I work in the tech industry, so I use my computer 10+ hours a day in ways that 99.99% of you don't. And yet, I have a 5 year old computer which cost me $300 (plus $200 on performance mods) a couple of years ago.

Why? Because that's all I need to do my work. My friends (all of them, working in tech or not) scoff at me and keep saying "what, you don't have money to buy a new one?" "man that computer is old!".

This is made worse (in their view) because due to some smart career moves, I am in my early 30's making substantially more than all of them.

I've stopped saying anything, but in the beginning I would state the following:

  • I travel a lot, and I keep my data backed up and safe, so if I lose the laptop or get it stolen, it's cheap to replace; I can treat it a disposable computer.

  • It has some characteristics that $2000+ MacBooks don't: the keyboard for example is far superior, which is really important for someone who uses the computer like me. Yet don't even say that one of my tech friends who has a Mac - they just don't believe it. Their bias is so strong that they just can't see what's in front of them.

  • And finally, one key thing that most people don't know, is that computing power for personal computers (laptops, desktops, etc) has BARELY increased in the last 5 years, especially for the needs of the average user. The only thing that improved is battery life, and even that is not substantial.

Most people buy a new computer when their old one gets slow. I know that with a few changes, like a new battery, a re-install of the operating system, add an SSD drive, more RAM, you can extend the life of the old computer for 5 MORE years. Yet, when I tell this to people, they nod in agreement and then ignore my advice / help and go spend enormous amounts of money on a shiny new computer.

 

This is just an example with something I know well, but the point is that these days people do this with everything. Cars, mobile phones, home appliances, clothes, shoes, furniture, watches, accessories - people always go for the latest and greatest when in fact they DON'T NEED IT. I'm too young to remember, but I hear all the time from my parents and grandparents how you used to take your washing machine to the tech who would fix it instead of buying a new one; take your shoes to the shoemaker so that they could fix it instead of buying new ones.

Now in some cases, unfortunately the incentive is not there to fix it - like the washing machine and shoemaker examples above, those professions either don't exist locally or if they do it's much more expensive than buying new shoes or a new washing machine. But there are plenty of stuff that can still be fixed in these days, the problem is that people just don't bother.

 

Last year I moved to a small town which has great weather for at least 9 months of the year. I immediately thought about buying a used convertible, when to try a few ones... but then I decided to buy a motorbike. It's cheaper to run and more fun. Cue in the shit from my friends again "man you could buy a new Porsche, why did you buy a motorbike?" or "what are you going to do when it starts raining" (which happens less than a month a year here).

Everyone knows that when you buy a new car you immediately lose half the value once it rolls out of the stand. So why do people buy new cars? The used car industry is huge, you can buy a much better, more powerful used car for the same price as a new one, and if you buy from a stand, it has warranty. You can get almost half price for a barely used car, with less than 5000 miles.

But most people still buy a new car. In this small, hilly European town where I live a motorbike is better than a new or used car - gets you through traffic, easier to park (it's hell parking here) and way way more fun. And it's at least 50% cheaper to buy and run than any car. And don't get started on motorbikes are not safe, we're talking about a very small town here, there are barely any freeways inside the city.

 

Do you see a pattern here? Admittedly I'm a frugal guy but I strongly believe that is directly connected to the money I make, and the money I save. Hence why I have so much more money than people around me. These same people that are jealous of me spend their money on stupid stuff all day, every day. They make foolish decisions about large amounts of money with their heart instead of using their mind.

 

Sometimes to save money you have to spend it. For example: do you need to drink coffee every day? Then why don't you spend $200 on a coffee machine to have in your office / home / whatever instead of spending $2.5 or $5 every day on coffee? You'll have your money back in half a year. Just remember to buy the white label machines, there is no point in shelling out double the money for a branded Nespresso machine.

 

Don't fall for the consumerism trap. Don't buy stuff because "you need to treat yourself" - that's a female excuse, and we all know that females are the worst offenders when it comes to buying stupid stuff and stuff you don't need. They always put looks over function.

The problem these days is that advertisers have done a great job of turning us into mindless drones. Have you ever coveted something really bad, like that new car, that new watch, that new games console? You then went out and bought it, and you were incredibly happy... for a few weeks.

It's all a dopamine rush. When you buy new stuff you feel pleasure because the chemicals in your brain tell you so. But then when novelty wears off... you crave more new stuff. It's like a silent, slow going addiction.

 

One last thing to keep in mind, sometimes the cheapest is not the best option. Think about an intersection between price and quality. We all know that quality goes up with price (well not always, but most of the time) so the sweet spot is somewhere in between. I always look for something that will last me the longest amount of time possible, so I can spend the least money possible but still enjoy it or use it for a long time. I even go as far as to calculate how many years something will last me, then calculate how much it will cost me per year.

 

For example I can get a used iPhone for $600, and I can make it last at least 4 years, which is about $150 per year. Yet with those $150 I can buy a cheap Android phone every year, or a better $300 Android phone every two years. In this case the there is no best decision, it's up to you (I prefer the iPhone, because I like to change phones less often), but the worst decision is clear - don't buy a new iPhone or Android for $1000, because it will not last you more than 4 years, and that comes out at $250 a year.
 

When you need to buy something or make a decision with a large amount of money, ask yourself:

  • Do you really need it? If not, don't buy it. Remember the dopamine rush theory.

  • If you really need it, make sure you are in that sweet spot (low price - quality intersection, discussed above). Buy quality goods that will last you a long time, but at the cheapest price possible.

  • Whatever you're buying, always check out the used market first.