Reading time: 5 min

Summary:

1. If you take ages to mentally approve expensive purchases, consider the following calculation method:
2. "Total cost ($) / Life expectancy (days)" - Is this daily cost lower than what you would be willing to pay every day to use it? If yes, buy it (if it clearly improves your life).

I take ages to mentally "approve" expensive purchases

I have this problem.

I can afford to spend on new or "extra stuff" that enhances my life, but I'm quite frugal.

I find it very hard to "approve", in my head, large purchases, even if a purchase would clearly add a lot of value and enhance my quality of life.

Things like:

• new glasses (my existing pair are years old)

• a new laptop (when the existing is very slow and has a broken hinge, previously repaired)

• a new desk chair (my existing is 10+ years old)

• a new desk (the old is second-hand and is a design that blocks me from pushing my chair in properly)

• a new phone (my screen has pixel lines going across it, it's 6 years old; it's dying), etc.

When I consider non-essential, non-urgent purchases, I go through this massive thought process and waiting period before I buy anything:

1. Do I really need it?

2. Is it replacing something I'm already using? Is the existing item already broken or approaching end-of-life?

3. Does it bring a lot of value or clearly enhance my quality of life?

4. How much am I willing to pay for this?

5. Where am I going to put it? Do I have space?

6. Has it gone through my 1-week waiting period? [whoops, wanted to link to a post about "purchase waiting periods" that I haven't posted yet.]

Etc.

I overthink it.

My quantitative solution

I've adapted the following calculation method when I consider large purchases. It made my large purchase decisions much easier, making it a simple, single number:

Convert the total cost of the item to how much it would cost per day to use it.
Total cost ($) / Life expectancy (days)

(This is "amortisation" in accounting.)

Is this "amortised" daily cost lower than what you would be willing to pay every day to use it?

If yes, you should buy it.

Example applications

I bought a new pair of glasses and a new laptop this way.

Glasses are as precious as sight to me. I'd pay a lot every day to have the sense of sight.

So, although my new glasses are relatively expensive because the lenses required are not commonly available, they were well worth the purchase. Although, the person at the shop did point out that my old pair, despite being many years old, were kept in pretty good condition.

My laptop goes through heavy use. I'd pay a lot every day to use a laptop.

I was looking at some pretty expensive laptops, knowing I can use them to their full capability. And it hurt looking at the lump sum cost I'd be paying. But amortised into a daily cost, it looked really cheap compared to what I'd be willing to pay daily.

Also, convert the total cost and daily cost in dollars into your time cost for another perspective.

A relevant concept in behavioural economics: Humans tend to put way more emphasis on short-term costs and gains versus long-term costs and gains. Studies have found that most of us would rather have a little money now than a lot of money later.

Happy new year!

Other notes / thoughts:

I go through a massive thought process for my meal choices as well.

I typed "My solution" and this popped into my head: "My Bologna" by "Weird Al" Yankovic (YouTube). Then, I proceeded to chant "My Solution" in time with "My Bologna".

Okay. I realised, in my Standard Notes database, I have a mountain of draft posts (originally not intended for listed.to) and notes with just a few sentences detailing many ideas and thoughts.

I'll slowly push them out on listed.

This is great! Many years ago, I considered the problem of not having enough posts and ideas. I dreamed of having a massive database of notes I can just draw from.

And now I have it. My notes are truly my Memory Repository.