection that I would listen to the collection a maximum of three or four times over the course of the rest of my life. I also know that I can listen to the songs for free on various legal, music web sites. I just don’t need to pay any money to own the music or to have the necessary rights to make copies for my personal use. The radio and other streaming sites are sufficient for my purposes. As a result, even though the deal on the Coltrane set is a great deal, it would still be a waste of money for me to purchase the set.

By comparison, I received a PM from a local radio station letting me know that it was “giving away” copies of a new Janis Ian 2-disc set. Recipients needed only to pay $3.00 to cover shipping costs and the station would send out the CDs.

I immediately jumped at the chance to get the CDs even though the savings are not nearly as substantial as the savings on the Coltrane set that I passed up. I could buy the Janis Ian set for $13.99 at Amazon (or at least I could when I checked on the price) so I am only saving about $10.00.

I only know two Janis Ian songs (“Society’s Child” and “At Seventeen”). I actually know Coltrane’s body of work much better. The difference between the two deals is that three days before I received the Janis Ian offer, I had looked at “Society’s Child” and “At Seventeen” on iTunes and decided against the $2.60 charge to purchase both songs. I really wanted those songs so when I had the opportunity to acquire those songs plus another 20 or so tracks for only $3.00, I jumped at the chance.

In case you are missing my point, and I know that happens a lot if my family’s reaction to almost anything I say is any indication, we all have to set our own spending priorities. More importantly, our priorities are largely defined by our circumstances at any given moment. If I were younger and unmarried, I would almost certainly have purchased both the Coltrane and Ian sets. If I did not already have a substantial jazz library, the Coltrane deal would have been much better than the Ian deal. If I did not like jazz or folk, neither deal would have been good for me.

Every purchase needs to be made in the context of who we are, what we need and what we want, and no two people will always make the same purchasing decisions. As a result, none of us should really be judging the purchasing decisions that others may make.

How do you make your purchasing decisions? What is important to you? To what purchases do you give more importance than other people might? What purchasing decisions do you see other people make, only to leave you scratching your head wondering why?